Clean Energy Market Growth
Investments in renewable energy (and energy efficiency) started in the mid-1970’s. Now, fifty years later, renewables have edged up to about 20% of the total energy US electricity generation. That growth will continue to accelerate. The only question is how fast.
- The growing global call for action on climate change: Major reports from scientific and government organizations resonate with a consistent message – if we don’t dramatically reduce our consumption of fossil fuels, climate change will upend society, and the health and well-being of our communities. Even the US Department of Defense has stated “to keep the nation secure, we must tackle the existential threat of climate change.”
- Clean energy projects make financial sense: The businesses that are spending on clean energy are doing so because the economics of these energy projects are compelling. In 2021, the global investment in clean energy was $755B, with $105B invested in the US. While those numbers have risen sharply, we need to be spending well north of $1T per year to meet emission reduction targets. Every year we miss the targets means the subsequent spending must go up even higher.
- Growth in global energy demand: More than a billion people do not have access to electricity. Continued growth in energy demand is a certainty.
- Rapid innovation: Smart ideas that have been patiently waiting decades for attention are becoming reality. Energy is the lifeblood of the next wave of human evolution – creating a demand for innovation in energy technology. And investment is the lifeblood of innovation.
- Push for energy security: Regional conflicts like the war in Ukraine are deeply intertwined with the global fossil fuel industry. Governments are encouraging the growth of strong local clean energy industries – reducing reliance on regions of the world where the fossil fuels have been the source of national and international conflict.
- Government policy and regulatory initiatives: Powerful combinations of incentives and subsidies, along with government regulation, have propelled the clean energy market forward. While the details will change and we’ll see the inherent ups-and-downs of political decision making across countries and continents, more government action is inevitable. The question is not “if” a more aggressive approach is coming – but rather “how far and how fast” will government bodies choose to move.
- Finally, the fossil fuel companies will not embrace the new energy economy: The fossil fuel industry is deeply wedded to the status quo – and so the industry will continue to try to slow the growth of truly clean energy. Entrenched businesses show a consistent cycle of growth, maturity, stagnation, and then massive decline. This pattern has been well-documented by thoughtful business writers like Clayton Christensen.