Brendon James
“There are decades where nothing happens, and there are weeks where decades happen.” ― Vladimir Ilyich Lenin.
This is an applicable quote for our time and lived experience today. There is a significant argument to be made that the long arc of the energy industry is moving toward electrification. The culmination of the increase in the deployment of wind, solar, geothermal power generation technology, and electric vehicles has been a part of this story.
Ember – a non-profit, independent energy analyst organisation based in the UK – reports that for the first time ever, wind and solar contributed to 10 per cent of the global electricity generation. A 2022 report by the World Economic Forum and says that in a single week in 2021 more electric cars were sold than in all of 2012.
[caption id="attachment_1010584" align="alignnone" width="780"] Global sales and sales market share of electric cars. In a single week in 2021 more electric cars were sold than in all of 2012. World Economic Forum, 2022. -[/caption]
This would have been achieved through government policy support, innovative market design, and technology improvement in terms of power capacity, reliability, and cost reduction. Ten per cent may not be seen as significant but if this is considered in the current policy environment, exponential growth is expected in the next few decades. Some can argue that even with these shifts happening, carbon-intensive energy sources such as coal consumption also rose significantly during the last few years in Asia and Europe for complex reasons not limited to the war between Russia and Ukraine.
However, a major challenge to this point of view is that the coal being utilised currently in many markets is expensive to produce (notwithstanding the pollution externalities) and consume when compared to clean energy sources. The cost makes the current trend not economically sustainable in the medium to long term.
These trends must be understood in the context of an environment of even more aggressive policy support in developing countries that will supercharge deployment in the post-covid economy. Some notable examples are three pieces of legislation passed in the US (namely, the Bipartisan Infrastructure Investment & Jobs Act, the Inflation Reduction Act, and the CHIPS Act) that will channel billions of dollars into clean energy deployment and technology development. The Inflation Reduction Act alone allocates $369 billion toward climate change-related initiatives, including making buildings more energy efficient and resilient, increasing the adoption of electric vehicles, and cleaning up the water supply. The Infrastructure Investment & Jobs Act and the CHIPS Act has allocations of $500 billion and $67 billion respectively which are to be used to bring semiconductor manufacturing back to US soil (Michelson 2022). The private capital expected to follow this public investment will be in the trillions of dollars.
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