President Donald Trump's climate change executive order is intended to roll back government policies that allegedly are holding fossil fuels back. It's true that fossil fuels, and especially coal, are losing market share and investor confidence: The world's 40 largest coal companies saw their market capitalization decrease by a stunning 37 percent between 2010 and 2015. But what really holds fossil fuels back is that investors and consumers prefer clean energy.
Combined, energy productivity — which refers to technical efficiency improvements, increased conservation and better energy management — and renewable energy are now the largest sources of new energy services to the American economy. Without the improvements in energy productivity made since 1980, U.S. energy consumption would be more than 50 percent higher than it is today.
Energy productivity does something that fossil fuels can no longer consistently do; it saves people money. The cheapest energy of all is the energy we don't use. Energy productivity is already outperforming the fossil fuel sector in terms of job growth and cost savings. Almost 900,000 workers spend more than half their time doing energy efficiency work. Doubling energy productivity would save the U.S. economy $327 billion annually after subtracting investment costs, and would generate 1.3 million new jobs.
In 2016, for the third consecutive year, the majority of new electric generating capacity added to the grid was from solar, wind and other renewable sources. Renewable energy has reached grid parity in nearly the entire country, according to the U.S. Energy Information Administration, as well as Lazard and Deutsche Bank, which advise large energy investors. Put differently, the life cycle cost of electricity from wind and solar is now at or below the cost of electricity from coal, nuclear, and even gas — even without subsidies.
The number of solar energy jobs in the U.S. has doubled in the last five years and is more than twice the number in the coal mining industry. Wind power provided an industry record of 102,000 jobs in 2016, a 32 percent increase over 2015, with the greatest number of jobs in Texas and Oklahoma. Overall, the solar and wind energy industries employ more Americans in the electricity generation sector than coal, oil and natural gas combined.
Energy productivity and renewable energy are a safer and lower risk for investors. As a result of uncertainty in both the demand for and the supply of energy, investors prefer projects that are smaller in scale, have a shorter payback period — or both. Renewable energy projects typically require from a few thousand to a few million dollars to launch. By contrast, coal and gas plants typically involve an investment of hundreds of millions or even billions of dollars. In addition, energy productivity and renewable energy projects can pay off investors in eight years or less. Coal and gas plants, by contrast, typically involve payback periods of 20 or more years.
And there is more to come. Energy productivity and renewable energy are in the early stages of innovation in three important ways:
•Reducing cost per unit of energy service. The cost of solar cells is one-fourth of what it was eight years ago, and LED lights have dropped in cost by a factor of six to eight in the same period. By contrast, the cost per unit of energy service for conventional fossil fuel plants has changed little over that time. The biggest change is the reduced cost of natural gas as a fuel, but the reduction has not been by a factor of four.
•Performance, as measured by efficiency in producing energy. Eight years ago, solar cells converted eight percent of the sunlight they received to electricity; today they convert 18 to 20 percent. Boiler efficiency for a fossil fuel plant is essentially the same as it was eight years ago.
•Functions they can serve. Combining information technology, solar energy and storage in our homes will allow us to change energy demand hour by hour for each appliance and transfer energy to our cars overnight.
In coming years, we will both produce and consume energy in our homes and businesses. Energy productivity and renewable energy provide more attractive options for energy users and investors. Energy productivity is far less expensive today than fossil fuel generation, and residential solar has reached grid parity in 20 states, with the expectation it will be competitive in 42 states by 2020.
There is no going back.
John Byrne (email@example.com) is a distinguished professor of energy and climate policy at the University of Delaware and chairman and founder of the Foundation for Renewable Energy and Environment. John Dernbach (firstname.lastname@example.org) is commonwealth professor of environmental law and sustainability at Widener University Commonwealth Law School, and director of the school's Environmental Law and Sustainability Center. This op-ed is adapted from research papers written by each of the authors.