After years of downplaying the economic viability of renewable energy, “big oil” has finally been overrun by a clean-energy giant. NextEra, a Florida-based utility and clean power producer, had a market capitalization of $138.6 billion at the beginning of this month. They have hundreds of renewable projects built and planned across the entire continental United States, making them the most expansive clean energy producer in the world. The big oil behemoth, ExxonMobile, dipped down to $137.9 billion that same day, representing the first time a renewable energy company had been valued higher than the once-unbeatable oil conglomerates.
Any kid with a Robinhood account could tell you, “well, that is probably just due to market volatility during the pandemic.” To an extent they would be right. Market volatility has gone through the roof since the outbreak of COVID-19. However, this is not an entirely random panic of investors, but rather a strategic long term consideration. The pandemic has driven down demand for fossil fuels, with the world largely pausing its consumption for several weeks and decreasing use in general over the past 8 months as more people are working from home and avoiding travel. This dramatic disturbance to the fossil fuel industry may be the catalyst for its long-awaited downfall.
Economists have long predicted its demise, but the industry had so far propped up its dominance with misinformation and lobbying, using its money and power to block meaningful action on climate change and diverting crucial investment from renewable energy R&D. This strategy, like that of the tobacco industry, has always been one of delaying the inevitable rather than fighting for long term viability. Fossil fuels like coal, oil, and natural gas are fixed resources which will eventually fall to the impacts of scarcity, which has already led the industry to search for deposits in increasingly remote places with increasingly dangerous methods. I don’t think you need to be an expert in risk analysis and safety engineering to see that there are better alternatives.
The United States has steadily reduced its reliance on fossil fuels in the past decade. States within the Great Plains, such as Kansas and Iowa, have rapidly increased their wind-based electric production to 40% of their total electricity production, eating away at coal’s dominance and preventing natural gas from gaining a foothold like it has in much of the rest of the country. The next step in the energy transition is to not just replace coal generation with renewables, but cut into the natural gas production once championed as a “transition fuel”.
Since solar and wind have dropped in price, they finally represent projects with both environmental and economic advantages. Their price decrease isn’t slowing down either—while 75% of all planned electricity generation projects are either wind or solar, 85% of all closing plants are coal or natural gas. With this demonstrated tsunami of a trend coming, the fossil fuel industry has no options left. They need to get with the program and build some frickin’ turbines.
Some have dug their head out of the sand and have taken the hint. Shell, Total, Repsol, and others have announced carbon neutrality & reduction targets for the next few decades. They’ve begun to invest in renewable energy infrastructure and R&D, but will need to pivot even more thoroughly in the next few years to have a significant impact. With NextEra leading the way, these transitioning energy giants have a long way to catch up to the competition.
For years there have been people who said that renewable energy was pointless and would never become economically viable, while others said that it needed to be treated with non-economic value in order to avert climate disaster. Both groups have now been proven wrong. Sustainable change in the energy sector is both possible and financially lucrative, meaning a new chapter in the energy transition is upon us. Renewable energy just took the throne and its rule is the only thing that will keep us from destroying our home.