As the 19th century entered its final decade, the War of Currents was nearing its peak. On one side of this war was Thomas Edison, who had invested heavily in direct-current (DC) technology. Tesla and Westinghouse backed alternating-current (AC), which they believed (correctly) to be more efficient.
In the spring of 1891, a seemingly small event in Telluride, Colorado, decisively turned the tide in favor of AC. The Ames hydroelectric-power plant, financed by mining entrepreneur L. L. Nunn, and built around equipment supplied by Westinghouse, began transmitting AC power to Nunn’s gold-mining operations 2.6 miles away.
It was the first successful demonstration of AC’s efficiency advantages over long distances, and it led to the unveiling of AC at the 1893 Chicago World Fair, followed by Westinghouse winning the contract to build an AC-based power plant at Niagara falls. The rest is history. Edison lost the plot, and AC came to dominate the story of electricity.
The victory of AC over DC, in the midst of a noisy debate fueled as much by misinformation and propaganda as by science, is the sort of outcome under uncertainty that markets excel at delivering.
In 2015, the climate-change debate is where the War of Currents was in 1893. The December climate convention in Paris, COP 21, is shaping up to be the most significant since Kyoto in 1997. It might well do for clean-energy technologies what the Chicago World Fair did for electricity. It might be an inflection point.
Except this time around, the drama centers on government and UN technocrats rather than technologists and private investors. Rather than trusting market serendipity, climate experts are hoping that strong regulatory forcing combined with aggressive government investment in energy R&D will do the trick. In the November issue of The Atlantic, Bill Gates makes a persuasive case for just this approach.
Is Gates right that this dual-pronged attack is necessary? Probably. Can it work? There’s a slim chance.
It’s clear that the market is unlikely to solve the problem of climate change on its own. If scientists are right, and there is no reason to think they aren’t, averting climate change will require such large-scale, rapid action, that no single energy technology, new or emerging, could be the solution. Neither could any single non-energy technology, such as video-conferencing as a substitute for travel, solve the problem on its own.
There is always a possibility that a single cheap and effective solution will emerge, rendering expensive interventions moot, but few climate experts are willing to trust the future to that unlikely prospect.
The challenge therefore, is one of rapid, concerted deployment of a portfolio of emerging and mature energy and non-energy technologies. This means accepting a certain level of attendant risks. The Volkwagen emissions scandal illustrates these risks well: Aggressive forcing, through EU policy instruments, of the adoption of diesel engines (which are better suited to reducing emissions) created incentives that led to sophisticated gaming.