Energy Transformation Update
Transforming energy systems is urgently needed to reach our climate goals, and this year has been a game changer thanks to the combination of U.S. federal governmental support including via the Bipartisan Infrastructure Law and the Inflation Reduction Act as well as continued rapid declines in clean technology costs and greater interest by investors around the world. We need a similar combination of forces to transform our food systems, and look forward to being part of building that regenerative food future together. Thank you to Christensen Global intern, Carly Walther-Porino (Dartmouth ‘25), who provided this insightful summary on how energy can deliver climate impact, community prosperity, and just transition, powered up by new resources. Let’s keep the pressure on the Administration to go farther faster, rather than reversing momentum such as the recent opening up of offshore natural gas development rights and the Willow Project in Alaska. We have to rethink everything. The old moderated approach just won’t get us there.
Energy Transformation Update 2023
By Carly Walther-Porino, Dartmouth ‘25
The Intergovernmental Panel on Climate Change (IPCC) has alerted us for decades, producing comprehensive assessments of climate change information demonstrating that we must cut emissions to save lives, livelihoods, and ecosystems around the world.
In March 2023, the IPCC released its latest Synthesis Report which emphasizes that climate change is “widespread, rapid, and intensifying” and that we are already locked into irreversible changes and warming in the next decades. The report integrated information from the IPCC’s Sixth Assessment Report that was released in three main parts beginning in August 2021. These assessments concluded that even if we took immediate action to slash emissions and deploy solutions today, we can expect warming until at least mid-century. Therefore, we must adapt and mitigate simultaneously.
The IPCC report gives us tangible data to guide us in goal-setting for significant climate mitigation. In the IPCC’s projected low and very low emission scenarios (SSP1-1.9 and SSP1-2.6), CO2 emissions will decline to net zero around 2050 and 2070 and thereafter achieve net negative emissions. That also means decreasing global greenhouse gas emissions by 43 percent from 2019 levels by 2030, which includes decreasing C02 emissions to 48% below 2019 levels by 2030. To achieve these goals, it is critical to decarbonize energy.
Energy supply is the single-most polluting economic sector and is responsible for 35 percent of global emissions. Thus, we must fundamentally change the way we produce and consume energy. Our systems, which widely support fossil fuels, need to be restructured efficiently and at scale. The good thing is that these goals, while daunting, are achievable. According to the IPPC, attainable and low-cost solutions are already available, but they are not being implemented at the necessary speed and scale. We have all the resources, we just need to put them in the right places, and we need the will.
We are undergoing an enormous shift in the way we think about energy and the way we use it. Various institutions are leading by example, changing their practices, and deploying innovative climate solutions to accelerate the clean energy transition. Countries, policymakers, corporations, and other institutions must take quick action to implement creative solutions and pave the way to a carbon-free future.
Systems and Institutions Working to Accelerate the Clean Energy Transition:
News from Abroad: Innovation, Infrastructure, and Accomplishments
Cross-Border Clean Power Connector
The UK and the Netherlands are building the biggest cross-border energy link under the North Sea, LionLink, which will connect the UK to a Dutch offshore wind farm. The undersea cable will provide clean, affordable, and secure energy. The large-scale electricity line tackles two issues at once: energy security and intermittency. The power line will reduce reliance on Russian oil and gas, which is especially important since the invasion of Ukraine, after which Russia cut its natural gas supplies to Europe by 80 percent. LionLink will also offer a consistent clean energy option as grid operators can import clean energy from a neighboring country instead of relying on fossil fuel plants. The system also ensures that the energy produced is not wasted. For example, if there are windy conditions in the UK and low winds in the Netherlands, Dutch grid operators will be able to import that energy supply. The cross-border electricity line is the second of its kind, but it is the largest. It is estimated to boost UK energy supplies with enough to power 1.8 million homes.
Energy security and the clean energy transition are closely linked, and multi-faceted solutions like LionLink will be essential in the next decade. As the world is pressing to move away from CO2 emissions, global energy demand has also been on the rise, making the transition increasingly challenging, but all the more vital.
100% Renewables 100% of the time (almost): Spain Accomplishes a Renewable Energy Milestone
Amidst increased energy demand, Spain managed to power itself entirely with renewable energy for nine hours straight. Energy generated by solar panels, wind turbines, and hydro energy was able to power mainland Spain from 10 am to 7 pm local time (CEST) on Tuesday, May 16.
Spain’s recent increases in production capacity for wind and solar technology, coupled with the particularly sunny and windy conditions on May 16th allowed their energy system to operate at peak capacity, El País reported.
Renewable energy now accounts for one-third of the electricity generation worldwide, and Spain’s milestone gives us a glimpse of what the clean energy future holds. Spain’s accomplishment proves that with increasing renewable energy infrastructure, we can meet people’s energy needs without increasing carbon emissions. However, we need to see accomplishments like this on a global scale.
Fortunately, there are major institutions headed in the right direction.
What institutions are decarbonizing their energy use? What systems are accelerating the clean energy transition?
Big tech companies are capable of tipping the scale when it comes to climate change. Many, such as Google and Microsoft, have already committed to zero-carbon emissions within their operations, but they also have enormous influence as “trendsetters”. Big Tech data centers only account for around 1% of global electricity use. But tech firms have massive economic, financial, and social footprints which, combined with their enormous cultural and scientific influence, give them the ability to transform major industries.
So let’s take a look at what some of them are doing:
Electricity demand is increasing, and the current boom in artificial intelligence is putting even greater stress on that demand because many companies such as Microsoft Corp., Alphabet Inc.’s Google, and OpenAI require massive data centers for cloud computing. Therefore, corporations must take steps to decarbonize their footprints. The good thing is, some of them are.
Google:
Where they’ve been:
In 2007, Google set a goal for their operations to be carbon neutral, mostly taking the form of offsets
The company (along with other large companies such as Walmart and Microsoft) signed large wind and solar deals to match electricity demand (PPAs), which standardized the corporate PPAs and drove down the price of wind and solar globally.
Google was the first company to achieve 100% renewable energy matching on a global basis, meaning they take their electricity consumption and purchase that amount in renewable energy markets
Google has made significant efforts to use its capital and its influence to decarbonize the electricity grid.
Like Microsoft, they have also committed to making global operations run on 100% renewable energy.
The issues they found:
There are few global markets that support these energy transitions at scale.
In an episode of Bloomberg’s podcast, Switched On, Caroline Golin, Global Head of Energy Market Development and Policy at Google highlights this issue.
Golin discusses Google’s approach to renewable energy. She says that Google found that when they were executing the global annual match system, there were entire data centers and many hours of the day when their data centers weren't running on renewable energy. Even when Google was “100% renewable”, they were still only about 66% carbon-free on an hourly basis.
Where they are:
Google used these findings to problem-solve, they had to evolve the way they thought about these issues. Golin says, “Whether or not you've set a goal for your company, it's about whether or not you are using collective action to put in place market structures, products, and technologies to put in place a decarbonized grid.” Google concluded it could not do that with the global matching approach.
We must implement traceability software that allows for location-specific and time tracking to ensure electricity is carbon-free
Where they’re going:
Google’s vision is to have 24/7 carbon-free energy by 2030 at all hours of the day. On top of that, the energy they procure has to be generated on the grid where they operate. Golin says they refer to their vision as the “moonshot goal.”
Golin worked on the 24/7 Carbon Free-Energy Compact with the UN and initiated the global movement to carry out Google’s objective. The compact is comprised of “a set of principles and actions that stakeholders across the energy ecosystem can commit to in order to drive systemic change”.
The compact’s signatories support the idea that we must fundamentally change the market policies and regulations that guide our electricity systems to get to a decarbonized grid.
The Vision:
Companies around the world need to be purchasing clean energy in areas where it will have the most impact.
Companies need to be investing, and that means using their capital now to avoid an overbuilt and expensive system.
Google’s goal, along with energy leaders around the world, is to shift our markets and our policies to support technological innovation and figure out how to best utilize that tech.
Microsoft:
Where they’ve been:
In 2020, Microsoft announced its sustainability commitments to be carbon-negative, water positive, and zero waste by 2030, and to protect more land than they use by 2025.
Where they are:
On May 3rd, Microsoft released its 2022 Environmental Sustainability Report, explaining the company’s overall sustainability strategy.
The company has invested 1 billion dollars in its Climate Innovation Fund, which aims to accelerate the global development of carbon reduction, capture, and removal technologies and the deployment of new climate innovations through equity and debt capital. Investing in technological innovation will drive down costs and accelerate the integration of clean energy resources at scale.
On May 10th, Microsoft signed a nuclear fusion deal with Helion Energy as part of its sustainability strategy. The power purchase agreement (PPA) will provide Microsoft with nuclear fusion energy beginning in 2028 and will target power generation of 50 megawatts or greater (one megawatt can supply, on average, about 1,000 U.S. homes per day) to power its data centers.
In 2022, the company has shown that it is possible to decrease emissions amidst increased demand. In 2022, Microsoft grew by 18 percent and its overall emissions declined by 0.5 percent.
Where they’re going:
Like Google, Microsoft’s long-term vision is for the world’s grids to be generated completely from zero-carbon sources, 100 percent of the time.
In an attempt to advance that vision, Microsoft signed new power purchase agreements around the globe in 2022, bringing their portfolio of PPAs for carbon-free energy to over 13.5 GW (one GW can produce enough electricity to support 750,000 homes).
Companies play a major role in accelerating the energy transition. That means they need to be investing and using their capital now to avoid an overbuilt and expensive system.
However, policy and regulation must align with what action we are seeing in the corporate sector. Golin emphasizes that we don’t have the systems in place that provide an efficient blueprint for how the energy market should work.
Policy: Deconstructing and Rebuilding
For the past six decades, the US has implemented more or less the same regulatory process to govern most utilities. Deconstruction is necessary.
We must approach the energy system with the goal to commoditize clean energy and completely transition off of fossil fuels.
Golin says moving forward requires deconstruction of the current “regulatory paradigm.”
To propel the rapid transition led by big tech, policymakers must reconstruct and align regulatory signals.
Policy in the US
Policy reform is critical to the rapid reduction of carbon emissions and at the forefront of accelerating the clean energy transition, and the United States has a long way to go. The US is experiencing a time characterized by a political divide, which has made it difficult to accelerate progress from a policy standpoint and seems to dim any light at the end of the tunnel. However, in August 2022, President Biden signed the Inflation Reduction Act (IRA) of 2022 into law and drive change and propel the global clean energy economy forward.
What is the Inflation Reduction Act?
The IRA is the most significant climate legislation in U.S. history with the largest investments in clean energy and climate solutions. The IRA’s investments of 369 billion dollars in energy security and climate change programs will lower energy costs, increase cleaner production, and reduce carbon emissions by roughly 40 percent by 2030.
Recent Policy News:
The IRA has allowed for advancements in reducing building emissions and efficiency as well as the electrification of ports to build a zero-emissions shipping future.
Building Emissions:
The White House recently held a meeting with 24 Governors’ offices to discuss ways to lower utility bills, improve climate resilience, and reduce emissions through commercial and residential building decarbonization policies. The participants discussed pathways to accelerate progress through federal-state partnership, the Inflation Reduction Act, and the Bipartisan Infrastructure Law (BIL). Biden declared that building policies will be an important part of reducing emissions, as building emissions account for almost 40 percent of greenhouse gas emissions in the US. The IRA and the BIL will provide states with the financial tools to reduce building-related emissions and give them opportunities to implement policies and innovative programs to reduce energy consumption and lower costs.
A Zero-Emissions Future For Shipping:
The Biden-Harris Administration recently announced key infrastructure funding to electrify ports.
The IRA allocated 3 billion dollars to the Environmental Protection Agency (EPA) to finance zero-emission port equipment and technology, as well as assist ports in developing climate action plans that aim to decrease air pollutants in American ports and advance environmental justice.
The EPA will also spend another $1 billion to reduce emissions from heavy-duty commercial vehicles, including those that travel in and out of ports.
The Administration’s announcements align with previous announcements made under the U.S. National Blueprint for Transportation Decarbonization, an interagency framework of strategies and actions to have a zero-emission transportation sector by 2050.
The document formalizes the country’s commitment to carrying out a comprehensive decarbonization plan. However, we still have a long way to go when it comes to policy, and not just in the United States.
Fossil Fuel Non-Proliferation Treaty: Creating the Missing Framework:
Tzeporah Berman, International Program Director at Stand.earth and the Chair of the Fossil Fuel Non-Proliferation Treaty Initiative is calling out US policy and pushing for a quick phase-out of fossil fuels. She presents the case for the global treaty to support the clean energy transition in her TED Talk, where she highlights one of the most significant barriers we are facing in this transition: governments regulate emissions but not the production of fossil fuels. She says, “For decades countries have been negotiating targets, but behind our back, the fossil fuel industry has been growing production and locking in further emissions”, and still, in the past decade, 86 percent of carbon emissions are from oil, gas, and coal.
Berman Calls Out Policy Makers for Enabling The Fossil Fuel Industry To Remain Invisible:
After talking to policymakers around the globe, Berman found that there are very few policies that dictate the amount of fossil fuel production, and who gets to produce. And cases that regulate or constrain the production side of fossil fuels are nearly nonexistent.
One of her most shocking findings is that the words oil, gas, and coal do not appear in the Paris Agreement, our international treaty on climate change. She says, “The fossil fuel industry has been successful in making themselves invisible.” But policies and policymakers are the enablers. The reason we have commoditized natural gas is that we have created policies, regulations, and infrastructure to support that commodity. We have to do that for carbon-free energy even if it's hard for us to imagine.
The Vision: We need a framework to constrain the production of fossil fuels.
Where we are now:
Even if we were to phase out coal, oil, and gas overnight, existing projects would take us beyond 1.5 degrees. We are on track to produce 120 percent more planned fossil fuel production than consistent with limiting warming to 1.5 degrees.
Berman emphasizes that we are making the leap from the “potential to the possible”. We already have enough fossil fuels to progressively transition off of them, but the industry continues to expand oil, gas, and coal production and exploration.
Who is responsible?
Solutions vary between countries. They are not one-size-fits-all. Globally, we need a great deal of financial leadership and divestment. Berman highlights that it is the governments of wealthy countries that need to do the majority of the work. As we hear time and time again, those who contribute the least to climate change bear the most impact.
US and China share roughly 43 percent of the world's carbon footprint. The powerful and wealthy countries need to shift their policies to align with their impact.
About the Treaty:
The Fossil Fuel Non-Proliferation Treaty Initiative will create the missing framework so countries can negotiate the fossil-fuel phase-out equitably. Rebecca Byrnes, the deputy director of the Fossil Fuel Non-Proliferation Treaty Initiative, says the Treaty is not “just about ending something. It’s about starting something new.”
Cities, officials, and scientists alike have already endorsed the principles of the Treaty which aim to facilitate new and productive conversations, especially between oil-producing nations that are not likely to endorse the goals of the Paris Agreement.
The Treaty lays out three pillars of action:
Ending the exploration for and production of oil, gas, and coal
Phasing out existing stockpiles and production in line with the Paris Agreement’s 1.5C goal
Ensuring a just transition to a post–fossil fuel world.
The Treaty aims to cut fossil fuel emissions at the production and distribution phase.
In Light of Current Policy, Why is the Treaty so Important?
Right now, global leaders discuss emission targets without stopping the expansion of fossil fuels, which Berman calls “lunacy”, especially considering 60 percent of oil and gas and 90 percent of coal must stay in the ground to limit warming to 1.5 C. Berman explains that for decades, climate policy has been designed with the idea that the price of carbon will increase with reduced demand, and the cost of renewables will decrease while markets will constrain supply, but it hasn’t played out that way. Markets are distorted because of the power and influence of the fossil fuel industry and reliance on future technology. We have to deploy the capital we have now. Berman says, “Why produce a resource we absolutely cannot burn if we want to avoid catastrophic warming? It’s like telling alcoholics they need to stop drinking or they’ll die, then handing them bottles of vodka.”
Closing Statement:
Various institutions are taking strides in the right direction to accelerate the clean energy transition and limit warming to 1.5 degrees. Action from industry leaders, countries, and policymakers is the most vital it has ever been. Our actions in the next decade will build the bridge to our carbon-zero future or accelerate its collapse. The energy transition is ridden with challenges, but it is encompassed by immense excitement and innovation. We need to see change everywhere, all at once; And thankfully, it's within reach.