The Shift to Renewable Energy in American Corporations

Narratives invoking the "unstoppable" pace of a global transition from fossil fuels to renewable energy have been increasingly frequent among politicians, corporate executives, media commentators, and environmental protesters.

However, in reality, the global shifts in energy production, energy consumption, and greenhouse gas emissions that we urgently require are not occurring

In 2019, fossil fuels accounted for more than 80% of worldwide primary energy demand, while global greenhouse gas emissions reached new highs. In 2020, wind and solar accounted for only 10% of worldwide electricity generation. Despite reports of its demise, coal-fired power generation continues to grow worldwide. In 2020, global efforts to decommission coal power stations were offset by the construction of new coal plants in China alone, resulting in a 12.5 GW increase in the global coal fleet. Some have recently proposed that the Covid-19 outbreak and resulting economic downturn mark a watershed moment. Indeed, worldwide energy demand declined by about 4% in 2020, while global energy-related CO2 emissions fell by 5.8%, marking the biggest yearly decline since WWII. Despite these short-term alterations, the pandemic has failed to produce any meaningful long-term changes in the energy industry or associated emissions. Global energy-related CO2 emissions are expected to climb by 4.8% in 2021, the second largest yearly increase on record. Demand for all fossil fuels is expected to increase in 2021.6 Global energy demand is expected to rise by 4.6% in 2021, remaining 0.5% higher than in 2019. By the end of 2020, electricity demand had already rebounded to levels greater than in December 2019, and worldwide electricity emissions were higher than in 2015. By the end of 2020, worldwide coal demand had increased by 3.5% over the same period in 2019. Coal demand is expected to rise by 4.5% in 2021, accounting for 60% greater growth than all renewables combined and erasing 80% of the 2020 reduction.

Oil demand is expected to recover by 6% in 2021, the fastest increase since 1976. By 2026, global oil consumption is expected to reach 104.1 million barrels per day (mb/d), up 4.4 mb/d from 2019 levels.

As a result, there is little indication that an energy transformation with the depth and speed required to satisfy the 2015 Paris Agreement will occur

Indeed, the majority of the world's largest economies are falling short of meeting their Nationally Determined Contributions (NDCs) to reduce emissions. These facts lead to a clear conclusion: the dominant, neoliberal climate policy paradigm, which employs a "sticks and carrots" approach that attempts to disincentivize fossil fuels through carbon pricing while promoting low-carbon investment through subsidies and preferential contractual arrangements, has proven completely ineffective. This policy paradigm places governments as guardians and guarantors of private players' profits, preventing them from confronting social or environmental issues head on. The effects were disastrous: 15 years after the European Union's flagship Emissions Trading System was established, the vast majority of worldwide emissions (84%) are still not priced at all, and the share of emissions priced high enough to be potentially effective is well below 1%. The International Monetary Fund (IMF) estimates that the worldwide average carbon price is only one-twentieth of the absolute minimum price that it considers required. Although renewables have grown their global proportion of energy consumption, this expansion has been outpaced by rising electricity demand. In recent years, the worldwide power grid has expanded at a rate of about 300 GW each year, but renewable capacity increased by only 198 GW in 2020, and the rate of expansion year after year has been slow over the past decade, averaging only 11 GW per year. Worse, the rate of growth in renewable energy deployment has nearly halved during the last five years. Today, the expansion of renewables is hampered by an investment crisis, and investment levels will need to rise considerably in order to meet climate goals:

China, which accounted for 40% of renewables investment in 2017, dropped its investment by 38% in 2018, with investments falling another 8% in 2020 to their lowest level since 2013

Investment in new renewable power generation capacity (mostly wind and solar) must reach USD 22.5 trillion by 2050. This corresponds to over USD 662 billion per year, substantially double the levels of investment observed in recent years, which have averaged around USD 300 billion. Furthermore, the existing strategy fails to appropriately account for the impact of "variable renewable energy" (VRE). There is a possibility that electricity companies will be increasingly unable to operate the "baseload" fossil fuel facilities that are still used in many parts of the world. As a result, governments are currently stepping in to subsidize the fossil fuel industry, at the expense of taxpayers and consumers. The technology needed to integrate renewable energy into power systems are encountering considerable challenges. According to the IEA, less than 2% of the global demand-side flexibility potential is now being utilized. To summarize, the current policy is incapable of achieving the critically needed energy transformation. It is based on failing "market mechanisms" ("sticks and carrots"), suffers from enormous investment deficits, and has failed to address the technological issues provided by variable renewable energy. We require an alternate paradigm. As we saw with the epidemic, resolving complex global challenges in short periods necessitates government planning and collaboration. A TUED-PSI-FNME-CGT collaborative report on Public Energy Futures, to be issued at COP 26, will lay forth a vision for democratically controlled public ownership and management of the energy sector. A truly public strategy to energy transition is required to mitigate climate change and avoid its worst consequences.