Finally, Some Grounds for Optimism?

NOTE: I penned this piece last summer but have only got around to publishing it now. While some of the details have since dated, it still seems to me worth sharing because its purpose, after all, is reflection on the trend of a decade--the decade between the 2006-2008 period when I was researching and writing a great deal about energy issues--and the present, and this still seems relevant.

A decade ago when considering the problem of fossil fuel scarcity and the prospects for alternatives as a way to fill the gap, I was consistently struck by the fact that fossil fuels were only cheap because of the externalization of so many of their environmental and other costs, and on top of this, consistent, massive state support. I was struck, too, by how despite these ways of lowering their apparent cost, the trend was in the direction of their deceptively low market price rising anyway. At the same time it was impossible not to notice how much less support renewable energy had had by comparison, the steady progress many forms of renewable energy were making in terms of price and energy return on investment in spite of this lack of support, and the sheer range of plausible concepts that held out the hope of far better results (at least some of which might amount to something)—all of these indicating enormous untapped potential.

Between the rise in the cost of fossil fuels, on the one hand (especially when one looked past the obfuscations of market prices); and the increasing productivity and cheapness of at least some forms of renewable energy; it seemed likely that the latter would become competitive with the former. It also seemed that this could be greatly accelerated if states were to shift their support from fossil fuels to renewables, and strive for energy efficiency—the reduction of energy consumption involved bringing the target of 100 percent renewable energy production within easier reach—in a focused, massive program.

I did not assume that the 2003-2008 oil price shock represented a new plateau, but I also did not expect that prices would stay as low as they have since then. (That the average annual price of a barrel of oil has, for almost a decade, not gone above $100 again, that the price touched $27 in 2016 in 2008 dollars—is a surprise to me.) At the same time, the switchover of state support from fossil fuels to renewables has simply not happened, the opposite actually happening in the United States and elsewhere by many measures, the subsidies for fossil fuels actually grown more lavish. Meanwhile progress on energy efficiency has been underwhelming, especially when one looks beyond the more simplistic and misleading measures.

Still, the installation of renewable energy-based electrical production capacity proceeded much more rapidly these past several years than it had before the crisis, in the process lowering costs. In 2016 the headline went that the electricity produced by photovoltaic solar cells became cheaper than electricity generated by the coal-fired plants that were recently the cheapest of sources. To be sure, this is not yet the case everywhere in the world, under all business conditions, according to every method of crunching the numbers—as career detractors of renewable energy never miss a chance to remind everyone. Nonetheless, many a reading of the market indicates that in much of the world, and certainly much of the Western world (the central and southern U.S., for example), a new solar energy-based power plant can viably produce cheaper electricity over its lifetime than a new coal-fired one. And the math is robust enough that the change is touted not merely by environmentalists given to advocating renewables because of their ecological benefits, but by thoroughly mainstream business news outlets that, if anything, are prone to the opposite bias, like Bloomberg and Fortune.

Especially given the unpromising market conditions and policy circumstances the world attained this milestone rather faster than I expected. And unlike the great majority of what is reported about energy and the environment, this was welcome news—and a significant boost to optimism about rebuilding the world's energy base along more sustainable lines. Certainly it has demonstrated the enormous, untapped potential of a technology derided and dismissed by so much mainstream opinion. (Simply put, Goldman Sachs was wrong and Greenpeace was right.)

Additionally, it seems very likely that this trend will continue through subsequent years, to the advantage of photovoltaics over fossil fuels. And not only is it expected that within the next decade or so its price advantage will become a global norm. It is widely expected that even without rises in the price of fossil fuels that advantage will go on deepening. Bloomberg New Energy Finance (BNEF), which has tended to be conservative in its past estimates, forecasts that the cost of solar-generated electricity will fall to a third its present level by 2040. According to one projection, well before that date, perhaps in the early 2030s, energy companies will find it cost-effective not just to opt for solar over coal in building new plants from scratch, but to actually junk an old coal plant on which they are only paying operating costs in favor of building a new solar plant. Another, still more aggressive projection by Ray Kurzweil has solar energy providing 100 percent of the world's electricity by then, simply by sustaining its recently observed rate of growth in its share of the energy mix for a mere decade.

Given that no one seriously expects solar to carry the burden alone, that long-established hydroelectric power already contributes over a tenth of what the world uses, and that comparably cheap wind installations are also making rapid progress (up 13 percent in 2016 over the prior year according to the Global Wind Energy Council), the date at which all electricity is generated by renewables would come well before the arrival of 100 percent solar. And, in contrast with many of the forecasts for which is so well-known, he is far from alone here, our producing 80 percent of our electricity from renewables by 2030 now a subject of serious debate.

Of course, in considering such expectations, certain caveats have to be remembered. The most significant is that even if the expansion of renewable energy production has been very rapid, the world is still dependent on fossil fuels for five-sixths of its energy. Additionally, of the one-sixth derived from renewables, long-established hydroelectric energy is still the principal contributor (supplying two-thirds). By this measure, not very much has changed from before. It might be added that the recent woes of the coal industry have been due not to the drop in price of solar or other renewables, but the expansion of that last hope of the fossil fuel industry, natural gas. Meanwhile coal production and consumption appear to be bouncing back after the drop of the prior year, not only in the United States, but China and India as well.

Additionally, some parts of the transition will make the matter more complicated than a straight extrapolation from observed growth rates. It remains far easier to phase out a coal-fired electric plant in favor of photovoltaics, or wind turbines, than to shift to renewable energy-based vehicle fleets, even just looking at ground transport, rather than the more difficult matters of ships and aircraft. (Sales of even electric private cars are, if fast-growing, still a very small share of the sale of new vehicles, at the same time that the American taste for large cars has gone global.) The efforts to develop alternatives to fuel oil, like algal biofuels, sadly, cannot point to equally dramatic progress, while simple math demonstrates that even should we fully electrify transport, it will mean that much more demand for electricity, delaying the point at which we get 100 percent of our electricity from renewables. (Indeed, as the situation stands it is worth remarking that the consumption of oil as well as coal has been rebounding recently in the United States and elsewhere.)

Moreover, the possibility that the transition will be resisted politically rather than just in the marketplace has to be taken seriously, given the dismal record of governments during the four decades since the energy crisis of the 1970s forced the question. Certainly the career fossil fuel-boosters and renewables-bashers continue to blanket the media with specious arguments about the unworkability of renewables on a large-scale, from dubiously calculated figures on Energy Return On Investment to straw man arguments about grid unreliability to sanctimonious ranting and raving against any and all instances of government support for renewable energy by those who turn a blind eye to Big Oil's vastly larger support to silly charges that from an ecological standpoint renewables can only ever be a curse "worse than the disease." (And of course, accompanying all this are plenty of Cornucopian promises of fossil fuel superabundance and climate change denial directed against the two most significant non-price arguments for a shift away from fossil fuels.) Even if it increasingly looks like a rear-guard action, the extent to which such an action can slow down the desperately needed transition ought not to be slighted given how much longer it has taken to reach this point than was hoped by the more forward-thinking in the 1970s. Indeed, the recent direction of policy in several of the principal energy-consuming nations has been less than encouraging, with this going even for the nations which have so often been looked to for leadership in the area of energy and climate, particularly Germany and China.

All the same, the current press regarding Big Oil's hopes for a "golden age" of natural gas carries with it considerable qualifications and doubts not merely about its grossly exaggerated attractiveness from a greenhouse gas emissions standpoint, but even its price-competitiveness. At the same time many observers suggest that this year's spike in coal prices and output is a temporary, short-term shift that ought not to distract from the long downward trend (peak coal possibly behind us already).

Additionally, thorny as the problem of transport may be, transportation accounts for less than a third of energy consumption, such that slower progress here does not eliminate the reality of enormous gains if electricity production is effectively shifted to renewables. And even the hints of backtracking in national policy have been judged by many to be of less enduring significance than alleged—with even the more bullish predictions regarding the coal use of China and India appearing less inconsistent with their longer-run commitment to reduced fossil fuel use and carbon emissions when their policies are examined comprehensively.

Still, even the most optimistic reading of the situation underlines how complacent and wrong-headed it would be to trust merely to the progress of one or two technologies to wholly transform the energy base. It would be complacent also to trust to market forces—or more accurately, the current combination of market forces and policymaking. Instead there is a need for ambitious policies at the local, national, regional and global levels committing governments to locking in and accelerating the deployment of renewable energy production of all types to the greatest extent possible, not simply by encouraging the expanded installation of photovoltaic solar and ground-based and offshore wind, but investigating and developing the fuller range of options in this area. The next generation of solar cells (thin-film cells, etc.), holding out the prospect of greater efficiencies, also hold out the possibility of lowering costs and enlarging capacity still more rapidly than the BNEF analysis suggests, while there are, too, new ways of deploying these technologies that may expand capacity and reliability are well worth examination (like airborne solar and wind generation). The same goes for other sources scarcely exploited to date (tidal energy, wave energy), while algal and comparable biofuels remain worthy of continued interest.

These policies should facilitate the fullest possible use of the energy produced, with power generation more widely distributed at one end (with net-zero and net-positive buildings as the goal), and grids more integrated at the other (perhaps working toward a resilient global smart grid), while improving storage capability through support for the development of more cost-effective batteries and biofuels. They should devote attention to the special problems of transport based on renewables. (Equipping those most voracious of oil-burners, large commercial ships, with SkySails-style kites could be just the beginning.) They should encourage a more efficient use of energy at the demand end, interest in which seems to have sadly declined after the post-2008 oil price drop, despite unending demonstrations of the capacity of properly designed goods from housing to vehicles to electronics to provide meaningful savings in energy consumption without compromising (and even improving) economic productivity or living standards. (While more novel, more dynamic and therefore less certain, the same can be said for changed approaches to the production and delivery of goods and services, from telecommuting to 3-D printing to cellular agriculture.) And of course, the more affluent and technologically developed nations should do all in their power to promote and facilitate the implementation of these technologies in those poorer and less developed nations still building their infrastructures.

Indeed, robust policies promoting the full gamut of potential contributors to the solution, developing the options with which too little has been done, and searching out the possibilities scarcely thought of now is likely to be essential to turning the target of a 100 percent transition to renewables inside the next generation from a pious wish into a reality—a goal all the more desirable given how even the most rapid progress envisaged by today's optimists is still less than what the climate crisis demands.