We pinned our hopes on COP26 but is salvation coming from a different direction?
There is unprecedented growth of solar and wind energy and this growth comes with systems changes that are about to tip fossil fuels into permanent decline
How can growth of renewable energy tip fossil fuels into permanent decline?
Many fossil-related parameters have peaked. ‘World coal use peaked in 2013…. Total auto sales fell 14%. Oil and total fossil-fuel use probably peaked in 2019. Capital fled. By mid-2020, the world’s top 16 listed hydrocarbon companies combined were worth less than Apple. Fossil-fuelled electricity peaked in 2018; Bloomberg New Energy Finance expects the power sector’s CO2 emissions never to recover to their 2018 peak.’
Renewable energy by itself continues to grow very fast, they added 90% of the world’s new electric generating capacity in 2020 and are expected to average 95% by 2025. They also produced approximately 29%–31% of the world’s electricity in 2020. Overtaking fossil-fuelled generation in Europe and both coal and nuclear generation in the United States.
The cheapest unsubsidized 2019 wind and solar sold for a stunningly low $17/MWh, heading below $10 in this decade. So far, renewables were mainly add-ons to fossil-powered electricity production. Now they are going to eat into the latter, and fast.
Coal, gas, and nuclear stations therefore struggle, with no business case to build and little or none even to run, they will be pushed out of business. Renewable electricity will capture a growing market share; this will reduce the capacity factor (i.e. operating time) of conventional power stations and their capital costs will have to be covered in a shorter operating time, pushing upward kWh costs. Thereby improving the business case for renewable energy once more.
There is a second factor that will push fossil fuels out of use.
As renewable capacity grows, there will be more intervals at which they cannot sell their electricity. Rather than being a disadvantage, this is another asset. For the surplus electricity will used to produce renewable fuels.
Cheap, because the solar panels and wind turbines that produce them are already paid for and operating costs are near zero. Crediting that surplus flips the story. It reveals how to win the decarbonization endgame by displacing and undercutting fossil fuels while creating a fat extra margin for renewable owners. Fossil-fuel game over?
Thus cheap, ubiquitous, renewable electricity will enable and reward promptly electrifying virtually all fossil-fuel uses; either directly or by making renewable electricity into carbon-free hydrogen or ammonia.