Two Major Reasons for Environmental Hope

So, there’s a lot of challenging stuff going on in the world, and there are a lot of things that I’m feeling pessimistic about, so I thought I’d share a couple of related things that I’m feeling optimistic about. I’ve become much more optimistic about these over the past few years, and I think the world may become a much better place because of them.

Greenhouse Gas Production Will Drop Because Renewable Energy Is Now the Cheapest Source of Electricity

While global warming is very real, has caused serious problems, and will cause substantially worse problems in the future, I believe we’re on the cusp of technological changes that will greatly reduce carbon release in the near future. In particular, a large fraction (40%-ish worldwide, slightly over half in the US) of greenhouse gas release is caused by (a) burning fossil fuels for electricity generation and heat and (b) transportation. However, we’re on the edge of a transition point where electricity generation will rapidly shift towards renewable energy.

Historically, fossil fuel based electricity generation (mostly coal and natural gas plants) has been a dominant source of electricity because it’s cheap and the global warming consequences are uninternalized externalities. Until very recently, the lifetime total cost (capital cost and operating costs) of fossil fuel based electricity generation has been much lower than solar or wind power. That’s now changed. In the last couple of years, the total cost of both wind power and photovoltaic solar power has dropped below the cost of coal and natural gas powered electric generation. That’s true both in most of the US and in the developing world.

In fact, solar and wind power are starting to have total costs (including capital costs) approaching or even below the ongoing costs of coal plants, even neglecting the capital costs of coal plants. What that means is that we’re right around the point where it is cheaper to build new solar or wind generation power and to shutter existing coal plants than it is to continue running the existing coal plants. If the costs of solar and wind continue to drop (even if the rate of change slows down), they will also pass the point where building new renewable energy resources is cheaper than continuing to operate even natural gas plants, which are typically the most cost-effective non-renewable electricity generating plants.

Already, this is resulting in the net growth of electric production being essentially entirely renewable, with renewables growing rapidly while fossil fuel electric production decreases and shifts from dirtier coal to cleaner (but still dirty) natural gas. Unfortunately, some of the growth of renewables is being used to shutter nuclear plants prematurely — while nuclear power has significant downsides, it’s better than fossil fuel powered currently while fighting global warming is so essential. But even with that, the change is very positive. For example, in the US, electricity production from fossil fuels declined from roughly 2,581,000 gigawatt-hours in 2019 to 2,426,000 gigawatt-hours in 2020. At the same time, renewable production increased from roughly 763,000 gigawatt-hours to 825,000 gigawatt hours. And those changes will accelerate as the cost advantage of renewable power grows. Especially if the cost of renewables keeps dropping — and there’s little reason to think it won’t — we’ll quickly reach a point where a major shift in where we get our electricity happens.

There will be complications down the road. In particular, most renewable electricity generation is not stable over time. Sunny days produce solar power, nights don’t; windy days generate more wind power than quiet days. Conversely, coal and nuclear plants take a lot of time to get up to production temperatures, and then produce very consistent amounts of power. That means that as more and more of the overall generating capacity is renewable, and less and less is coal and nuclear, we’ll need to invest more in technologies to match supply to demand — grid-scale batteries (including mechanical batteries like changing hydroelectric generation to shift power temporally), house and car scale batteries with smart charging, and peaker natural gas plants that only run at times of high demand. This isn’t going to be simple, and it increases the cost of renewable energy compared to more stable sources. However, as the cost of renewable energy keeps dropping, the cost of renewable energy and the increased storage needs is dropping below the costs of fossil fuel based power.

In the US, power demand is relatively static — it’s not increasing much year to year, and in some recent years it’s actually declining. But in other parts of the world — India, China, and Africa — power consumption is still rising rapidly. That’s a good thing! Increased power consumption supports better lifestyles, and we should be happy about poor people having more resources and better lives. But does that mean that we’re doomed to have more carbon release? No, because even in China and India and Africa, the costs of renewable energy is dropping below the cost of new coal and even new natural gas. Increasingly, we’ll be seeing massive increases in renewable electrical generation around the world, which will mean better quality of life for the poor at the same time as carbon release drops.

Cheap enough electricity also makes many carbon-capture technologies more viable. Also, when electricity is cheap enough, heat generation and industrial purposes that currently rely on carbon intensive approaches will also shift towards using electricity generated by clean sources.

This process isn’t going to be super fast — but the rate at which we’re producing greenhouse gases is likely to drop rapidly over the next couple decades, eventually hitting net negative, because technological progress is going to make it economically obvious. It will take a while, and in the meantime temperatures are going to continue to rise, with disastrous consequences. But while this may make the world of 2050 significantly worse, I’m much more sanguine about the likely world of, say, 2200, and maybe even 2100, than I was ten years ago.

Economic Considerations Will Make Electric Vehicles Dominant

The other half of this is the electrification of transport. A ton of pollution, including a large fraction of global warming gasses, comes out of the tailpipes of cars and trucks. And until recently, there was little alternative to the internal combustion engine. That’s suddenly changed.

Within the last few years, the lifetime cost of owning an electric vehicle, counting capital costs, maintenance costs, and cost of power, has dropped below the cost of owning a comparable ICE vehicle in classes where comparable electric vehicles exist. It’s now cheaper to buy a new Model 3 and own it over its lifetime than it is to buy a new mid-sized sedan and own it over its lifetime. Likewise, a Leaf is cheaper on a total cost of ownership basis than an economy sedan. Because most of the costs of an electric vehicle are in the battery pack, and battery costs continue to plummet, the advantage of EVs is likely to grow substantially in the near future.

Also, new classes of EVs are hitting the market now or in the near future. The F150 Lightning and similar pick-up trucks will make a huge difference as well, with the F150 Lightning hitting the market around May of this year. Eventually, as battery costs drop, EVs will move into every segment of the automotive industry and force out the ICEs by outcompeting them. This will take a while — most people buy used vehicles, and we’re still a while out from the point where even a majority of new vehicles are EVs. But the writing’s on the wall: as battery prices drop, buying ICEs will increasingly mean spending more money to get worse cars. It won’t be that long before new ICE cars are a thing of the past, and then the used car market will gradually also become the used EV market instead. And there’s a feedback loop with the decreasing costs of renewable electricity, as well: as electricity prices drop in real terms because of ever cheaper, clean generation capability being built, the cost advantage of EVs will increase. These tech changes will drive changes in environmental impact.

This is huge, for multiple reasons. First, of course, this is the other big piece in solving global warming. Transportation is a major source of greenhouse gases, and when we electrify transportation while also shifting to a green grid, we make major progress on greenhouse gases.

But also, tailpipes and electricity generation are major sources of air pollution, and air pollution’s effects are awful. We’re only now getting past the huge damage leaded gasoline caused, but even modern ICEs pump lots of damaging gases and particulates into the air. We’re all less smart and less healthy than we would be without air pollution. The evidence on this is unambiguous. But the harm to our children will be less than the harm to us. And our grandchildren (for people of roughly my generation) may grow up in a world where the air pollution from cars and from power plants is a thing of the past. Their lives will be vastly better because of having clean air to breathe. And these effects will be bigger for poorer communities that currently bear the brunt of the burdens from pollution.

So, there are plenty of things to be worried about in the world today. But it looks like technology and economic considerations are going to produce some huge gains in the near future. Policy still matters, of course — every year matters, and incentives to cause the transition faster will be better. However, even without policy to incorporate the externalities caused by pollution, dollars and cents will still drive us to a world with much lower greenhouse gas production and other air pollution in the coming decade or two.

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