The first signs of serious interest in renewable energy and energy efficiency emerged in the mid-1970’s. Now, forty years later, the percentage of energy generated by renewables has edged up to 5-15% of the total energy supply. (The totals vary depending on the types of generation considered to be "renewable." For example, the energy created by hydroelectric dams is not always included.) At the same time, the 2013 revenues for the world’s 25 largest fossil fuel companies was $4.7T. So, while clean energy has grown slowly and is relatively small compared to the multi-trillion dollar fossil fuel industry, there is a lot of money flying around in the new energy economy.
Going forward, there are a lot of reasons to think that we’ve entered a period of very rapid expansion. Here are a few:
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A growing global call for action on global warming: Major reports from scientific groups, faith-based institutions, military organizations, and forward thinking business groups around the world resonate with a single message - we are burning fossil fuels at a rate that, left unchecked, will create environmental and economic havoc. The recent announcement from China and the US about climate change, as well as the latest Pentagon assessment, demonstrate that the science of global warming has won - investment in the new energy economy is going to ramp up even faster.
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Growth in global energy demand: More than a billion people do not have access to electricity. Energy demand is accelerating among growing middle class populations in China, India and other rising economies. Continued growth in energy demand is a certainty.
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Push for energy security: Regional conflicts in the Middle East, eastern Europe, and other parts of the world are deeply intertwined with the global fossil fuel industry. Governments are encouraging the growth of strong local clean energy industry - reducing reliance on regions of the world where the traditional energy industry has been the source of national and international conflict.
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Clean energy projects make financial sense: The global investment in clean energy projects is currently in the neighborhood of $250B per year. The businesses that are spending on clean energy are doing so because the economics of the projects are compelling, and the ideas are backed by proven track records. Many organizations are calling for the annual investment to rise to $1T per year as quickly as possible.
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Government policy and regulatory initiatives continue: Despite strong opposition in some quarters, powerful combinations of incentives and subsidies, along with government regulation, have propelled the clean energy market forward. While the details will change and we will 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 eventually choose to move.
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A revitalized focus on innovation: Ideas that have been patiently waiting decades for attention are now reality. It took more than 60 years for solar technology to develop to the point where arrays of solar panels are now generating utility scale power. Bill Gates and other forward thinking business leaders are calling for massive injections of capital into new ideas around power generation and energy efficiency. Energy is the lifeblood of the next wave of human evolution – creating a demand for innovation in energy technology that will carry on for the foreseeable future. And, investment is the lifeblood of innovation.
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Finally, the fossil fuel companies will not embrace the new energy economy: The fossil fuel industry is deeply wedded to the status quo - and, because of that, the industry will continue to try to slow the growth of truly clean energy. The track record of large scale business enterprises shows a consistent cycle of growth, maturity and then long run decline - a cycle that has repeated itself over and over and over again. This is a pattern that is well-documented by thoughtful business writers like Clayton Christensen. This is not some sort of academic idea. British Petroleum's aborted attempt to shift "beyond petroleum" proves the point.
The big message here is that most of the the fossil fuel reserves currently held by the fossil fuel companies must must stay in the ground to avert a global catastrophe. That means that the stock prices of the fossil fuel companies, and the business models they are built upon, are very questionable. Long term, investments in these companies will become highly risky.
Divestors are people who understand these trends and have connected the dots - and they are pulling their money out of the fossil fuel industry. It's not a hard thing to do. And, it's a smart thing to do.
To learn more about these trends, there are many resources you can tap to gather more information. See the Resources page for some places to start.
