After the novel coronavirus turned the entire energy industry on its head, much of the world took the hint and dove headlong into the global clean energy transition, some in the interest of avoiding catastrophic climate change by creating a decarbonized future and others in the interest of staying afloat in a decarbonized economy that is seeming more and more inevitable.
The World Economic Forum has advocated as a “new energy order” and a “great reset.” Prominent international agencies such as the United Nations, the International Energy Agency, and the European Union are all putting together or enacting green stimulus plans. In the private sector, a surprising number of blue chip companies are pushing for a green energy stimulus, but the United States has been slow to follow suit, and has quickly fallen behind.
It was in this context that Vox published an August article contending that “the U.S. has everything it needs to decarbonize by 2035,” and outlined a plan for “How to drive fossil fuels out of the US economy, quickly.” The game plan includes a mobilization as sweeping as President Franklin Delano Roosevelt’s New Deal, which revived the U.S. economy in the wake of the Great Depression “with a massively expanded workforce (drawing in women and African Americans) and turbocharged productive capacity.” This kind of sweeping, all-or-nothing effort is essential for the United States--the second-biggest one greenhouse gas emitter in the world after China -- to decarbonize the economy “fast enough to avert the worst of climate change,” Vox reports. “ To do its part in limiting global temperature rise to between 1.5° and 2° Celsius, the U.S. must reach net-zero carbon emissions by 2050 at the latest. To achieve this, the full resources of the U.S. economy must be bent toward manufacturing the needed clean-energy technology and infrastructure.”
Finally, there is hope on the horizon. A new economic stimulus proposal that has already, amazingly, been approved by the U.S. Congress sets aside approximately $35.2 billion for energy tech initiatives in what one policy analyst called “the biggest energy bill we’ve seen in a decade.” These historically hefty funds will go to the Energy Act of 2020 and the Energy for the Environment Act, both of which are driving big technology initiatives. “[The Energy Act of 2020] is a bipartisan, bicameral energy innovation package that authorizes over $35 billion in RD&D activities across DOE’s portfolio and strengthens or creates programs crucial to advancing new technologies into the market,” states a summary document provided by the U.S. government. Related: Goldman Turns Bullish On Oil: Sees $65 Brent In 2021
According to reporting by TechCrunch, solar power, transportation tech, and energy efficiency efforts are the biggest winners in the new energy bill. “There’s $1.5 billion for new solar technologies including modules, concentrating solar technology, new photovoltaic technologies and initiatives to expand solar manufacturing and recycling technologies. And $2.6 billion set aside for transportation technologies,” TechCrunch writes. “Finally, energy-efficiency and weatherization programs are continuing to be supported through a $1.7 billion reauthorization of the Weatherization Assistance Program.”
There is also a considerable chunk of money set aside for energy-grid tech, energy storage, smart utility and energy distribution innovations, hydropower generators, and new research and development for wind and offshore wind power technologies.
The money is not just going to renewable energies, however, it’s also going to economic sectors where innovation and improvement is sorely needed in order to aid in the overall decarbonization effort. Industries like iron, stell, aluminum, cement, shipping, aviation and long-distance trucking, all of which are currently high-emissions fossil-fuel guzzlers, will have access to a $500 million pot to help make these industries greener.
This bill will certainly be a blow to the ailing U.S. shale industry, which has been the powerhouse of the U.S. for many years. But countless studies indicate that green energy, not fossil fuels, will create sorely needed jobs for the United States. In the long term, ESG is a smart investment for the country as well as its workers, many of whose jobs are quickly becoming obsolete. As the summary report of the Energy Act of 2020 asserts, making these considerable investments at this critical juncture will help “reduce our nation’s greenhouse gas emissions, bring good-paying jobs back to the United States, and allow us to export these technologies to growing markets abroad for years to come.”
But this bill is just the beginning. There’s still a lot of work to do if we have any chance of reaching net-zero carbon emissions by 2050. But while this bill is just step one, it’s an extremely promising advance for bipartisan cooperation in the global green energy transition, which is already underway, like it or not.
By Haley Zaremba for Oilprice.com
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