What’s Behind the World’s Biggest Climate Victory? Capitalism.

The chief executive of the world’s largest private coal company sat before a group of U.S. lawmakers who wanted to know whether the fuel had a future. He didn’t hesitate. “Coal,” he said, “is the future.”

It was 2010. Coal supplied nearly half of America’s power, the executive testified, and was growing more than 1.5 times faster than oil, natural gas, nuclear and renewables combined. Global demand was on pace to rise 53% within two decades. And renewable energy? Not an option. “Wind and solar comprise just 1% of today’s U.S. energy mix,” Gregory Boyce, then the chief executive of Peabody Energy Corp., told the members of Congress. “It is unrealistic to suggest that renewables could replace conventional baseload fuels.”

Not quite. This April, for the first time ever, renewable energy supplied more power to America’s grid than coal—the clearest sign yet that solar and wind can now go head-to-head with fossil fuels. In two-thirds of the world, they’ve become the cheapest forms of power.

Solar and wind will power half the globe by 2050, based on BloombergNEF forecasts. By that time, coal and nuclear will have all but disappeared in the U.S., forced out by cheaper renewables and natural gas.

Solar and Wind Take Off as Coal Fades Away

Coal plants

By 2025, renewable power plants will greatly outnumber non-renewable plants, but still won’t have the same capacity level

The market triumph of renewable energy marks the biggest victory yet in the fight against global warming. Solar and wind are proliferating not because of moral do-gooders but because they’re now the most profitable part of the power business in most of the world. An industry that once relied on heavy subsidies and was propped up by government mandates is now increasingly standing on its own.

As a recent United Nations report put it: The renewable energy sector is “looking all grown up.”

In the effort to slow climate change, the energy sector matters. Electricity generation has traditionally been the world’s biggest source of greenhouse-gas emissions. In the U.S., for the first time since the 1970s, this is no longer the case. Since 2016, American power plants have given off less carbon dioxide than the nation’s transportation sector, where oil continues to dominate. The turnabout owes a lot to cheap and cleaner-burning natural gas, but wind and solar farms are playing an increasingly important role.

Solar, wind and hydropower resources combined generate more than a quarter of the world’s electricity. In China and India that share will surpass 60% by 2050, BNEF estimates show, and Europe will top 90%.

Renewable energy won’t save the world on its own. Power generation accounts for about a quarter of greenhouse-gas emissions being released into the atmosphere in the U.S. The rest comes mainly from transportation, manufacturing, agriculture and heating and cooling homes and businesses.

Those sectors will need to match the sweeping technological advances and more efficient manufacturing that have slashed the costs of solar and wind power. Battery prices have fallen 84% in less than a decade. Cheaper parts are what have made solar and wind more economical to build than coal and gas plants across two-thirds of the world. Five years ago, by BNEF’s count, this was virtually nowhere.

Low costs sparked a clean-power frenzy that has quadrupled global renewable energycapacity to 1,650 gigawatts within the past nine years—more than every power plant in the U.S. combined. From Western Europe to China, solar and wind are beating out fossil-fuel plants without subsidies. Some projects are ditching long-term contracts altogether, relying instead on exotic hedges.

In the U.S., natural gas remains king of the power mix, accounting for about 40% of the nation’s electricity. But renewable energy’s share is quickly climbing, reaching 25% earlier this year.

In a sign of where things are headed, solar installers and wind technicians are the two fastest-growing professions in the U.S. Solar now employs more people than any other power source. Wind supports almost as many jobs as gas.

Today, gas is increasingly coming under attack. Berkeley, California, became the first city in America to ban gas in new homes and businesses earlier this year. Lawmakers from Seattle to San Jose are weighing bans. The British government has proposed a similar prohibition.

In developing parts of the world, coal still dominates. China is home to the largest capacity of hydro, wind and solar power—and it remains the world’s biggest consumer of coal. Pakistan’s dream of generating 60% of its power from clean energy sources is still decades away. In Indonesia, coal plants are so cheap to run that the Southeast Asian nation is projected to nearly double its coal generation in the next 25 years.

The growing divide underscores a global dilemma: Wealthy nations can afford to turn their backs on coal, but it remains an easy fallback in countries where electricity is scarce, unreliable, or unaffordable.

There’s reason to think coal’s role as the fuel of last resort might change. Solar is being marketed as a cheaper fix for the 1.1 billion people who lack access to electricity. Groups have formed to help rural communities put up panels and erect turbines. Renewable energy installers, including Tesla Inc. and Sunrun Inc., have descended on places like Puerto Rico that have few options for affordable and reliable power.

The laggards today will catch up in the years ahead. In Mexico, for example, wind and solar will jump from 5% of the power mix last year to 77% in 2050, according to BNEF, pushing out coal.

Last year alone, global investments in renewable energy hit almost $273 billion, according to a report by BNEF, UN Environment and the Frankfurt School. That’s three times the estimated spending on coal- and gas-powered generation. Electricity prices, meanwhile, plunge below zero at times in solar-rich Germany and California and wind-rich Texas, sending a signal to generators that they need to back off so they don’t stress the grid.

Cheaper renewable power may be good for consumers and the planet, but the shift is squeezing the profits of conventional power plants.

Coal plants are dying off, and the U.S. government keeps cutting its own demand forecasts for the fuel. Nuclear reactors are retiring early. Natural gas plants in development now are at risk of becoming stranded assets before they’re even paid off. A debate is raging around the world over whether to let these generators go or keep some around in the name of grid “resilience”—a term U.S. President Donald Trump has taken up to make the case for both coal and nuclear subsidies.

Back when Peabody’s then-CEO showed up before U.S. lawmakers for that climate change hearing nine years ago, the replacement of all of America’s coal plants with zero-emission resources seemed close to an impossibility. Doing so would take “2,400 times today’s solar capacity, 40 times the current wind farms currently in place, 250 new nuclear plants or 500 Hoover Dams,” the coal executive said at the time. Peabody, in a statement this week, said its outlook from a decade ago reflected a mix of internal and external projections, “many of which came to pass and some which did not.”

What’s clear now is that the nation’s renewable energy capacity has surpassed that of coal. Peabody, meanwhile, went on to declare bankruptcy in 2016, along with most every other major coal producer in America.

*This story is part of Covering Climate Now, a global collaboration of more than 250 news outlets to highlight climate change.

 

 

 

16 September 2019

Bloomberg