Oil prices might be very low, but that’s not going to take away from investments in renewable energy.
That’s at least the consensus from Citigroup, the latest investment researcher to say clean energy won’t be slowed by cheap oil, Bloomberg reported Monday. Deutsche Bank and Goldman Sachs have also predicted that the oil price slump won’t affect renewable energy growth.
There’s a simple reason for this: Oil and renewables aren’t really in competition. Oil powers cars and heaters, and renewable energy — by and large — powers the electricity grid. (As we get more electric cars, transportation could increasingly rely on renewable energy, but we’re still pretty far from widespread electric car adoption.)
The United States generated merely one percent of its electricity with oil in 2014, according to the Energy Information Administration. Globally, only 11 countries get more than 20 percent of their electric power from oil, Bloomberg reported.
Natural gas, not oil, is in competition with renewable energy. The fastest-growing source of energy, natural gas-powered plants now provide more than a quarter of the U.S. electricity supply. However, if low oil prices cause suppliers to limit production, natural gas prices could actually go up, making renewable energy even more cost effective.
Renewable sources, including hydropower, contributed about 12 percent of the U.S. electricity supply last year.
Citigroup’s optimistic prediction about renewables comes at a time when clean energy investment is growing across the globe. Worldwide, investment in renewable energy went up 17 percent last year, according to a U.N. report released Tuesday.
“Once again in 2014, renewables made up nearly half of the net power capacity added worldwide,” Achim Steiner, UN Under-Secretary-General and Executive Director of UNEP, said in a statement.
The cost-benefit analysis of renewable energy has been a huge debate in recent years. While conservative groups like Americans for Prosperity say we can’t afford to go renewable, others say we can’t afford not to. More than two-thirds of today’s proven fossil fuel reserves need to still be in the ground in 2050 in order to prevent catastrophic levels of climate change, according to the International Energy Agency.
Fortunately for clean energy proponents, prices for both wind and solar have fallen dramatically in recent years. The price of a residential solar system dropped by nearly half in the past five years, according to the Solar Energy Industries Association. Likewise, the cost of wind energy has dropped nearly 60 percent since 2009. Research shows during that same time period, jobs in the U.S. solar industry have grown by 85 percent.
In fact, the promise of job growth in the United States has been one of the strongest counterarguments to the perceived cost of renewable energy. As the United States and other countries announce carbon-cutting measures in advance of the U.N. climate talks in Paris later this year, it’s becoming clearer what clean energy job growth could look like on a global scale.
In “Assessing the Missed Benefits of Countries’ National Contributions,” also released Monday, scientists at the NewClimate Institute said that carbon-reduction commitments could create a million new “green jobs” in the United States, China, and the European Union by 2030.
“It is an economic incentive to act on climate for local benefits on fossil fuel imports, jobs and air pollution,” Niklas Höhne, one of the report’s authors, told ThinkProgress. “For many situations renewables are cost competitive with fossil fuel power plants. If then in addition the co-benefits are taken into account, they are often the preferred choice.”