This year had its fair share of both wins and losses on climate and clean energy. As we prepare for the new year, let's reflect on some of the key events that took place.
Renewable Energy Growth Shows No Signs of Stopping
The International Energy Agency (IEA) recently released an exciting renewable markets report. Renewable energy growth is accelerating faster than ever, and 2021 is on track to set a record for new installations and capacity. In the next five years, IEA projects a 60 percent rise in renewable capacity from 2020 levels, totaling more than 4,800 GW. This growth will likely account for a 95 percent of power capacity increase from all energy sources.
Renewables are also rapidly economically outpacing fossil fuels. According to the IEA, solar is now the cheapest electricity source in history. What's more, in 2020, 62 percent of renewables were cheaper than the cheapest new fossil fuel, and almost 90 percent of new generation was renewable. The growth outlook in the next year shows no signs of slowing down.
Inflation & Energy Prices Are Rising
On the negative side, energy prices are driving inflation. The United States and most of the world still heavily rely on fossil-fueled energy, and its demand is currently greater than supply. Take automotive gas as an example: The national average costs are the most expensive in almost a decade. On the one hand, increased energy demand is a positive indicator - the U.S. economy is getting back on track, rebounding as transport and travel ramp up. But with cold weather on the horizon (and events like Texas' winter energy crisis in the rearview mirror), we will see only greater demand, heightened energy bills and potential outages.
The Biden Administration is pushing to move away from fossil fuels, while simultaneously calling on foreign producers to increase supply in an effort to mitigate costs. A clean energy transition can't happen overnight, but these types of situations emphasize the need for updated infrastructure and increased renewables. We hope that climate commitments, upcoming legislation and heightened renewables investment will soon make energy cost spikes a thing of the past.
The Biden Administration's Infrastructure Bill Is Now Law
The Biden Administration's two-part infrastructure package is a big step on the path to change. In early November, President Joe Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act into law. These funds will go toward building, repairing and/or upgrading:
In addition, the bill includes environmental protections and climate change resilience efforts:
The U.S. House of Representatives recently passed the second infrastructure bill, the Build Back Better Act. This bill includes extensive funding for social programs as well as $555 billion in climate provisions. In fact, $320 billion alone will go toward clean energy spending and tax credits. This is the largest climate effort in American history and is intended to cut more than a gigaton of greenhouse gas emission by 2030.
Paris Agreement & COP26 Successes
As we addressed in last month's newsletter, the Biden Administration re-entered the Paris Agreement on the first day of his presidency. The United States thus re-committed to helping limit global temperature rise to well below 2 degrees Celsius. At the U.N.'s recent Conference of Parties (COP26), global parties made strides toward Paris Agreement goals. Delegates focused on equitable climate action, climate finance and ramp-up of targets for greenhouse gas reductions. You can read more about the positive and negative outcomes of COP26 here.
Electric Vehicle Market Valuations Are Rising
With more stringent warming targets, expanded clean energy funding and climate at the forefront of society, the global electric vehicle (EV) market is expected to skyrocket. In 2020, the EV market was valued at 169.95 billion U.S. dollars. It is projected to reach $244.73 billion this year, and $1,039.3 billion by 2026 - a compound annual growth rate of 33.5 percent.
In the past year, EV companies like Tesla, Lucid and Rivian already saw immense growth. Tesla's market valuation surpassed $1 trillion in late October, and its stocks rose steadily throughout the past year. Lucid went public this past July and is already generating revenue and producing vehicles. The company's valuation jumped to $89.9 billion in mid-November, passing Ford Motor Company and placing the EV startup neck-and-neck with General Motors. Rivian Automotive Inc. also had success; the company hit a valuation of $127.3 billion only three trading days after its initial public offering.
Community Solar Legislation Expands
Community solar provides a more affordable alternative to rooftop solar, helping to equalize the economic and environmental boons of solar energy. These programs allow community stakeholders to utilize large, shared solar facilities hosted by electric co-ops, utilities and other community organizations. This year, several states expanded or rolled out community solar legislation and/or programming.
Minnesota, for example, initiated a solar garden in 2013; it now has more community solar projects and capacity than any other state. Illinois' new Climate and Equitable Jobs Act creates funding blocks to support all types of solar projects. Starting this month, the bill will fund credits for 10 MW of community solar, as well as 250 MW dedicated to formerly waitlisted community solar projects. Last month, the New Jersey Board of Public Utilities awarded 165 MW to 105 new community solar projects. This is part of a pilot project that began in 2020 and previously included 45 installations across the state.
North Carolina is a laggard in community solar and would do well to emulate the efforts of these states and others. Although there have been legislative initiatives and a few independent programs, the concept struggled to take off. Many issues stem from Duke Energy's lack of efforts toward fair pricing and return on consumer investment, as well as an assumption that the program would not attract enough customers.
North Carolina House Bill 951 Is the Southeast's First Law to Regulate CO2 Emissions
North Carolina is, however, moving forward in other energy-related areas. Most notably, recently passed House Bill 951 seeks a 70 percent reduction in carbon emissions (from 2005 levels) by 2030. The law requires the N.C. Utilities Commission to develop a carbon plan that will reach these goals and requires retirement of uneconomical coal plants. The bill was a collaborative effort between legislators, industry members, environmental groups, clean energy organizations and others. Although it definitely has its negatives and raised concerns about utility customer costs, it makes promising strides toward climate progress. Read more about HB 951 here.