In 1895, before the U.S. relied on gasoline, there were 900 electric streetcars covering 11,000 miles. Then, oil companies purchased the transit systems and converted them to gas-driven buses. We’ve been dependent upon fossil fuels ever since.
More than 100 years later, we may be saved from that dependency by economics. Bill McKibben wrote in The New York Review of Books that the fossil fuel industry is withering. Once investors see that there is more advantage to promoting wind and sun, the change will happen more quickly. “At what point does a new technology cause an existing industry to start losing significant value?” This will happen as soon as investors recognize that this new technology is accounting for all the growth in a particular sector.
In 2017, sun and wind power produced only 6 percent of the world’s electricity, but 45 percent of its growth. As prices for solar panels fall, there will be far more growth. Since we have almost reached the peak use of fossil fuels, they will be devalued. Who is going to invest in a shrinking industry?
This transition can already be seen in the coal industry, where Peabody, the world’s largest private coal company, went from being on Fortune’s list of most admired companies in 2008 to bankruptcy in 2016. Despite Donald Trump trying to save the coal industry, more coal power plants shut down during his first two years than during Obama’s first term.
As for natural gas, between 2010 and 2014 the shale industry had a negative cash flow of more than $200 billion. Banks are reluctant to invest, as they see gas projects as non-productive “stranded assets.” Even GE, which manufactures turbines for coal and gas plants, finds its stock falling.
Car companies are expanding their electric car fleets, as they believe the demand for electric vehicles will continue to increase drastically through 2020, and auto analysts are warning that the resale value of gas cars will fall dramatically over the next few years.
Oil is the slowest-growing sector of the stock market. One reason fossil fuel companies are not transitioning to wind and sun is they see little ongoing profit there. Banks are key to the demise of fossil fuels. The Bank of England, for example, has warned about stranded fossil fuel assets. Major banks are now warning of risks of investing in fossil fuels. The fear is that banks will insist that existing fossil fuel plants continue, so they can pay back their investments.
Unfortunately, in the U.S. and Canada, the fossil fuel industry has great political power, and it is they who are denying climate change. McKibben led the largest divestment campaign in history, persuading universities and churches to divest from fossil fuels.
The change to sustainable energy will help people worldwide. At present, 80 percent of the world’s population lives in countries that import fossil fuels, benefiting only a few rich corporations. Solar and wind energy provide local jobs and enable more people to be independent.
Fossil fuel supporters argue that with solar power, you can’t have electricity on a cloudy day, which is incorrect. Storage capacity in batteries has increased, and the cost of lithium-ion batteries has dropped 30 percent in the past year. This greatly increases the potential for saving and using energy whenever you need it. Utilities are now building wind and solar with storage for less than they would pay to build or run new fossil fuel plants.
Polls show that “clean energy” is popular, though “climate action” is not. There are now more than 3 million clean energy jobs in America, versus 50,000 coal mining jobs. Wind and solar energy have quintupled in the past decade, without emitting greenhouse gases.
The Green New Deal aims for 100 percent renewable energy by 2030, which seemed unrealistic until the increased capacity for battery storage became a reality. Already in 2017, 10 percent of total U.S. energy came from renewable energy.
As long as more banks continue to see investment in sustainable energy as more profitable than in fossil fuels, solar and wind will be the preferred choice. Hopefully, politicians won’t find a way to derail these opportunities for sustainable energy.