I have some exciting news today. It’s finally happening.
There’s a world-wide renewable energy boom going on.
All the metrics are there. In terms of investment, capacity, jobs and proportion of the total energy mix, renewables are surging ahead and showing no sign of slowing down. About time, hey?
“A flurry of end-of-year reports have revealed rising deployment, record-breaking generation and surging market demand.”
– Business Green
Global investments in renewable energy hit an all time high of $329 (£230) billion in 2015. This was 4% higher than 2014.. Well over half of these investments came from the Asia Pacific region, with China leading the way. Investments have increased five-fold over the last decade and renewable energy now accounts for over half of all extra capacity added each year. So all the signs suggest this figure will be even chubbier in 2016. Despite Germany loving up the domestic solar, Europe is no longer the driver of renewable energy worldwide: the emerging economies like China, India, Brazil and South Africa are where the action is happening.
Renewables, especially wind and solar, are quickly falling in price as the technology develops and economies of scale kick in with growing use and demand. The price drop for solar PV is particularly impressive. From 2009 to 2014 it dropped an incredible 75% of its cost, and is predicted to shed another 45% by 2019. Onshore wind is now the cheapest form of energy in many regions, including the UK. And that’s despite our government cutting all subsidy support for it.
Record-Breaking Capacity & Generation
The UK wind energy sector broke all its records for weekly, monthly and yearly generation in 2015, and in Scotland wind produced enough electricity for over 140% of all households. In total, renewable energy overtook coal in the UK’s energy mix for the first time in 2015.
Globally, solar and wind capacity is growing almost exponentially. Check out this graph from the Climate Council’s 2015 report:
Now that’s a good-looking graph.
It’s well known that renewable energy creates more jobs than fossil fuels or nuclear. I didn’t know quite how substantial the difference was, though. Business Green reports that renewable energy projects can create as many as ten times as many jobs as fossil fuel projects of a similar size. Globally, around 7.7 million people work in the renewable energy sector.
In the USA, more people now work in solar alone than in oil and gas. That’s pretty damn impressive considering how much oil and gas the country produces. Most of those jobs are in solar installation. The great thing about that is that installation of solar panels is not something that globe-trotting multinationals can outsource to somewhere with cheaper workers: it has to be done locally. In the UK, jobs in the renewables sector are growing way faster than average employment and now three times as many people work in wind and marine energy than in coal. To be fair, we don’t really have that much coal production, but still. One of the cool things about the UK’s renewable sector is that 80% of the workers are employed by a small or medium sized business. Go go economic diversity!
Fossils Are Dying
The price of oil has tumbled to a low of $28 a barrel, which is apparently less than the price of an actual barrel. Crazy times. This is causing huge domino effects in the rest of the economy which many predict could lead to another financial crash. The dramatic price drop seems to be because of newly lifted sanctions on oil-exporting in Iran, the extra gas production from fracking in the US and also falling demand. The price of gas and coal has also been dropping. Many people, including myself and the CEOs of large fossil fuel firms, thought the drop in price would stall the growth of renewables. It has done nothing of the sort. If anything, it could be driving investment in renewables even faster as investors are increasingly seeing fossils as a risky and shrinking industry, while renewables are heading on a secure upwards trend.
Best of all: energy companies have recently shelved $380 billion worth of new extraction projects because the price is too low to make them profitable! Also, the second largest coal company in the US just went bust. What with governments from China to the UK signing anti-coal policies, the industry’s days are numbered and it will surely be the first of the three fossils to sink into history.
Not There Yet
This is all extremely promising and fantastic. But it’s important we don’t get carried away in a fit of optimism and become complacent. We are not there yet.
Renewable energy still only accounts for just under a quarter of our global energy mix, and climate change looms large. We’ve already burnt over two thirds of our carbon budget, meaning the majority of known fossil fuel reserves will need to stay in the ground. That’s a colossal challenge, because the fossil fuel companies will be hell-bent on burning them. The value of those reserves is already reflected in their stock prices, so the day they officially become ”stranded assets” will trigger a huge global economic crash that’ll make 2008 look like a picnic – unless governments and international institutions have the foresight to implement clever stabilising policies.
We also have the problem of poverty and population growth. The bulk of the new renewables capacity is happening in the developing world, which on one hand is fantastic because it has the social justice benefit of bringing energy access to people who didn’t have it before. But it also means the carbon cutting impact is smaller, since in many regions renewable capacity is adding to rather than replacing fossil fuel energy. As the developing world gets more affluent and populous, carbon cutting will get even harder. However, if they weren’t adding renewables they would be adding fossils rather than nothing so I guess the net impact is still a cut in emissions.
Maybe It’s All Going To Be Okay
Despite these challenges, the clean energy boom and the fall of fossils is undoubtedly good news. The best news I’ve heard since the 2015 Paris Agreement was passed. The trends for renewables are going sharply upwards and the power of compound growth means they will not only grow but accelerate and snowball. I’m hopeful that they could grow fast enough – and fossils could fall apart quick enough – to meet the tight carbon reduction targets required to stay below 2 degrees and avert runaway-climate change.
Maybe everything is going to be okay after all.