The current renewables boom

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In an absolute sense, the world is heavily dependent on fossil fuels, which currently provide over 80 per cent of the energy on which global society depends. However, the annual growth rates of various energy sources show that change is on the way (see Figure 19.1). Since 2001, the growth rates of the solar photovoltaic (30 per cent), wind (26 per cent) and biofuel (17 per cent) sectors have been much larger than for the traditional sectors of coal (4.4 per cent), oil (1.6 per cent), natural gas (2.5 per cent) and even nuclear (1.1 per cent).

This trend is characteristic of a new dynamic, namely the growing role that renewable energy sources are playing globally and in the US. Many of the new technologies that harness renewables are, or soon will be, economically competitive with fossil fuels. Although renewable energy currently provides only about 6 per cent of total US energy, there are compelling reasons to put these technologies to

Figure 19.1 Percentage growth by technology sector of contributions to global energy generation from 2001-2005

Source: WI and CAP, 2006.

use on a larger scale, reasons that will become more and more viable as production levels increase.

These new technologies are increasingly attracting global investment from large corporations (such as Mitsubishi and Shell), venture capital and mainstream international banks. From 1995 to 2005, global investment in renewable forms of energy grew from about US$8 billion to over US$39 billion (see Figure 19.2). Current investment in wind power already greatly surpasses investment in nuclear (see Figure 19.3), showing that wind, like other renewables, must be taken seriously as a mainstream source of energy for the future.

Recent developments in the global marketplace demonstrate the potential for rapid growth in the renewables sector:

• Global wind energy generation has more than tripled since 2000, providing enough electricity to power the homes of about 25 million Americans. After lagging behind Europe for more than a decade, the US led the world in wind energy installations in 2005.

Figure 19.2 Global investment in renewable energy from 1995-2005

Source: WI and CAP, 2006.

Figure 19.2 Global investment in renewable energy from 1995-2005

Source: WI and CAP, 2006.

• World production of electricity-generating solar cells is expanding rapidly, up 45 per cent in 2005, to six times the 2000 level. The solar cell industry is quickly becoming one of the world's fastest growing and most profitable industries.

• Production of fuel ethanol from crops more than doubled between 2000 and 2005, and biodiesel from vegetable oil and waste expanded nearly four-fold over this period.

European and Asian countries have led the development of most of these technologies over the past decade. The prominent positions that Germany and Spain hold in wind power, for example, and that Japan and Germany enjoy in solar energy, were achieved thanks to strong and enduring policies that their legislatures adopted in the 1990s. These policies created steadily growing markets for renewable energy technologies, fueling the development of robust new manufacturing industries.

The renewable energy boom can also be tracked through the emergence of renewable energy billionaires. In many countries, such as Germany (where the

Figure 19.3 Global construction starts for wind and nuclear power from 1980-2005

Source: WI and CAP, 2006.

Figure 19.3 Global construction starts for wind and nuclear power from 1980-2005

Source: WI and CAP, 2006.

three richest men made their fortune on wind and solar energy) and China, entrepreneurs have rightly envisioned a rapid expansion of non-fossil energy and have made money in the process. A similar situation occurred in the first two decades of the 20th century during the beginning of the oil age when young entrepreneurs such as John D. Rockefeller made their fortunes investing in the oil business, which then represented only a trivial part of the nation's energy source.

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