Climate change and global warming have gone from a niche political issue 20 or more years ago to front and center topics, which impact a wide variety of industries and much of our public discourse. From the Green New Deal to other plans to combat the spread of climate change and other ecological impacts, a wide variety of solutions have been proposed to help reduce the economic impact of any plan that might constrain industry in addition to promoting Earth’s long-term well-being. For many, one of the more business or market-friendly solutions is a carbon pricing plan. Below, we’ll explore what it is, how it works, and what it means for industry going forward in uncertain economic times.
What is Carbon Pricing?
Carbon pricing is when carbon emissions themselves are calculated and a cost is associated with the emission. For example, carbon emissions are created when coal, natural gas, and oil are used to create energy. These energy sources, known as fossil fuels, create the carbon emissions which are primarily responsible, if not heavily contribute, to climate change. Proponents of carbon pricing argue that climate change, including rising sea levels and temperatures, is mainly caused by industries and activities which disproportionately produce these outputs, and, therefore these effects.
By working to assign a price to these carbon outputs, businesses will become more conscious of creating these outputs and will, in turn, find a way to create less of them. This burden shifting from those who have to deal with the impact of climate change and find a solution, namely government and taxpayers, to those who create the carbon outputs, energy producers and other industries, is just one goal of carbon pricing. The other goal is to help ensure that more climate-friendly technology will be introduced and used in the fight against climate change by businesses as they look to reduce their overall carbon usage.
How Do Carbon Pricing Plans Work?
The first way to implement a carbon pricing plan is through a plan which has received its fair share of news coverage and is commonly known as cap-and-trade. This system would impose a cap on the amount of carbon emissions that could be used in a year and use a market-based system so manufacturers, energy producers, or others could obtain more. For example, if 100 carbon units are divided among qualifying businesses in whole or in part, some businesses can pay others or go to an open market to bid on carbon units which help ensure they make their energy or production quota. This incentivizes many businesses to 1) invest in more efficient ways to produce their product or energy and 2) invest in more environmentally friendly ways for these actions to happen. This also helps reward energy efficient businesses by allowing them to sell their share of the carbon unit to recoup the cost of installing and investing in environmentally-friendly technology and eventually profiting from such a decision in the short or long term.
The second way to implement a carbon pricing plan is through a carbon tax. A much more straightforward way to implement a carbon pricing plan, the carbon tax would penalize those who use carbon more by taxing them more. The incentive for any carbon producer would thus be lowering their tax burden by investing in energy efficient and environmentally-friendly technology. Some have also proposed a rising carbon tax over time so even the largest firms are not immune from the direct cost of producing carbon without taking steps to improve their energy efficiency. Finally, there are several hybrid models that take both plans into account which have been proposed and may be workable.
What does this mean for energy producers and other carbon-heavy industries?
Many individuals and business leaders have been watching the evolution of the carbon pricing plan and the different proposals surrounding it with interest for what it could mean for both the economy and the environment. While there are many proposals under discussion at various levels of government, Congress has yet to pass a bill which would mandate a definitive carbon pricing plan scheme. For now, the national debate will continue as to the best way to implement a carbon pricing plan, if one is implemented at all.
From policy changes to changes in how individuals and businesses consume energy, below are just some of the changes that could happen in 2021 relevant to energy so you can be prepared.
Renewables will experience a resurgence
Due to the pandemic, some solar and wind projects were postponed as we learned how to live in the new normal. In 2021, we should expect to see a resumption of those projects, with some coming online this year leading to more renewable energy capacity likely approaching 2019 levels. Unfortunately, growth may still lag previously anticipated growth, so room for improvement in renewable energy growth will likely still be a priority into 2022.
Oil production will continue to decline throughout 2021
Due to the COVID-19 related lockdowns, the demand for oil dropped precipitously as individuals and businesses no longer used their cars, public transport, or airplanes to get to where they needed to be. This sharp decline for an already-battered oil industry does not look to be getting better, and production may not ramp up to pre-pandemic levels for the foreseeable future.
Liquified Natural Gas and Coal will feel 2021 impacts
Liquified natural gas will likely continue to be lower than pre-pandemic levels up until the second half of 2021. However, this is dependent on the industrial sector’s economic recovery, given that it is the primary driver of demand for liquefied natural gas. Similarly, demand for coal has followed a similar path due to the COVID-19 related economic slowdown that has plagued our world. If in 2021, there is increased electricity consumption and the use of natural gas increases to fuel the demand for more energy, it is likely that coal prices will increase as well.
Electric power generation may remain relatively low through 2021
Given continued economic uncertainty throughout various sectors, electric power generation may remain relatively low as businesses and industries scale up to meet potentially more demand if the COVID-19 vaccines enable a return to workplaces across the world. Additionally, the ability of the construction industry to add new capacity to power generation will play a role in if and how electric power generation is ramped up this year.
Global energy demand will continue to rise despite pandemic-related economic uncertainty
Leading the way on global energy demand, developing nations will continue to demand more energy as they bring power to places that were not connected or lacked sufficient power. Additionally, higher standards of living worldwide will increase the demand for consistent, reliable energy even if developed nations’ energy demands remain relatively stable or even decline.
What can we expect for 2021?
2021 promises to be a tumultuous and uncertain year for energy given the uncertainty surrounding an economic recovery and the speed at which the global population can get vaccinated against COVID-19. Given some governments’ vaccination targets, the second half of 2021 could be markedly more certain than the first.
However unlikely, recent work regarding iron as a clean energy source has been encouraging and demonstrates that in areas where solar, wind, and hydrogen power aren’t possible or are too expensive, there can be an alternative renewable power source. Below, we’ll detail why burning iron for fuel could be the next big thing in renewable energy.
What is iron?
Iron is commonly thought of in two ways: as a vitamin and as a mineral that is converted to metal. It is found throughout our lives, most often in kitchen implements such as cast iron skillets and other metal implements. Iron can also be found in powdered form. In this form is how it is useful to creating renewable energy.
How does burning iron for fuel create renewable energy?
Referred to as the “circular economy of iron burning,” iron is burned and creates and improves combustion processes through a variety of means, including electrolysis. Following the successful high-heat combustion process, there is waste comprised of oxidized rust that can be recycled to create new energy in this circular energy creation process.
What are the advantages of iron and why hasn’t this been tried before?
Iron may be thought of as bulky and heavy but, as a powder, it is light and easily transportable. Iron as a source of renewable energy is possible almost anywhere with the right facilities. Although iron as renewable energy has been available for quite a while, traditional fossil fuels such as oil and coal have been more plentiful and cheaper, thus not requiring new ways of creating energy. Only with the need for renewable energy for both environmental and practical purposes has iron become another possible energy creator to meet the world’s energy needs.
Is iron as a renewable energy source possible in the short term or is this a longer-term strategy?
Iron as a source of renewable energy is a promising idea that is feasible for a small number of energy producers but, as of now, requires much more planning and a larger supply chain to make this a reality. As it stands, many facilities are not yet equipped to convert iron into energy and thus cannot take advantage of it.
Is this a positive development for renewable energy?
Although many do not immediately associate iron with renewable energy, burning iron for fuel could be the next big thing in renewable energy. The more good options governments and localities have, the more likely they will be to choose renewable energy going forward.
With the renewed emphasis on climate change, many states and municipalities are exploring every possible option to increase the amount of options they have when producing renewable energy. For many years, solar and wind have been the dominant forms of renewable energy, and the first thing many people think of when they think of clean energy. Now, green hydrogen, which was previously prohibitive due to cost and infrastructure, is another renewable and reasonable alternative to wind and solar. Below, we’ll detail what hydrogen power and green hydrogen are and what it can do for renewable energy.
What is hydrogen power?
Hydrogen power is created by splitting water into hydrogen and oxygen, leaving only water as a by-product, making it a great clean energy solution for states and municipalities. However, the traditional manner to create hydrogen is not even close to environmentally friendly due to the exposure of hydrogen to fossil fuels. It also requires a large amount of energy to split atoms and create hydrogen power, creating another environmental harm. This process proved to be unwieldy and impractical, not to mention the environmentally unfriendly impact this process would have.
What is green hydrogen power?
Green hydrogen, in contrast, is produced in a much more environmentally friendly way. Green hydrogen, although not a recent invention, has just recently become a practical alternative to traditional hydrogen power. Given the fact that a large amount of energy is returned to the grid from other renewable energy sources – such as wind and solar – the amount of energy expended to create green hydrogen energy and its potential to cause more pollution is no longer a significant consideration. Another consideration to the value and ecological proposition of producing green hydrogen power is that electrolyzers, the machines that split water into hydrogen and oxygen, are becoming much more efficient than their predecessors.
What can the potential impact of green hydrogen power on renewable energy be?
Green hydrogen power can potentially have a revolutionary impact on renewable energy and how it is produced, given the advances in both the power grid and electrolyzers. This new way to create renewable energy can help shift more resources into clean energy, reducing overall negative environmental impact and causing long-term investment in more reliable energy solutions. Some companies are already working to integrate green hydrogen power into their existing operations or plans, so they can reap its benefits early and often. For some sectors of the economy that are so far untouched by wind or solar power, green hydrogen can provide a clean energy alternative given the requirements of more concentrated energy. No matter its uses per industry, green hydrogen power will help propel clean energy forward and provide another way to power homes, businesses, and other important locations.
Renewable energy has taken the world by storm and has contributed to powering homes and businesses in addition to helping clean up our environment. From its inception, renewable energy has continued to grow by leaps and bounds year after year. Although many have known anecdotally that there has been an increase in renewable energy levels, a recent study by the International Energy Agency confirms that renewable energy created electricity has hit record levels in 2020. Additionally, the fossil fuel industry declined due to COVID-19.
Investments in new energy throughout 2020 have radically skewed to renewable energy. According to the International Energy Agency report, almost 90% of 2020’s new electricity generation is from renewable energy sources. In contrast, only 10% is powered by gas and coal sources. Renewable energy is on track to only keep growing, with some experts believing that it will be the world’s largest power source by 2025. This would eclipse the current electricity power leader of coal, the leader for the past 50 years which has supplied around a third of the world’s electricity.
Among the renewable electricity sources, the pack is led by hydropower which supplies around half of renewable electricity and is then followed by wind and solar electricity generation sources. Since 2010, solar power capacity has increased 18 times over and wind has increased four times over. This has eaten into the percentage of hydropower as a percentage of renewable electricity which dropped from 77% in 2010 to 45% in 2020.
Driving renewable energy growth in 2020 were the U.S. and China, which added a total of four percent more capacity in total renewable energy output. However, the U.S. and China are not expected to be the nations that will continue to power the growth of renewable electricity over the next year in 2021. Instead, India and the nations of the European Union are supposed to be the countries that will be driving the growth of renewable energy. The European Union and some of its member countries have already set aside billions to help promote and implement renewable energy solutions.
2021 will be a crucial year for renewable energy in the U.S. given that the incoming administration may implement policies that encourage the creation, installation, and deployment of renewable energy solutions across the country. This could especially be true of easier to deploy renewable energy sources such as solar and wind power. Much of the progress will also depend on how cooperative Congress is with the incoming administration’s energy agenda.
No matter what happens in 2021 and beyond, it is incontrovertible that 2020 set records in the area of renewable energy. Through long-term and consistent investment, these energy sources were deployed in record numbers while their more traditional counterparts – coal and gas – declined and do not seem on track for recovery to their pre-2020 numbers. Renewable energy sources are part of our present and are the wave of the future.
Oil has long been a mainstay in our lives when it comes to how we power our homes, get to and from a local place, and transport ourselves to far off lands. Whether it’s planes or automobiles, oil is needed to get most engines going so people can to where they need to be. Oil has also worked to heat homes across our nation when the winter comes. For decades, the reliable way to guarantee energy every year was through oil. However, the end of the oil age may be upon us.
Why has oil been a reliable energy source for decades?
For decades, oil was a dependable source of energy for millions of people with a few notable exceptions such as the oil embargo in the 1970s and a few other interruptions. By and large, oil was a reliable way to create energy around the country. It was also relatively cheap to transport, store, refine, and then sell to consumers and others with, at one time, seemingly limitless oil reserves and deposits throughout the world, including in the United States.
What makes oil less attractive as time has gone on?
While, in the beginning, oil was much cheaper and seemingly limitless, demand began to catch up with supply. Oil price wars became more common and the amount of money consumers had to spend to drive or airlines had to spend to effectively fly their fleet made it a less attractive option. Additionally, as so many around the world have become more and more concerned with climate change and its causes, oil production and products that use oil – namely vehicles and airplanes – have come to be seen as culprits for a changing environment and planet.
Are there any realistic alternatives?
In previous decades, many energy experts would not have believed there would be a realistic alternative to oil powering our energy needs but today, clean energy is becoming more and more prevalent. Now, totally electric cars that are emission free are able to get all the power they need off any local power grid. There are more clean energy power plants that consist of wind, solar, or hydroelectric power that is renewable and does not create harmful emissions that damage our planet or contribute to climate change.
What does this mean for the future of oil?
As transportation networks continue to be stretched, environmental considerations become top of mind for corporations and consumers, and it becomes cheaper to invest in renewable energy sources, the future is likely bleak for oil. While it does not look like there will be any immediate stoppage of the use of oil for transportation, home heating, or other purposes in the short term, there will likely be more use for renewable energy sources and a decline of sources that continue to be depleted. Oil may still be a current commodity, but it may go the way of the dinosaur for our grandchildren.
It’s no secret that the presidential campaign is now in full swing, and voters are starting to pay attention to the myriad of issues presented to them. One of those issues that is likely going to be on every voter’s mind at one time or another is how to get to clean energy as quickly as possible. Democratic presidential nominee, former Vice President Joe Biden, has presented a plan that can potentially make clean energy in 15 years possible.
What does the plan do and how does it help us get to clean energy by 2035?
One of the linchpins of the plan is dealing with our nation’s energy grid. For example, there are power plants in parts of our nation that are relying on more traditional energy producing technologies such as coal, oil, and gas which would certainly not qualify as clean. In addition to harming the environment, these technologies often make us dependent on at least one foreign source of energy, such as in the case of oil. Biden’s plan makes cleaning up the energy system one of its biggest priorities.
How much will Biden’s plan cost and what do some argue the benefit is?
Former Vice President Biden’s plan is wide ranging and very comprehensive with a total cost of around $2 billion to implement it over the course of four years. For those who are concerned about the environment, this plan is a long overdue step toward helping stop and reverse the catastrophic events surrounding climate change. Getting rid of a major source of pollution will help us take better care of our planet, which will pay dividends for generations to come.
What are the specific requirements of the energy industry under Biden’s plan?
The Biden plan calls for clean electricity by 2035 with no attendant carbon production. For those who stressed energy independence, this is a benefit due to the federal attention that will be paid to this plan and its implementation if the Biden/Harris ticket should win. However, some skeptics have noted that while some states have fairly advanced standards for power generation and specific sources and thus would have no problem meeting Biden’s plan, there are others where that would be much more difficult given their lax energy standards. This plan, no matter if it is truly implemented in four years, is a huge step forward for clean energy.
What happens going forward with this plan?
As with most things in politics, it is likely to be litigated, criticized, and picked apart over the course of the campaign. Should Biden win, the official White House policy may be something resembling this plan, but it may have some changes given the tone and tenor of the campaign or there may be some adjustments due to Congress’ input. No matter what happens during the campaign, the people who will have a say as to whether this plan or one similar to it gets implemented are the voters.
For so many, how they get power is just as important as the amount of power they consume. Given today’s environmentally conscious consumers and the movement to stop or slow global warming, there is a growing concern that traditional sources of power are no longer sufficient to stop the spread of climate change. Consumers and business leaders are turning to new, innovative, and, most importantly, renewable sources of power which replace traditional sources of power. This pivot to new sources of power can and has been accomplished by hydro and wind power but also has success when solar power is involved. Below, we’ll discuss how solar power can be a significant contributor to creating power as it stands and what new, exciting developments have come about.
What is solar power and how does it work?
Solar power is, simply, energy harnessed from the sun’s rays which is then used to power cells via solar panels. Panels are often placed on top of buildings in order to absorb as much of the sun’s rays as possible. This then creates an electrical process that allows the panels to transfer power to the building they are placed on. Any excess power after the building has consumed all needed power can then be sent to the power grid for use by other buildings or for other endeavors.
Notably, this isn’t the only way to place solar panels. There are large areas with many solar panels (known as solar farms) in sunny places throughout the country that do not have the typical “drain” associated with panels feeding a building. This allows for power to be sent to the power grid from a renewable source and ensure that homes, businesses, and industry is powered by an environmentally friendly source.
What new methods can help improve solar power?
Recent studies have given lift to the idea that solar power can get even better and more accessible in the years to come. One method is incorporating oxygen into solar panels to be able to create an electrical process by capturing what is known as “invisible light,” which is light that the human eye is unable to capture unaided. Additionally, new materials may make the manufacture of solar panels cheaper, so they can be used in a more widespread manner not just on solar farms but more frequently in residential dwellings or in other ways that we may not have yet considered due to the sometimes cost prohibitive nature.
What does this mean for the future of renewable energy?
Renewable energy, specifically solar, now has the potential to play an even greater role in our country’s energy supply and power grid. No matter whether a community or state decides to use traditional solar panels or a newly improved solar panel setup, we can be assured that the future with solar power will be bright.
Renewable energy use is on the rise and can create long-lasting benefits for not only our environment, but our long-term energy needs as well. This energy plan, Governor Cuomo’s own “Green New Deal,” aims to revolutionize the way that New Yorkers consume energy and make the state less dependent on fossil fuels and other types of non-renewable energy sources over time. This plan, while not unique to New York, is unprecedented throughout the state’s history, and may well revolutionize the energy industry in New York like the New Deal revolutionized America in the 1930s.
What does Governor Cuomo’s Green New Deal plan include?
Governor Cuomo’s Green New Deal plan includes plans to boost the state’s clean energy standard to 70 percent from 50 percent by 2030. There are a variety of ways the Governor proposes to do this which include:
- Increasing the offshore wind target from 2,400 megawatts by 2030 to 9,000 megawatts by 2035
- Doubling solar deployment from 3,000 megawatts by 2023 to 6,000 by 2025
- Maximizing large scale renewable energy contributions already in place from New York’s resources
- Striving toward more than double the land-based solar and wind resources based on the Clean Energy Standard
Are there any financial incentives to spur the private sector in the Green New Deal?
Governor Cuomo also included $1.5 billion in awards for more than 20 solar, energy, and wind projects in New York. These projects are slated to power more than 550,000 homes in addition to creating more than 2,500 jobs that will help New Yorkers in the short and long-term.
Has there been anything recently announced since the 2019 rollout of the plan?
The Governor’s 2020 state of the union address specifically addressed 21 awards that will help create more than 2,000 jobs and helps propagate more than $2.5 billion in private investment. Notably, projects received bids that were 23% lower than three years ago, saving taxpayers money and allowing for more work to be done toward renewable energy solutions. The implementation of these projects are the energy equivalents to helping take 300,000 cars off the road each year and reduces carbon emissions by 1.3 million metric tons annually.
What does this mean for New York and renewable energy?
This is a boon for New York and renewable energy across the state and, hopefully, nation. Using this as an example, energy may be able to be revolutionized across the United States so that older, more inefficient, and more expensive ways of producing energy are phased out so the consumer can benefit. This can help pave the way for increased productivity from energy sources, in addition to cleaner air and water that makes cities or other areas more attractive for short and long-term investment. No matter what the specifics of Governor Cuomo’s proposal are, the long-term trend toward more renewable energy in New York is a positive for clients who may be able to see the financial and ecological benefits sooner rather than later.
For hundreds of years, humans have found different and novel ways to produce energy. Those innovations, such as oil and gas, were revolutionary for their time, but created unparalleled pollution which impacted our environment immediately and over time. While helpful during a time in which these energy sources seemed limitless, these energy sources, such as coal, ended up becoming a noose around the neck of energy producers and consumers. With the advent of renewable energy, there was another alternative and, now, for the first time in 130 years, renewable energy has surpassed coal. This striking milestone reveals much about the future of energy and why even improbable energy sources can become major producers of the electricity we consume.
What is coal-powered energy?
Located mostly in a nation’s mountains, coal is a resource that has been used for around 200 years for a variety of purposes, from home heating and power to helping drive railroads forward as the primary fuel for locomotives. This then-abundant, cheap resource powered our nation’s industry and countless homes, factories, and office buildings. It also created thousands of jobs for coal miners and those who had to service all facets of the industry, from mining coal to transporting and packaging it for use around the country. This energy source, when burned, caused heavy pollution in cities and other places and was creating a problem when it came to the long-term health and environmental impact. While cheap and abundant during a time, this energy source doubled back on its users and may have created more problems than it solved.
What is renewable energy?
Quite simply, renewable energy is any energy source that can be renewed, replenished, and will not be exhausted like conventional energy sources such as coal, oil, and other finite energy sources. Wind, solar, hydro-electric, and other sources which are sometimes more expensive to create at the outset may be better long-term investments in energy production in addition to environmental protection. It also is the wave of the future, given the diminishing amount of certain energy resources that have previously been mined or tapped. Given this backdrop, it is no surprise that as an ascendant energy source, renewable energy would eventually eclipse coal in the amount of use.
How has renewable energy surpassed coal as an energy source for the first time in 130 years?
In 2019, according to Electric Power Monthly, renewable energy surpassed coal as an energy source for the first time in 130 years with renewable energy comprising 23% energy usage and coal comprising 20% of energy usage. While some of this change can be attributed to higher temperatures in certain parts of the nation, which allows for less energy generation in areas that rely on traditional energy sources in the winter. In addition to the lessening of usage of traditional energy sources, there was heavy generation of energy from wind-based sources in addition to solar sources. Hydroelectric generation was also helped by seasonal changes to help drive the energy produced from this source up. No matter whether seasonal changes were to be credited for renewable energy sources eking out coal, it shows that the next generation of energy sources is quickly beating out the previous generation’s energy sources.
What does this mean for me and my clients?
This is a net positive for us all. Cleaner, more reliable energy sources can help ensure that prices are more uniform, we have a pristine environment, and a power grid that is less subject to disruption from imported fuels. Working to create more predictable energy sources that will last longer will hopefully lead to lower fuel prices for us all.