Transition to renewables is picking up steam despite the Ukraine War.
It’s hard to know what’s up and what’s down in energy right now. What’s hot and what’s not – wait, no, scratch that, given how hot the planet is this northern summer! But headlines would have you believe fossil fuels are back in a big way. Truth is, the fog of war in Ukraine is affecting our senses. And the haze of those fires burning from Morocco to California is blocking our vision.
What is plain when you look at the data is that the energy transition is barrelling along. In fact, it is accelerating in 2022 in part due to Putin’s war. I considered entitling this column “Vladimir: Climate Champion,” but couldn’t give the bastard that much credit. It is not a small irony that history will see his war as one that drove the transition from fossil fuels further and faster.
Regardless of what the Manchinian candidate does, 145 GW of coal are closing.
Why do I say this? Let’s look at the facts. As of mid-June, wind, solar and hydro – the main renewable energy sources – have generated more power in America, the largest economy in the world, this year than coal and nuclear. As of June 15, renewables generated 23% of the country’s electricity. According to the S&P, the great coal crash that accelerated under President Trump will proceed through the 2020s. By their reckoning, coal’s share of the electricity market will go from 22% to a staggeringly low 5% by 2030.
Regardless of what the Manchinian candidate or Supreme Court says about the U.S. EPA, 145 gigawatts (GW) of coal are closing – it’s just economics. I know that’s not good enough. We need the U.S. Senate and SCOTUS to move to climate action stations. But the transition is now unstoppable.
Gas is slowly but surely going the way of coal
And what of the rest of the world, I hear you cry? Well, Europe is scrambling to do what it can. Romania just passed an emergency law to phase out coal by 2030 and exploit its wind and solar resources. Denmark has just upped its goal to go beyond 100% clean electricity. The U.K. recently announced the results of the biggest ever round of its renewable energy auction scheme: 11 GW. That’s 7 GW of offshore wind, more than 2 GW of solar and 1 GW of onshore wind, plus some tidal and other stuff thrown in the mix. These projects will produce around 13% of the country’s current electricity at four times less than the cost of gas!
And that’s what it’s all about: getting off gas because that’s what Putin has on Europe. More and more countries across the Eurozone are introducing new policies to end gas (see the image below from S&P Global). The International Energy Agency (IEA) says gas demand will rise in the current five-year period by 140 billion cubic meters (bcm). Sound like a lot to you? It’s less than half the increase of 370 bcm in the previous five years, which included the COVID downturn. Goodbye gas. It is slowly but surely going the way of coal.
There be dragons
Not so fast, I hear you say: China! There be dragons puffing pure poisonous smoke in those Mordor-like manufacturing plants, right? Right. There are problems and much too much coal. And yet there are also signs of transformation from this giant economy. Remember, China has a goal of 570 GW of wind and solar deployment inside the country in the current 5-year plan. And it’s on track. That’s as much as the rest of Asia had built as of 2020, plus America’s installed total, plus the E.U.’s plus Latin America and Africa’s installed base – all to be built by 2025! And this is on top of its already world’s best currently installed capacity of 500 GW.
Solar installations across China are up 140% year on year – an impressive growth story given its baseline.
China is teaching the world new lessons in reducing dependency on fossil fuels in 2022 with innovative policies. Solar installations across China are up 140% year on year – an impressive growth story given its baseline. What’s fascinating is that much of it is rooftop solar. This was a segment of the market that barely existed five years ago. Solar was all about large, utility-scale projects shipping power from Western provinces to Eastern cities. Now they are building solar on the roofs of all cities with a “Whole-Country Rooftop Solar program.” It began in September last year with a pilot run in 676 counties in 31 provinces and is now spreading like wildfire.
While the U.S. can’t pass its Build Back Better legislation to reign in the 13% of future emissions that we’re responsible for more quickly than is happening by market forces, the Chinese command-and-control system is putting a lid on its 25% of the world’s emissions. We can argue the academics on this but can’t ignore the impact and results.
Startup of the month
This leads me to the startup of the month that I want to highlight. One of the ways the bad guys are obfuscating the above good news is by creating confusion about the positive impact of clean energy. They point out that it requires minerals to produce solar cells, wind turbines and batteries. Yes, it does. And this should be sourced properly with appropriate community, labor and ecological safeguards, as any mining effort should. But the fundamental difference with fossil fuels is that the footprint of clean energy technologies is a fraction of that of fossil fuels to produce the same power in our lives. And mineral inputs are almost 100% recyclable, whereas fossil fuels get burnt once and become polluting CO2. Here’s an example from my homeland of Australia.
Source: Saul Griffith
Take a look at this data from Saul Griffith of “Electrify” fame and Rewiring America (and Australia) along with OtherLab. The comparison speaks for itself. The key is to create the recycling industry now as we scale the adoption of clean energy technologies. So a favorite startup of mine at the moment is WEEE Center in Kenya, which is pioneering e-waste recycling on the continent. My outfit, New Energy Nexus, recently awarded the company the AfricaTech Prize for Climate Solutions. Others like Redwood Materials and SolarCycle have shown in OECD markets that recycling the components of the energy transition and creating a truly circular economy will be a very, very good business. The best source of cobalt, after all, is a Best Buy recycling bin. Time to build these companies now to deliver this circular outcome going forward.
Shine on!
