For decades, spectacularly inaccurate forecasts have underestimated the potential of clean energy, buying time for the fossil fuel industry. But as two new analyzes from authoritative institutions show, renewables have already convinced the market and are now poised for exponential growth.
DENVER – For decades at the Rocky Mountain Institute (RMI) we have argued that the clean energy transition will cost less and move faster than governments, businesses and many analysts expect. In recent years, this prospect has been fully justified: the costs of renewables have consistently fallen faster than expected, while implementation has progressed more rapidly.
Thanks to this virtuous circle, renewable energies have made their way. And now, new analyzes from two authoritative research institutions have added to the mountain of data showing that a rapid transition to clean energy is the least expensive way forward.
Policymakers, business leaders, and financial institutions must urgently consider the promising implications of this development. With the United Nations Climate Change Conference (COP26) in Glasgow set to kick off this weekend, it is imperative that world leaders recognize that achieving the 1.5 ° C warming target – a climate agreement established at the meeting made in Paris – it’s not about making sacrifices; it’s about seizing opportunities. The negotiation process needs to be reformulated so that it is less about burden sharing and more of a lucrative race to implement cleaner and cheaper energy technologies.
With the world already experiencing extreme weather events brought on by climate, a rapid transition to clean energy also has the virtue of being the safest route ahead. If we fail in this historic endeavor, we risk not only wasting trillions of dollars, but also pushing civilization down a dangerous and potentially catastrophic climate change path.
One can only guess why meteorologists, for decades, have underestimated falling costs and the accelerating pace of renewable energy deployment. But the results are clear: the bad predictions have involved trillions of dollars in investment for energy infrastructure that is not only more expensive but also more damaging to human society and all life on the planet.
Now we are faced with what may be our last chance to correct decades of missed opportunities. Either we move quickly to the cheapest, cleanest and most advanced energy solutions of the future, or we continue to waste billions more on a system that is killing us.
New studies have shed light on how a rapid transition to clean energy would work. In the International Renewable Energy Agency (IRENA) report The Renewable Spring, lead author Kingsmill Bond shows that renewables follow the same exponential growth curve as past technological revolutions, following well-understood and predictable patterns.
In the document, Bond notes that the energy transition will continue to attract capital and build its own momentum. But this process can and should be supported to ensure that it progresses as quickly as possible. Policymakers wanting to drive change must create an environment conducive to the optimal flow of capital. Bond clearly establishes the sequence of steps involved in this process.
Examination of past energy revolutions reveals several important insights. First, capital is attracted to technological disruptions and tends to flow into the areas of growth and opportunity associated with the initiation of these revolutions. As a result, once a new set of technologies passes its gestation period, capital is widely available. Second, financial markets anticipate change. As capital moves, it accelerates the process of change by allocating new capital to growing industries and withdrawing it from declining ones.
Current signals from financial markets show that we are in the first phase of a predictable energy transition, with spectacular outperformance from new energy sectors and downgrading of the fossil fuel sector. This is the point where smart policy makers can step in to establish the institutional framework necessary to accelerate the energy transition and reap the economic benefits of building local clean energy supply chains. As we can see from the market trends highlighted in the IRENA report, the change is already underway.
Reinforcing the findings of the IRENA report, a recent analysis by the Institute for New Economic Thought (INET) at the Oxford Martin School shows that a rapid transition to clean energy solutions will save trillions of dollars, as well as keep the world aligned with the Goal. 1.5 ° Celsius of the Paris Agreement. A slower implementation route would be more economically expensive than a faster one and incur significantly higher climate costs due to preventable disasters and deteriorating living conditions.
Due to the power of exponential growth, an accelerated path for renewable energy is eminently achievable. The INET Oxford report finds that if the deployment of solar, wind, battery and hydrogen electrolysers maintains exponential growth trends for another decade, the world will be on track to achieve net zero-emission power generation in 25 years.
In its own coverage of the report, Bloomberg News suggests as a “conservative estimate” that a rapid transition to clean energy would save $ 26 trillion compared to continuing with the current energy system. After all, the more solar and wind we build, the bigger the price reductions for those technologies.
Additionally, in his own response to the INET Oxford study, 350.org’s Bill McKibben notes that the cost of fossil fuels will not fall, and that any technology learning curve advantage for oil and gas will be outweighed by the fact that the easily accessible reserves in the world have already been exploited. Therefore, he warns that precisely because solar and wind will save consumers money, the fossil fuel industry will continue to try to slow the transition to mitigate its own losses.
We must not allow any further delay. As we approach COP26, it is essential that world leaders understand that we already have cleaner and cheaper energy solutions ready to implement now. Reaching our goal of 1.5 ° C is not about making sacrifices; it’s about seizing opportunities. By getting to work now, we can save billions of dollars and avoid the climate devastation that would otherwise affect our children and grandchildren.
Jules Kortenhorst is CEO of RMI.
Copyright: Project Syndicate, 2020