Originally posted in Real Clear Energy:
May 22, 2020
It’s hard to image that 150 years ago Americans were hunting whales for oil to light homes. When Moby Dick was first published in the mid-1800s, whale oil demand was at its peak. It was the fifth-largest sector of the economy. Fifty years later, the industry was dead. Whale oil was fully displaced by petroleum thanks to the entrepreneurial spirit of Edmund Drake.
At about the same time, coal was replacing wood in homes and businesses because coal is more energy dense and could be moved around easier. Coal’s role powering the Industrial Revolution of the 19th and 20th centuries is a core part of U.S. history, and many family histories too. Upon coming to America, my great grandfather mined coal in Pennsylvania to save up and buy farmland in Maryland.
Now coal’s peak also has passed. Estimates out earlier this month show the U.S. is on track to produce more electricity from renewable power than from coal for the first time on record. Market forces—specifically low-cost natural gas and renewables—are driving coal plant closures at an increasing rate.
The future of energy is clean energy. That’s what makes the moves by today’s oil industry so interesting.
Over the past month, in the midst of a pandemic, low oil prices, and a recession, Total and Royal Dutch Shell followed BP in unveiling ambitious plans to reach net zero greenhouse gas emissions by 2050. The oil majors will cut their own emissions, cut emissions from the power they buy, and reduce the emissions intensity of the products they sell.
In fact, companies of all types continue to set aggressive emissions reductions goals. In the first three months of this year, more than 100 companies set targets, up from 53 in the same period in 2019. Power purchase agreements that let companies buy their own wind and solar power also have increased. More voluntary efforts should be encouraged to set up a race to the top for environmental performance.
We’re passing through a tipping point because the economics of clean energy are better than ever. Clean energy is a sound investment—no matter what the external factors are.
Onshore wind is cheaper than new gas-fired plants in most areas of the country, even without tax credits. Solar projects that track the sun across the sky cost the same as natural gas plants. Offshore wind is written into the plans for east coast states eager to achieve net zero goals. Energy storage costs are dropping. Energy efficiency investments have enabled the U.S. economy to produce twice as much output from the same amount of energy compared to 40 years ago.
The growth of these innovative power sources has led to burgeoning new industries that employ American workers with steady, well-paying jobs and reduced greenhouse gas emissions. At the start of this year, we were celebrating a 25 percent reduction in U.S. emissions led by a diverse and robust clean energy economy with over 6 million jobs, and growing.
Unfortunately, along with the rest of the economy—clean energy has been set back over the past eight weeks. While some projects have stayed on track by abiding social distancing in the field, many more are delayed. Contracts need to be renegotiated, and the cascading effects will be felt for some time. In April alone more than 400,000 clean energy jobs were lost. That means that the pandemic has erased two times the clean energy jobs created nationwide over the last three years. Hardest hit states in April with over 25 percent declines include Georgia and Kentucky. Sadly, additional clean energy job losses are likely in the coming months.
He may not be an energy expert, but Bob Dylan’s lyric the “darkest hour is right before the dawn” feels appropriate. Fortunately for the clean energy sector, strong market fundamentals leading into this crisis will prevail. The sun will rise again.
History shows that pandemics aren’t unprecedented, and neither are recessions. Recovery will come, and the energy economy will play a major part of the story of job growth. The structural changes that the economy undertook before the crisis—and will undertake now based on sound corporate decisions—will mean that when historians write this chapter, clean energy will have made its mark. And the diverse, well-paying jobs and reduced emissions associated with the transition will benefit Americans today and tomorrow.
Charles Hernick is the Vice President of Policy and Advocacy at Citizens for Responsible Energy Solutions (CRES) Forum, a nonpartisan, nonprofit 501c(3) organization committed to educating the public and influencing the national conversation about clean energy, including through the Clean Energy Forward campaign.