can you write about the effects of technological change on the economy (past technologies and future technologies)and how public policy can be used to make sure these changes benefit everybody?

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I commented about this on Matt's blog, but basically Noah is right. Small modular technologies ftw. In addition, there is a lot of stuff coming down the innovation pipe that will address many of the hard-to-abate sectors. Not all of this is high science (thought some is). A lot of it is just business model innovations that enable a producer to get a premium for a carbon neutral product.

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Dec 2, 2020Liked by Noah Smith

I would say, "Yes, there has been a learning curve, but it's really getting to that breakout point were you're producing at larger and larger scales that production efficiencies begin to drive down prices for any existing tech product". Economies of scale are at work here as far as pricing goes.

Step 1: innovate.

Step 2: develop mass production capabilities.

Step 3: Produce oodles of widgets.

Step4: Competition to mass produce widgets more and more cheaply

Step 4: widget prices decline.

Step 5: go to step 1, rinse and repeat.

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I like the optimism and the enthusiasm, but I can't help but feel there's something off about those broad approximations. Let me try and elaborate.

First, comparing the price of renewables (solar / wind) vs. the price for gas or coal plants falls in the apples vs. oranges category. That's because you can drive a coal power plant: you burn coal, you get electricity, that's all there is to it. On the contrary, with renewables, you have to wait for the sun to shine, or for the wind to blow. If you want the comparison to be meaningful, you need to factor in storage and distribution (because typically, renewables can't be deployed as close to densely populated areas as traditional power plants). This changes the price, a lot.

There's another devil hidden in the details: all energy sources are characterized by their peak production capacity, but coal, gas or nuclear plants can actually achieve this peak, whereas renewables almost never do. There has been some hope that this could be addressed by considering wider areas: if the wind is stale somewhere, it must be blowing hard somewhere else, right. But this seems to be mostly false, and even if it were true, it would increase the distribution infrastructure needs.

So we might be underestimating both the cost of renewables, and the amount we need to build. But that's not over yet.

Modern solar farms seem to occupy around 25 km²/GW. That's probably largely dependent on where you build them, but it's still orders of magnitude more than the equivalent, even before you start thinking about storage. Given the size of a Tesla farm, and knowing you have to store enough energy for the night, that adds up, too.

But the main sticking point is that we continue assuming that natural resources are free and unlimited. They're not. And you can hardly state that an energy source is renewable if the raw materials you use to capture it are not. Since the energy density for renewables is low, we're are talking about a lot of resources. Meaning that the cost we should worry about is not financial, it is the CO² cost of extraction and construction. This is something technology is not likely to help us with.

Last, but not least, time. We may be able to do al of the above, cheaply, and without burning our CO² budget. But we also have to do it in time. And when talking about infrastructure, a couple of decades is a really short time, especially when you want to do something radically different. I don't see, for example, the US deploying 250 GW of renewable energy to phase out coal plants in the next 30 years. And I sincerely hope they prove me wrong. If you're serious about decarbonating the economy, you can do so faster, and for cheaper, with unglamorous nuclear power plants. We already know how to build them, they don't need storage, the resource cost is crazy cheap, the financial cost is bearable with the proper level of state support.

Given we are supposed to cut our CO² emmissions by 6 in 30 years, chasing renewables with the time, money and resources we have on our hands looks heavily suboptimal.

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Interesting how technology gets us out of one type of difficulty while creating the next difficulty for the next generation. The internal combustion engine saved us from horses and cariages. One can only immagine how much horse dung New York would have to dispose of every day - and the hay prices to feed those monsters! Malthusians of the 19th century would envision New York under six feet of horse dung. Not to mention emissions from candles and oil lamps. It is hard to have faith in the future when it is difficult to see what solutions are coming over the next horizon.

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Noah you should check out Vinay Gupta's work. Hexayurt, Mattereum, and much more. Really interesting thinker-doer!

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Have been waiting for some time to read this. Shouda done it earlier. GREAT post!l

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It doesn't make sense to ignore the GHG reductions from substitution of natural gas for coal in power plants enabled by the TECHNOLOGIES of horizontal drilling and fracking even if fracking is politically incorrect. Already natural gas pipelines are carrying some green hydrogen so deployment of natural gas infrastructure is a useful step towards decarbonization in more ways than one. Replacing natural gas for cooking and heating with electricity should be low on the priority list both because electricity is not clean enough yet and because hydrogen will eventually replace the natural gas.

Also worth a mention is carbon sequestration both by afforestation (the trillion tree initiative is significant) and TECHNOLOGY like the Salk Institutes' very promising research in vastly increasing sequestration by food crops.

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You say that because deployment increases prices go down. Couldn't it be the other way somewhat where prices go down and because of that deployment goes up? Do agree that with tech we'd expect that prices go down, but the learning rate doesn't seem constant and I'm not really sure of any effects of deployment on price (other than through tech making supply curve move to the right increasing both quantity and decreasing price).

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