It’s been quite a while since oil has been this cheap. It isn’t having the dramatic effect people have expected–people are still drilling, in some places gas at the pump is still pretty high, people haven’t doubled their driving.
And people are still investing in renewable energy. This is actually important, as for those of us who hope that renewables can help lower emissions, there is a perennial worry that short term events can slow down innovation. Fossil fuels have a lot of history behind them and a lot of very real advantages to overcome.
If we want renewables to comprise about 30% of electricity generation worldwide, which is a sane total to shoot for (especially if we can get another 30% from nuclear power and maybe 9% from hydroelectricity) then what we need to see is steady investment in plant, installation and research.
We seem to be getting it now.
Chris Mooney, a writer I don’t have much time for, looked at Bloomberg’s New Energy Finance’s report on investment and found that “2015 was a record year for global investment in the clean energy space, with $ 329 billion invested in wind, solar panels, biomass plants and more around the world. (The number does not include investments in large hydroelectric facilities).”
About half came from China and the U.S. “Fully one-third of the 2015 clean energy investment occurred in China — a punchline we’ve come to expect by now. That country saw investments of $ 110.5 billion last year. The United States was second with $ 56 billion.”
Perhaps most importantly, “Measured in terms of electricity generating capacity, the world saw an additional 64 gigawatts of wind capacity added and 57 gigawatts of solar capacity, BNEF estimates. The most striking figure here is that while 2015 only saw about 4 percent more clean energy investment than 2014 (when $ 316 billion was invested), the growth in renewable energy generating capacity was much higher at 30 percent. This, again, signals declining cost.”
Are subsidies still important to renewable energy? Yes. Is renewable energy still more expensive than fossil fuels? In most places, yes. Is renewable energy still growing rapidly from a small base? Yes.
And to emphasize, should developing countries like India continue to use cheap coal to lift their populations out of poverty? Yes, yes and again yes.
But we will switch our emphasis to renewables over the course of this century regarding the optimum fuel portfolio and this shows that investors are for once thinking more long term than usual.
Investment is freer from the politics of subsidy, the fiddling with capacity vs. generation games, the fantasy of Levelized Cost Of Energy. It reflects where people with money think that money can get a return.