Friday, January 22, 2016

Renewable energy sees a welcome paradigm change

According to a recent National Geographic article, the renewables industry is managing to remain reasonably robust, even in this new era of cheap oil.
Many economics commentators seem to have just assumed that, with oil languishing at below $30 a barrel, the demand for renewable energy will just dwindle away to nothing. Indeed, there does seem to have been an uptick in sales of air travel and gas guzzling cars, with 2015 setting a new record for new vehicle sales in Canada (and probably elsewhere), largely thanks to sales of SUVs, pick-ups and vans, with a concomitant decrease in the sales of electric vehicles. How fickle and self-serving Joe Consumer is!
The economies and stock exchanges of oil exporting countries like Canada, Russia, Venezuela and Saudi Arabia have also taken a battering. But the renewable energy industry has, surprisingly, stayed remarkably buoyant. According to Bloomberg New Energy Finance, 2015 saw a record $329 billion invested globally in renewables, as well as a record installation of renewable power capacity (up 30% from 2014). For example, 60% of the new generating capacity in the US came from renewables in 2015, and the figure is expected to be closer to 70% this year.
National Geographic points out several reasons for this.
Firstly, even as the prices of oil and gas have fallen, wind and solar energy has also become substantially cheaper, and they are likely to become cheaper still as the technology continues to advance. Renewables are now competitive with natural gas in most countries (oil itself, and gasoline, are not in direct competition with electricity generation sources like wind and solar), and many jurisdictions are actively trying to phase out carbon-intensive technologies like coal-burning, and are introducing stringent new regulations in order to achieve that.
Secondly, public opinion and public policy are finally favouring renewables, as more and more reports bring home the scale and the immediacy of the climate change problem. After the Paris accord, most countries now have obligations to cut their emissions of carbon dioxide and other greenhouse gases. Some countries, such as India and China, are also looking to renewables to relieve their embarrassing and dangerous smog and pollution problems, and some developing countries just see it as a cheaper and quicker way of developing new generating capacity. Even some oil exporting countries are investing heavily in renewables in order to reduce home demand for oil and gas and thereby maximize stocks available for export.
Thirdly, there is also now strong support for renewables, no just from governments and municipalities, but from industry. Influence Map reports that half of the world's major companies now support taking measures to reduce greenhouse gases, and a third are in favour of some kind of a price on carbon. Whether this is purely out of self-interest and public relations is surely a moot point.
So, although it may perhaps seem counter-intuitive, there are many reasons why renewable energy is continuing to enjoy a boom, even in this age of dirt-cheap oil. Who knows, this may even herald a new era for wind and solar, and mark a welcome paradigm change in the way we produce and use our power.

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