The world will move away from fossil fuels. It’s not an “if” but a “when.”
The transition has begun — more than half of the new generating capacity added to the grid globally now comes from renewables. Last week, energy developers in Dubai bid below 3 cents per kwh for a solar project . This was a new world record low, breaking by 15% the old record set in Mexico…a month ago.
Coal, while still a big business, is in trouble. A Goldman Sachs report calls the decline of coal “irreversible.” It may take longer, but oil and gas have a limited long-term future as well . The world’s governments will expand efforts to price carbon in some way (China and multiple regions around the world already have a cap and trade in place), and electric vehicles will gain ground as battery costs continue to fall.
Dramatic shifts in industries can be exciting — trillions of dollars are in play — but also painful for those in the old industries. Some of those with vested interests will not making the transition willingly (an understatement for sure), but some players taking part in the clean economy game will come as a surprise.
Check out these 4 headlines from the last couple of weeks. They demonstrate a remarkable range of reactions to the reality of the coming clean economy.
- “NRG Steps Back from Alternative Energy Ventures”
- “Exxon Backs Carbon-Capture Technology to Feed Fuel Cells”
- “New York Plans to Make Fighting Climate Change Good Business”
- “Saudi Prince Shares Plan to Cut Oil Dependency and Energize the Economy”
It’s like news-driven whiplash. Starting from the good news…
Some of the major oil-producing countries seem to grasp what a former Saudi oil minister said years ago: “The Stone Age came to an end, not because we had a lack of stones.” The UAE has been aggressively investing in clean tech for years, and now Saudi Arabia, in a power shakeup, seems to be embracing a shift from what King Salman’s son, Prince Mohammed, calls “an oil addiction…that has hampered the development of many different sector.” (Clearly, not all oil countries are on board — I don’t see Putin talking green).
Back in the states, New York’s Governor Cuomo — who since Hurricane Sandy has tried to build a pro-climate-action legacy — wants to shake up the utility model. He hopes to incentivize power suppliers to innovate and help households and businesses reduce energy use. It’s worked for California for years.
In the not-as-good-news category, we have some energy giants making baby steps or sidesteps from the clean economy future. Exxon’s investment in fuel cells sounds like a clean energy play, and fuel cells can be an important part of and energy system with greater resilience. But carbon-capture is, at best, unproven economically and thermodynamically. Exxon likely just wants to keep fossil fuels in play for longer rather than embracing the shift (see EU oil giants calling for price on carbon or investing $500 million annually in renewables like French giant Total).
Finally, as New York tries to help utilities go clean, one of the only U.S. utilities that was forward-thinking, NRG, retrenched. Five months ago, the company fired its visionary and reality-based CEO, David Crane (see this excellent article on that story and where Crane is now). So it was not surprising when NRG announced last week that it would cut back on its alternative energy ventures and sell a majority stake in its EV charging business. As for its residential solar business, the CEO said, “We don’t have any grand aspirations in terms of the total sales and installations.”
And that’s really too bad, because if we need anything at all to deal with climate change, it’s grand plans.
Who would’ve guessed that the ones with the grand clean-economy aspirations would be Saudi Arabia?!