By Elizabeth Offer
The emergency weather conditions in Texas sparked discussions on the future of green energy and the necessity of natural gas. Controversy over who is responsible for the power outages in Texas a few months ago led to critiques of the state’s power system. While many pointed to Texas’ recent focus on green energy, ultimately, traditional power sources were to blame for the mass outages, demonstrating the need for alternative energy sources and energy-saving technology.
BP’s decision to pivot towards wind and solar power and decrease natural gas production could indicate a corporate shift away from natural gas. In the Wall Street Journal, Sarah MacFarlane quotes BP Chief Executive Bernard Looney, who explained that “demand could have already peaked and that it would potentially never recover to pre-pandemic levels” and that BP now “calls for a 40% reduction in oil-and-gas production over the coming decade.”
The U.S. Energy Information Administration reported that renewable energies provided about 20% of the power supplied to the U.S. in 2020, matching the nation’s reliance on nuclear energy that year. Bloomberg finds that the low cost of renewable energy production “quadrupled global renewable energy capacity to 1,650 gigawatts within the past nine years—more than every power plant in the U.S. combined.” Although natural gas represents 40% of US power, the low costs of solar and wind power make renewable energy more attractive than natural gas in Europe and China.
Solar and wind power is starting to be self-sufficient and less reliant on government subsidies, and investors are starting to recognize the potential for profits. Mark Roser for Our World in Data revealed that the price of onshore wind power from 2009 to 2019 dropped 70%, while the price of solar power dropped 89% in that same time frame. As an economy of scale, subsidies gave companies the funding to experiment with the technology and allowed for the increased production, further lowering the output prices.
With alternative energy becoming more mainstream today, research into increasing its efficiency and lowering production costs are being funded by both private and public markets. While most of the economy suffered throughout 2020, many clean energy ETFs such as the First Trust Nasdaq Clean Edge Green Energy Index Fund and Invesco Solar soared. BNK Invest analysts predict that underlying holdings in the Green Energy Index Fund will increase. The Nasdaq’s Green Energy Index Fund’s investment in Tesla is largely responsible for these overall increases, but not the only way that clean energy technologies show promise.
International research into wind energy in Scotland explored the use of floating wind turbines to satisfy the Paris climate accord. Sarah McFarlane for the Wall Street Journal explained that “floating wind is almost double the cost of fixed offshore wind,” but would allow wind energy in areas where the continental shelf makes fixed wind turbines impossible, leaving potential profitability uncertain and requiring more research.
There are still hurdles in improving the energy capacity and reliability of renewable energy, but renewable energy’s upward trend over the past year and the increased research into making these energy sources competitive emphasizes their growing importance in global energy production. Texas’ energy crisis demonstrates the dangers of an over-reliance on natural gas and the need for clean, reliable power sources.