When President Obama conceived of the New Energy Economy in 2009, the opposition labeled it as radical — something that would bankrupt the country for an amorphous goal. But since 2005, the United States has reduced its annual energy-related CO2 levels by 14% while its economy has grown by 28%.
Public policies are encouraging investment in clean energy alternatives, prompting utilities to buy solar-and-wind-powered electricity — fuels that have dropped precipitously in price and that are now increasingly economic. The public, meanwhile, has been demanding the change while oil and gas operations are also trying to find their niches in a decarbonized world.
“The Democrats have won the trifecta,” referring to the White House and both chambers of Congress, says Senator Edward Markey, D-Mass., during a talk sponsored by OurEnergyPolicy. “It was fueled by the young and the old who elevated climate change to a level of political potency we have not seen before. Now it has been catapulted to the top three or four issues they care about. The planet is running a fever. We have to engage in preventative care.”
In 2009, then-Rep. Markey and former Rep. Henry Waxman of California had written a cap-and-trade measure to reduce CO2 emissions. And two years ago, Senator Markey and Rep. Alexandria Ocasio-Cortez introduced the Green New Deal. That package would invest more in wind and solar technologies, electric vehicles, energy efficiency, public transportation, and smart grids that make more room for green electrons.
The projects, meanwhile, would go into at-risk communities as well as those that are now dependent on coal — all facilitated by a well-funded “climate bank” that provides low-interest loans and a Civilian Climate Corps that preserves wetlands and other eco-sensitive areas.
All that is part of the broader infrastructure plan on Capitol Hill: one of the dimensions is bipartisan and would make investments in roads, bridges, seaports, airports, and broadband. The second part is under the banner of “The American Jobs Plan” that is climate-centric. Either way, Americans would get a lot of bang for their buck: every $1 billion spent will create 13,000 jobs, says the U.S. Chamber of Commerce and the American Petroleum Institute.
Who’s in Charge?
“The public sector needs to lead,” says Senator Markey. “The private sector will step up. If you do it right, the industry will sign off on it. The technologies are there and companies can make those investment decisions over a longer-term. We need to frame this in a way that can be successful.”
Consider: in 2009, 2,000 megawatts of solar energy and 25,000 megawatts of wind energy were deployed. Today, 100,000 megawatts of solar energy and 140,000 megawatts of wind power exist. Electric vehicles, meanwhile, are expected to boom: BloombergNEF figures that 10% of all new cars will be electric by 2025. They will be 28% by 2030 and 58% by 2040. The auto industry is on board: General Motors and Volvo, for example, will make all EVs by 2035.
If the energy transition is accelerated, the world economy will grow by 2.4% over the next decade, says the International Renewable Energy Agency (IRENA). The agency’s 1.5 degree Celsius pathway predicts 122 million energy-related jobs in 2050, more than double today’s 58 million. To get there, it says that an annual investment equal to 5% of global gross domestic product is necessary. A Stanford University study generally agrees, saying that the benefits of this conversion will exceed the costs. It cites reduced global warming and less air pollution along with stable energy prices and new jobs.
“Energy transformation will drive economic transformation” and address poverty conditions, says Francesco La Camera, IRENA’s Director-General.
To be sure, it is not a seamless transition. California, for example, now relies on natural gas for a third of its electricity, nearly all of which is imported from outside the state. That said, California is achieving its renewable energy goals — now about 40% of the generation mix. It wants to decarbonize its grid by 2045.
But what about those states that rely on fossil fuels? During a separate discussion hosted by OurEnergyPolicy, Chad Holliday who is the former chief executive of DuPont and the former chair of Bank of America and Royal Dutch Shell, said that the impact of climate change on human beings has the potential to dwarf that of COVID-19. Nevertheless, he said that oil and gas enterprises are not the enemies — that they bring an inherent skill-set to the table.
“If we think about the industry being the enemy and we have to shoot them, it won’t work,” says Holliday. “Ask what we can do and where we need to partner.”
Green Workers Wanted
To that end, a report by Wood MacKenzie says that $211 billion will get invested in offshore wind over the next five years — something that is well-suited for oil and gas companies. That is because they have a deep understanding of the waters where the turbines would be placed.
Norway’s Equinor, for example, has a goal of reducing its carbon intensity by half by 2050. It is thus going big on renewable energy and specifically offshore wind: 6,000 megawatts in six years and 16,000 megawatts in 15 years. Meanwhile, Royal Dutch Shell is building electric vehicle charging stations and ExxonMobil Corp. is investing $10 billion in emissions reduction technologies. That includes everything from carbon capture to battery technology to advancing green hydrogen.
The Biden administration says that the transition to a net-zero economy will produce a global clean energy market worth $23 trillion. The United States, with its world-class universities and research and technology labs, is well-positioned to be a global leader. The government can advanced the technologies to scale-up battery storage, carbon capture and sequestration, alternative vehicles, and advanced nuclear reactors.
To be clear, net-zero does not mean the elimination of fossil fuels, which will remain a staple of the global economy. It does mean off-setting those emissions. That can be done, in part, by creating smart grids to facilitate energy efficiencies and by building pipelines that can transport clean hydrogen to electric generators and fueling stations.
The same corollary is true for the nation’s coal miners — a group that numbered 125,000 in 2050 but that is now 50,000. Since 2011, at least 318 out of 530 coal plants have closed, says the Sierra Club. And even the most coal-heavy utilities like American Electric Power, Duke Energy, and Southern Co. have no plans to build those plants. In fact, they each have net-zero goals by 2050 — as do 70% of the largest U.S. electric and gas utilities, says S&P Global Market Intelligence.
“Can we please stop stressing about going green,” says Andrew Forrest, chairman of Fortescue Metals, during an earlier webinar. “To all the West Virginia coal workers and all the coal workers across North America: The (green economy) needs your skills. It can pay you better. It can give you long-term security. If you don’t change, your jobs are on the line — no matter what subsidies get thrown at it. Your jobs cannot be replaced if you have a customer.”
The energy transition cannot be restrained. It’s well underway — a function of public policy, technological advances, and consumer demand. It’s now a question of just how much public financing the movement will get and whether the nation can hit its carbon-reduction timetables. If the progress already made this century is a precursor of things to come, there’s a reason for optimism.