As Clean Energy Surpasses Coal, U.S. Energy Transition Locks Into Place
This piece was first published in Forbes on June 30, 2019. It is reprinted with their permission.
The industrial revolution hit England a century before it landed in the United States. Now, the U.S. is again following in its progenitor’s footsteps in reaching another major milestone in industrial development.
Data published last week by the U.S. Energy Information Administration shows that the U.S. produced more electricity with renewables than coal over the course of a month for the first time ever in April. The finding reflects the latest step in the U.S.’ move toward cleaner energy and mirrors the more mature trend in the U.K., where coal use has fallen precipitously since early this millennium and today makes up just 5% of the power generation mix.
In both countries, the inversion of coal and clean energy fortunes has been driven by concerted investment in clean energy technologies. Yet, where the U.K. has carried through with policies specifically discouraging the burning of coal in power generation, notably a carbon price floor in effect since 2013, and has committed to eliminating coal generation by 2025, the decline in U.S. coal demand continues under a president who has sought to eliminate policies such as the Clean Power Plan. Recall that, less than a year ago, the president boasted that “the coal industry is back”.
In April utility-scale clean energy sources, including hydropower, wind and solar, accounted for 23% of electricity production. Wind produced a record 30.2 million megawatt-hours of power, half of the 60 million megawatt-hours produced by coal for the month. Factor in all sources of clean energy including hydropower and clean generation totaled nearly 69 million megawatt-hours for the month.
April is a month of mild weather and low power demand, when many coal plants go offline for scheduled maintenance. But the trend in falling coal utilization is unmistakable. Coal fueled just 20% of total electric production, down nearly a fifth in one year.
What’s particularly notable, given the current U.S. political climate, is how durable both the rise in clean energy and the decline in coal have been. Renewables capped years of growth by accounting for more than a third of newly built utility-scale generation last year. On the flip side, 13GW of coal generation retired in 2018, continuing a 40% decline over the past decade.
Its likewise notable that all of these trends continue despite the Trump administration’s efforts to forcibly sustain the coal industry and frustrate its replacements. Those efforts demonstrate a willing disregard for market forces, an underestimation of the integrity of America’s electricity market regulators, and a discounting of a larger America’s power to innovate around efforts to stifle innovation.
The administration has also overlooked an ingrained national commitment to environmental quality. If the last statement reads naïve, recall that the U.S. is home to the world’s first national park and its most substantial environmental regulator, the EPA.
The following are a few of the surprises the administration discovered in trying to force regressive energy policies.
Electricity markets abide by the laws of economics. Investment bank Lazard reported in November that the unsubsidized, levelized cost of utility-scale wind and solar generation is as low as $29 and $36 per megawatt-hour, respectively. That’s at least as good at the $36 value for a fully depreciated coal powerplant. Factor in production and tax credits and wind and solar are clearly cheaper, and their price continues to fall.
The FERC cannot be coerced to destroy the markets it has nurtured. In late 2017 Energy Secretary Rick Perry proposed that the Federal Energy Regulatory Commission, the agency that regulates the country’s wholesale electricity markets, order the subsidization of coal and nuclear plants for the unique resiliency benefit they were said to provide the electricity system. The FERC rightly rebuffed that claim as unsupported in fact, and deemed the effort to play favorites as a threat to electricity markets that have provided consumers both cost savings and reliable service.
Investors love clean energy. Investors directed $64 billion to clean energy in 2018, up 12% from the year before. What’s more, some of the country’s biggest energy consumers, including tech companies Facebook and Google, expressed ongoing confidence in clean energy by entering into power purchase agreements for wind and solar power.
States and municipalities have stepped up to the plate. Twenty-nine states have renewable portfolio standards mandating clean electricity generation, accounting for 63% of the electricity sold in the country. Over the past year states including Connecticut and Massachusetts have raised their clean energy targets, while New Jersey is rejoining the Regional Greenhouse Gas Initiative. Not cowered by Washington, a multitude of cities including Los Angeles and Philadelphia have announced plans to get all of their electricity from carbon-free sources, and New York state recently introduced its plan to achieve a net-zero carbon economy by mid-century
Youth action is on the rise. The Sunrise Movement, Juliana v. the United States and other actions are just the beginning for a generation of young Americans concerned about the climate that they’ll inherit. Youth are the future, and the quicker they assume power, the more securely today’s climate policies will become permanent relics of the past. More broadly, nearly 60% of Americans today are alarmed or concerned about climate change. The administration is out of touch on all fronts.
So, yes, the president still denies climate change, and at the national level we don’t yet have the coherent policy that has more fully transformed the likes of the U.K. But, if Winston Churchill’s oft-quoted reprimand of Americans holds true (that we tend to do wrong until we do right) the U.S. will, inevitably, fully embrace a clean energy transition, just as it followed the U.K. into the industrial revolution two centuries ago. Of course, the climate won’t wait that long.