“By the end of the coming decade we will be on one of two paths. One is the path of surrender, where we have sleep walked past the point of no return, jeopardizing the health and safety of everyone on this planet,” the Secretary General of the United Nations’ Climate Change Conference COP25 told his audience last December. “Do we really want to be remembered as the generation that buried its head in the sand, that fiddled while the planet burned? The other option is the path of hope.”
While the United Nations and expert organizations such as the Intergovernmental Panel on Climate Change (IPCC) have done the professional and diplomatic version of begging, pleading, and crying for more serious and urgent development of renewable energy, the private sector has been slow to respond. As Oilprice reported in November, the “number one bottleneck for clean energy tech” is funding.
Summing up the issue, an MIT Technology Review article titled “Why Bad Things Happen to Clean-Energy Startups” reported that “By now [bankruptcy] is a familiar phenomenon in clean energy. Companies must make a massive up-front investment to develop new hardware and scale up manufacturing, all while chasing moving price and performance targets as incumbent technologies improve. Faced with such challenges, vanishingly few succeed.”
While it’s true that overall, global investment in renewables has been on an upward trend, the growth rate has been volatile, and the United States, the world’s second-largest energy consumer, has made a lackluster effort to curb emissions, to put it lightly. While there are lots of promising energy alternatives currently under development, they face major barriers to being scaled up. “The question is where such investments will come from,” wrote MIT. “The Trump administration has taken steps to dismantle the federal funding program for clean-energy startups, and venture capital investments for such technologies have dropped nearly 30 percent since 2011, from $7.5 billion to $5.2 billion, according to a recent report from the Brookings Institution.” Related: Tesla Shares Race, But How Long Will The Rally Last?
That article, happily, is now a bit dated. While the outlook for corporate interest in weaning the world off fossil fuel was pretty bleak back in 2017 when the MIT article was published, it looks like the energy tide may finally be turning for the private sector. This week PV Magazine reported that “with businesses more eager than ever to make bold clean energy promises, the global market for corporate renewable energy power purchase agreements continues to surge.” The article continues, citing findings from Bloomberg New Energy Finance (BNEF), “last year, corporations contracted an unprecedented volume of renewable energy projects, up more than 40% from the previous year’s record.”
BNEF’s newly released 1H 2020 Corporate Energy Market Outlook found that over 100 corporations from 23 different nations signed clean energy contracts totaling approximately 19.5 GW of clean energy projects in the last year. “This was up from 13.6 GW in 2018, and more than triple the activity seen in 2017,” says PV Magazine. “The analysts estimate the demand for corporate PPAs amounted to between $20 billion and $30 billion in investment and was equivalent to more than 10% of all the renewable energy capacity added last year.”
Lead sustainability analyst at BNEF Jonas Rooze told PV, “Corporations have purchased over 50 GW of clean energy since 2008. That is bigger than the power generation fleets of markets like Vietnam and Poland. These buyers are reshaping power markets and the business models of energy companies around the world.” Chief among these corporations is the tech sector, which is leading the way for a more emissions-conscious business model going forward. “Google signed contracts to purchase over 2.7 GW of clean energy globally, followed by Facebook (1.1 GW), Amazon (0.9 GW) and Microsoft (0.8 GW).” Let’s just hope that the rest of the world is very quick to follow in these footsteps.
By Haley Zaremba for Oilprice.com
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If the aforementioned objectives are pursued energetically and rationally, funding will not be a problem. This could be enhanced further by accurate down-to-earth information rather than bombastic claims about the destructive impact of climate change on the globe.
Divestment campaigners of oil and gas stocks and those who like to burnish their environmental credentials by talking tough on oil and gas do it either out of ignorance or out of political agenda or both. They should offer practical solutions or shut up.
They tell Big Oil, companies and sovereign funds to divest of their oil and gas stocks but they don’t provide them with similar lucrative alternatives as oil and gas as Norway’s Sovereign Fund, the world’s biggest found at its own loss and was forced to drop its divestment plans otherwise the whole fund would have been undermined financially affecting the future and prosperity of Norway’s people and economy.
Divestment and global climate change campaigners tell people of the world to drop internal combustion engines (ICEs) and move to electric vehicles (EVs) but they omit to tell them about the trillions of dollars needed for capacity expansion of electricity generation to recharge the millions of the EV’s batteries the overwhelming percentage of which will still come from natural gas, oil and nuclear energy.
They should first learn about the facts of life that underpin the global economy and therefore their prosperity and livelihood.
They will then learn that there will be no post-oil era and no peak oil demand either and also no imminent global energy transition throughout the 21st century and far beyond and that the oil and gas business will continue to be the fulcrum of the global economy well into the foreseeable future.
They should also know that we’re now in an era of energy diversification where alternative sources to fossil fuels, notably renewables, are growing alongside—not at the expense of—the incumbents.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London