Markets around the world are making amazing progress, but not quickly enough.
by John Timmer – Mar 13, 2016
The story of the US’ energy economy has become simple: natural gas has gotten incredibly cheap, wind is catching up, and solar will be competitive before the decade is out. All of this is driving a boom in renewable energy and pushing coal out of its dominant spot on the market.
But the US isn’t the world—it’s not even the largest carbon emitter anymore—and its experience doesn’t always reflect what’s happening in other countries. At the recent meeting of the American Association for the Advancement of Science (or AAAS), speakers had the chance to review what’s happening with renewable energy in a number of other critical countries: Germany, India, and China.
Combined, these countries cover a broad spectrum of experiences. Germany’s a mature industrial economy that’s pushed renewables hard; China’s binged on fossil fuels, but is now trying to change its trajectory; and India is the nation most likely to follow in China’s footsteps.
The USA
The local perspective was provided by UC Berkeley’s Deborah Sunter, who works on modeling the future US electrical grid. Dr. Sunter argued that Assembly Bill 32, passed by California in 2007, was a key moment in the US’ energy transition. With that legislation, California committed to cut emissions to 1990 levels. Soon after, a number of Northeast states formed the Regional Greenhouse Gas Initiative, the US’ largest carbon emissions trading market.
If those were key moments, however, Sunter implied that many more might be on the horizon. Her models indicate that, purely on an economic basis, natural gas will largely displace coal by the 2030s. This will be a temporary victory, however. If recent trends hold, installed solar will become cheaper than natural gas by 2020, and it will take just a decade or two for solar energy to really explode. In her models, it will become so widespread that storage will be deployed simply in order to time-shift solar-generated electricity, allowing it to be used at night.
Solar will also be boosted by another California initiative: the state wants all new housing construction to be net-zero emissions by 2020. The University of California system also plans to be carbon neutral by 2025. Its progress highlights the challenge of going from high renewables to fully renewable. While solar arrays installed near campuses help with the former, the UC system also installed bioreactors to transform campus food waste into methane for fuel cells.
But even eliminating emissions won’t be enough. Sunter said that our cumulative global emissions mean that we need to look at ways of having negative emissions; she suggested biofuels combined with carbon capture and storage might be a relatively general solution. Given its likely cost, such a plan will probably require a more direct government role in the energy markets.
(In acknowledging that there’s also still space for new technology to upset the models, Sunter said what was probably the best line of the conference. “We’ve always heard that fusion’s a decade away,” she said. “But I’m going to be an optimist and say it’s only 40 years out.”)
The tone set by Sunter—we should expect radical change and drastic lowering of emissions, but it won’t be enough—was echoed by speakers who focused on other countries.
Germany
Germany’s planned energy transformation, the Energiewende, has an outsized influence on how renewable energy is perceived. Critics portray the country’s rush to renewable energy as a costly boondoggle that has crippled utilities and created soaring utility prices. Supporters say it shows how much can be accomplished with sustained governmental direction.
The Energiewende is so critical that it came up in two different sessions at the AAAS meeting, tackled by different speakers. One was Christine Sturm who, after years in the German energy industry, has started a PhD at Arizona State; the second was the German embassy’s First Secretary for Climate and Energy Issues, Dr. Georg Maue. Sturm and Maue agreed on a number of points: Germany is well along in its renewable transition, but it’s hit the utilities hard. Additionally, the decision to drop nuclear from its power mix is not universally supported.
Sturm provided the basic figures: in 2015, renewables provided one third of Germany’s electricity, generating 194 terawatt-hours. The country’s greenhouse gas emissions are down by 27 percent since 1990, but part of that is simply the efficiencies gained following reunification. Regardless, even as emissions have dropped, the German economy has continued to grow. The country even maintains a substantial industrial base.
Sturm said that the Energiewende wasn’t ideally timed. It came during a period when the government was opening the electricity industry to greater competition, which made it tough to turn a profit from grid operations. The combination of the two, she said, put the German utility industry “on the brink of dissolution”—most grid companies reorganized, and many merged or consolidated. Income and earnings dropped for utilities, which lowered the capital they had available for new renewable installations. It’s possible that these problems partly counteracted the intended goal.
At the same time, the Energiewende hasn’t been bad for all energy consumers. While small consumers pay more to grid providers, Maue said, wholesale electricity prices have dropped considerably. Because they can often buy wholesale, most industries in Germany now spend less than two percent of their total costs on electricity.
Sturm also argued that the Energiewende has effectively destroyed shared societal resources, including both nuclear and coal power plants. Coal plants are required by law to be available to stabilize the grid during solar or wind shortages, and Sturm said that electricity prices often drop below zero because it’s more economical for the coal plants to run continuously (creating a surplus of electricity) than to cycle on and off quickly. Maue, for his part, called the nuclear phase-out “not well accepted in Germany—and not needed.”
But Maue had good news, too. Forty-five percent of northern Germany’s electricity comes from renewables using the existing grid—”more than anyone thought possible.” And he said that grid management has become so effective at dealing with intermittent sources that “baseload is not a concept anymore,” even before demand-response management (also called a smart grid) becomes widespread.
Sturm said that surrounding countries also benefit, as Germany exports some of its renewable electricity in order to stabilize its grid. (Although she implied that this could be a problem as surrounding countries expand their renewable generation.)
But again, energy challenges go beyond the current boom in renewables. Maue said that Germany plans on using efficiency to cut electricity use by half, but when two-thirds of German housing was built before the first energy efficiency rules were put in place, this will be difficult. Sturm put the country’s long-term plans in further context: per capita emissions will be limited to the equivalent of a roundtrip flight from Frankfurt to Los Angeles, or driving 14,000 kilometers in a typical car. Again, it’s hard to see how to get there without having negative emissions.
Half a BRIC
The BRIC countries (Brazil, Russia, India, and China) are frequently lumped together because they are large, rapidly expanding economies. But that grouping doesn’t work when you’re talking energy. Brazil and Russia are major exporters of fossil fuels and, since Brazil’s flirtation with biofuels was ended by oil discoveries, have largely sat the renewables boom out.
India and China, however, were focuses of talks. India was covered by Kartikeya Singh, who described the country’s energy economy as complex; while it’s expanding its use of coal, it also has extensive plans for solar and wind. But Singh focused on an addition segment of the Indian market that’s often overlooked: the over 300 million Indians who aren’t currently on the electrical grid at all.
For almost everyone in this situation, the answer is solar power, which is rapidly displacing kerosene. Singh found three types of solar workhorses being put to use: small panels to charge lamps and cell phones, home-sized supplies that can power TVs and light a house, and microgrids for larger collections of buildings. Singh’s findings are based on online surveys, field interviews with installers, and visits with some of the companies that sell and install solar.
Singh was surprised to learn how few companies operate nationally. India has “an internal economy that is not unified,” as he put it, and most installers operate in one or a handful of states. Many are small startups with just a few employees, and a lot of these go out of business (but demand is such that more pop up to take their place).
Most solar installers rely on government support to get started; Singh says the conservative banking industry generally doesn’t provide loans for either the installers or the people who want panels. In many cases, the larger companies will offer financing plans to make up for this.
The biggest surprise is that over 80 percent of the companies are also doing business in areas that are already served by the grid because, as Singh put it, India has “an electricity distribution system that is crippled.” He noted that the average backup coal supply at most plants is only four days, so blackouts remain common. Many Indians have taken it upon themselves to make sure they have power when the grid fails.
If the India portrayed by Singh represents a ground-up approach to renewable energy, then Georgetown’s Joanna Lewis covered the other end of the spectrum: China. There, the government is attempting to deal with a multi-decade binge on coal through state-driven renewable power initiatives.
Despite its status as the world’s largest carbon emitter, China now has half of the world’s installed wind power and is building enough turbines to allow Asia to install 35 terawatts of wind capacity each year. Recent investments in solar power have also caught up to wind, so that market may boom as well.
But the country has to act fast; in order to reach its goal of hitting an emissions peak in 2030, China has to have coal use peak in 2020. That leaves very little time to shift a very large energy economy.
Understanding that shift is hard, as Dr. Lewis explained. “Very few predictions of China’s energy future have been accurate.” Emissions both shot up faster than anyone expected, and are now levelling off more quickly than anyone thought possible. One indication of the radical pace of change: China went from 90+ percent of new capacity being coal in 2006 to it being less than 40 percent by 2013. That’s a radical change, but certainly not sufficient to peak coal emissions before the decade is out.
To reach its goals, the country plans to have 20 percent of its power come from non-emitting sources by 2030, which will require further expansion of renewables. Part of that will come through market forces. Within the next two years, China will have the largest carbon cap-and-trade system anywhere. And part of that may come from the sheer scale of Chinese manufacturing. Lewis said that the most aggressive but viable scenario could have the country generating 80 percent of its power via renewables by 2050.
But doing so would probably involve idling some coal plants that would still have years of service life left in them. And Lewis said that renewables are already facing other problems, primarily in terms of transmission bottlenecks. The best solar and wind resources, for example, are in the north and west of the country (primarily Inner Mongolia). But most of the major population centers are in the east. And locally, Inner Mongolia uses a lot of combined heat and power plants that take days to ramp up and down. As a result, a lot of China’s wind capacity ends up being curtailed.
The main point Lewis drove home, however, was how the scale of China consistently challenges expectations. Small, incremental changes add up to a huge effect at these scales, while large, directed efforts can get swallowed up by the immense market.
Good news and bad news
It’s possible to come away from these talks feeling optimistic. The costs of renewable energy have plunged even as our ability to build and install vast amounts of wind and solar hardware have skyrocketed. The price trajectories are such that we’ll inevitably be installing lots of both Before the decade’s out, they’ll be cheaper than fossil fuels, begin generating more quickly than other large power facilities, all while being immune to any future price shocks.
And, if Germany’s experience is any indication, our existing grids can cope with more renewable power than many have given them credit for.
But the renewables boom will only get us so far. We’ve taken so long to reduce emissions, and committed to so much existing fossil fuel infrastructure, that carbon emissions will almost inevitably make their way into dangerous territory. Most countries need to go at least carbon neutral, which will require storage or some other technology to follow the same trajectory that wind and solar have.
And our procrastination may eventually force us to pull carbon out of the atmosphere, which means technology we haven’t even invented yet. And it’s hard to feel optimistic about that.
