Economics of Green Energy

Secretary Chu and Elon Musk, participating in a fireside chat at the ARPA-E convention. Steve Clemmons moderated the event.Photo Credit: Sarah Gerrity, Energy Department Date Taken: 02/26/2013 -14:18
In the current global economic climate, does the investment in green energy make sense?

With the U.S. mired in political gridlock, “sequester” spending cuts taking effect, and an economy riddled with unemployment, does a focus on green energy make sense in this financial climate? Will there be a job for me in this field when I graduate college in 2014?

The speakers and panelists I heard at the 2013 ARPA-E 2013 helped me answer these questions.

Tesla and Space X founder and CEO Elon Musk said sustainable energy is one of the biggest problems we face as a global population and will lead to an economic collapse if the issue is not addressed.

Outgoing Energy Secretary Stephen Chu said, In areas where the US needs to compete globally, we did not grow,” between 1980 and 2000. According to Chu, the manufacturing side of the US economy has not grown, thereby limiting the competitive capacity of the US in the global market. By investing in industries that manufacture green tech and green energy products, the US could expand sectors of industry that produce exportable goods.

In the “Developing the developing world” session, the panelists focused on the strategies used in the developing world to bring cleaner fuels to the bottom level of the economic population pyramid. They identified the market demand for small scale, low cost, energy technologies in the emerging and developing markets.

According to the Executive Director of the Energy Access Initiative of the UN Foundation, Richenda Van Leeuwen, there are 1.3 billion people currently without access to electricity, and the UN’s “Sustainable Development for All” Millennium Development Goal, there is clearly a large market of people to supply clean technology to. The panelists agreed that the market is primed for green energy.

Kate Steel, an Associate for Energy and Sustainability for, discussed some of the strategies used by the NGO’s and companies involved to try to keep the price of electricity low, since affordability is a real issue for these communities. These strategies include the use of microgrids, pre-paid electricity plans, and moving away from kerosene and battery power, which in the long-term is an extremely expensive way for these populations to get their power. Expansion is possible in these populations; it just takes more innovative strategies and smarter technology.

Thus, according to those speakers, investments in green energy sectors does not only promote growth in industries that create exportable goods, but there is also evidence for a global market demand for green technology and innovation. If the prices of these goods could remain affordable in the global market, I see great potential for America’s investment in green energy to be a profitable one.

Seems like I might just be able to find a job in this industry after all.

arzooThis article was written by our own Arzoo Malhotra.
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