In early November last year, the most important political event in a generation took place.
It wasn’t the US election.
It happened four days before that in Morocco, at the 22nd Conference of the Parties to the UN Framework Convention on Climate Change, when nearly 500 heads of state or government and ministers from around the world gathered to turn the fight against climate change into a binding international law.
The reason this matters so much is that it’s the mother of all market signals — the starting gun in the race to make the transition from the industrial global economy to a low carbon one. That race is already off to a flying start. For the first time since the industrial revolution, the world economy is now growing without a corresponding rise in global carbon emissions.
2016 was another record year for renewables, with global solar capacity rising by 37% andwind by 17%. Solar became the cheapest form of energy in 58 lower-income countries, including China, India and Brazil. We’re now well past the point at which we’re building more clean energy globally than dirty energy. And according to the International Renewable Energy Agency, 9.5 million people are working in renewables worldwide.
The world’s four biggest carbon emitters are India, Europe, the United States and China. And they’re all waking up to what this really means. A month after the Paris Agreement was ratified for example, India announced a new plan to get more than half their electricity from renewables by 2027. That puts them well ahead of their original Paris Agreement pledge, and means they won’t be needing any new coal-fired power stations. Their energy minister, Piyush Goyal, has publicly stated that coal is too risky and too expensive and that he wants to stop coal imports as soon as possible.
In the United Kingdom, coal usage has fallen off a cliff, dropping by more than 50% since 2010. As a result, the country’s carbon emissions have fallen to their lowest level since 1894, the year that Karl Benz invented the petrol powered car.
Canada and Finland are planning on phasing out coal entirely by 2030, and France says they’ll be done by 2023. Meanwhile, clean energy made up 86% of new power added to electricity grids in Europe in 2016. It was a particularly good year for wind, which overtook coal as the second-largest source of electricity on the continent. Germany, France, the Netherlands, Finland, Ireland and Lithuania all had record numbers of new installations, and the wind industry now provides 330,000 jobs and billions of euros of European exports. And on the 22nd February, Denmark produced 97GW of wind energy, enough to power 10 million households, or the entire country for a day.
In the United States, renewables became the largest source of new electric capacity for the first time last year, pushing carbon emissions to a 25-year low. Coal’s share of electricity dropped to 30%, the lowest level since officials started keeping track 70 years ago. Trump might make promises to bring coal back, but he can’t control market forces. Coal plants are closing at an unprecedented rate and new ones are too expensive to build. Wind, solar and natural gas are a lot cheaper and now make up about half the country’s electricity generation.
This is happening in the places you’d least expect. Texas for example, is the leading state for wind with three times the amount of its nearest competitor, Iowa. Climate change might be a controversial issue for people in the red states but clean energy isn’t, for one simple reason. The solar and wind industries are creating jobs 12 times faster than the rest of the economy. Solar employs 260,000 people, and accounted for 1 in every 50 jobs created last year. Another 102,000 Americans work in the wind industry, and wind farm technician is the fastest growing job in the country. Employment in energy efficiency is also booming, with 2.2 million Americans employed in the design, installation, or manufacturing of energy efficiency products and services.
And in China, they’re in the middle of the greatest energy transition of all time. Part of this is due to air pollution problems, but mostly it’s economic. China is hellbent on becoming a clean energy superpower. In January they announced an additional $361 billion in planned investment. This comes on top of record spending in 2016, when 23GW of wind was installed and more than 34GW of solar. That’s double the amount they installed in 2015, and equates to more than three football pitches per hour. It includes what is now the world’s largest solar plant on the Tibetan plateau, which generates 648 MW and can power 150,000 homes.
China is also aggressively reducing coal use. also suspended 134 coal projects, meaning 137GW of dirty energy will no longer be built. State regulators are now saying it looks like China reached peak coal three years ago — its share of electricity generation has dropped from 84% in 2011 to 62% today and the latest projections are that it will drop to 26% by 2040. As a result, Chinese emissions decreased by 0.7 per cent in 2015 and are projected to fall 0.5 per cent in 2016.
So what does this all mean? Well, in January, BP said they think oil demand will continue to grow until 2040 and that electric vehicles will make up only 6% of the global market in 2035. These figures are laughable. They’re completely divorced from the reality of what’s actually going on here. Like every other fossil fuel major BP is still pretending that there won’t be any cost reductions in wind, solar, battery power or electric vehicles, and that most countries aren’t going to meet their Paris Agreement commitments.
And yet Europe, China, the US and India, accounting for 60% of global emissions between them, are already on track to exceed their Paris commitments. Where they lead, other countries will follow. It now looks like solar will cost $1.1–1.7 per watt by 2020, and electric cars will be as cheap or cheaper than standard models by 2020. And according to a new report by the Grantham Institute, one of the world’s most respected climate change research outfits, that means that the global demand for oil and coal will peak in 2020.
THIS IS A BIG FUCKING DEAL and the world’s big financiers know it. In 2016, J.P. Morgan, Bank of America, Citigroup and Morgan Stanley all announced they will be phasing out coal financing. Deutsche Bank followed them in January with plans to halt investment of all new coal financing and to scale back existing exposure to the thermal coal mining sector. The global fossil fuel divestment movement has seen a total of 695 institutions and 58,000 individuals divest a total of $5.44 trillion.
The writing is on the wall. This is the beginning of the end for fossil-fuelled economic growth. Within a few decades, low-carbon business models, technologies and practices will be the norm in every industry.
Meeting that demand is by far the greatest economic opportunity of all time.
Of course, it’s gonna get ugly. The incumbents will fight their inevitable demise with everything they’ve got (and as the biggest industry the world has ever seen, they’ve got a lot). But as we’re fond of saying here at Future Crunch, the war they are fighting is a losing one. And the good guys are starting to win.
Future Crunch fosters intelligent, optimistic thinking for the future. We help people understand what’s on the frontiers of science, technology and human progress, and what it means for humanity
Our fortnightly newsletter is filled with stories about people from around the planet who are using science and technology to make the world a better place.