Just last month, Exxon predicted that oil will still be the top energy source in 2040.
Views like this fail to recognize that the case for full conversion to renewables is more compelling—and feasible—than ever, and countries, including in Asia, are creating investment opportunities that could total $100 trillion by 2050.
Oil prices are tumbling, 2015 was a record year for investment in renewables, and in December, 195 countries adopted the COP21 climate agreement, all indicating the writing is on the wall for the fossil fuel industry.
Countries, cities going 100 per cent renewable
A number of countries committed to 100 per cent renewable electricity generation or 100 per cent renewable primary energy targets in their Intended Nationally Determined Contributions (INDCs) under COP21. Nearly 100 cities around the world have also taken steps to decarbonize.
But the INDCs submitted so far will only limit temperatures to a 2.7°C global increase, not the 2°C—or if possible 1.5°C—required. Thankfully, INDCs can be increased over time, and several more countries are beginning to study 100 per cent renewable solutions.
Asia, which will contribute more than half the rise in global carbon emissions over the next 20 years if no action is taken, is starting to see leadership from countries like Fiji and certain provinces, including Fukushima Prefecture in Japan and Palawan and Mindanao in the Philippines, which have 100 per cent renewable targets. India has set a capacity target of 175 GW of renewables by 2022. The People’s Republic of China (PRC) spent more than twice as much as the US on renewables in 2014.
100 per cent renewable is possible, even with today’s technology
Last year, some of the world’s top civil engineers and scientists released a study demonstrating that 100 per cent renewable energy—including for heat and transportation—is possible using today’s technology for the 139 countries it covered. The results shown below in terms of costs, jobs and many more things, speak for themselves, and demonstrate that good planning is needed, not base-load.
The US National Atmospheric and Oceanic Administration also just released a study demonstrating the US could get 70 per cent of its energy from wind and solar, by 2030, without increasing costs, using today’s technology, validating the study I mentioned above.
ADB-sponsored research in Central and West Asia, combined with World Energy Council hydropower data, indicate that potential power from wind, solar, and hydro conservatively totals more than 40 times the region’s 2012 electricity generating capacity.
Elsewhere, Myanmar has conservatively 56 times current generating capacity available from renewable sources. Viet Nam has 26 times, Indonesia 20, the Phillipines and the PRC 17, and Sri Lanka 10.
In short, renewable resources are abundant.
Coal costs society five times as much as wind, solar
Bloomberg New Energy Finance reports that the global average levelized cost of electricity (LCOE) for solar in 2015 dropped by 60 per cent to $0.122/kWh from more than $0.30 in 2009 and wind was $0.083 compared with $0.10.
However, LCOE calculations include data from older facilities and mask just how cheap new renewables have become. Recent tariffs, such as the Re4.63 ($0.07) per kWh for a solar photovoltaic project recently awarded to Sun Edison in India, and the $0.0387 ($0.0553 post-subsidy) tariff awarded to First Solar in the US, are well below the Bloomberg’s most recent LCOE estimates.
Renewables are even more attractive after subsidies—for both fossil fuels and renewables—are taken into account. The IMF estimates that fossil fuel subsidies (including externalities) cost $5 trillion last year. The subsidy for coal alone ($2.53 trillion in 2013) would add $0.29/kWh to the coal LCOE or tariff given that coal produced 8,710 TWh in 2013. Using the First Solar tariff and a recent coal tariff, the all-in cost per kilowatt hour for solar is $0.0553 and for coal is $0.3234.
But the biggest hurdle is psychological. Conventional energy is seen as indispensable, rather than a way to keep the power flowing while shifting to renewables. That mindset must change.
Replacing existing fossil fuel-based electricity globally could cost anywhere from $4 trillion to $40 trillion depending on the technology used. Yet even at $40 trillion, the elimination of coal subsidies ($3.15 trillion in 2015) gives a less than 13-year payback period.
That payback period will shorten as better technologies make renewable energy more accessible, cost effective, and easier to store.
For example, Harvard University has developed a non-toxic organic flow battery that would allow solar and wind to provide stable electricity for around $27/kWh in materials. That is 11 per cent of the $230/kWh point at which Citigroup says it is cheaper to build storage than generation. European company Green Energy Storage is expected to start selling Harvard’s battery to utilities in 2018.
Cost of delay high, time running out
Outdoor air pollution accounted for 3.7 million deaths in 2012, making fossil fuels twice as deadly as HIV, which killed 1.6 million people in the same year.
It took 29 years for CO2 levels to rise from 350 parts per million (ppm) to 400 ppm. Scientists say we need levels to peak at 450 ppm, or we can expect significant sea level rises that threaten major cities.
That gives us less than 30 years to decarbonize. And probably less.
Developing Asia may take longer than that given its dependence on coal. Countries need help identifying available resources, prioritizing projects, and establishing legal frameworks. They also need to significantly boost manufacturing capacity for wind, solar, and storage.
But the biggest hurdle is psychological. Conventional energy is seen as indispensable, rather than a way to keep the power flowing while shifting to renewables.
That mindset must change. Going 100 per cent renewable isn’t hypothetical. It is doable and it’s the best path to a sustainable future.
Mike Grimm is investment specialist, private sector operations department, Asian Development Bank. This post was originally published on the ADB Blog.