Seventy-three percent — that’s how much the portion of G-20 countries’ clean energy–derived electricity has grown in the past five years, according to a report in the Financial Times earlier this month. It’s an impressive figure, and one that notes the beginning of a shift away from traditional fossil fuel sources among the world’s major economies. To be more exact: In 2015, 8 percent of these countries’ total electricity came from sources like wind and solar power, compared with only 4.6 percent in 2010.
Still, 8 percent is not a very large share, and it’s worth highlighting that two of the G-20 countries with some of the greatest control over fossil fuels — the U.S. and China — show some of the weakest results. These countries, as the FT rightly points out, were also two of the biggest backers of the international climate accord agreed to in Paris last December. And that’s not even considering Russia and Saudi Arabia, whose use of renewable energy the FT labels as “negligible.”
Nonetheless, as the cost of underlying technologies diminishes further and further, it has become clear that clean, sustainable energy is the future. This 21st century sector is at a crucial point in its evolution, as proponents like Tesla Motors CEO and founder Elon Musk are transforming clean power from a niche industry into a mature one. Last year renewable energy saw more than $280 billion in global investment, up 5 percent from the previous year, according to Bloomberg New Energy Finance.
“The point of [Tesla’s developments thus far] was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good,” Musk wrote in his Master Plan: Part Deux, released in July. “That’s what ‘sustainable’ means. It’s not some silly, hippy thing — it matters for everyone.”
The path to bringing clean technology to the mainstream is no easy feat. This is proved by the volatility of Tesla’s share price around announcements of its merger with solar panel maker SolarCity Corp. On the day back in June when Musk first announced his intentions for SolarCity, Tesla stock fell 10 percent. It dropped 2 percent on August 1 when Musk said that the two companies had reached an agreement.
These moves, however, may just be bumps in a road that leads inevitably to clean and renewable energy. A Bloomberg forecast predicts that by 2040, 60 percent of power generators will use zero-emission energy sources. That same report, which was issued in June, suggests that by 2030, solar power technology will be among the least costly energy-generating sources in most countries. Both wind and solar, the report says, will become cheaper than coal and gas to power generators by 2027. And this trend is already well under way; a 2015 International Energy Agency report showed that the cost of generating electricity using sustainable energy sources had dropped significantly since 2010.
But whereas this industry is expanding rapidly and its future looks bright, investment in sustainability-minded companies, in general, is difficult at this moment. As the Kensho data analytics platform shows, since the beginning of 2010, popular “green” ETFs have been more volatile than the S&P 500 benchmark index and post smaller returns. It is for this reason that government support of these technologies is so important to the success of this vital industry.
Yet the rise of clean technology and renewable energy is remarkable for another reason, beyond the obvious arguments for the necessity of sustainable power generation. Green power sources are noteworthy because they could present a new era for the market. Unlike traditional power sources, green power sources have the possibility to be neither cyclical nor seasonal, meaning wind and solar futures might not vary as much during the year as natural gas and oil futures do. Furthermore, the ascendancy of clean energy could lead to a more decentralized power grid, which could completely upend the current utility model.
It’s also worth noting that at this very moment in the U.K., with the proposed Hinkley Point C nuclear power plant under review by the new Theresa May administration, there’s talk of scrapping the project for cleaner and renewable electricity sources. A report from Bloomberg suggests that for the same amount — £18 billion ($23.5 billion) — Britain could build an offshore wind farm that would generate the same amount of electricity.
Some newspapers have suggested that the review of the Hinkley project may be motivated by a degree of Sinophobia — the new administration’s unwillingness to work with the Chinese, which would have a 33 percent stake in the project. But what if Brexit — in spite of all the economic upheaval it has and will cause — provides an opportunity for the U.K. to lead the way toward renewable energy? It at least hasn’t prevented it, given that a 2030 emission-cutting mandate was passed by Parliament in the days after the referendum vote.
In the past, the promise of renewables has disintegrated into disappointment. But as the 73 percent growth figure suggests, a new paradigm may be upon us.