Having just returned from my second clean energy finance summit this year, I was relieved to find that despite the rumors, the renewable energy industries aren’t dying—indeed they’re booming.

Source: Michael Liebreich BNEF Summit Keynote, 23 April 2013

In 2012, according to Bloomberg New Energy Finance, $269 billion flowed into the clean energy sector worldwide—a big number by any standard.  Total global investment in renewable generating capacity now lags total investment in coal, oil, and gas generation combined by only 25 percent. With that much money you could purchase Google or Microsoft outright.

While clean energy investment in 2012 was down 11 percent from 2011, it is still 44 percent above the 2009 figure and 230 percent higher than it was in 2005.  Moreover, virtually all of the decline stems from the sharply falling prices for solar and wind equipment—a trend that in the long run will accelerate growth. While clean energy growth has understandably slowed from the extraordinary double-digit rates of the past decade, this remains one of the world’s largest and most dynamic industrial sectors.

The one dark cloud that hovered over both conferences (the Cleantech Investor Summit in Palm Springs and the Bloomberg New Energy Finance Summit in New York) was the United States, where declining government support and the uncertainty generated by a dysfunctional Congress led to a sharp decline in financing in 2012.  While the falling investment figures do presage a slowdown inU.S. clean energy growth in the next two years, it is still notable that theU.S. added more renewable capacity than any other single country last year.

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Germany has seen success with solar power, despite having about the equivalent solar resource of Alaska. The U.S. contains vast solar resources, but could use more federal policies to utilize this renewable resource. Trans-Atlantic collaboration could boost the transition to sustainable energy systems on both sides of the Pond. (Source: German-American Chambers of Commerce)

The U.S. and Germany are obligated, as two of the largest economies and historic emitters of greenhouse gas emissions in the world, to lead the global transition to cleaner power systems. Their success or failure in transforming energy systems has immense global signaling effects. Closer cooperation in this innovative sector could revamp a faltering historic partnership.

Germany’s chosen path to a clean energy future is ambitious and unprecedented amongst industrialized countries. The government passed a series of measures in 2011 to simultaneously move away from fossil fuels and phase out nuclear power. Renewable energy is to become the backbone of the country’s energy system – at least 60 percent of the nation’s primary energy consumption and 80 percent of electricity are to come from renewables in 2050. Meanwhile, the last nuclear reactor is to be shut down in 2022. (See the table below for an overview of German energy policy goals).

The country is already a leader in renewable energies. Few countries have a greater installed per capita capacity of renewables, excluding hydropower, than does Germany. Moreover, the government also envisions energy efficiency to be a key component in enabling the clean energy transition. Germany aims to reduce primary energy consumption by 50 percent by 2050 and increase energy productivity, or the GDP produced per unit of energy, by 2.1 percent per year.

The U.S. trails German ambition and lacks a federal clean energy strategy, but is nonetheless one of the most important and dynamic renewable energy markets in the world. As of the end of 2011, the U.S. led the world in installed biomass and geothermal power capacity, ranked second in total installed renewable power as well as wind power capacity, third in hydropower, and fifth in solar photovoltaic (PV) capacity. While total emissions in the U.S. have historically been higher than most other countries, no other country has seen a larger drop in energy-related greenhouse gas emissions over the past five years. Shifts from coal to natural gas in the power sector, as well as fuel efficiency improvements in the transportation sector, are the main reason for this reduction, but growing investments in renewable energies also contributed to this positive trend.

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A video circulated recently in which a Fox Business Network analyst made the laughable assertion that Germany’s success with solar power is due to its abundant solar resources (for those missing the humor here, Germany has about the equivalent solar resource of Alaska). While the gaff elicited plenty of chuckles from around the energy sector, the analyst also made another claim that received less attention, but may be similarly incorrect.

Shale gas operations, such as the one above, are multiplying across the U.S. But will unconventional gas resources produce as much energy as is typically touted? (Source: Flickr user Nexen)

In trying to make the argument that the United States should pursue natural gas as opposed to solar power for electricity generation, the Fox analyst states: “Now people are saying, well, solar may be dead in the water. What’s going to happen with nat. gas? You guys know this very well; we have a hundred years of energy.… Let’s take our focus off of solar, let’s move it to nat. gas, and let’s get this economy going.” (We can, for the sake of argument here, ignore the many other nuances in this debate, such as the fact that the U.S. Southwest has some of the best solar resources in the world, and that natural gas and solar are actually complementary technologies and are in no way mutually exclusive.)

The claim that natural gas resources will provide the United States with 100 years of energy is often thrown around (and not just by a fossil fuel-happy news organization like Fox) thanks to recent technological advancements in hydraulic fracturing and horizontal drilling techniques that sparked the so-called “shale revolution.” Shale gas now accounts for almost 40 percent of U.S. natural gas production and has reversed the trend of declining gas production numbers.

However, the estimated amount of natural gas that is available is not a hard number, and the upswing in gas production may not be as long-term a trend as many people believe. In January 2012, the U.S. Energy Information Administration slashed its estimate of unproven technically recoverable shale gas resources by 42 percent. This new estimate, along with proven shale gas reserves, amounts to 579 trillion cubic feet of available natural gas.

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Following the call to action and sweeping plan of attack offered by President Obama during his Second Inaugural Address last month and State of the Union this week, it is clear that he has made climate change a priority in his second term.  From outlining the need to increase renewable energy research and installations to setting an ambitious goal of improving efficiency in homes and businesses by 50 percent over the next twenty years, President Obama’s wide-reaching plan has the potential to once again make the United States a global leader in environmental action.

President Obama discusses Hurricane Sandy, an extreme weather event that has been linked with climate change, with disaster response officials. Obama has reaffirmed his intention to fight climate change in his second term (Source: The White House)

While President Obama’s renewed commitment to address climate change has raised hopes, it is important to review the successes and failures of his last four years in order to set realistic expectations for what is possible during his second term.

Early during his first term, the United Nations climate negotiations in Copenhagen presented President Obama with a major international opportunity to demonstrate how his Administration would differ from the previous eight years of the United States playing foil to international environmental cooperation during the Bush Era.  The Obama Administration did not rise to the challenge, instead offering minor concessions while continuing to push for stalling the negotiations until 2015 and beyond, effectively deferring the responsibility for an international treaty to the next Presidential term.

Domestically, Obama’s environmental track record fared somewhat better.  The Administration has advanced environmental protection by increasing vehicle mileage standards, expanding protected areas, strengthening air quality standards, and raising federal investment in clean energy to the highest levels in US history.  On the other hand, the Obama Administration failed to oversee comprehensive climate legislation, and has drawn out the decision on the Keystone XL tar sands pipeline.

Of course, there are some extenuating circumstances that Obama faced in his first term that made success more difficult to achieve.  While a lack of political readiness or will to move may be to blame for the Administration’s lack of forward progress at international negotiations, domestically the Obama team’s success was tempered by a divided congress, the prolonged economic depression, and a desire to remain an appealing candidate throughout a hotly contested re-election. 

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President Obama’s decision to make climate change and energy a centerpiece of his Inaugural Address has taken political analysts and partisans on both sides of the issue by surprise. Of the half dozen specific issues raised in the speech, only the economy, foreign affairs, and the social safety net had as many words devoted to them.

Why would a President who has recently made only glancing reference to climate change double-down on one of the most contentious issues of his first Administration?  A second failure on climate would go down as a signature feature of the Obama legacy—and not a positive one.

Hurricane Sandy and Mayor Michael Bloomberg’s clarion call on climate change just days before the 2012 election were undoubtedly part of the reason for the President’s decision.  But the speech itself provides a deeper explanation.  With his young daughters standing a few feet away, Obama declared that failure to respond to the threat of climate change “would betray our children and future generations.”  No President has ever faced an issue whose consequences will last so long.  Historians a century now could see it as his most tragic legacy.

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The recent increase in U.S. oil production after four decades of decline has attracted great excitement in the energy industry and beyond.  The International Energy Agency, projects that North America could become a net oil exporter within the next few decades.

While these developments are undeniably dramatic, they may be obscuring some other unexpected and potentially transformative changes with large implications for the U.S. economy and the global environment.  They include:

1.  U.S. energy consumption declined in 2012 for the fourth time in the last five years—even as economic recovery began to take hold.  According to preliminary Worldwatch estimates, total energy use in 2012 was a full 7 percent below the 2007 level, the steepest five-year decrease in at least 60 years.  Most of this decline results from advances in U.S. energy productivity—dominated by gains in transportation fuel economy and building efficiency.

2.  Reliance on natural gas is growing rapidly, particularly in power generation.  Falling natural gas prices, sparked by the shale gas boom, has led electric utilities to switch from  coal to gas while many manufacturing companies have been replacing oil with gas.  (Not surprisingly since gas prices averaged the equivalent of $18 per barrel in 2012 while oil hovered at $100.)  Natural gas provided the U.S. with 27 percent of its total energy in 2012, compared with just 18 percent from coal.

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I visited Berlin a week after President Obama’s reelection, and came away envious of the strategic clarity and political consensus that mark Germany’s new energy strategy. After months of watching Democrats and Republicans bash each other with vacuous and contradictory rhetoric about where our country’s energy future lies, it was refreshing to see that one of our key allies has a plan—and is implementing it.

Despite having a relatively weak solar resource, strong domestic policy has enabled Germany to dominate the global solar PV market (Source: REN21).

In 2012, Germany got more than 25 percent of its electricity from renewable energy, up from 5 percent in 1995 and 10 percent as recently as 2005. Since 1995, the U.S. share of renewable electricity has hardly budged—going from 10 percent to 11.5 percent.) At the same time, Germany has rapidly increased its energy efficiency, and reduced its carbon dioxide emissions and dependence on imported fossil fuels. Government plans are even more ambitious—at least 80 percent of the nation’s electricity is to come from renewables in 2050.

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There is ample reason to praise President Obama’s engagement with a diverse collection of world leaders; in particular, the administration’s “pivot to Asia” indicates recognition of an evolving geopolitical landscape, a recognition that will hopefully continue in his second term. But one region in particular has been noticeably absent from the administration’s agenda: sub-Saharan Africa. And this oversight could have long-term implications for the energy future of the sub-Saharan African region, and even the economic future of the United States.

No region suffers from energy poverty more than sub-Saharan Africa, where nearly seven out of ten people lack access to reliable and affordable electricity.

Sub-Saharan Africa is a region full of contradictions. On the one hand, it is home to six of the ten fastest growing economies between 2001 and 2010; on the other, 14 of the 20 states Foreign Policy’s Failed State Index deems “critical” are located in sub-Saharan Africa. Throughout the region, one of the largest obstacles towards widespread and equitable economic development is the crippling degree of energy poverty. The most recent data suggests that a lack of access to reliable and affordable electricity leaves nearly 70 percent of sub-Saharan Africans in the dark every day.

With the re-election of President Obama, the time is ripe for the administration to realize that, for all of the region’s struggles, reaching out to sub-Saharan Africa is within the United States’ self-interest. Prioritizing the alleviation of energy poverty is one way to strengthen efforts to improve the quality of education, reduce illness and disease, boost incomes across the region, and also to lay the groundwork for budding economic partnerships. 

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The controversial Businessweek cover in the aftermath of Sandy. (Source: Bloomberg Businessweek)

For the past several years, nearly all major news outlets and most high-profile politicians in the United States have been silent on the issue of human-caused climate change. Even in the wake of Hurricane Sandy, initial reporting on the catastrophe failed to mention climate change, at least directly. But it’s clear that this attitude needs to change. Fast.

As Sandy roared toward the Northeast, the New York Times, Washington Post, and Fox News all devoted time and space to covering the effects of the storm surge. They reported on its severity, emphasized where more aid was needed, and brought into sharp relief the human dimension of a more-than-human catastrophe. Reporters brought stories of devastation and heartache to the rest of the country (and the world) and gave readers and viewers tips on how they can assist the affected and support those who, in many cases, lost everything.

Several commentators, such as New York governor Andrew Cuomo, noted that extreme weather events are becoming more common, but they failed to mention the links to climate change directly. Limited and ambiguous references to climate change—one of the most pressing issues that humanity has ever faced—has long been the state of political discourse in the United States.

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President Obama's energy policy won the support of many Americans. (Source: Flickr.com, Photo by Tyler Driscoll for Obama for America)

After months of retrograde discussion of energy policy on the campaign trail, the United States woke up on Wednesday to a surprisingly happy conclusion: U.S. voters have rejected candidate Romney’s fossil fuels-only approach to energy policy and embraced the new course set by President Obama in his first term.

It was the fossil fuel industry itself, fueled by millions of dollars from the coal and oil industries, that decided more than a year ago to turn the 2012 election into a crusade—and a referendum.  Bolstered by an unprecedented war-chest and exaggerated attention to a few failed solar loans by the Obama administration, the energy establishment made its election preference abundantly clear, giving American voters a clear choice. It was an all-in bet by the “drill-baby-drill” crowd—and one they decisively lost.

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