The transition to a low-carbon energy system can only succeed if we switch to renewable energy and energy efficiency while parting from fossil fuels. Already, the global share of renewable energy in electricity production has increased sharply. Nevertheless, many new coal power plants, anticipated to run for many decades, were connected to the grid in recent years. How do these divergent trends add up? To begin, let us take a look at China, the microcosm of the global energy revolution. Contrary to all predictions, China burned less coal in 2014 than the year before—a first in more than three decades. That downward trend continued in the year 2015. This is all the more remarkable because the country’s power consumption and its economy grew significantly during the same time.
The reasons for the shift away from coal are manifold. For one, faced with significant popular discontent about smog, many cities are shutting down old coal-fired plants and a dozen provinces have committed to reduce coal consumption. Further, like no country in the world, China is investing in water, wind and solar power, namely about 90 billion US dollars in 2014. In Europe, too, the operators of coal-fired power plants are facing hard times. For them, the market is forever shrinking because the demand for electricity is dropping. In 2014, countries such as Denmark and Germany consumed as little energy as in the 1970s. Even new plants, such as Vattenfall Kraftwerk Moorburg, taken into operation in early 2015, are paying off less and less because they are no longer operating at full capacity.
Renewable energy – no longer a niche market
The coal industry must also contend with, in addition to declining energy consumption, new competition. The expansion of renewables has exceeded forecasts by far. Many scenarios of the early 2000s predicted a market penetration of renewables by the year 2020. Yet, in Europe at least, that was already achieved in 2010. There, wind and solar power now dominate the new installations, comprising 79 percent of all newly installed power generating capacity. In other words, four out of five new power plants run on renewable technologies.
However, not only in Europe but throughout the world, renewable energy is on the rise. In 2012, renewables comprised 19 percent of the global final energy consumption, albeit half of this was supplied by “old” renewables such as hydropower plants or wood burning. Nevertheless, the growth of the “new” renewable energy sources such as photovoltaics, wind power, geothermal energy, wave power and biogas plants are taking up speed. Mass production, technological developments and larger markets mean that the costs of these energies are falling rapidly. In the last four years, for example, they dropped by up to 50 percent. Increasingly, renewables projects are even being built without subsidies, since they are less expensive than fossil fuels.
China is a driving force
The year 2014 was a record year for wind power, with 51 gigawatts of newly installed capacity across the globe. The driving force in the global market was China, where nearly every second new wind farm was installed. Europe, for its part, saw a rise of 12 gigawatts of wind power in 2014, spearheaded by Germany and the United Kingdom. The turbines installed by the end of 2014 produce enough electricity to cover more than ten percent of Europe’s electricity consumption. In Spain, wind power generates one-fifth of the total electricity demand. In Denmark, wind power contributes one third of electricity production, and on windy days the country even turns off all of its conventional power plants given the power surplus. Newly installed wind capacity also rose in the United States (4.8 gigawatts) in 2014, after a weak year, while Canada set a new record with 1.8 gigawatts. The growth of wind power in Africa was relatively modest in 2014 (0.9 gigawatts), with Morocco and South Africa ahead of the other nations. A greater dynamic exists in Latin America, where Brazil has long been a pioneer in wind power, but now tailgated by Chile and Uruguay.
The market for solar power has likewise grown significantly in 2014. During that year, more than 40 gigawatts of new solar power was introduced worldwide—a quarter of which by China alone. The United States, where some 4 million households are fueled by solar power, added 6 gigawatts of photovoltaic capacity in 2014. In Italy, photovoltaics now comprises 8 percent of the total electricity generation, and in less sunny Germany nearly 6 percent. In most industrialized countries, it is now cheaper for many homeowners to produce their own electricity, with solar panels on their roofs, than to buy it from the grid. In developing countries, off-grid solar power is a decisive advantage for rural areas that are not yet connected to the main power grid. Indeed, in many cases, it is the only opportunity for accessing energy at all. So-called microgrids help to distribute renewable energy technologies to rural areas that previously had no access to electricity, including in India. Given the ongoing, drastic decline in the prices of solar panels, the Indian government recently corrected its expansion target for solar power by 2022 by a factor of five upwards: from 20 to 100 gigawatts.
In the international rankings of the largest annual growth of renewable energy, big countries such as Germany, China and the United States are regularly on top. Yet, in relation to their economic power, smaller countries such as Mauritius, Costa Rica and Uruguay are investing significantly more. In fact, they are the hidden champions of the global energy transition. Since 2008, Uruguay has been channeling around 3 percent of its economic power into the transformation of the energy supply. Today, it derives 95 percent of its electricity from renewable sources and was able to reduce electricity prices by 5 per cent thanks to a decreased use of fossil fuels.
Around the globe, the signs of the time point to renewable energies. There is cause for optimism that the power supply is being transformed worldwide at such a rapid pace. Nevertheless, the clock is ticking. Emissions are still on the rise and climate change is relentlessly progressing. Meanwhile, the once-dominant traditional energy sources are struggling to maintain their place. The question is not whether a global energy transition is technically feasible. Instead, the question is whether the switch to a low-carbon energy supply can be implemented against the interests of the fossil fuel lobby. This is where politics comes in.
This article was first published on Heinrich-Böll-Stiftung, North America.
Photo credit: Joe Brusky (CC BY-NC 2.0).