Should We Continue to Incentivize Renewable Energy?

The story

In 2016, about $297 billion was spent globally on renewables, more than twice the $143 billion spent on new nuclear, coal, gas, and fuel-oil power plants, according to the most recent data from the International Energy Agency.

The IEA estimates that renewable energy will account for 56 percent of net generating capacity added through 2025.

Bloomberg reports that while the share of fossil fuels in global energy generation has remained relatively stable over the last 20 years, there is significant growth in the pace of renewables uptake. The article notes:

“Incumbency identifies history’s winners. Growth, even at a nascent stage, identifies what comes next – and attracts investment accordingly.”

Growth and cost drivers

Renewable energy was originally bolstered by substantial government incentives, but these have diminished consistently over the last 10 years, while renewables have rapidly grown more competitive.

The Wall Street Journal reports:

“Renewable costs have fallen so far in the past few years that ‘wind and solar now represent the lowest-cost option for generating electricity,’ said Francis O’Sullivan, research director of the Massachusetts Institute of Technology’s Energy Initiative.”

In the United States, 20 years’ worth of government tax credits have propelled renewables forward. Some of these credits are set to expire soon.

Risks

Renewable output varies, relying on the sun to shine and the wind to blow, and thus cannot always be dispatched when needed like coal or gas can. However, experts say it takes a high level of renewables penetration in a market for that to be a problem.

Meanwhile, a recent study concluded that we are on the brink of a much worse financial crisis than the one from 2008, as between 1 and 3 trillion worth of fossil fuel investments become economically unviable.

What do you think?

Should government continue to incentivize renewable energy? Hit Take Action, then share your thoughts below.

—Sara E. Murphy

(Photo Credit: seagul / iStock)