State of The Transition, June 2016: A long list of advances, a short list of setbacks – including Brexit.

The list of main setbacks for the global energy transition in June includes a potentially big one: Brexit. But when you view that vote in the light of the month’s long list of main advances, and the other such long lists for January through May 2016, plus the three years before, dots join to tell a story. If the British are collectively ill advised enough to go ahead with their exit from the EU, they risk creating an isolated island that will be a stark outlier on an increasingly clear and positive direction of travel in the rest of the world.
Global renewable energy statistics for 2015 were published this month. 147 gigawatts of were installed, and investment in renewables is now twice that going to coal & gas combined. Solar PV global capacity continues to rise exponentially as a consequence. Onshore wind and PV will “win the cost race” globally and become the cheapest two energy options in many nations by 2020. In some markets, they already are. In India, solar has become the fastest-growing new energy source. China is on course to generate fully a quarter of its electricity from wind power by 2030.
In the USA, solar accounted for 64% of all new electricity that came online during Q1 2016. The customers of a single solar company produced 10 gigawatt hours of solar electricity in a single day (SolarCity). That is much the same as a fully operational nuclear power plant. Some 60 of the hundred largest US companies by sales have set goals for renewable-energy procurement, greenhouse gas emissions reductions and energy efficiency. Among them, Apple set up up an energy company, and applied to supply excess solar electricity from its installations to customers of all types. Recall that Apple also intends to be mass producing solar-charged EVs by 2020.
In the UK, solar beat coal over a whole month of UK electricity generation for first time in May. No longer can it be argued that renewables are incapable of powering modern industry: Nissan will power a factory in the UK partly with solar and wind. Its 11 megawatts of renewables (not much at all) will be enough to make 31,000 cars a year. They will be EVs.
With 1 million now on the world’s roads, EVs are on track for a 2˚C global-warming scenario scenario, the goal of the UN’s Paris agreement on climate change. (But note, they are the only sector on track so far). The zeitgeist here is becoming clear. Most notably this month, Volkswagen announced a plan to seek redemption from its emissions fraud crimes via a strategy centred on EVs, robo-taxis, and a ride sharing network. The knock on effects of battery development for EVs on use of storage in buildings continued in June. BMW announced a small commercial energy storage solution, joining frontrunner Tesla, and other big corporate movers like GE. French oil major Total entered the residential power market by acquiring Lampiris, Belgium’s third-largest natural gas and renewable power vendor for the residential sector. This on top of its earlier major investments in solar (Sunpower) and batteries (Saft). At least one of the oil majors is seriously hedging its bets on the great global energy transition.
On June 13th, Dong Energy, a renewable energy company, became the largest IPO anywhere in the world so far this year. Dong was once an oil and gas company: its name stands for Danish Oil and Gas. Now 75% of its capital is going into renewables. Lesson: oil and gas companies can make it across the energy transition, no matter what Shell and the others tell us.
Successful IPOs or not, the capitalisation of renewables will not be the same as it has been for the energy incumbency. Innovative financing linked to energy, beneficial to individuals and communities, is breaking out even in the large corporate sector. In June, Marks and Spencer unveiled a scheme to crowdfund customer-owned solar for its stores, offering a 5% rate of return for customers who invest in it. This is not a good time to be a traditional utility, or a bank for that matter.
Withdrawal of investment from fossil fuels, another megatrend, continued in high places in June. Washington D.C. announced divestment of its $6.4 billion pension fund from oil, gas, and coal companies. A Swedish state pension fund divested holdings in an additional 19 fossil-fuel production companies, bringing its total to 38 companies eschewed (23 in coal, 15 in oil and gas).
Withdrawal of investment is not the only closing door for the fossil fuel incumbency. Pursuit of shale for fracked oil and gas is now laden with political risk. In June, Scotland and Germany voted in favour of bans on fracking.
As for the UN’s Paris agreement on climate change, and the totally decarbonised energy world it aims at, the USA and India vowed to push early ratification of the treaty in June. Presidents Obama and Modi also agreed a $1 billion US – India pact on renewable energy. France became the first major nation to ratify. The EU smashed its 2020 emissions target (20%) six years early. The US, Canada and Mexico pledged to source 50% of their electricity from clean energy by 2025 en route to their Paris commitments. Norway set a new national emissions goal of 2030, bringing its target forward by 20 years. The parliamentarians of this oil and gas producing nation came close to banning fuel cars by 2025. Only the conservative element in its governing alliance voted against. Oslo voted to slash its emissions 95% by 2030, and to ban cars in the city centre by 2019 en route to that target.
As for the main setbacks in June, the list is much shorter. Shell chose to ignore the developments at Dong and Total, and put a revamped shale arm at heart of its growth strategy. Evidence emerged of Americans regaining their appetite for gas guzzlers: some 75% of EV and hybrid trade-ins are for gasoline cars. In Saudi Arabia, recent encouraging developments were devalued by an announcement to scale back plans for renewables in favour of gas.
Then there was Brexit. In the UK, populist rightist politicians, mostly climate-change deniers and people clearly willing to tell lies to get their way, won a referendum to leave the EU. Yet within a week, UK ministers approved a world-leading national carbon emissions target: a 57% cut by 2032 on 1990 levels. The EU target is 40% by 2030. Clearly, Brexit does not necessarily mean that a Conservative government will back off Paris commitments. It will not be able to hit them if fracked shale and nuclear remain the favoured options, and clean energy continues to be suppressed to make space for them, of course. But given the direction of travel so clear in the rest of the world, what chance would any government have of maintaining course with that?
Or indeed with Brexit itself, given the clear evidence of broken promises already emerging, and the long two years of exit negotiations required?