The renewable energy sector cheered this week on the incentives for clean energy included in the omnibus congress. And it’s even more optimistic about the prospects under Biden’s government, given the president’s plans for a $ 2 billion effort to put the country on track to remove greenhouse gases from the power grid by 2035, and for the overall economy by 2050.
Although this promise will face hurdles in Congress, especially if Republicans maintain control of the Senate, Biden can still move to benefit the renewable industry that has grown steadily over the past four years – despite President Donald Trump’s trade tariffs, rent increases and frequent attacks on the industry.
“The realization – the realization of the market, the realization of the financial community and the realization of the customer – that we are moving towards the clean energy economy has already happened,” said Abigail Ross Hopper, CEO of Solar Energy Industries Association, a solar power group, said. “But the pace of the transition is still what can be applied.”
Biden is expected to accelerate the use of electric vehicles and increase the transmission networks of power lines, which will provide new opportunities renewable generators, analysts said. He has pledged to invest $ 400 billion in clean energy development and research over ten years and to deploy more than 500,000 new electric vehicle charging stations with states by the end of 2030.
Simply a change in the White House’s messages will benefit renewable energy, says Ben Serrurier, manager of electricity practices at the clean energy think tank, Rocky Mountain Institute, because many red states were careful to charge their own solar and wind industries. over the past four years risked causing an eruption of Trump, who once claimed that the sound of wind turbines causes cancer and that solar panels are expensive and fragile.
“With more political coverage coming from above, and an energy transition outline that could depict a few years into the future, I would not be surprised if you see more aggressive action from companies that were previously reluctant, because you have Us. a political space carved out for them, ‘said Serrurier.
Renewable energy is now on track to surpass coal as the world’s largest source of electricity by 2025, according to a report by the International Energy Agency in November. And in the US, the latest outlook from the Energy Department’s Energy Information Administration is positive about wind and solar power, which along with hydropower and other renewable energy will surpass 20 percent of U.S. electricity generation next year, about the same level as coal or nuclear power. . EIA plans to add a 23-gigawatt record of new wind capacity to new wind capacity this year – almost double the previous record – while solar power capacity will increase by 12.8 GW in 2020, enough to power millions of homes.
One of the biggest breakthroughs for wind and solar power in recent years has been the sharp drop in the prices of batteries, which enables electricity users to store their electricity when the sun is not shining and the wind is not blowing.
According to research firm BloombergNEF, lithium-ion battery prices have fallen 89 percent over the past decade. Researchers now expect battery prices to reach nearly $ 100 / kWh by 2023, a threshold they say will allow automakers to manufacture and sell electric vehicles at a price comparable to internal combustion vehicles.
But the situation for fossil fuels is especially darker. U.S. crude oil production, which weakened a weakened fuel demand a day before the pandemic, climbed to a record 13 million barrels, slipped to 11 million barrels a day, according to the latest government data. Natural gas production, which has doubled since the spread of hydrofracking began in earnest in 2005, is expected to have a moderate decline amid the weak prices caused by a large supply.
According to the law firm Haynes and Boone, the weak prices for natural gas and crude oil – which briefly turned negative when the pandemic took off in April – forced 45 oil and gas companies to go bankrupt.
The outlook for coal is much more dire. The energy source, which produced more than half of U.S. electricity more than a decade ago, dropped nearly a quarter of the power market share under Trump, despite his promises to revive the industry. The valuations for coal producers have declined sharply, and the leading company, Peabody Energy, is struggling to avoid its second bankruptcy case in five years.
Yet renewable energy will not soon displace fossil fuels, and it remains a small part of the overall energy market, even with rapid growth, said Erik Olson, climate and energy analyst at the Breakthrough Institute. He warned that while clean energy growth will continue, it will take time before it scales up to where it will dramatically change energy markets.
“You’re now really seeing the early wave of renewable energy starting to reform the power sector,” Olson said.
The dramatic drop in fuel demand amid the Covid-19 pandemic has accelerated the debt-laden oil and gas industry’s need to shrink, and companies such as Exxon Mobil, which dropped its market value by as much as half earlier this year, are forced to lay off tens of thousands of employees and break down their expenses as a bulwark against a flood of red ink.
But the pandemic also hit jobs in the clean energy sector badly, leaving 446,000 total clean energy workers out of work since February, even as it expanded, according to the BW Research Partnership analysis.
Now, with a new White House promising to enact stricter regulations on catching the heat-capture methane and a ban on new permits to drill on federal land, oil companies will have to spend money to adapt or, in the case of smaller enterprises. who do not have the money or expertise to do so, to look for other options.
The oil and gas industry will eventually be profitable again, albeit with a smaller footprint, said Dave Meats, director of energy research at Morningstar. Meats added that in the waning months of the Trump administration, enough drilling permits had been built up to keep their activities on federal soil relatively unchanged. Meanwhile, drillers will move their craft to private land to make up for the loss of access to federal land.
But, Meats added, by the end of this decade, it would be ‘unrealistic to expect further growth’.
“I would compare it to tobacco in the late ’90s,” Meats said. “There is a long-term, secular decline. The stable growth we have seen is going to slow down, flatten out and eventually there will be a contraction.”
In the U.S. energy capital Houston, the oil industry is preparing for a future in which companies return to profitability – but with fewer players in the area, an oil and gas lobbyist in Texas said. For now, they are preparing for new teams of lobbyists to try to negotiate the edge of Biden’s plans or to start looking for ways to adapt to the new normal.
“The companies say whether they should hire more outside consultants or drastically change their business model,” the lobbyist said.
While everyone, from progressive protesters in the area to Wall Street analysts, is trying to reduce greenhouse gases in the energy supply, the fossil fuel sector is trying to remain politically relevant and adapt to a changing world.
Biden has promised stricter pollution standards for the powerful greenhouse gas methane created under the Obama administration – and rolled back under the Trump administration. This is something analysts have said the new president will have to do to overtake governments in Europe.
BP, ConocoPhillips and other big companies that have promised to reduce their own emissions will be able to follow suit, but smaller, independent players may have to fight just to sit at the negotiating table. However, the smaller businesses claim that the world will need their fuel for at least the next few decades.
“While we understand that many of the nominees of the Biden administration believe that our country needs to switch from fossil fuels, even according to the International Energy Agency’s Sustainable Development Scenario, which assumes that each country will meet its Paris obligations, the the world will still get nearly 50 percent of its energy from oil and gas by 2050, ‘said Anne Bradbury, chief executive of the AXPC Trade Association, which represents independent oil companies, in a recent statement. “If the world is to address global climate change, the American oil and gas industry. “
But statements like this may be too late, said Mark Jones, Rice University.
“Oil and gas are making a rearguard effort to keep the industry going for as long as possible and as robustly as possible,” Jones said. “But there is a clear understanding that renewable energy is the future.”