The irreversible momentum of clean energy

15.01.2017 10:19:51

Cite as: B. Obama, Science
10.1126/science.aam6284 (2017).


The irreversible momentum of clean energy

By Barack Obama

President of the United States, Washington, DC 20500, USA.

Email: press@who.eop.gov. After 20 January 2017: contact@obamaoffice44.org

Private-sector efforts help drive decoupling of emissions and economic growth


The release of carbon dioxide (CO2) and other greenhouse
gases (GHGs) due to human activity is increasing global av-
erage surface air temperatures, disrupting weather patterns,
and acidifying the ocean (1). Left unchecked, the continued
growth of GHG emissions could cause global average tem-
peratures to increase by another 4°C or more by 2100 and
by 1.5 to 2 times as much in many midcontinent and far
northern locations (1). Although our understanding of the
impacts of climate change is increasingly and disturbingly
clear, there is still debate about the proper course for U.S.
policy-a debate that is very much on display during the
current presidential transition. But putting near-term poli-
tics aside, the mounting economic and scientific evidence
leave me confident that trends toward a clean-energy econ-
omy that have emerged during my presidency will continue
and that the economic opportunity for our country to har-
ness that trend will only grow. This Policy Forum will focus
on the four reasons I believe the trend toward clean energy
is irreversible.

 

ECONOMIES GROW, EMISSIONS FALL

The United States is showing that GHG mitigation need not
conflict with economic growth. Rather, it can boost efficien-
cy, productivity, and innovation.

Since 2008, the United States has experienced the first
sustained period of rapid GHG emissions reductions and
simultaneous economic growth on record. Specifically, CO2
emissions from the energy sector fell by 9.5% from 2008 to
2015, while the economy grew by more than 10%. In this
same period, the amount of energy consumed per dollar of
real gross domestic product (GDP) fell by almost 11%, the
amount of CO2 emitted per unit of energy consumed de-
clined by 8%, and CO2 emitted per dollar of GDP declined by
18% (2).

The importance of this trend cannot be understated.
This "decoupling" of energy sector emissions and economic
growth should put to rest the argument that combatting
climate change requires accepting lower growth or a lower
standard of living. In fact, although this decoupling is most
pronounced in the United States, evidence that economies
can grow while emissions do not is emerging around the
world. The International Energy Agency's (IEA's) prelimi-
nary estimate of energy-related CO2 emissions in 2015 re-
veals that emissions stayed flat compared with the year be-
fore, whereas the global economy grew (3). The IEA noted
that "There have been only four periods in the past 40 years
in which CO2 emission levels were flat or fell compared with
the previous year, with three of those-the early 1980s, 1992,
and 2009-being associated with global economic weakness.
By contrast, the recent halt in emissions growth comes in a
period of economic growth."

At the same time, evidence is mounting that any eco-
nomic strategy that ignores carbon pollution will impose
tremendous costs to the global economy and will result in
fewer jobs and less economic growth over the long term.
Estimates of the economic damages from warming of 4°C
over preindustrial levels range from 1% to 5% of global GDP
each year by 2100 (4). One of the most frequently cited eco-
nomic models pins the estimate of annual damages from
warming of 4°C at ~4% of global GDP (4-6), which could
lead to lost U.S. federal revenue of roughly $340 billion to
$690 billion annually (7).

Moreover, these estimates do not include the possibility
of GHG increases triggering catastrophic events, such as the
accelerated shrinkage of the Greenland and Antarctic ice
sheets, drastic changes in ocean currents, or sizable releases
of GHGs from previously frozen soils and sediments that
rapidly accelerate warming. In addition, these estimates
factor in economic damages but do not address the critical
question of whether the underlying rate of economic growth
(rather than just the level of GDP) is affected by climate
change, so these studies could substantially understate the
potential damage of climate change on the global macroe-
conomy (8, 9).

As a result, it is becoming increasingly clear that, regard-
less of the inherent uncertainties in predicting future cli-
mate and weather patterns, the investments needed to
reduce emissions-and to increase resilience and prepared-
ness for the changes in climate that can no longer be avoid-
ed-will be modest in comparison with the benefits from
avoided climate-change damages. This means, in the coming
years, states, localities, and businesses will need to continue
making these critical investments, in addition to taking
common-sense steps to disclose climate risk to taxpayers,


homeowners, shareholders, and customers. Global insur-
ance and reinsurance businesses are already taking such
steps as their analytical models reveal growing climate risk.

 

PRIVATE-SECTOR EMISSIONS REDUCTIONS

Beyond the macroeconomic case, businesses are coming to
the conclusion that reducing emissions is not just good for
the environment-it can also boost bottom lines, cut costs
for consumers, and deliver returns for shareholders.

Perhaps the most compelling example is energy efficien-
cy. Government has played a role in encouraging this kind
of investment and innovation: My Administration has put in
place (i) fuel economy standards that are net beneficial and
are projected to cut more than 8 billion tons of carbon pol-
lution over the lifetime of new vehicles sold between 2012
and 2029 (10) and (ii) 44 appliance standards and new
building codes that are projected to cut 2.4 billion tons of
carbon pollution and save $550 billion for consumers by
2030 (11).

But ultimately, these investments are being made by
firms that decide to cut their energy waste in order to save
money and invest in other areas of their businesses. For ex-
ample, Alcoa has set a goal of reducing its GHG intensity
30% by 2020 from its 2005 baseline, and General Motors is
working to reduce its energy intensity from facilities by 20%
from its 2011 baseline over the same timeframe (12). In-
vestments like these are contributing to what we are seeing
take place across the economy: Total energy consumption in
2015 was 2.5% lower than it was in 2008, whereas the econ-
omy was 10% larger (2).

This kind of corporate decision-making can save money,
but it also has the potential to create jobs that pay well. A
U.S. Department of Energy report released this week found
that ~2.2 million Americans are currently employed in the
design, installation, and manufacture of energy-efficiency
products and services. This compares with the roughly 1.1
million Americans who are employed in the production of
fossil fuels and their use for electric power generation (13).
Policies that continue to encourage businesses to save mon-
ey by cutting energy waste could pay a major employment
dividend and are based on stronger economic logic than
continuing the nearly $5 billion per year in federal fossil-
fuel subsidies, a market distortion that should be corrected
on its own or in the context of corporate tax reform (14).

 

MARKET FORCES IN THE POWER SECTOR

The American electric-power sector-the largest source of
GHG emissions in our economy-is being transformed, in
large part, because of market dynamics. In 2008, natural gas
made up ~21% of U.S. electricity generation. Today, it makes
up ~33%, an increase due almost entirely to the shift from
higher-emitting coal to lower-emitting natural gas, brought
about primarily by the increased availability of low-cost gas
due to new production techniques (2, 15). Because the cost
of new electricity generation using natural gas is projected
to remain low relative to coal, it is unlikely that utilities will
change course and choose to build coal-fired power plants,
which would be more expensive than natural gas plants,
regardless of any near-term changes in federal policy. Alt-
hough methane emissions from natural gas production are a
serious concern, firms have an economic incentive over the
long term to put in place waste-reducing measures con-
sistent with standards my Administration has put in place,
and states will continue making important progress toward
addressing this issue, irrespective of near-term federal policy.

Renewable electricity costs also fell dramatically between
2008 and 2015: the cost of electricity fell 41% for wind, 54%
for rooftop solar photovoltaic (PV) installations, and 64%
for utility-scale PV (16). According to Bloomberg New Ener-
gy Finance, 2015 was a record year for clean-energy invest-
ment, with those energy sources attracting twice as much
global capital as fossil fuels (17).

Public policy-ranging from Recovery Act investments to
recent tax credit extensions-has played a crucial role, but
technology advances and market forces will continue to
drive renewable deployment. The levelized cost of electricity
from new renewables like wind and solar in some parts of
the United States is already lower than that for new coal
generation, without counting subsidies for renewables (2).

That is why American businesses are making the move
toward renewable energy sources. Google, for example, an-
nounced last month that, in 2017, it plans to power 100% of
its operations using renewable energy-in large part
through large-scale, long-term contracts to buy renewable
energy directly (18). Walmart, the nation's largest retailer,
has set a goal of getting 100% of its energy from renewables
in the coming years (19). And economy-wide, solar and wind
firms now employ more than 360,000 Americans, compared
with around 160,000 Americans who work in coal electric
generation and support (13).

Beyond market forces, state-level policy will continue to
drive clean-energy momentum. States representing 40% of
the U.S. population are continuing to move ahead with
clean-energy plans, and even outside of those states, clean
energy is expanding. For example, wind power alone made
up 12% of Texas's electricity production in 2015 and, at cer-
tain points in 2015, that number was >40%, and wind pro-
vided 32% of Iowa's total electricity generation in 2015, up
from 8% in 2008 (a higher fraction than in any other state) (15, 20).

 

GLOBAL MOMENTUM

Outside the United States, countries and their businesses
are moving forward, seeking to reap benefits for their coun-
tries by being at the front of the clean-energy race. This has


not always been the case. A short time ago, many believed
that only a small number of advanced economies should be
responsible for reducing GHG emissions and contributing to
the fight against climate change. But nations agreed in Paris
that all countries should put forward increasingly ambitious
climate policies and be subject to consistent transparency
and accountability requirements. This was a fundamental
shift in the diplomatic landscape, which has already yielded
substantial dividends. The Paris Agreement entered into
force in less than a year, and, at the follow-up meeting this
fall in Marrakesh, countries agreed that, with more than 110
countries representing more than 75% of global emissions
having already joined the Paris Agreement, climate action
"momentum is irreversible" (21).

Although substantive action over decades will be re-
quired to realize the vision of Paris, analysis of countries'
individual contributions suggests that meeting medium-
term respective targets and increasing their ambition in the
years ahead-coupled with scaled-up investment in clean-
energy technologies-could increase the international com-
munity's probability of limiting warming to 2°C by as much
as 50% (22).

Were the United States to step away from Paris, it would
lose its seat at the table to hold other countries to their
commitments, demand transparency, and encourage ambi-
tion. This does not mean the next Administration needs to
follow identical domestic policies to my Administration's.
There are multiple paths and mechanisms by which this
country can achieve-efficiently and economically-the tar-
gets we embraced in the Paris Agreement. The Paris Agree-
ment itself is based on a nationally determined structure
whereby each country sets and updates its own commit-
ments. Regardless of U.S. domestic policies, it would un-
dermine our economic interests to walk away from the
opportunity to hold countries representing two-thirds of
global emissions-including China, India, Mexico, European
Union members, and others-accountable.

This should not be a partisan issue. It is good business
and good economics to lead a technological revolution and
define market trends. And it is smart planning to set long-
term emission-reduction targets and give American compa-
nies, entrepreneurs, and investors certainty so they can in-
vest and manufacture the emission-reducing technologies
that we can use domestically and export to the rest of the
world. That is why hundreds of major companies-including
energy-related companies from ExxonMobil and Shell, to
DuPont and Rio Tinto, to Berkshire Hathaway Energy, Cal-
pine, and Pacific Gas and Electric Company-have support-
ed the Paris process, and leading investors have committed
$1 billion in patient, private capital to support clean-energy
breakthroughs that could make even greater climate ambi-
tion possible.

CONCLUSION

We have long known, on the basis of a massive scientific
record, that the urgency of acting to mitigate climate change
is real and cannot be ignored. In recent years, we have also
seen that the economic case for action-and against inac-
tion-is just as clear, the business case for clean energy is
growing, and the trend toward a cleaner power sector can
be sustained regardless of near-term federal policies.

Despite the policy uncertainty that we face, I remain
convinced that no country is better suited to confront the
climate challenge and reap the economic benefits of a low-
carbon future than the United States and that continued
participation in the Paris process will yield great benefit for
the American people, as well as the international communi-
ty. Prudent U.S. policy over the next several decades would
prioritize, among other actions, decarbonizing the U.S. en-
ergy system, storing carbon and reducing emissions within
U.S. lands, and reducing non-CO2 emissions (23).

Of course, one of the great advantages of our system of
government is that each president is able to chart his or her
own policy course. And President-elect Donald Trump will
have the opportunity to do so. The latest science and eco-
nomics provide a helpful guide for what the future may
bring, in many cases independent of near-term policy choic-
es, when it comes to combatting climate change and transi-
tioning to a clean-energy economy.

REFERENCES AND NOTES

1. T. F. Stocker et al., in Climate Change 2013: The Physical Science Basis.
Contribution of Working Group I to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change, T. F. Stocker et al., Eds. (Cambridge
Univ. Press, New York, 2013), pp. 33-115.

2. Council of Economic Advisers, in "Economic report of the President" (Council of
Economic Advisers, White House, Washington, DC, 2017), pp. 423-484;
http://bit.ly/2ibrgt9.

3. International Energy Agency, "World energy outlook 2016" (International Energy
Agency, Paris, 2016).

4. W. Nordhaus, The Climate Casino: Risk, Uncertainty, and Economics for a Warming
World (Yale Univ. Press, New Haven, CT, 2013).

5. W. Nordhaus, DICE-2016R model (Yale Univ., New Haven, CT, 2016);
http://bit.ly/2iJ9OQn.

6. The result for 4°C of warming cited here from DICE-2016R (in which this degree of
warming is reached between 2095 and 2100 without further mitigation) is
consistent with that reported from the DICE-2013R model in (5), Fig. 22, p. 140.

7. U.S. Office of Management and Budget, Climate Change: The Fiscal Risks Facing
the Federal Government (OMB, Washington, DC, 2016); http://bit.ly/2ibxJo1.

8. M. Burke, S. M. Hsiang, E. Miguel, Nature 527, 235 (2015).
doi:10.1038/nature15725 Medline

9. M. Dell, B. F. Jones, B. A. Olken, Am. Econ. J. Macroecon. 4, 66 (2012).
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10. U.S. Environmental Protection Agency, U.S. Department of Transportation,
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11. DOE, Appliance and Equipment Standards Program (Office of Energy Efficiency
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12. The White House, "Fact Sheet: White House announces commitments to the
American Business Act on Climate Pledge" (White House, Washington, DC,
2015); http://bit.ly/2iBxWHouse.


13. BW Research Partnership, U.S. Energy and Employment Report (DOE,
Washington, DC, 2017).

14. U.S. Department of the Treasury, "United States-Progress report on fossil fuel
subsidies" (Treasury, Washington, DC, 2014); www.treasury.gov.

15. U.S. Energy Information Administration, "Monthly Energy Review, November
2016" (EIA, Washington, DC, 2015); http://bit.ly/2iQjPbD.

16. DOE, Revolution...Now: The Future Arrives for Five Clean Energy Technologies-
2016 Update (DOE, Washington, DC, 2016); http://bit.ly/2hTv1WG.

17. A. McCrone, Ed., Clean Energy Investment: By the Numbers-End of Year 2015
(Bloomberg, New York, 2015); http://bloom.bg/2jaz4zG.

18. U. Holzle, "We're set to reach 100% renewable energy-and it's just the
beginning" (Google, 2016); http://bit.ly/2hTEbSR.

19. Walmart, Walmart's Approach to Renewable Energy (Walmart, 2014);
http://bit.ly/2j5A_PDF.

20. R. Fares, "Texas sets all-time wind energy record" [blog]. Sci. Am., 14 January
2016; http://bit.ly/2iBj9Jq.

21. United Nations Framework Convention on Climate Change, Marrakech Action
Proclamation for our Climate and Sustainable Development (UNFCCC, 2016);
http://bit.ly/2iQnUNFCCC.

22. A. A. Fawcett et al., Science 350, 1168 (2015). doi:10.1126/science.aad5761
Medline

23. The White House, United States Mid-Century Strategy for Deep Decarbonization
(White House, Washington, DC, 2016); http://bit.ly/2hRSWhiteHouse.

ACKNOWLEDGMENTS

B. Deese, J. Holdren, S. Murray, and D. Hornung contributed to the researching,
drafting, and editing of this article.

 

Published online 9 January 2017

10.1126/science.aam6284

 

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