It is a similar situation in the world of electric mobility. Ten years ago, the total cost of ownership of an electric car was many times higher than that of an equivalent petrol or diesel car. Today, electric cars are cheaper overall: although the purchase price is indeed a little higher, the cost of running one is much lower. And the purchase price of an electric car is set to fall considerably in the next ten years.
Limited increase in consumption
Should we be worried about having cheap energy? Won’t we end up using more of it as a result? I see no reason to panic. First, energy consumption is “inelastic”. In other words, a change in price has only a negligible effect on demand. When the price of energy increases, we still commute to work and we still heat our homes. After all, we have to. When the price falls, this only leads to a small increase in consumption – and this increase can be counteracted with the efficiency measures we take.
Second, there is more than enough sunshine, wind and geothermal energy to supply all the renewable electricity we need and much of the energy we require for heating. It is true to say that these sources are not distributed equally across the planet, but then neither are sources of fossil fuel. We have simulated the climate-neutral Swiss energy system in detail with hourly weather patterns and seasonal fluctuations, and we reached the conclusion that it will work most reliably and cost-effectively if we import around 25 percent of the energy we consume in the future. At present, this figure stands at around 75 percent.
Guiding the transition
The heated debate about the planned energy levies makes it easy to forget their purpose: incentive taxes make fossil fuels more expensive, thus facilitating the switch to renewable energies and making them cheaper in the long run. An incentive tax is successful when nobody has to pay it any longer because everybody has switched to the new system. Other instruments create direct incentives; for example, by relieving the financial burden on electric mobility or replacing heating installations. Most countries use both taxes and incentives to support the switch. These efforts are also reflected in the new CO2 law.
Rapid action is critical
We may need stricter regulation – as was the case with the phase-out of leaded petrol and obligatory catalytic converters – if we are to leave fossil fuels behind entirely. However, these regulations will only meet widespread support when renewable energy is so cheap and commonplace that few people and companies will want to use fossil fuels. This could well happen of its own accord, but the right measures could guarantee this acceptance and speed up the process considerably.
A strict Swiss climate policy can reduce domestic CO2 emissions and make a substantial contribution toward making renewable energy cheaper than fossil fuels ever were. This is also relevant for other countries; after all, their approach to the climate will also shape our future. In the next 20 years, a billion people in Africa and Asia will receive access to energy, and the governments in these parts of the world have shown great interest in cheaper energy sources. In other words, action is important and speed is of the essence.
