The environmental benefits of expanding renewable energy are clear. Fossil fuels contribute heavily to climate change, which has already begun to have devastating impacts on Earth’s ecosystems. But for many, environmental factors are not persuasive enough to shift the attention away from fossil fuels and towards renewable energy: a lot of resources have been invested into fossil fuels, and many assets could end up stranded in a transition to renewable energy. Going green isn't just about protecting the environment, however—it can boost profits and create jobs. In this article, we examine the persuasive economic arguments in favor of adopting renewable energy sources.
Renewable Energy Promotes Job Growth
If one thing was made clear by the 2016 election, it is that many Americans believe our country needs more jobs. Many argue that protecting the fossil fuel industry will safeguard jobs, and allowing more oil drilling and coal mining will create yet more jobs. However, renewable energy is no slouch when it comes to creating domestic jobs: there are already more solar workers than there are coal miners. The fact that renewable energy is more sustainable than fossil fuel energy is icing on the cake.
An E2 study conducted in March of 2016 showed that 2.5 million Americans work in the “clean tech” sector, which includes everything from renewable energy generation, to energy efficient vehicles and a plethora of other energy efficiency occupations. This includes jobs in manufacturing, design, development and branding. The industry is wide-ranging and growing fast: more jobs are being created as clean energy technologies mature, expand and advance. According to the National Solar Jobs Census, for example, direct solar industry employment has gone up 123 percent over the past six years, and shows no sign of stopping.
|Source: "Clean Jobs America," E2.|
While the number of jobs created is certainly important, one must also consider what types of jobs are being created, and what types of workers are likely to benefit from them. Perhaps one of the greatest job-related benefits of green energy is that it holds the potential to rebuild the American middle class thanks to “green collar jobs,” namely well-paid, skilled jobs in construction, assembly, installation, operation, maintenance, transportation, and manufacturing. In fact, most jobs associated with the solar industry, including solar installers, assemblers, sales representatives, and designers, all earn above the national median wage of $17.04 per hour. The jobs associated with this industry also vary greatly in terms of necessary qualifications, providing work for people from many different backgrounds.
Renewable Energy Facilitates Energy Independence
Perhaps one of the strongest arguments in favor of hydraulic fracturing (fracking) to obtain oil and natural gas is that the process can occur on American soil, thereby helping to steer the country away from its dependence on foreign energy supplies. However, even with this new source of fossil fuels, the United States will still remain dependent on foreign energy production since oil prices are determined by global supply and demand. Collapsing oil production in a key oil-exporting country (because of a political crisis, for instance) would lead to higher prices throughout the world, harming American consumers and businesses.
Renewable energy, on the other hand, has the potential to fulfill nearly all of the energy needs of the United States without heavily relying on a global marketplace, allowing for true energy independence. As a result, both our energy supply and the price of energy will no longer be subject to the geopolitical complexities that are inherent to the oil and gas industries. By investing in renewable energy like biofuels, geothermal, hydropower, solar, and wind, the U.S. energy market will achieve increased stability and predictability.
Energy independence also requires that we not rely too heavily on fossil fuels, even if they come from our own country. It is never wise to put all one's eggs in the same basket: being able to rely on multiple energy sources creates a buffer and makes for a more resilient system.
The need to lessen our dependence on fossil fuels is all the more important because of the risk that we are in the midst of a “carbon bubble.” Like a bubble in the housing market, when real estate prices become unsustainably high, the carbon bubble is an overvaluation of fossil fuel companies. Many analysts argue that investors are not taking into account the hidden cost of fossil fuels, namely their high carbon emissions which lead to global warming. Once those hidden costs are included in stock market valuations, the carbon bubble could pop, leading to a potentially massive financial crisis. That moment of reckoning may be approaching. As a result of the Paris Climate Agreement, nations have agreed to reduce carbon emissions to keep global warming below 2 degrees Celsius (3.6 Fahrenheit). Unless an economic way to remove carbon dioxide from the atmosphere is developed, this goal can only be reached if nations drastically reduce their use of fossil fuels. Fossil fuel companies, and by extension their investors, could therefore see their assets stranded in unburnable fossil fuel reserves (see graphic below).
|The global carbon budget -- a bubble about to burst? Source: Carbon Tracker Initiative|
Renewable Energy Attracts Big Money
What do big money investors—such as banks, billionaires, and pension funds—and renewable energy have in common? Buzzwords. Efficiency, innovation and reputation are integral to the two industries—so much so that the two have become linked. This is because where there is efficiency there are savings, where there is innovation there is profit, and with savings and profit come reputation, subsequently feeding into the positive feedback loop of growth that characterizes good global investing. The renewable energy sector offers all of these traits, and thus it is unsurprising that in 2016, the United States was the second largest investor in clean energy, for a total of $56 billion—a figure that is up 8 percent from the previous year. What’s more, global clean energy investment has risen from $62 billion in 2004 to a staggering $329 billion in 2015.
The Carbon Disclosure Project (CDP), which helps investors measure and manage their environmental impacts, recently conducted a study to analyze the market for companies investing in climate change solutions. It found that “S&P 500 industry leaders on climate change generated 18 percent higher return on investment, 50 percent lower volatility of earnings over the past decade and 21 percent stronger dividend growth to shareholders than their low scoring peers.” Big money investors are always looking for the next big investment—in this day and age, that is renewable energy.
Renewable Energy Is in High Demand
Perhaps one of the most important arguments for adopting renewable energy practices is that clean energy is in demand, both by commercial interests and property owners. Major companies like Ikea, Apple, and Coca Cola—among many others—have joined a collaborative, global initiative called the RE100. Companies that are part of this coalition have made the commitment to use 100 percent renewable energy for their electricity. Thus far, 87 major corporations have made the pledge, and more are sure to join.
As demand grows, new initiatives like the Department of Energy’s Property Assessed Clean Energy (PACE) program and EESI's own on-bill financing project are being developed to help residential homes afford renewable technology like solar panels as well as energy efficiency upgrades. Specialized payment programs such as PACE help thousands obtain cheaper financing for efficiency and clean energy upgrades. Such programs work because they respond to demonstrated consumer interest. According to a Gallup poll from March 2016, 73 percent of Americans prioritize alternative energy over oil and gas. What’s more, the poll showed that this preference is nonpartisan; in both parties, majorities expressed a preference for alternative energy. Though the Gallup poll used the term "alternative" to describe renewables, in truth renewable energy should no longer be regarded as "alternative"—it has truly become mainstream. Ultimately, no matter where people stand politically, renewable energy is something everyone can get behind.
Author: Emma Dietz
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- "National Solar Jobs Census," The Solar Foundation
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- "Property-Assessed Clean Energy Programs," Department of Energy
- "In U.S., 73% Now Prioritize Alternative Energy Over Oil, Gas," Gallup