Can we live without the tar sands, the oil and gas pipelines, the oil tankers, the fracking and the coal-fired power? Can we live without our gas-heated homes and factories, and our oil-powered planes, ships, trucks, trains and automobiles?
They are all part of the fossil-fueled economy, and as such they are essential.
But they are also transitory. This too will pass, the court servants whisper to the fossil fuel Caesars as they power up their oil tankers, exploratory rigs and giant mechanical coal-mining shovels.
Right on time, the Clean Energy Economy is arriving to take over the baton of progress from the Fossil Fueled Economy. Within the incredibly short span of three hundred years the world will have moved from the Firewood Economy to the Fossil-Fueled Economy to the Clean Energy Economy, also known as the Solar Economy, since most clean energy is directly or indirectly solar.
We need to celebrate the Age of Fossil Fuels, and then move on. Without the incredible power of all that ancient stored solar energy we could never have developed the steam engine. We could never have flown, never developed the electric vehicle, never developed a solar panel or a modern wind turbine. We needed the growth of science and the genius of engineering to achieve these things, and they in turn needed fossil fuels, without which none of our civilizational progress would have been possible.
If the hand-over of the baton is successful, historians will look back on the Age of Fossil Fuels from a thousand or ten thousand years ahead and be astonished at how much its sudden injection of power enabled us to achieve.
If the hand-over fails, however, and the baton is dropped, those same future historians will tell how our fossil fuel addiction caused the greatest self-inflicted wounds in the history of the world—the multiple wounds of climate soil erosion, ocean fish depletion, species extinction and the climate crisis.
Luckily, the Clean Energy Economy is ready to take over the baton in time to minimize at least some of the wounds, depending on how quickly it can do so.
It is taking over because more and more people are realizing just how dire the climate crisis is, and because more and more people are reading the science, connecting the dots and dismissing the confusionism of the industry-funded climate deniers.
It is taking over because scientists and engineers are successfully improving clean energy technologies, and because prices are falling, consumers are buying, and investors are pouring money into a clean energy future. They know that the future global economy will—and must—be a green economy. Here’s the evidence.
#1: Investors are Pouring Money into the Clean Energy Economy
Investors are becoming alarmed by climate change: it’s their biggest source of uncertainty, while the clean energy economy is their biggest source of confidence. They know that the future economy must be green for both environmental and economic reasons, and they are betting good money on it.
Between 2004 and 2011 there was a five-fold increase in annual investments in clean energy, from $54 billion to $302 billion. This fell back to $269 billion in 2012 for the simple reason that renewable energy technologies had become cheaper, requiring less cash.
By 2030, according to Bloomberg New Energy Finance CEO Michael Liebreich, clean energy investments will total 73% of global energy investments, at $630 billion. Even the bearish IEA suggests that clean energy investments will total 57% of total energy investments by 2030. (1)
The Ethical Markets Green Transition Scoreboard, which tracks the private investments that are growing the green economy worldwide, shows that since 2007, $5.2 trillion had been invested or committed to the green energy economy by mid-2013. Investors and governments are on track to invest $10 trillion in clean energy by 2020. Ethical Markets founder Hazel Henderson writes that “Models show that investing at least $1 trillion per year until 2020 will lead from the fossil fueled industrial era to a technologically advanced solar age based on ethical principles of equity, efficiency, biomimicry and earth systems science.” (2)
Investment is also pouring into Green Bonds, says Bloomberg New Energy Finance CEO Michael Liebreich (pictured above): “Bloomberg New Energy Finance figures show $14 billion worth of clean energy project bonds and asset-backed securities were issued in 2013, far above the previous record from 2010 of $6.5bn. The opening days of 2014 have seen signs this surge will continue: the European Investment Bank issued $860m worth of green bonds, and a similar amount has come from the World Bank and Export Development Canada combined. I would expect this year’s total figure to establish a new record, perhaps at $20bn or higher.” (3)
But what about natural gas—isn’t that a clean energy source? Not by a long mile. To quote North America’s leading climate and clean energy wonk, Joe Romm: “By the time natural gas has a net climate benefit you’ll likely be dead and the climate ruined.” (4)
#2: The Solar Revolution is Underway
Since 1977, solar PV prices have fallen by an incredible 99%. They fell by almost 80% from 2007-2012, and by 20% during 2012 alone. Solar price parity has already arrived in sunny areas of the world where electricity prices are high. Within ten years most regions of the world will pass solar price parity, and every homeowner will be able to make money by investing in clean energy.
The billionaire Warren Buffett is investing $2.5 billion in solar energy, acquiring what will become the largest photovoltaic development in the world. His Berkshire Hathaway subsidiary MidAmerican Energy Holdings has more than 1,830 MW in assets, including wind, geothermal and hydro projects. “Once so risky that only government backing could draw private capital, solar projects now are making returns of about 15%, according to Stanford University’s center for energy policy and finance.” (5)
Imagine if we had said ‘NO’ to the first computers or the first cellphones because they cost too much. Or to the first wheel.
#3: The Wind Energy Revolution is Underway
Globally, wind power has growing steadily, reaching a global installed capacity of 318 GW by the end of 2013. Just three countries—China, the US and Germany—account for 59% of the installed capacity, showing how much is yet to be delivered. (6)
Wind turbine prices have fallen by 43% since 2009. The US Department of Energy’s 2012 Wind Technologies Market Report shows that average US prices fell from $70/MWh in 2009 to below $40/MWh in 2012. (7)
In January 2014, more than 99% of the new electric capacity that was added in the U.S. came from renewable energy sources. (8)
#4: China is Leading the World
In 2011 China increased its investment in clean energy by 20%, more than any other country. They know the world economy is going green, and they want to be front of the pack, developing and selling the technologies. (9)
China’s rate of solar PV installations has ramped up to a world-beating 14 GW a year, on track to reach 65 GW by 2015. Their wind energy is 75 GW, compared to 90 GW for the entire European Union, and their wind energy goal for 2020 is 200 GW. China has a solid track record of exceeding its previous wind and solar targets.
China still obtains 65% of its power from 676 GW of coal-fired generation, but the triple threat of pollution, climate-induced disasters and popular unrest is clearly exercising the minds of the Chinese leadership. If they were to split the clean energy challenge four ways between efficiency, solar, wind and geothermal, aiming to end the use of coal by 2030, they would need to install 700 GW of solar by 2030 to displace 170 GW of coal-fired power. (Solar capacity needs to be four times larger than coal-fired capacity, since solar produces power 20% of the time compared to coal-fired power 80% of the time.) This would require the installation of 50 GW of solar PV a year, which is four times the current annual target—but only four times.
If Chinese wind energy was to displace the coal-fired equivalent of 170 GW, with wind generating energy 33% of the time, they would need to install 412 GW by 2030, compared to their 2020 goal of 200 GW. It seems eminently doable. (10)
#5: The Electric Vehicle Revolution is Beginning
Electric vehicles are intrinsically three times more efficient than conventional cars, and when they are powered by green energy, their operation produces no air pollution or greenhouse gases.
Electric vehicle battery prices fell by 40% from 2010-2012. The 2009 price was $1,000/kwh; the current Tesla price is $200/kwh. Projections for 2016 are as low as $120/kwh. (11)
Since 2011, EV battery prices have fallen by 37%, and since 2010 there has been a nine-fold increase in EV models available on the market. By 2018/2020, prices will have fallen such that there will be cost-competitive EVs without need for subsidy, taking full life costs into account. “Regardless of the source of the EV’s electricity—be it a coal-fired power plant, nuclear plant, solar array, or wind farm—it will pollute less than a typical conventional gas-powered vehicle.” (12)
During 2013, the number of electric cars sold in America increased fourfold from 15,708 to 67,232, showing that worries about range anxiety may be overhyped. Tesla’s sales shot up from 160 to 13,050; sales of the Nissan Leaf increased from 5,212 to 16,076. (13) Globally, Bloomberg Finance estimates sales of more than 300,000 electric vehicles in 2014, 50% higher than 2013. They expect a breakout year in 2015 or 2016; “it might even happen in 2014.”
Quite aside from zero-emission electric vehicles, if North America were to adopt the best fuel efficiency standards for cars, we would require 50% less oil and reduce vehicle air pollution and greenhouse gas emissions by 50%.
If Canada and the US were to adopt the proposed European standard that from 2020, all new cars in the EU should emit no more than 95 grams of CO2 per km (95 g/km) and 68-78 g/km after 2025, the amount of oil needed for cars would fall by 50%, with no loss in personal convenience or jobs. The current average is 170 g/km. (14) To put this in perspective, in 2012 US light vehicles averaged 233.5 g/km; Europe’s five biggest markets averaged 140.3 g/km, and Japan averaged 130.8 g/km. (15)
The entire Volkswagen Group is planning to reduce its fleet emissions to 95 g/km by 2020. It already offers 36 models under 100 g/km, and 245 model variants under 120 g/km. (16)
The world is moving steadily towards a system of transport that will no longer need oil. For a vision of such a future, see Transportation without Oil by Guy Dauncey. (17)
#6: Entire Countries are Requiring that their Future Energy be Green
• Scotland has a mandate to achieve 100% renewable power supply by 2020. (18)
• Denmark has a goal to obtain 100% of its heat and power from renewables by 2035, and 100% of all its energy from renewables by 2050.
• Even Saudi Arabia has set a goal to get 50% of its electricity from renewables by 2032.
• The town of Gussing, in Upper Austria, is already powered by 100% renewable fuel, heat and power.
• Upper Austria, inspired by Gussing, has set a target to achieve 100% renewable heat and power by 2030.
• Many businesses including IKEA, Whole Foods and Google are aiming to power or are already powering their companies with 100% renewable energy.
• 8 Countries, 41 Cities, 48 Regions, 8 Utilities, and 21 Non-Profit/Educational/Public Institutions have shifted or are committed to shift to 100% renewable energy in at least one sector.
• In the 1st quarter of 2013, Portugal got 70% of its electricity from renewable energy. (19)
#7: The Only Future Economy that will Flourish will be a Clean Energy Economy
Finally, the argument that continued fossil fuel investment is essential for the future economic growth is deeply flawed. In reality, the exact opposite is true. It cannot be long before an economist wins the Nobel Prize for Economics for producing a solidly researched paper that demonstrates this on these and other grounds:
1) The financial cost of climate change, according to the economist Sir Nicholas Stern, will be equivalent to losing at between 5% and 20% of global gross domestic product a year. (20) Weather-related disasters liked to climate change are costing the global economy more each year, from an average of around $50bn a year in the 1980s to just under $200bn a year in the last decade.
According to the reinsurance company, Munich Re, data, total reported losses from disasters are estimated at $3.8 trillion in the period from 1980 to 2012 with 74% due to extreme-weather.
“While you cannot connect any single weather event to climate change, scientists have warned that extreme weather events will increase in intensity if climate change is left unchecked.” – Rachel Kyte, World Bank Vice-President for Sustainable Development.
Weather-related economic impacts are especially high in fast-growing, middle-income countries due to increasingly exposed, valuable assets. The average impact of disasters equaled 1% of GDP over the six years from 2001 to 2006, ten times higher than the average for high-income countries. (21)
2) The long-term health costs of air pollution from electricity alone are such that every tonne of carbon pollution eliminated reduces health costs by between $50 and $380. (22) A recent US study found that the nationwide hidden health costs of fossil fuels in electricity generation are at least $886.5 billion a year, or 6% of the nation’s GDP. (23) Globally, a recent study has shown that the air quality and health improvements that will accrue from switching to clean energy average $49 per ton of CO2 removed, compared to $30 per ton for the cost of the transition, creating a net economic benefit of $20 for every ton of carbon emissions eliminated. (24)
3) Most countries need to import fossil fuels, causing their economy to bleed money. Every dollar spent on renewable energy, by contrast, remains in the country, generating wealth, jobs and taxes.
4) A German study found that in a renewables-expansion scenario GDP would be 1.0 to 2.9% greater by 2030 than in a scenario without renewables. (25)
5) Among countries that produce and sell their own fossil fuels, there is good evidence that the value of fossil fuels inflates the currency, putting exports at a disadvantage (aka ‘Dutch disease’). (26)
6) Future growth is suppressed by the looming scarcity of cheap oil. Whenever the price of oil passes $110 a barrel investors take fright due to the perceived inability of the global oil supply to sustain such growth, applying the brakes to global growth. The current shale gas boom will do little to prevent this from happening in the long run. (27)
7) The only reasons why fossil fuel prices are not higher are (a) because they are heavily subsidized, using tax-payer dollars to support the industries, and (b) because the cost of the environmental and health damage they cause is covered by governments and insurance, not by the industry itself through a price on carbon.
8) The price of solar energy in particular is falling rapidly, and will continue to do so as scientists and engineers develop ever more effective solar technologies.
9) Globally, fossil fuels reserves are valued as if they can all be burnt, in spite of the evidence that doing so will cause terrible consequences. The global bank HSBC has warned that “40-60% of the market capitalization of oil and gas companies is at risk from the carbon bubble,” and the economist Sir Nicholas Stern has warned that the world could be heading for a major economic crisis as stock markets inflate a carbon investment bubble in fossil fuels to the tune of trillions of dollars. (28)
10) More than three times more green jobs are generated in the clean energy economy per $1 invested than in fossil fuel or nuclear energy. (29) (30) After the 2008-9 financial meltdown, Canada dedicated far less of its stimulus spending to clean energy than Mexico, the US, Australia, China and South Korea. If Canada’s per capita spending had matched US investment in renewable energy, an additional $11.5 billion would have been invested in clean energy, and 66,000 jobs would have been created. (31)
The clean energy economy is ready to take over the baton of progress from the fossil fuelled economy. With every month that passes, more people switch their mental allegiance from fossil-fuels to clean energy. Only people with their heads in the sands of climate denial continue to argue that we should expand our use of fossil fuels. The only way to build the future economy is to continue to invest in the clean energy economy.
Guy Dauncey is Founder and Communications Director of the BCSEA. He is the author of nine books, including The Climate Challenge: 101 Solutions to Global Warming (New Society Publishers, 2009)
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