Costs are going up for rival sources of energy and renewables retain their price advantage
The “new normal”, said International Energy Agency spokesperson Heymi Bahar last May, may be a far faster expansion of renewable energy than expected, driven mainly by market forces. So fast, in fact, that it raises a different kind of risk (but he didn’t mention that). The good news is big and undeniable. There has been a step-change in the growth of wind and solar power, which jumped by 45 per cent worldwide in 2020. The old pattern was that the global economy grew by around three per cent a year, and the demand for electricity grew a bit faster. Renewables grew at around the same rate, but their share was not rising at all. And it was only 15 per cent of total electricity generation, compared to 85 per cent for fossil fuels and nuclear. That’s why the overall global emissions of carbon dioxide have not been shrinking. There was no hope of cutting emissions until non-fossil energy sources were being produced in volume to take up the slack. Now that has all changed. Over the past decade the ‘levelised’ cost of renewable power has dropped by between around 60 per cent (wind) and 80 per cent (solar), making both of them cheaper than fossil fuels in most places. The trend has been visible for years, but now it is being reflected in actual hardware. The non-fossil share of electricity production, will be 29 per cent in 2021 and probably be 31 per cent next year. Solar accounts for more than half of that amount, and wind for most of the rest. And the IEA estimates that renewables will make up 95 per cent of new power capacity globally between now and 2026. So, if the share of renewables in total power generation is now growing at two per cent a year, what will it be in 2026? Forty per cent? And 50 per cent in 2030? That would be a genuine revolution. But costs are going up for rival sources of energy too, and so far, renewables are retaining their price advantage. So, the question remains valid: what would actually happen if fossil fuels go into an unexpectedly rapid decline, with around a third of their existing market vanishing by 2030 and most of the rest in the course of that decade?
The very good thing that would happen is an equally rapid decline in global carbon dioxide emissions, maybe even fast enough to enable us to stay below the +1.5°C threshold of warming through the 2030s. That would save some tens of millions of lives and a few trillion dollars in avoided fire, flood and storm damage. The less attractive result would be chaos in ‘sunset’ industries on which the Sun is going down much too fast: no time for retraining and gentle transitions, just collapse. One can see the parts of the car industry that didn’t turn electric fast enough going down that route, together with the entire coal industry. The gas industry goes into rapid decline and the oil industry splits between the few very low-cost producers in the Gulf, who stay in business by cutting their prices radically, and the rest, who go to the wall. Then, around 2040, the remaining oil producers go broke as well. If you can’t get some geopolitical clashes out of that scenario, you’re not really trying, but it’s still the most promising scenario I have seen for a long time. If we can actually replace the world’s entire energy infrastructure in a single generation without even a major war or famine, I will gladly revise my views on the evolutionary fitness of the human race.
(Gwynne Dyer’s new book is ‘The Shortest History of War’. The views expressed are personal.)