The Renewable Revolution
by Michael T. Klare
There are 4 reasons why the transition to a Green Energy Era is finally gaining traction
Don’t hold your breath, but future historians may look back on 2015 as the year that the renewable energy ascendancy began, the moment when the world started to move decisively away from its reliance on fossil fuels. Those fuels -- oil, natural gas, and coal – will continue to dominate the energy landscape for years to come, but for the first time, it appears that a shift to renewable energy sources is gaining momentum. It will have momentous implications for the world economy -- as profound as the shift from wood to coal or coal to oil in previous centuries.
Global economic growth has, of course, long been powered by an increasing supply of fossil fuels, especially petroleum. The oil states and energy corporations continue to dream of a future in which they will play a dominant role. But new developments, including a surprising surge in wind and solar installations, suggest that oil’s dominance may not prove as “enduring” as imagined. “Rapidly spreading solar technology could change everything,” energy analyst Nick Butler recently wrote in the Financial Times. “There is growing evidence that some fundamental changes are coming that will over time put a question mark over investments in old energy systems.”
Normally, transitions from one energy system to another take many decades. According to Vaclav Smil of the University of Manitoba, the shift from wood to coal and coal to oil each took 50 years. Hence, he argues, “The slow pace of this energy transition is not surprising…In fact, it is expected.” Smil’s analysis, however, assumes two things: first, that a business-as-usual environment in which decisions about energy investments will largely be made within the same profit-seeking outlook as in the past will continue to prevail; and second, that it will take decades for renewables to best fossil fuels in terms of cost and practicality. Both assumptions, appear increasingly flawed. Concern over climate change is already altering the political and regulatory landscape, while improvements in wind and solar technology are occurring at an extraordinary rate, rapidly eliminating the price advantage of fossil fuels.
Experts largely agree that renewables will claim a larger share of the global energy budget in the years ahead. Nevertheless, most mainstream analysts continue to believe that fossil fuels will be the dominant form of energy for decades. There are, however, four key trends that could speed the transition to renewables in striking ways: the world’s growing determination to put a brake on the advance of climate change; a sea change in China’s stance on growth and the environment; the increasing embrace of green energy in the developing world; and the growing affordability of renewable energy.
Taking Climate Change Seriously
Resistance to progress on climate change is widespread and well entrenched. As Naomi Klein documents This Changes Everything, the major fossil fuel companies have mounted well-financed campaigns for years to sow doubt about the reality of climate change, while politicians in their pay, have obstructed efforts to restrain carbon emissions. At the same time, many ordinary people have been reluctant to acknowledge what's happening, a phenomenon examined by George Marshall in Don’t Even Think About It. As the devastating effects of extreme weather gain greater prominence in everyday life, however, all of this is clearly in flux.
The most impressive indication of this shift can be found in the carbon-reduction plans major nations are now submitting to U.N. authorities in preparation for a global climate summit to be held this in December 2015. Under a measure adopted by delegates to the most recent (Lima 2014) summit, all parties to the U.N. Framework Convention on Climate Change (UNFCCC) are obliged to submit detailed action plans known as “intended nationally determined contributions” (INDCs) to the global climate effort. These plans, for the most part, have proven to be impressively tough and ambitious. The numbers now being offered when it comes to carbon reduction would have been inconceivable only a few years ago.
The U.S. plan, for example, promises that national carbon emissions will drop 26 – 28% below 2005 levels by 2025, a substantial reduction. There are many obstacles to achieving this goal, notably the diehard resistance of Republican legislators with strong ties to the fossil fuel industry. The White House insists, however, that many of the measures included in the INDC can be achieved through executive branch action, including curbs on carbon emissions from coal plants and mandated improvements in the fuel efficiency of cars and trucks. Other countries have submitted similarly ambitious INDCs. Mexico has pledged to cap its carbon emissions by 2026, and to achieve a 22% reduction in greenhouse gas levels by 2030. Its commitment is the first such pledge by a major developing nation.
No one can predict the outcome of the December climate summit, but few observers expect the measures it may endorse to be tough enough to keep future increases in global temperatures below two degrees Celsius, the maximum amount scientists believe the planet can absorb without incurring climate disasters far beyond anything seen to date. Nevertheless, implementation of the INDCs, or even a significant portion of them, would at least produce a significant reduction in fossil fuel consumption and point the way to a different future.
A Sea Change in Chinese Energy Behavior
China’s share of world energy consumption is expected to jump from 19 to 27% by 2040, with most of its added energy previously assumed to come from fossil fuels, which would account for 43% of all added fossil fuel consumption worldwide. So the significant moves by China to reduce its reliance on those energy sources, now being promised by senior government officials, would have an outsized impact on the global energy equation. China’s plan is expected to incorporate commitments made by President Xi Jinping in late 2014 where he promised to cap China’s carbon emissions by 2030 and increase the share of non-fossil fuels in primary energy consumption to around 20% by that time and agreed to work with the U.S. “to make sure international climate change negotiations will reach agreement as scheduled at the Paris conference in 2015.”
Although the Chinese plan allows for continued growth in carbon emissions for another 15 years, it substantially reduces the amount of new energy that will be derived from fossil fuels. It will require China to deploy an additional 1,000 gigawatts of nuclear, wind, solar, and other zero-emission generation capacity by 2030 -- more than all the coal-fired power plants that exist in the country today. Moreover, Chinese leaders are preparing to move even faster than this pledge. Under pressure from urban residents to reduce punishing levels of smog, the authorities have since announced ambitious plans to lessen reliance on coal for electricity generation and rely instead on hydropower, nuclear, wind, and solar power, as well as natural gas.
Their evident determination to reduce reliance on oil and coal represents a real change of mood and thinking. It’s likely to result in a far different energy landscape than the one long laid out by most experts. Despite repeated predictions of ever-increasing coal consumption, for instance, China actually burned less coal in 2014 than in the previous year, the first such decline in decades. At the same time, it increased its spending on renewable forms of energy by a third in 2014 to $83 billion -- the most ever spent by a single country in one year . If China leads the way globally and such trends continue, the transition from fossil fuels to renewables will occur far sooner than expected.
Green Goes Global
The giant oil companies continue to insist that developing nations -- eager to expand their economies but too poor to invest in alternative energy -- will continue to rely on fossil fuels in a big way. But surprise, surprise: those countries are also showing every sign of turning to renewables in their drive to expand energy output.
The global South’s surprisingly enthusiastic embrace of renewables is impressively documented in Global Trends in Renewable Energy Investment 2015, a recent collaboration between the Frankfurt School of Finance and Management and the U.N. Environment Programme. It reports that the developing countries, excluding China, spent $30 billion on renewables in 2014, a substantial rise over the previous year. Together with China, investment in renewables in the developing world totalled nearly as much as that spent by the developed countries that year. Significant increases in spending on renewables were registered by Brazil (for a total of $7.6 billion), India ($7.4 billion), and South Africa ($5.5 billion); investments of $1 billion or more were posted by Chile, Indonesia, Kenya, Mexico, and Turkey. Given how little such countries were devoting to a renewable future just a few years ago, this is a sign of changing times.
No less striking is the degree to which oil-producing countries are beginning to embrace green energy. In January, for example, the Dubai Electricity and Water Authority awarded a contract to Saudi Arabia’s ACWA Power International to build a 200-megawatt, $330 million solar electricity plant that would deliver electricity or one-third less than the cost of natural gas-fired generation.
The Falling Price of Renewables
As the Dubai deal indicates, price is playing a crucial role in the shift from fossil fuels to renewables. Listen to the apostles of coal and oil and you’d think that poor countries had no choice but to rely on their chosen form of energy because of its low cost compared to other fuels. Until recently, this would have been gospel among mainstream energy experts, but the cost of renewables, especially solar power, is dropping so rapidly that, even in a moment when the price of oil has been halved, the news on the horizon couldn’t be clearer: fossil fuels are no longer guaranteed a price advantage in delivering energy to developing countries. Among the harbingers of this change: the cost of solar photovoltaic cells (PVs) has plunged by 75% since 2009 and the cost of electricity generated by solar PVs has fallen globally by 50% since 2010. In other words, solar is now becoming competitive with oil and natural gas, even at their currently depressed prices. Over time, as renewable-technology costs continue to come down and economies of scale continue to increase, the relative competitiveness of renewables in the global energy mix will only increase further.
Developing nations have a powerful reason to favor renewables over fossil energy that has nothing to do with price and everything to do with costs of another sort. As the most recent reports from the U.N.’s Intergovernmental Panel on Climate Change (IPCC) make clear, poor countries in the global South will suffer more (and sooner) from the ravages of climate change than countries in the global North. This is so because these countries are expected to experience some of the sharpest declines in rainfall and so the most droughts, endangering the food supply for hundreds of millions of people. Combine such concerns with the plunging prices of renewable energy, and it appears that the transition away from fossil fuels will occur faster than predicted in the very regions that the oil companies were counting on for future profits.
A New World’s A-Coming
Add up these relatively unexpected factors, and one conclusion seems self-evident: we are witnessing the start of a global energy transition that could turn expectations upside down, politically, environmentally, and economically. It won’t happen overnight and it will face fierce opposition from powerful and entrenched fossil fuel interests. Even so, it shows every sign of accelerating, which means that while we may be talking decades, the half-century horizon previously assumed is probably no longer in the cards. Fossil fuels -- and the companies, politicians, and petro-states they have long enriched -- will lose their dominant status and be overtaken by the purveyors of renewable energy far more quickly than that.
Even with the quickening of investment in green technology, the likelihood that world temperatures will be held at a 2C rise, that all-important threshold for catastrophic damage, is unfortunately vanishingly small. Our children and grandchildren will live in a distinctly less inviting world. But as the destructive effects of climate change become more pronounced and more embedded in daily life across the planet, the impetus to slow the warming phenomenon will only intensify. This means that the urge to impose strict curbs on fossil fuel consumption and the companies that promote it will grow, too.
We’re talking, in other words, about the building of genuine momentum for an energy transition. This means that the majority of people alive on the planet today will experience the ascendancy of renewables. As with previous energy transitions, the shift is going to produce winners and losers. Countries and companies that assume early leadership in the development and installation of advanced green technologies will prosper in the years ahead. Those committed to the perpetuation of fossil energy will see their wealth and power decline or disappear. For the planet as a whole, the transition can’t come soon enough.
◊ Michael T. Klare is a professor of peace & world security studies at Hampshire College. Publ. here 18.4.2015