While Donald Trump and a dwindling cadre of his enablers continue their efforts to deceive the American people about the existence of manmade climate change and its dire implications for humanity’s future, many among those who take their job responsibilities more seriously are deeply invested in predicting and planning for its economic consequences.
Despite all the perverse efforts—by Trump and others—to reverse the progress the developed world has made towards creation of alternative energy sources, the reality is that the market doesn’t much care about Donald Trump. Car companies in this country and others, for example, are rushing headlong to develop electric-powered vehicles (EVs), goaded on by the success of such brands as Tesla. Insurers now factor anticipated climate-caused disruptions into their risk assessments as a matter of routine. Banks are reducing their exposure in lending to declining industries such as coal. Nothing Donald Trump or any other obstinate climate denier says or does is going to dissuade them. These industries completely understand what is happening, because it goes directly to their bottom line.
As a result, in our now-thoroughly globalized economy, the markets that drive growth are slowly being cultivated to embrace renewable energy as a matter of sheer expense and practicality: Fossil fuels such as coal, oil, even natural gas are gradually becoming cost-prohibitive compared to the cost of wind, solar and lithium-ion storage batteries. Right now renewables make up only a small fraction of the energy (6%) the world uses, but their growth has been steady and exponential over the past few years. Meanwhile, the cost of wind and solar energy has dropped about 20% upon every doubling of capacity. There is no question that renewable energy sources are on the rise. The only question is whether the inevitable obsolescence of fossil fuels will arrive in time to save the planet and humanity from the pernicious effects of their longtime use.
As detailed by veteran climate warrior and author Bill McKibben in this month's New York Review of Books, one of the people invested in determining the economic impact of this shift towards renewables is Kingsmill Bond, formerly of Deutsche Bank and now a strategic advisor for a British think-tank called Carbon Tracker. Bond believes at some point in the near future (possibly the early 2020's), renewable energies will represent all growth in energy usage, with a corresponding drop-off in the demand for fossil fuels. Historically, when a comparison of competing technologies shows all the new growth to be occurring in one sector, an inflection point occurs where the old technology peaks and its usage begins to wane. In the case of energy sources, according to Bond, it follows that we will soon reach peak fossil fuel usage, as it will simply become economically undesirable to continue burning fossil fuels when cheaper energy alternatives are available.
In the NYRB article, McKibben reviews a report by Bond and Carbon Tracker titled ”2020 Vision: Why You Should See the Fossil Fuel Peak Coming.”
The turning point in such transitions “is typically the moment when the impact is felt in financial markets”—when stock prices tumble and never recover. Who is going to invest in an industry that is clearly destined to shrink? Though we’ll still be using lots of oil, its price should fall if it has to compete with the price of sunshine. Hence the huge investments in pipelines and tankers and undersea exploration will be increasingly unrecoverable. Precisely how long it will take is impossible to predict, but the outcome seems clear.
According to McKibben, perhaps the most telling example of what’s occurring is, quite literally, the canary in the proverbial coal mine.
Despite Trump’s made-up claims, empty promises, and repetitive lies to the contrary, coal is dying ever more rapidly on his watch. More coal-fired power plants were shut down during Trump’s first two years in office than during the entirety of President Obama’s two terms. Meanwhile, renewables are on the rise, again, in spite of anything Trump does or says.
Coal production will drop nearly 8 percent in 2019, and then another 4.5 percent in 2020, according to a new Trump administration analysis.
But over the same two years, total renewable power generation will rise 30 percent, the U.S. Energy Information Administration (EIA) projected on Tuesday.
So despite campaigning on a pledge to save the dirtiest of fossil fuels, President Donald Trump is overseeing a collapse in both domestic coal production and coal generation.
As McKibben highlights for us, India was viewed by the coal industry as one of its last, best remaining hopes. As recently as 2015, coal use was projected to triple in India by 2030. But India, as it turns out, is a very sun-drenched country; so when the price of solar began to fall, the country’s businesses reacted in a very predictable way.
[T]he price of renewable energy began to fall precipitously, and because India suffered from dire air pollution but has inexhaustible supplies of sunlight, its use of solar power started to increase dramatically.
“In 2017, the price in India of wind and solar power dropped 50 percent to $35–40 a megawatt hour,” said Tim Buckley, who analyzes Australasia/South Asia for the Institute for Energy Economics and Financial Analysis. “Fifty percent in one year. And a zero inflation indexation for the next twenty-five years. Just amazing.” This price drop occurred not because India subsidizes renewable energy (it doesn’t), but because engineers did such a good job of making solar panels more efficient. The cost of power from a newly built coal plant using Indian coal is, by comparison, about $60 a megawatt hour. If you have to import the coal, the price of power is $70/megawatt hour.
Following these cost savings, according to McKibben, India’s installation of capacity for solar power in 2018 proceeded to outpace that of coal-fired plants forty-fold. Meanwhile, banks worldwide are getting out of the business of coal lending, according to the Feb. 2019 report from the Institute for Energy Economics and Financial Analysis.
This same market-centric math applies to natural gas, as banks that finance the construction of the gas infrastructure have recently demonstrated. These banks take the long view of a plant’s capacity and profitability, sometimes over decades. What they see happening is natural gas production eventually becoming an overpriced “stranded asset”: It’s still producing electricity, but not at a cost commensurate with that of renewables. As a result, many companies—previously at the forefront of the natural gas “boom”—are now finding it harder to get plants financed. McKibben points to the stock price of General Electric, plummeting so much in the last few years that it is no longer listed on the Dow Industrial Index. The coal and gas plants on which the company has built its value are becoming obsolete in the eyes of financiers.
Which brings us to oil, and the omnipresent internal combustion engine. Oil is the most difficult fossil fuel to replace by renewables, mostly because of … cars. Admittedly, we have a long way to go, but as the push for autonomous and semi-autonomous vehicles (AVs) takes precedence at every major car company, what we are seeing, as a byproduct, is a marked uptick in electric-powered vehicles that will form the baseline for those all-but inevitable advances in mobility.
The world’s leading car companies have become convinced that electric vehicles will account for all the growth in demand by the early 2020s. That’s why, by January 2018, they had committed $90 billion to developing electric vehicles—and why, by 2017, Tesla was worth more than GM or Ford. And for every Tesla that rolls off the assembly line, Chinese manufacturers are producing five electric cars. Auto analysts are already warning consumers to think twice before buying a gas-powered car, since its resale value may fall dramatically over just the next three years.
According to Carbon Tracker’s Bond, despite the claims of both OPEC and the oil companies to the contrary, there is no way that petrochemicals in existing non-automotive applications (jet fuel and plastics, for example) can offset the potential reduction in oil usage caused by re-orienting automotive travel to electric.
So, great news, one would conclude? Unfortunately, not so much. As McKibben notes, simply waiting for the world economy to transform its energy habits will not help us avoid the global catastrophe that awaits for us as the climate irrevocably changes. Even a switchover to renewables, as dictated by the immutable business cycle, still won’t occur fast enough to save us from the horrendous impacts of climate change, without a concerted and unified effort by all of the nations most responsible for it.
A far more important question, of course, is whether the changes now underway will happen fast enough to alter our grim climatic future. Here, the answers are less positive. Scientists, conservative by nature, have routinely underestimated the pace of planetary disruption: the enormous melt now observed at the poles was not supposed to happen until late in the century, for instance, and the galloping pace of ocean acidification wasn’t even recognized as a threat two decades ago. That means that we have very little time to act—not enough, certainly, for business cycles to do the job alone.
The problem is that the same impulse that causes companies to automatically seek the cost savings provided by renewables also prompts them to monetize existing technologies as much as they can, even if those existing technologies are becoming obsolete. So (as McKibben points out), while we see China reducing its own coal-fired plants to try to ameliorate the severe air pollution problems afflicting the choking citizens living within its own borders, those same Chinese companies are eager to sell the same technology to lesser developed nations to make a profit. Capitalism isn’t governed by any moral imperatives—it’s governed by greed and expedience. And as long as fossil fuel companies can continue to bankroll politicians to do their bidding in this country and others, at both the local and national levels, there is no incentive for them to make any switch to renewables or otherwise stop what they’ve succeeded at doing for decades—influencing, and in many cases, writing national policy to serve their narrow interests.
On that score, the damage done by erstwhile “leaders” like Trump goes well beyond his own self-serving posture of climate denial. It’s not a coincidence that two of the biggest beneficiaries of this administration’s policies have been Russia and Saudi Arabia, wholesale petro-states in effect and practice. Neither they nor ExxonMobil are going to go gently into a world learning to eschew their fossil fuels, particularly when they can spend their vast resources on influencing our elections instead.
The Intergovernmental Panel On Climate Change tells us that the world has roughly twelve years to cut our fossil fuel consumption in half, in order to stave off just the worst effects of climate change. As McKibben states, the only way we get there is through government action, by raising and re-raising the urgency of this issue through activism and political pressure. We can no longer allow any of our elected officials to sidestep or avoid confronting what is the single most important issue of our lifetimes.
We have to hammer a sense of urgency into a media that prefers to chase Trump tweets. Most of all, we have to get the stooges of the fossil fuel companies out of office, and keep them out, for good.