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Fake Solutions

Introduction to Environmental Economics

Page 3:  Fake Solutions

Under microeconomic duress, it is always more cost effective to pretend to have a solution to a problem than to have an actual solution. Solutions that don't quite work can always be found that provide more microeconomic income to promoters than solutions that would actually work.

Fake solutions not only cost resources that are thereby wasted (sunken costs), but also prevent real solutions from being implemented by tying up resources that could otherwise enable real solutions (opportunity costs).


Overselling Photovoltaics (PV)

Overselling of photovoltaics provides a case study of fake solutions. Photovoltaics does provide some real solutions to real problems, but its heavy overselling to solve problems it cannot solve is exemplary of fake solutions. Like nuclear energy, overselling photovoltaics appears rational only by overlooking key shortcomings.


Terawatt Solar Photovoltaics

Photovoltaics (abbreviated PV) refers to solar panels of semiconductor materials that convert sunlight into electricity. These panels are useful for charging batteries of recreational vehicles, powering isolated water pumps for livestock, powering small pumps for solar water heating systems, etc.

However, the Obama Administration provided subsidies to sell PV as a replacement for widespread use of electricity from nuclear and fossil fuel power plants, which have high safety and climate change costs, slowing down efforts to address the safety and climate change problems by diverting resources away from real solutions. The result was that electricity produced from nuclear and fossil fuels was not reduced, while it could have been sharply reduced and replaced during that time period.

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Besides requiring too much electricity to manufacture PV panels, and besides generating pollution because PV panels degrade and are discarded, pollution is also generated by the manufacturing of PV panels, using solvents to prepare the semiconductor materials.

In addition, experimental PV manufacturing still requires special hard-fo-find rare earth elements, which John O’Donnell years ago referred to as “unobtainium” (although the audience reaction may not be audible in that part of the video, everyone at that lecture laughed when he said that – a well known problem with PV research).


Groupthink

Groupthink is a leading cause of creating fake solutions. A group of people is so tied up communicating with itself and similar groups, that it fails to check with people who do not have the same knowledge and incentives as they do.

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Career Bias

Historically, the industrial revolution heralded a new era of mechanical progress in which it was possible to temporarily adopt static social partitions to manage basic physical industrialization. However, mechanical industrialization has now progressed enough to incorporate an electronic revolution, which requires dynamic instead of static management.

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Groupthink and Career Bias in Photovoltaics

The semiconductor industry has previously done phenomenally well, sharply lowering prices and creating durable products and excess capacity. But having been accustomed to previous fast growth, it is now looking for new markets to fan higher growth, and overselling photovoltaics is an attempt to do that.

Research into all unproven technologies is needed in case an unlikely major breakthrough happens. Photovoltaics deserves to be researched. But it has already been researched for decades without a major break-through. Semiconductor companies and their supporting institutions need to rethink over-reliance on hoping for physically impossible break-throughs in photovoltaics.

“Exit problems appear to be particularly severe in companies that for long periods enjoyed rapid growth, commanding market positions, and high cash flow and profits. In these situations, the culture of the organization and the mindset of managers seem to make it extremely difficult for adjustment to take place until long after the problems have become severe, and in some cases even unsolvable. …In industry after industry with excess capacity, managers fail to recognize that they themselves need to downsize; instead they leave the exit to others while they continue to invest. When all managers behave this way, exit is significantly delayed at substantial cost of real resources to society.”
— 
Jensen, A Theory of the Firm, p. 31

The problem is like a semiconductor company (Toshiba) investing in nuclear energy. If nuclear energy was safe, which many people have known for a long time is not true, then a semiconductor company investing in nuclear energy might seem rational.

But they forgot to check to see if nuclear energy was safe for the environment. It wasn't. It had decades of unresolved costly safety issues piling up that many people whose career did not depend on nuclear energy could have told them about. This glaring oversight caused the otherwise successful semiconductor company to fail (e.g., become a zombie business  promoting more “lost decades”).


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Sunday, 24-Sep-2017 17:32:02 GMT