The world is on a mission to control Earth’s rising temperatures and create a sustainable future for itself and future generations. With the energy sector accounting for nearly three-quarters of all greenhouse gas emissions today, governments and industries from every sector have come together to forge a path forward through energy transition.
These entities have invested billions in sustainable energy generation and revolutionized the status quo of how businesses power their processes – but will it be enough?
Experts say that to understand if enough dollars are being invested at the federal and state levels and if enough businesses are participating in the clean energy movement, we need to consult the data.
Intersolar/Energy Storage North America hosted its 2024 Conference in mid-January, where subject matter experts from across the country and various sectors came together to deliberate if our current energy transition rate is sufficient to achieve global net zero goals by 2050.
“Over the last 12 months, ending in Q3 2023, $225 billion was invested in America’s clean economy, representing a +42% year-over-year growth,” said Jesse Jenkins, Associate Professor and Macro-Systems Energy Engineer at Princeton University, speaking in one of the Intersolar keynotes.
The invested dollars represent an opportunity for large and small businesses alike to gain the capital needed to take the plunge and invest in a new way of doing business – a way that not only guarantees sustainability while providing more domestic production processes back to America but also enhances uptime performance in the form of energy reliability, especially during a time when the country is facing issues associated with high energy demand on a rapidly aging grid.
However, despite these investments, it seems many companies and industries are still falling short of meeting the mark with their energy transition journey.
“Before January 2021, greenhouse gas emissions were falling by about 2% each year – not enough to get us to net zero by 2050. The passage of the Investment Reduction Act basically doubled the pace of decarbonization and cut emissions by 4% yearly,” said Jenkins.
“But, even this pace falls short of the pace needed to hit net zero. If we want to hit net zero by 2050, we need to decarbonize by 6% every year,” he added. “Effectively, we are still running behind.”
There are several reasons why – despite substantial investment in national decarbonization efforts – the United States is still pacing behind its target goals.
For instance, according to William Walsh, VP of Energy Procurement and Management at Southern California Edison, comes to a two-fold issue: interest rates and a company’s ability to fully commission a project on time and on budget.
“We’re experiencing a push-and-pull effect in the market. Some of the supply chain issues are less expensive, but interest rates are rising. Policies help mitigate some of the processes, as well as in terms of procurement. The big issue is the viability of the projects and if we’re able to get them online in time.”
While pushing the deadline of one project back may not seem substantial, it carries the potential to affect the rest of a company’s project pipeline and increase original budget limits, jeopardizing the company’s ability to realize its net zero goals in a timely fashion.
When asked about the issue, Eric Hsieh, Deputy Assistant Secretary for Energy Storage at the DOE, referenced that many of these projects are still in their infancy with the market, meaning that many sectors and small- to medium-sized companies are showing hesitancy to invest in a still-budding industry.
According to the United Nations, only one-third of the world’s largest publicly traded businesses have made net zero commitments, and only half of them have divulged how their targets are embedded in their corporate strategy.
As these projects age and show their vitality and longevity, more industries will naturally adopt these methods, but the economy needs to hold fast in maintaining the importance of its investments.
“My hope is that our overall economic system is durable enough so all of these millions of experiments all over the country and in individual communities lead to solutions that are scalable in terms of viable business cases or value propositions that may not be reflected in the market itself [today],” said Hsieh.
To add to this point, Jenkins noted how this issue is compounded by the fact that for decades, the United States has relied heavily on the exportation of its manufacturing processes, hindering the growth and development of the electricity sector.
Because of this, we are now facing a grid unprepared for the influx of companies investing in American manufacturing – causing excess stress on the grid, which must be addressed if we hope to have a system ready to support the growing electric market.
“From 2006 to 2022, we started relying heavily on exporting our manufacturing needs, so the growth of our electricity sector only grew .04% each year, as compared to 1980 to 2005, which grew 2.4% each year. We used to build out our electricity sector, but now we have been stagnant for 20 years.
“This will fundamentally change as we grapple with demand growth – growth of electrification and hydrogen production and EV adoption is going to drive a new period of sustained demand growth for electricity. We will see 2% demand growth going forward, especially with AI and data center growth, which needs considerable amounts of new energy.
“We need to get back to a growth mentality,” said Jenkins.
Despite these challenges, overcoming them and creating a path forward for ramping up the energy transition movement and developing an economy ready to reach net zero goals are achievable.
“The most powerful forces in the world – including the purse strings of the federal government – are backing the energy transition in ways we’ve never seen before. They’ve expanded credits for a range of things like energy storage, hydrogen, and other fuels, while creating nationwide support to build out industries to fight climate change in immeasurable ways,” reported Jenkins.
According to Princeton University, wind, solar, and battery prices have plummeted so much that they are now the cheapest and most cost-effective energy available on the market today. The challenge that remains is how quickly we as an industry can build these energy transition projects over the coming decades.
To accomplish this, Princeton University has released its 100% Clean Electricity Playbook, which outlines the six steps needed to deliver an 80-90% cut in the electricity sector’s carbon dioxide emissions by 2035 while providing bulk electricity supply costs comparable to or lower than today’s levels.
- Build wind and solar at a record pace.
- Expand the grid to ready it for electrification and renewables.
- Retire the use of coal.
- Maintain the existing nuclear and natural gas capacity (on net).
- Demonstrate clean firm resources at a commercial scale in the mid-to-late 2020s.
- Transition to clean firm resources by 2045.
The clean energy transition is a necessary action needed to create a safe environment for future generations and stabilize the operations of businesses across the globe. While the United States is currently falling short of the mark, success is still within reach.
By placing an increased emphasis on taking advantage of available funding and increasing the pace with which clean energy projects are commissioned and available on the market, companies large and small can build a reliable, profitable, and clean ecosystem.
“Though [governments] need to take the lead, solving the climate crisis is not up to them alone. Non-state actors – industry, financial institutions, cities, and regions – play a critical role in getting the world to net zero CO2 emissions no later than 2050 [and can] help scale the ambition and action we need to ensure a sustainable planet,” said the Honorable Catherine McKenna, Chair of the High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities at the United Nations.