A total of $2.6 trillion has been diverted from fossil fuels to date. Cities, investors and even the Prince of Wales support the global divestment movement. Independent of concerns about climate change, investors are being forced to acknowledge the risks associated with hydrocarbons. As a consequence, we are seeing the lowest rate of discovery of new reserves in two decades. The low price points for oil have also resulted in far less shale and tar sands extraction.
In contrast to the slowing rates of fossil fuel extraction, the growth of renewable energy has been nothing short of spectacular. Buoyed by growing price parity and advances in storage to manage variability, renewable energy is thriving.
We have seen tremendous advances in renewable energy. Since 2010, the price of solar panels has declined by 80 percent while the cost of solar per kilowatt-hours has decreased by 50 percent. In the last five years, global solar capacity installed worldwide grew more than six-fold.
Clean energy is seeing exponential growth. While growth projections for renewable energy are high, in the last fifteen years, the growth rate for renewables has consistently surpassed projections. In 2000, the International Energy Agency (IEA) made predictions about the amount of solar that would be deployed in 2015, however, the actual installed capacity was 18 times greater than the IEA's projections. On its own, China will add an astounding 18 gigawatts of new solar capacity in 2015.
"[T]he sharp and unexpectedly steep decrease in prices for electricity produced from wind and solar and the demand destruction for fossil fuel energy from new efficiency improvements...We’ve seen a dramatic increase that’s far more rapid than anybody projected and it’s accelerating — not just in the United States but even more rapidly in developing countries." Al Gore explained. "The pressure is only going to build as the price of renewable electricity continues to fall."
At the end of 2014 the President of Ceres Mindy Lubber wrote, "Electric utility business models are changing before our eyes by eschewing new centralized power plants in favor of energy efficiency and decentralized distributed energy, which are less expensive for consumers and more resilient to extreme weather."
There are a number of factors undermining the demand for fossil fuels and driving demand for renewables. Lubber, expressed optimism about the future of renewables and cited the launch of bonds to finance renewable energy projects. She also pointed to market analyses that expose the risks associated with fossil fuels:
"[T]he financial industry is waking up to the oil industry’s potentially wasteful spending on development of new fossil fuel reserves when global oil demand is weakening and carbon-reducing trends are taking stronger hold." Lubber said. "Goldman Sachs found nearly $1 trillion of oil projects at risk due to shrinking demand and plummeting oil prices. Among the potential “zombie projects”: expensive Arctic oil, deep-water drilling and Canada’s oil sands."
Although fossil fuels continue to produce two-thirds of the energy we use, financial markets are increasingly considering the actual risks and costs associated with these dirty sources of energy.
As reported by the Guardian, in 2013, renewables began to overtake conventional fossil fuel and nuclear installations. It is no coincidence that 2013 was also the first year where we saw more renewable energy capacity installed than fossil fuel power plants (143 gigawatts (GW) compared to 141GW). In the US, the cost of installed solar has dropped from $77/watt in 1977 to $0.60/watt today.
In some markets today, renewables like solar are as cheap as conventional energy. We are already seeing solar price parity with traditional energy in states like Arizona, California and Texas. In the UK, the cost of electricity produced by onshore windfarms is now cheaper than energy derived from fossil fuels.
Hundreds of millions of dollars are now being invested to advance the key issue of renewable energy storage. This includes R&D from firms like Tesla, GE and Lockheed Martin. According to Deutsche Bank, the costs of energy storage will fall from about 14 cents per kilowatt-hour to about 2 cents within the next five years.
There will be more downward pressure on traditional energy from increasingly stringent regulatory regimes. In the UD, the EPA's Clean Power Plan will cut carbon emissions from power plants by 32 percent by 2030.
As evidenced by support for the White House’s climate initiative called the American Business Act on Climate Pledge, the business community is also increasingly supporting action to reduce emissions and cut fossil fuel pollution, some are even working towards getting all of their energy from renewable sources.
Optimism about the future of renewables derives from the speed at which innovation has occurred. This is the view of Johan Rockström an environmental science professor at Stockholm University and executive director of the Stockholm Resilience Centre. His hope is further buoyed by both the cost effectiveness of renewable energy and its massive deployment.
"2015 stands out as a remarkable and dynamic year for climate and energy in the United States." The Environmental Defense Fund said. "2015 is the year when we can truly say that our national energy landscape began to change in tandem with climate awareness."
As explained by Jeremy Leggett, author of the book "Winning of the War on Carbon", we are seeing a ‘tipping point’ in the decline of fossil fuel industries. He cites the declining cost of deploying renewable energy, the increasing cost of hydrocarbons and the politics of climate abatement.
Source: Global Warming is Real
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