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Renewables or Fossil Fuels: US at a Crossroads of Energy Dominance

published: 2019-10-08 0:00

Image by David Mark from Pixabay

There is a global race to get an upper hand in terms of renewable energy. Given the crucial role that energy supply plays in politics, surprisingly, the US does not seem eager to join, which has fueled the changes in the energy landscape. While the rest of the world is jumping on the wagon of the green power, the US is going the other way. America’s dominance over the world could be strengthened or weakened, depending on their decision regarding renewable energy. 

Indra Overland – head of the Center for Energy Research at the Norwegian Institute for International Affairs – explained that green energy is actually a double-edged sword for the US. Going green could mean forgoing a big part of its energy dominance. Staying with fossil fuels, on the other hand, means lagging behind while the other countries going green, getting less and less dependent on the oil supply of the US.

Skepticism over the renewables
Trump is a known skeptic of climate change. His policy also reflects his doubts due to several factors. Professor Overland explained that there is a top-down influence, where the major oil firms lobby to protect their interest. There is also the bottom-up influence, where the working-class people specializing in the extraction of fossil fuels see the rise of renewables as a threat to their very livelihood. And this is a large interest group which the current ruling party would like to attract.

However, this may change. The academic also indicated that the president’s attitude is largely influenced by the voter bases his party needs to win over. The majority of younger voters, regardless of their party affiliation, care about climate change and clean energy. They are also very vocal and active in invoking substantial changes. Their affinity towards the renewables could sway policymakers’ stance on clean energy.

The solar is soaring in the US
The solar industry in the US is booming, despite the lack of support from the government. According to the Q3 2019 US Solar Market Insight Report published by Wood Mackenzie, the utility-scale pipeline has reached a record-high of 37.9 GW, which is sufficient to provide electricity to 6.2 million homes.

The price of the electricity is getting increasingly lower on the utility front. The electricity prices set by the power purchase agreements could range between US$0.018~US$0.035 per kWh, which is way more attractive than any new fossil fuel plant could offer. The low and stable electricity cost of the renewables also attracts the corporate buyers, who can also enhance their image as socially responsible businesses by going green. Getting wind of the strong development of the solar industry, the investors are racing to finance solar projects. 

The ability to grow without the support of subsidies actually proves the profitability as well as the sustainability of the solar industry in the US. The majority of the stakeholders in the industry appreciate the value and benefits of solar technology. Should the US decide to embrace green energy, it would be benefiting from an already established industry that is mostly initiated and operated through a bottom-up approach. Professor Overland also argued that the US is more likely to be a country that is increasingly independent and self-reliant in terms of energy. Going green is not likely to bring the US closer to its neighboring countries.

A new world
The shift to renewable energy is democratizing the landscape of the energy supply. Every country has a certain amount of renewable energy, therefore is equipped to harvest it. While the US is trying to prop up its oil and coal industry, China is taking on a leading role in renewable energy by exporting its manufacturing, installing and financing services to numerous countries. Moreover, through these operations, China’s geopolitical influence is growing, most notably in Southeast Asia. 

International Renewable Energy Agency (IRENA) postulated in its new report A New World: The Geopolitics of the Energy Transformation that shifting from fossil fuels to renewable energy could be as historic as the shift from biomass (e.g. wood, crops, landfill gas, etc.) to coal and oil 200 years ago. This is likely to be a valid estimation, as the energy supply impacts everyone, from individuals to communities to nations. Consequently, it is one of the major factors that impact geopolitics. In the 20th century, the countries with the vast supply of oil — the Middle East — have an incredible pull in terms of geopolitics. However, as more and more countries are pursuing renewable energy, their dependence on the oil is waning, so is the influence of the oil-exporting countries over geopolitics. And, if history is any indication, whoever dominates the renewable energy will dominate the geopolitics of its region, if not the world politics in the 21st century. 

As the professor pointed out, the current administration of the US does not seem to grasp the magnitude of the energy transition and its impact. Judging from the imposed tariffs on the PV products, Trump does not seem to be imposing these tariffs to promote the homegrown PV companies in the U.S.; rather, he is attempting to hinder the general development of the global solar industry. However, this kind of attempt may have unexpected consequences. As the academic has told pv magazine in the previous interviews, “If Trump’s trade war is not successful in either breaking down the Chinese or bringing them to heel, their dominance may be very long-lasting. China has an immense discipline and vigor and now that it has rediscovered itself after the Maoist years it may keep going for a long time, also in solar power.”

America is at a crossroads. It can choose to remain as the fervent apostle of fossil fuels and forego its position of world dominance. Or it can choose to capitalize its world-class scientists and exert its innovation prowess. Ditching the fossil fuels may diminish their dominance, but only to a certain extent. However, going green can help them stay as a leader in technology as well as geopolitics. The choice is theirs, but not for long.



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