Part 3e - US vs. China - Renewables as a Strategy and Race to Adapt

Incorporating Renewable Energy as a Strategy and Race for Adaptation

Multiple studies have shown that energy availability and economic growth are inextricably linked[i]: “Ohler and Fetters (2014) contend that renewable energy technologies hold important roles in future energy use and economic prosperity, and subsequently lead to a faster transition towards a developed society.”[ii] Energy is required in “nearly every product and service in the economy and underpins the economic activity across each of its sectors,” so its impact “ripples through the rest of the economy.”[iii]

Certain countries, such as China, have already started leveraging their energy resources in order to achieve economic growth, as mentioned in the earlier sections, with the goal of achieving a more prominent power position and influence in the world order. A study conducted by IRENA found that doubling the share of renewable energy in the global energy mix increases global GDP in 2030 between 0.6% and 1.1%, which amounts to somewhere between USD $706 billion and USD $1.3 trillion.[iv]

Making the switch also decreases reliance on energy imports, which are susceptible to tariffs, fluctuations in supply, and other political and diplomatic factors. On one hand, this gives countries more bargaining power and stability, and brings “a shift in trade and energy linkages that will have impacts at the global and national level.”[v] On the other hand, countries like the United States, which are heavily reliant on oil and gas exporting revenues can create “economic fragility.”[vi] This is an issue in the long-term due to the volatility of the oil prices, but also because fossil fuels are a finite resource, with an end date that is approaching fast.

Increased investment in renewable energy will also translate to economic growth by creating more jobs and having a net positive effect on welfare. China is currently the largest renewable energy employer in the world, employing 3.4 million people in this sector, as opposed to the U.S., where there are around 0.7 million jobs in this field.[vii] Figure 25 shows just how far ahead China is in comparison to other countries in terms of renewable energy employment as of 2014 (in thousands of jobs). Continuing to increase its investment in renewables will continue to establish its dominance in the field and to decrease the unemployment rate as more jobs will open up in the renewable sector and in downstream fields.

As discussed in class, automation of various sectors is inevitable, however, renewable energy will still mean an increase in job opportunities along different segments of the value chain, such as “equipment manufacturing, construction and installation, operation and maintenance.”[viii] Technology advances have not yet been made to automate these processes and to keep up with the growing demand.

In the race to adapt to our ever-changing environmental and political climate, an increase in renewable energy systems would reduce the “traditional trade-off between economic growth and environmental conservation.”[ix] Countries, like China, who embrace this change early on are able to instill a smoother adaptation that will allow them to both “gain from and contribute to the transition most effectively.”[x]

As an entrepreneur or manager, it is important to tune in to these trends and shift our focus to getting involved in these as soon as possible in order to benefit from a first-mover advantage.

In our conclusion in Part 4, we look back at the journey of our story and want to highlight that a nation's rise or decline is measured across large swaths of time over multiple generations. Energy transition, development and deployment takes large sums of a nation's resources both in the realms of leadership in politics, monetary and fiscal policies, consumer education and support, and external factors like climate change. These are all the drivers pushing hard for change. This is a story of the 'finite' vs the 'infinite', change vs. the status quo, power and influence, and getting to the same endgame.

Only time will tell whether who will lead in the next century, as in our lifetimes we are seeing a sitting superpower in the United States that is being challenged by a rising superpower in China, on all fronts.

Life is exciting if nothing else!

Stanford is a technology entrepreneur and an amateur futurist very much interested in how technology can be used to better humanity. Continuous learning has always been a life long passion. Besides keeping a close pulse on the phenomenon of digital transformation and innovation happening all around us, he's often found thinking about what's coming around the next corner in the technology innovation landscape.

References:

[i] Vandael, N. a. (Summer 2015). Renewable Energy in Developing and Developed Nations. Journal of Undergraduate Research, University of Florida, Volume 15, Issue 3, 1-7.

[ii] Vandael, N. a. (Summer 2015). Renewable Energy in Developing and Developed Nations. Journal of Undergraduate Research, University of Florida, Volume 15, Issue 3, 1-7.

[iii] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[iv] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[v] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[vi] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[vii] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[viii] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[ix] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf

[x] Ferroukhi, R. e. (2016). Renewable Energy Benefits: Measuring the Economics. Retrieved from www.irena.org: https://www.irena.org/documentdownloads/publications/irena_measuring-the-economics_2016.pdf