Webinar Summary – The Price is Wrong: Why Capitalism Won’t Save the Planet

On October 21, 2024, the Boston University Global Development Policy Center (GDP Center) and BU Institute for Global Sustainability co-hosted Brett Christophers, Professor of Human Geography at the Institute for Housing and Urban Research at Uppsala University to discuss his new book, “The Price is Wrong: Why Capitalism Won’t Save the Planet,” as part of the Fall 2024 Global Economic Governance Initiative Book Talk Series. The conversation was moderated by Madison Condon, an associate professor of Law at Boston University.

Christophers opened by addressing a fundamental issue in the green energy transition—low profitability. Despite significant cost reductions in renewable technologies such as solar and wind energy, Christophers noted that that the return on investment remains low, typically around 5-7 percent. This is far less attractive than the high returns offered by fossil fuel investments, making it difficult to draw private-sector investment into renewables at the necessary scale.

He highlighted the instability in renewable energy markets as another significant hurdle. The prices of renewable energy are highly volatile, which complicates financing for new projects. This unpredictability makes renewable projects riskier than traditional fossil fuel projects, which tend to offer more stable and predictable returns. As a result, securing investment in renewables remains challenging.

One of the key points Christophers emphasized was the need for public ownership in the energy sector. Christophers argued that the private sector, driven by profit motives, is fundamentally ill-suited to lead the fight against climate change. He emphasized that public ownership of energy systems would enable a more sustainable approach. Under public ownership, decarbonization efforts could prioritize long-term environmental sustainability over short-term financial gains. This shift in focus could accelerate the transition to cleaner energy.

Christophers also highlighted the disparities between the Global North and the Global South in terms of the energy transition. While fossil fuels still dominate energy systems in the Global North, the Global South is experiencing rapidly increasing energy demands. Financial constraints in developing countries further complicate their ability to shift toward renewable energy, making international cooperation and funding crucial to supporting their transition.

He was also critical of the current reliance on subsidies and market-based solutions, like carbon pricing, to drive the green transition. While subsidies help, they are often insufficient to address the deeper systemic issues preventing widespread adoption of renewable energy. He argued that shifting more control over energy systems to the public sector could more effectively tackle these challenges, moving beyond the limitations of the current capitalist model.

Christophers wrapped up his main points by emphasizing that, despite technological advancements, the pace of decarbonization remains far too slow to meet global climate goals. He referred to recent reports from the International Energy Agency (IEA), which have warned that current global efforts fall short of what is needed to achieve net-zero emissions by 2050. This sluggish pace highlights the structural obstacles that continue to hinder the green energy transition.

Condon began the discussion by asking Christophers whether reverting to vertically integrated models—where energy companies handle everything from generation to distribution—could help resolve the profitability issue for renewables, or whether full public ownership was necessary. Christophers acknowledged that vertically integrated models could help by improving coordination across the energy supply chain. However, he argued that public ownership would offer a more comprehensive solution by removing the profit motive entirely, allowing for more aggressive and efficient decarbonization.

Condon then inquired about Power Purchase Agreements (PPAs), which allow corporations to enter long-term contracts with renewable energy producers. She asked if such contracts could stabilize prices enough to overcome the volatility issue. Christophers agreed that PPAs do reduce price volatility, making them an attractive option for companies like Amazon or Google. However, he noted that PPAs have limitations. Only a few large corporations can engage in such contracts, and they often use their market power to push down prices, which further squeezes profits for renewable energy developers. This, in turn, makes it harder to expand renewable energy at scale.

Finally, Condon asked whether proper carbon pricing—accounting for the external costs of fossil fuel use, such as pollution and climate change—could solve the profitability problem for renewables. Christophers agreed that fully internalizing the external costs of fossil fuels would indeed make renewables more competitive. However, he was skeptical about the political feasibility of such measures. Carbon pricing, he argued, has not been implemented widely or effectively enough to significantly alter the energy landscape. While carbon taxes could be part of the solution, Christophers emphasized that broader systemic changes, such as public ownership of energy systems, are necessary to truly address the climate crisis.

The audience’s questions during the Q&A ranged from carbon taxes, electricity and centralization to the role of multilateral development banks in financing green energy-related projects.

Ultimately, Christophers argued that the international community must rethink how it organizes and finances energy production, moving away from a profit-driven approach toward one centered on sustainability and public good.

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