Issue ... Climate Change
Impact Investments

Amory Lovins ... Four Trends Driving Profitable Climate Protection

Burgess COMMENTARY

Peter Burgess

Four Trends Driving Profitable Climate Protection

Four years ago Rocky Mountain Institute’s Reinventing Fire predicted that “climate protection…will be led more by countries and companies than by international treaties and organizations, more by the private sector and civil society than by governments, more by leading developing economies than by mature developed ones, and more by efficiency and clean energy’s economic fundamentals than by possible future carbon pricing.” As Climate Week NYC kicks off today, it’s a good time to ask, how are those four shifts going?

Clean energy’s economics looking better and better

In 2013 alone, renewable energy other than big hydropower received $254 billion of global investment; energy efficiency, $310–360 billion; and cogeneration of electricity with useful heat, about $70 billion. These three carbon-savers thus attracted about $650 billion of capital in one year.

Long-term fixed-price contracts to sell new U.S. windpower and utility-scale solar power have lately averaged below $0.025 and $0.04 per kWh, respectively. Those are net of federal subsidies, but wind’s has expired, solar’s will drop by two-thirds at the end of next year, and both will still win (though not as quickly in as many places) despite fossil fuels’ larger, decades-old, permanent subsidies. Unsubsidized wind and solar will still average below $0.04 and $0.06 per kWh respectively, beating new fossil-fueled plants by two- to three-fold and closing many as simply uneconomic.

That’s exactly what’s happening. In the next 15 years, fossil-fueled plants are expected to halve their capacity growth (not counting bigger retirements), renewables to double theirs. A simultaneous shift of scale to what the Economist calls “micropower”—renewables minus big hydro, plus cogeneration—now has half the new generation market and produces one-fourth of the world’s electricity.

Cheaper still is energy efficiency, with utilities’ programs averaging $0.02–0.03 per kWh and optimally designed investments often much less—even below zero. Moreover, efficiency dwarfs even the quarter-trillion-dollar and 80-billion-watt annual additions of global renewable energy (other than big hydro dams). U.S. energy savings since 1975, mostly from smarter technologies, have cut cumulative energy use 31 times more than renewable growth raised supplies. Yet efficiency remains invisible while the renewables sprouting on roofs and landscapes enjoy the limelight. Despite U.S. renewables’ rapid growth, savings’ growth in 2014 was three times bigger.

Developed countries start to share energy leadership

As developed countries’ buildings, factories, and mobility get efficient faster than they grow, they’re using less energy. America’s and Europe’s electricity and gasoline use has been falling since 2007. Australia’s electricity use has plummeted while its solar adoption per capita reached about ten times California’s. Since Fukushima, Japan’s lost nuclear output has been half displacedby efficiency, frugality, and renewables. And last year, renewables provided 10 percent of Britain’s electricity consumption, 13 percent of America’s, 20 percent of Ireland’s, 27 percent of Germany’s, 33 percent of Italy’s, 46 percent of Spain’s, 50 percent of Scotland’s, over 50 percent of Denmark’s, and 64 percent of Portugal’s. Germany’s fossil-fueled generation hit a 35-year low, renewables were its biggest power source, and its wholesale power prices were half those of 4½ years ago, with April on-peak prices below off-peak.