Why shifting to renewables is not mission impossible

The 10 warmest years since records began have all occurred in the past 15 years. This year was no exception; we are about to register the warmest year ever. According to scientists, this is indisputably correlated with the increased CO2 in the atmosphere. If we are to continue this current trend, the planet is on track to be between 3º and 5º degrees warmer than in pre-industrial times. This will potentially have dramatic and irreversible consequences for life on Earth.

To turn the tide is still possible, and it will need a major shift from fossil fuels to renewable energy. If the world is to reach the United Nations’ (IPCC) 2º target, renewable energy must increase from 13% to 80% of the world’s total energy consumption by 2050. According to IPCC, this can be done even with the technology we have today. There are few alternatives.

The United States, China and the EU have begun to develop a more ambitious climate policy. But the politicians need stronger support from their voters – the general public.

Over the past 10 years investment in renewable energy has risen from $20 billion annually to $200 billion. This has sparked an enormous growth in both installed renewable capacity as well as technological innovations. A transition is taking place, from centralized generation to distributed solutions, including solar, wind, bio and small hydro. In addition, the development of technology for battery storage is evolving faster than anybody could have predicted a few years ago.

The speed of innovation is picking up, while the cost of new technology is being reduced. Over the past five years, the price of solar panels has dropped by more than 50%, and in many countries solar energy is now able to compete with fossil fuel for customers without subsidies.

By 2025, analysts at McKinsey believe that a range of renewable technologies will be cost-competitive. At the same time, thecosts of extracting fossil fuels like oil and gas are increasing, strengthening our faith in renewable energy development and competitiveness.

In light of this development, I strongly believe that the renewable energy market will become an increasingly interesting area of investment. The global macro trends are pointing in the direction of more renewables. Technology development will decrease production costs drastically, and public support schemes will be reduced accordingly. At the same time, there are hopes that politicians will strengthen the climate policy so that the CO2-cost reflects the damage carbon dioxide does to the climate of our planet.

We currently see that the green shift is happening faster than sceptics have forecast. A new study from Bloomberg New Energy Finance predicts that more than half of the new electricity capacity in the market will be from renewable energy by 2030.

The green shift is happening as we speak, driven by new energy technologies and reduced costs. Smarter electricity grids to increase decentralized generation, customers’ new role as producers and increased focus on energy efficiency will push customer preference towards renewable energy solutions. This in turn will, hopefully, help politicians to act, supporting the market in solving the climate crisis and developing a new energy system adapted to the global climate.

Author: Christian Rynning-Tønnesen is CEO of Statkraft.

Image: Windmills generate electricity in the windy rolling foothills of the Rocky Mountains near the town of Pincher Creek, Alberta. REUTERS/Todd Korol