Tuesday, April 8, 2014

Innovation Blindness

Should we make massive investments in new "clean coal" or nuclear generation today?

Leaving aside the environmental debates, this post notes eloquently that blindness to technological innovation can severely hinder policymaking.  The post takes issue with an analysis showing the iphone today incorporates technologies that cost over $3000 in 1991.  Instead, the post argues, an iphone in 2014 incorporates over $3.5 million in 1991 technology. The 32GB memory alone would have been over $1.5 million in 1991.  Of course, the form factor is an entirely different matter.

We see the same thing in terms of energy policy.  Renewables are deemed "unreliable" and "expensive" based upon historical technologies and cost.  Instead just look at the cost curve for solar, wind, fuel cells and other renewable or environmentally-friendly technologies.  And think about the likely cost of storage technologies that will be available in 10 or 20 years, and the IT and communications advances to support demand management.  If you take such things into account, you will come up with entirely different answers to energy policy questions than if you look at historical costs.

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