The future of energy is zero carbon – and the race is onThe We Mean Business coalition
To find out more about We Mean Business and our work on clean power systems, please fill in the form at the bottom of this article and a member of our team will be in touch.
The global electricity system is on a path towards a future powered by clean, affordable and reliable energy. The future of energy is zero carbon.
Just last week, the UK passed a key milestone: For the first time since the Industrial Revolution, it is obtaining more power from zero-carbon sources than fossil fuels. The trend does not stop there. Renewable energy now generates more electricity in the United States than coal, and major economies such as Germany and Spain are increasingly powered by renewables.
Yet we need to accelerate. According to IRENA, renewables now make up more than half of newly installed power-generation capacity, but their overall share in the energy mix (including power, heat and transport) needs to grow six times faster to give us the climate-safe future we need.
To meet zero-carbon climate goals, there will be a huge surge in demand for renewable electricity to charge cars, heat homes and power industrial processes. Globally, decarbonization could see a 4-6 times greater demand for electricity, according to the Energy Transitions Commission.
Alongside this, the transport system is decarbonizing too. More than 10 countries are now committed to completely phasing out gas- and diesel-powered light passenger vehicles in the coming decades, including China and India. This presents a major business opportunity for electric utilities.
The future is coming much faster than many predicted. Here are some of the strongest signs of progress towards zero-carbon energy.
Utilities are switching to renewables
Utilities around the world are investing heavily in new renewables as the cheapest and most efficient way to meet growing consumer demand for clean energy.
The costs for renewable energy technologies decreased to a record low last year, according to IRENA. Their analysis reveals that renewables are the lowest-cost source of new power generation in most parts of the world today. And as costs for solar and wind technologies continue to fall, this will become the case in even more countries.
Spanish utility giant Iberdrola recently laid out a plan to build Europe’s largest solar power plant in the country. The company is currently consulting the environment ministry over building a 590-megawatt solar farm in the Western region of Extramadurra.
In the US, almost 20 GW of new renewable energy capacity was added in 2018, including 11.6 GW of solar and 7.5 GW of wind, according to BloombergNEF. And Xcel Energy, a large U.S. utility, has committed to zero-carbon power by 2050. A recent report found that three-quarters of US coal is now more expensive than solar and wind energy for American households.
Likewise in India, Tata Power has said it will not build new coal plants and will instead focus on clean power. The company’s Mundra coal-fired power plant — one of the biggest power plants in India — experienced losses reaching $191 million for the first three-quarters of FY2018-2019. Going forward, the company calls for up to 70% of new capacity additions to come from solar, wind and hydro through to 2025.
The utilities enabling this shift are making sure their own emissions are in line with what’s required by the Paris Agreement. Globally over 40 power utilities have committed to bold climate action through the We Mean Business coalition’s Take Action campaign. This includes over 20 utilities that have committed to science-based targets, such as Europe’s Ørsted, NRG Energy in the U.S. and CLP in China.
Investors are shifting away from fossil fuels
Investors are increasingly shifting funds away from fossil fuels and towards clean energy to minimise the risk of stranded assets and harness the growth potential of renewables.
This past March, the world’s largest sovereign wealth fund, which manages $1 trillion of Norway’s assets, made the largest fossil fuel divestment, dropping more than $13 billion of investments in oil and gas companies. Moving forward, the fund plans to invest up to $20 billion, beginning with wind and solar projects in developed markets.
Likewise, a group of almost 400 of the world’s leading investors, controlling over $30 trillion in assets, are pushing for ambitious climate action through the Climate Action 100+ campaign. The group is calling on many of the world’s most heavy emitting companies such as Shell and BP to align their business strategies with the goals of the Paris Agreement.
And a growing number of leading pension funds are divesting from fossil fuels, including the New York City pension fund.
Corporates are going 100% renewable
A growing wave of corporate customers are demanding clean energy as the best and most affordable way to power business growth and cut carbon emissions. Over 180 international companies are committed to procuring 100% renewable electricity through RE100, led by The Climate Group in partnership with CDP. Companies including the likes of Walmart and Hewlett Packard are now creating demand of over 184 TWh of renewable electricity annually — more than enough to power Argentina and Portugal combined. Each week, over 9.6 million people visit a solar-powered Walmart.
Businesses like these are also providing a new source of finance for a faster deployment of renewables by investing over $94 billion to reach their 100% goals.
Governments are ramping up their commitments to clean power
Governments around the world are harnessing the opportunity of the rapid shift to renewables as a driver of economic growth and jobs, and to ensure safe and reliable access to energy while protecting health.
Some 11 million people were employed in renewable energy worldwide in 2018, up from 10.3 million in 2017. Likewise, with air pollution responsible for 7 million premature deaths each year, the pressure on policymakers to switch to cleaner energy sources is growing.
There are already seven countries at (or very near to using) 100% renewable power grids, including Costa Rica and Norway. Major economies such as Germany and Spain are powered by 40%and 38% renewables, respectively. China reached a 38% share of renewable power capacity at the end of 2018.
And in the U.S., more than 80 cities, five counties and two states have committed to 100% renewables. For example, in 2018,, California Gov. Jerry Brown signed a bill to eliminate fossil fuels from the state’s electric grid by 2045.
The race to zero carbon
The future of energy is zero carbon. The transition will bring profound disruption, but also unprecedented opportunities for utilities and companies that seek to embrace it. The race is on.
Speak to someone from our team
To find out more about We Mean Business and our work on clean power systems, please fill in this form and a member of our team will be in touch.