Energy Effects of Climate Change
We must change – much like how we responded when the Cuyahoga River in Cleveland caught fire in 1969, which led to the Clean Water Act in 1972. Governments have similarly set up emissions reduction schemes to reduce acid rain and protect the ozone layer.
From a carbon emissions perspective, U.S. policy needs to be more aggressive. The U.S. has reduced some of its emissions by burning natural gas instead of coal, but in the long-term, natural gas is just a bridge. It is still a fossil fuel. Natural gas from fracking also carries risk of contaminating water supplies, and the risk is not fully understood.
We face huge energy challenges. These facts can be overwhelming and depressing, but we can’t keep our heads in the sand or blame someone else. Blame doesn’t matter. Let’s work more aggressively on solutions. Here are some game-changing opportunities.
The Power of Solar
During the last five years, solar prices have dropped 80%. Making kWh from solar will reach grid parity in most of the U.S. by 2020. That means it will be less expensive to make energy from solar panels than coal or natural gas within 7 years (this assumes that fossil fuel energy prices do not increase from where they are today).
When solar power becomes cheaper, utility companies will face a quandary as consumers disconnect from the grid and make their own power. The utility will have to distribute its infrastructure costs over a smaller population of remaining customers, which will drive their costs up, further motivating defections from the grid. This transformation is similar to the impact that cell phones and VOIP (voice over internet) have on land-lines. The utilities will likely adjust their business to avoid loss of customers.
For many buildings, it will become economically advantageous, secure, and self-reliant to make your own energy. Fossil fuels will lose appeal as they get more expensive, and this rise doesn’t even count external costs of fossil fuels – such as the cost to defend access to foreign oil (billions of U.S. military dollars every year), increased health costs from air pollution (asthma, cancer, etc.), and weather-related costs (which are harder to associate dollar for dollar to the root pollution).
The degrading appeal of fossil fuels will have serious impact on the stock prices of coal companies (and to a lesser extent, oil and natural gas). A significant percentage of their value is based on their stated reserves of fuels that are still in the ground, which may be unburnable due to regulation or stranded due to the inability to obtain a high enough price from them.
Regarding oil and natural gas for transportation, the shift to renewable energy may take more time, but there will be plenty of consumers who want an EV to be powered by their own roof panels. Because it takes a few years to get a car from design to market, let’s hope that American car companies start preparing now.