Renewable energy makes economic sense and China is leading the way

By Bridget Anderson

A new report from the International Renewable Energy Agency heralds a ‘significant shift in the energy paradigm’ as renewable energy prices are set to become competitive with fossil fuels by 2020. Within the next two years all clean energy will fall within the cost range of fossil fuels.

Over the past year, the global costs for onshore wind and solar PV have fallen to $0.06 and $0.10 per kilowatt hour (kWh) respectively. Fossil fuel technologies currently have a cost range of between $0.05-0.17 per kWh.

This new economic reality – that renewable energy is on a fast track to becoming the cheapest way to generate energy across the world – enormously strengthens the fight to stop climate change. In 2016, of all the energy generated, only 10 per cent came from renewables and 80 per cent came from fossil fuels such as oil, coal and gas. The challenge for humanity over the next few decades is to rapidly reverse this situation and completely phase out fossil fuel emissions before 2050.

The falling cost of renewable energy has been driven by a huge expansion of investment. The total amount of money invested globally in renewable energy capacity, early stage technology and research and development was $286 billion in 2015 – more than six times higher than investments in 2004. The global investment in renewables for 2017 was $333.5bn

China is the global leader in renewable energy investment. As the International Renewable Energy Agency’s new report puts it: China’s ‘shift toward clean generation technology’ is ‘driving the trend at the global level.’

In 2016 China invested $103 billion in renewables – which was 36 per cent of the world total according to the United Nations Environment Programme’s annual report on global trends in renewable energy. In 2017 China’s investment in renewables was up to $132.6bn – a quarter of global investment.

China’s dominating role in renewables, including the sectors of solar energy, electric vehicles and batteries, is set to strengthen and continue. In 2017, for example, Chinese solar manufacturers accounted for about 60 per cent of global solar cell production.

In its 2017-2022 forecast, the International Energy Agency predicts that China’s share of renewable energy capacity growth will account for 42 per cent of the global total in solar, 35 per cent of the global total in hydro and 40 per cent of the global total in wind (see infographic below).

China’s One Belt One Road initiative offers enormous opportunities and hope in driving forward towards a new clean energy paradigm internationally. Since it began, China has exported $8bn of solar equipment and has now become the number one exporter of environmental goods and services in the world.China’s huge investments in renewables gives content to Xi Jinping’s vision of China developing ‘a new model of modernisation, with humans developing in harmony with nature.’

The approach of Britain, Europe and the US stands in stark contrast to China’s leadership.

Worldwide investment on wind, solar and other renewables increased by 3 per cent in 2017 to $333.5bn, yet the UK’s investment last year fell by 56 per cent to $10.3bn. Europe as a whole saw a 26 per cent decline in renewables investment. The US’s investment in renewables increased by 1 per cent to $56.9bn – far behind China’s $132.6bn.

These figures are indicative of the fact that the West, despite bearing the historic responsibility for causing climate change, is holding back the global effort to prevent catastrophic climate change with insufficient, slow action. In order to keep global temperatures below a 1.5 degrees rise (the aim of the Paris Climate Change Agreement) the commitments made by the EU and by the US under Obama at the Paris Climate Summit need to be roughly tripled. Trump’s withdrawal from the Paris Agreement and his championing of fossil fuels takes the US in the opposite direction. The EU is faced with the choice of continuing on a track of exploitation coal and gas versus a move to renewables.

Europe and the US should follow China’s example and make a decisive, fast turn towards renewables and to end fossil fuel extraction. Such a move is not only necessary to defend humanity against the devastating consequences of climate change, but would also assist in paving the way for cheaper, cleaner and more secure energy generation for centuries to come – with obvious benefits for the health and prosperity of people across the world.