Capitalism Has Made Net Zero Achievable | Honest Liberal
Nations around the world are looking ahead to COP26 in Glasgow this year, and many of the western nations aim to achieve Net Zero Carbon emissions by 2050, though China is aiming for 2060. The reason we can achieve this goal is because of, not in spite of capitalism.
China is not willing to forgo it’s economic development, or her other ambitions, to appease environmentalists, but simultaneously it wants to play its role on the world stage, and for the time being that means showing leadership on climate change targets. Whether it really means to meet the target, or if it even can, are uncertain.
In the West, happily, capitalism has made us richer and more equal than any other system ever thought up by humanity. And its benefits have not been fully understood regarding moral and political issues; it is a system that is far greater than most know, and it has allowed the West to shoot for the stars on Net Zero.
According to Our World in Data “Just 10 years ago… it was much cheaper to build a new power plant that burns fossil fuels than to build a new solar photovoltaic (PV) or wind plant. Wind was 22%, and solar 223% more expensive than coal.”
The price of wind power fell by 70% between 2009 and 2019, and the price of solar power fell by 89% (from a much higher starting point admittedly) in the same period. Solar PV and Offshore wind are now the first and second cheapest forms of electricity generation respectively. Incredibly, from 1976 to 2019 the price of energy from PV has declined by 99.6%. But why has the price fallen, and why so fast?
The price fall of energy compared with how many units (PVs for example) have been installed shows that from 2010 to 2019, each time the PV capacity has doubled the price has fallen by 36%, this alludes to a virtuous circle of demand and supply. As supply increases, the product becomes cheaper, when a product becomes cheaper it becomes competitive in different markets across the globe compared to coal for example, then demand increases in those new markets and the cycle repeats itself.
In a global market, once the centre of gravity has shifted, to make two renewable energy sources the cheapest of all, and the political atmosphere globally has made clear that fossil fuels are not the future, it further encourages business people to invest and innovate in those technologies. The political atmosphere is wired into the economic reality; free people across the globe have voted for governments who have pledged to reduce carbon emissions, giving strong signals to CEOs and investors where to put their money.
All this data is really telling us one thing. In capitalism, innovation, prosperity and morality collide. People not only want to buy products that are cheap and of use to them, but once a nation becomes rich enough, they also want to vote with their feet, to vote on their conscience and buy products based on their moral ideals. No other system allows this. Even better, the suppliers of PV might be greedy and selfish beyond belief, but the beauty of capitalism is that self interest and the common good are inseparably intertwined. If immoral men want to make money they cannot do so without providing cheap products that the masses want to buy.
In no other system is this possible, and it is why we will meet our targets in a gradual and sensible way too – not by switching off all coal and gas energy production tomorrow, but through the market working it’s magic, and the freewill of billions in the West choosing electric cars, PV energy and lower carbon footprint goods.
The individual has the power to steer the behaviour of the CEO and of the Prime Minister, far more than the nihilistic Marxists could have ever imagined, and far more indeed, than communist regimes have ever achieved. Never mind owning the means of production, capitalism is the economic extension of democracy, and those votes cannot be rigged.
The Chinese government is more interested in economic growth and why shouldn’t they be, but in the West it is the choice of the people what the government and what the markets strive for. The growth of the clean energy market and cheap renewable energy is the success of the consumer for making such choices, for buying and voting as they do, and of the capitalist free market, for finding a way to make the vision of the consumer a reality.