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Renewable Energy and Natural Gas
Drive Coal and Oil Use Downward

by Daniel Cusick
E & E, February 1, 2013

Technological advances in electricity generation, fuel switching, and rising consumer awareness about demand-side management and energy efficiency has led to a measurable drop in U.S. energy demand and carbon emissions since 2007, according to new research findings from Bloomberg New Energy Finance.

In a report released yesterday, Bloomberg researchers working on behalf of the Business Council for Sustainable Energy state that natural gas and renewable energy resources like wind and solar are claiming an ever-larger share of the U.S. energy market, while fuels like coal and oil are on a downward trajectory, losing 4.3 and 2.6 percent of their total energy market share, respectively.

"The winner of all of this is U.S. emissions," the researchers state, noting a 13 percent reduction in energy-sector carbon dioxide over the five-year period ending in 2012.

"Significant changes are occurring in the U.S. energy sector that are boosting investment and accelerating deployment of a range of commercially available clean technologies," Lisa Jacobson, president of the Business Council for Sustainable Energy, said in a statement. The Washington, D.C.-based council is composed of businesses and nonprofit groups committed to advancing market-based approaches to the development and deployment of clean energy technologies.

The group's "Sustainable Energy in America 2013 Factbook" "portrays a dynamic and rapidly changing U.S. energy landscape," the authors say, where the adoption of clean energy technologies combined with much greater commitment to energy efficiency have ushered in a new era of consumption marked by a less-is-more philosophy.

The trend has been especially evident among large power consumers such as manufacturers whose bottom lines are closely tied to energy expenditures.

Among electric utilities, the report notes that efficiency expenditures reached $7 billion in 2011, "and financing for energy efficiency retrofits has become increasingly sophisticated, propelling further greening of U.S. buildings," the report states.

For example, energy intensity in the commercial building sector decreased by more than 40 percent since 1980. And over the last five years, overall energy demand decreased by 6.4 percent due to efficiency gains, the report said.

At the same time, renewable energy technologies are becoming more advanced and more widely deployed -- more than doubling over the past five years, the report notes -- while production costs for clean energy continue to drop.

Not ready for prime time?

Excluding tax credits, the researchers found that the real cost of electricity generated by large solar arrays has fallen from 31 cents per kilowatt-hour in 2009 to 14 cents per kWh last year. Over the same period, the cost of electricity from large wind farms dropped by 1 cent per kWh, from 9 to 8 cents.

"These new energy technologies, which some still claim aren't ready for prime time, are already making a major impact on U.S. energy," Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance, said of the findings. "And the U.S. has only begun to receive the full benefit of lower prices for clean energy equipment."

The researchers note that private-sector funding for advanced energy projects dropped off in 2008 as the global financial crisis took hold, but it rebounded between 2009 and 2011 as federal stimulus dollars and other tax incentives created a ripe investment environment for technologies like wind and solar power. Investment dropped off again in 2012 as government incentives expired or approached expiration, creating uncertainty in energy markets.

Even so, the report notes that the United States remains "the dominant leader" in venture capital and private equity financing of clean energy projects, with U.S. firms investing $36 billion in such applications since 2004.

In contrast, public market investment in clean energy has been greatly weakened in recent years by poor stock performance, oversupply in upstream manufacturing of renewable energy equipment, and market uncertainty about the continuation of government incentives for green energy programs, the authors found.

The report also says the United States "generally lacks an overarching policy framework for furthering the deployment of sustainable energy technologies."

That void includes a lack of regulations aimed at reducing greenhouse gas emissions from the energy sector as well as the lack of long-term certainty about federal tax incentives for renewable energy.

Daniel Cusick
Renewable Energy and Natural Gas Drive Coal and Oil Use Downward
E & E, February 1, 2013

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