The market triumph of renewable energy marks the biggest victory yet in the fight against global warming. Solar and wind are proliferating not because of moral do-gooders but because they’re now the most profitable part of the power business in most of the world. An industry that once relied on heavy subsidies and was propped up by government mandates is now increasingly standing on its own.
As a recent United Nations report put it: The renewable energy sector is “looking all grown up.”
In the effort to slow climate change, the energy sector matters. Electricity generation has traditionally been the world’s biggest source of greenhouse-gas emissions. In the U.S., for the first time since the 1970s, this is no longer the case. Since 2016, American power plants have given off less carbon dioxide than the nation’s transportation sector, where oil continues to dominate. The turnabout owes a lot to cheap and cleaner-burning natural gas, but wind and solar farms are playing an increasingly important role.
Solar, wind and hydropower resources combined generate more than a quarter of the world’s electricity. In China and India that share will surpass 60% by 2050, BNEF estimates show, and Europe will top 90%.
Renewable energy won’t save the world on its own. Power generation accounts for about a quarter of greenhouse-gas emissions being released into the atmosphere in the U.S. The rest comes mainly from transportation, manufacturing, agriculture and heating and cooling homes and businesses.
Those sectors will need to match the sweeping technological advances and more efficient manufacturing that have slashed the costs of solar and wind power. Battery prices have fallen 84% in less than a decade. Cheaper parts are what have made solar and wind more economical to build than coal and gas plants across two-thirds of the world. Five years ago, by BNEF’s count, this was virtually nowhere.
Low costs sparked a clean-power frenzy that has quadrupled global renewable energy capacity to 1,650 gigawatts within the past nine years—more than every power plant in the U.S. combined. From Western Europe to China, solar and wind are beating out fossil-fuel plants without subsidies. Some projects are ditching long-term contracts altogether, relying instead on exotic hedges.
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