A Preview of Key Energy Challenges for the 2020s

Utility poles and wires in front of sunset
March 6, 2020
This piece was first published in Forbes on March 2, 2020. It is reprinted with their permission.

The history of energy can be pretty neatly divided by the decade.  Going way back, the 1880s stood out for the dawn of electrification and the opening of the first central power plant, Thomas Edison’s Pearl Street station in Manhattan.  Jump forward a century and energy’s future didn’t look so bright.  Two 1970s oil crises brought the era of easy oil to an end, and left Americans with an unfamiliar sense of insecurity over the source and abundance of their fuels.  Most recently, the complex decade of the 2010s saw the dramatic growth of shale oil and gas, the coming-of-age of renewable energy and the cementing of climate change as a flashpoint in national energy policy.

Now, as we start a new decade it’s a good time to take a look at the challenges that are likely define energy in the 2020s.  How we collectively respond to these challenges will color future generations’ framing of the decade to come.

Johannes Urpelainen and Michael Aklin are energy historians who have focused on the often fraught development of renewable energy.  Their 2018 book, Renewables: The Politics of a Global Energy Transition tracks the last half century of battles between boosters of fossil and low-carbon energy.  Based on their reading of energy policy, economics and technology the pair recently offered their projections for key trends in the 2020s.  The new decade in energy will be more complex than any before, with decisions to be made that will fundamentally change the relationship between humans, energy and our environment.

The common thread in energy policy in the 2020s will be climate

“Did the international community and individual governments finally start making rapid progress to reduce the rate of climate change?” says Urpelainen, professor Energy, Resources and Environment in the School of Advanced International Studies at Johns Hopkins University.

“I think that’s going to be the one thing that people will remember 50 years from now.” 

The question hinges in large part on the future role of fossil fuels.  A notable change in recent years is the erosion of coal and oil’s insurmountable advantage in energy markets and policy circles, a phenomenon broadly known as lock-in.  The cancellation of major projects in Canada’s oil sands and the oil-rich South Australian Bight, Williams Companies’ abandonment of its Constitution gas pipeline project in New York, and the generally declining allure of oil equities all point to a more difficult path forward for fossil energy.  In the U.S. the retirement of coal-fired powerplants continues, with 27 gigawatts of coal power scheduled to go offline through 2025 despite support from the Trump administration.  

The roots of fossil fuel’s recent challenges lie in environmental concerns and opposition to big projects from state governments, as in New York, but also from the growing competitiveness of alternatives like wind and solar power, which are often the cheapest sources of new electricity generation and also major sources of jobs.

“As the renewable energy industry grows it starts demanding additional policy support,” says Urpelainen. “Over time you have the phenomenon of renewable energy lock-in, and renewable energy really becomes a mainstream part of the energy industry.”

Renewables will continue to face headwinds

“I think that the deployment of renewables will continue in all likelihood to increase,” says Aklin, an associate professor of political science at the University of Pittsburgh.  “The question is, what could slow it down?” 

The closing days of the last decade may hint at policy challenges to come.  In December, the nation’s wholesale electricity market regulator, the Federal Energy Regulatory Commission, finalized market rules that effectively undermine state authority to promote low-carbon energy resources, including nuclear.  Perhaps reflecting the zeitgeist, the FERC, which has long prided itself in operating free from political influence, faces growing criticism over the role of politics in its decision making.

“Yet, it’s clear that the intermittency of wind and solar power is really the main issue, and a lot of the policy challenges that are going to be critical moving forward will be about dealing with intermittency,” Aklin says.

Intermittency can be addressed by reducing the cost of electric storage batteries and by the buildout of interstate electric transmission lines to transport electricity from where the wind blows hardest to where power demand is greatest in any given moment.  Both solutions would also help balance the unpredictability of solar power.  But new, long-distance power line projects face NIMBY opposition from mid-route states that have little demand for additional power.  

Regulators will also need to consider dynamic electricity pricing that ties kilowatt-hour rates to current demand, reducing the need for peak generation.  In addition, solutions that harness the battery capacity of a growing fleet of plug-in electric vehicles would help to even out the unpredictability of wind and solar output.  EV’s may drive an increase in electricity demand, which could ease concern among electric utilities that their customer base is shrinking.  

“This would address the bigger challenge, which is to design energy systems in a way in which the key actors remain financially viable,” says Aklin.  Slowing demand for electricity “has created all kinds of issues in terms of funding or investing in maintaining the electric grid.  It has also created all kinds of incentives for utilities to try to slow down the deployment of renewables.”

Examples of power company efforts to slow the growth of renewables include a long history of opposition to solar feed-in tariffs.  In February, Indiana legislators approved HB 1414, a bill that would delay the closure of coal powerplants, and the development of cleaner energy sources to replace them.

“I think these regulations are going to decline,” says Aklin.  “Coal is just not going to be competitive enough.”

Demographic changes will influence climate politics

More broadly speaking, there are demographic trends that will increasingly manifest in the 2020s that bode well for the development of clean energy and efforts to slow the pace of climate change.  

“We already know that younger Republicans are more concerned about climate change, and more open to new energy solutions than older Republicans are,” says Urpelainen.  “And overall, renewable energy is not as polarized as many other topics in the United States.” 

In February, establishment conservatives seemed to acknowledge the rising influence of a younger generation when they put forth a plan to plant a trillion trees to suck carbon dioxide from the atmosphere.  Aside from debate over the plan’s practicality – the U.S. has only 300 billion trees today – and whether the plan is in fact a fig leaf to delay more meaningful Republican engagement over the fossil fuel industry’s role in climate change, the proposal is a public concession to the shifting political realities of climate change.   

The 2020s could also see more alliances of convenience in support of renewables, such as those that formed in Florida in 2015 when the Christian Coalition, tea partiers, liberals and environmentalists aligned to fight utility efforts slow the growth of rooftop solar.   

The longer-term role of natural gas will be questioned

“For a long time, we’ve thought of natural gas as kind of a transition or bridge fuel,” says Urpelainen.  “But increasingly you now have people expressing concern because we need to decarbonize and natural gas might be a bridge to nowhere.”  

“A lot really depends on whether the intermittency issue for renewables can be controlled.  If renewables plus storage becomes competitive then over time there will be no obvious case for natural gas.”

Recent research finds that solar plus storage can provide electricity more cheaply than gas peaking turbines in many cases, and battery storage alone will be cheaper than gas-fired electricity in the first half of the new decade.  

Industries that have trouble reducing emissions will face scrutiny

Industries where it’s hard to cut carbon emissions will also garner more scrutiny.  Airlines account for 2.4% of greenhouse emissions today, with emissions on track to triple by 2050.  Policymakers who are increasingly pressed to act on climate will also have to find ways to reduce emissions from agriculture and the cement industry, which collectively generate 20% of anthropogenic CO2.  

Legislators may direct serious money toward the development and deployment of carbon capture and storage technologies that reduce net carbon emissions.  CCS, however, poses huge questions around scalability and land use impacts, particularly where bioenergy crops with carbon capture and storage (BECCS) are concerned.

The bottom line is that the technologies exist to solve all of the 2020s energy and climate problems.  But the problem won’t be purely technological.  In fact, the biggest challenges will be anything but.  

Says Urpelainen: “There's a lot of basic political conflict that is going to make all of this difficult to address.”

Our blog highlights the research, opinions, and insights of individual authors. It does not represent the voice of the Kleinman Center.

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