The Growing Role of Private Investment in Clean Energy
But something else is underway. The price of renewable energy has been plummeting, and investment is beginning to set sail on the back of unsubsidized private interest. In this new world, the fate of renewable energy will be less tied to the government, and that will be good for the environment too.
This October, prior to the presidential election, Leonardo DiCaprio and climate scientist Katharine Hayhoe met with president Obama on the White House lawn to promote the new climate change documentary Before the Flood. The film focuses on raising climate change awareness and captures DiCaprio visiting Elon Musk at Tesla headquarters, walking across melting glaciers, and meeting with Pope Francis, who urges environmentalists to speak out, take action, and pray for the future of our planet. These scenes are standard fare for environmental messaging, but something else was mentioned on the White House lawn, something that was undersold in the film and is being understated by the incoming administration: the role of private investment.
Hayhoe is the director of the Climate Science Center at Texas Tech University, where she assesses the impact of climate change on local and regional environments. Standing on the White House lawn with DiCaprio and the president, she told a story about a visit she took to a West Texas wind farm. She began the story with the question: “What do you think of when you think of Texas?”
Texas is the sprawling ranch land of cowboys and steaks, western movies with ravines and tumbleweed, heavy-duty trucks, and, perhaps most of all, oil. The prosperity of Texas has long been linked to its oil industry, particularly in the western high plains, where the smiles on people’s faces are said to rise and fall with the price of west Texas crude.
But the answer Hayhoe was waiting for was “wind power.” She continued her story with a visit to a west Texas ranch where she asked the owner if he had wind turbines. She expected him to say no, that “those are for those sissy tree-huggers,” but instead he said that he was simply on a wait list and hadn’t received his turbines yet. When asked why he wanted them, he said: “Because the check arrives in the mail.”
In just the last two years, dramatic changes have transpired in renewable energy. Since 2012 the price of onshore wind power has fallen by 50% and the cost of solar photovoltaics has fallen by over 75%. Electric vehicle battery costs have dropped from $1,000/kWh to around $250/kWh. As prices fall these technologies are beginning to compete with fossil fuels, even without subsidies. There is a subtle truth emerging, that alternative energy can compete on its own and is an investment that can generate a lot of money.
According to Bloomberg New Energy Finance, unsubsidized domestic land-based wind power was cheaper in 2016 than nuclear or coal power and was approaching cost parity with natural gas. In Texas, this means that government subsidies are becoming irrelevant to the success of alternative energy technology and that the windmills in Hayhoe’s story are becoming an exciting opportunity to make money on domestic energy production.
Private investors are starting to take note. Just last week, the Breakthrough Energy Coalition announced a $1bn fund for technologies that create “Reliable affordable energy for the world.” Wind is an investment in America too. According to the American Wind Energy Association, wind power employs 21,000 US factory workers who build the turbines across 43 states.
Donald Trump and his administration have not defined themselves on a long-term environmental outlook; instead they emphasize capitalist values of production and wealth. But when channeled properly, these are some of America's greatest qualities, fueling our history of productivity and resourcefulness. As alternative energy sources like wind and solar begin to compete with fossil fuels, they will become the new engines of growth. As Hayhoe said, “Green is no longer only the color of trees […] green is also increasingly in Texas, around the U.S., and even in China, becoming the color of money, as well.”
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