The coronavirus and uncertain economic outlook have quickly eclipsed clean energy and climate in the minds of many business leaders. And for good reason: Public health concerns require companies to prioritize the safety of employees and customers above all else.
Yet as we begin to enter the recovery phase, following a landmark year for corporate clean energy commitments, the transition to a clean economy hangs in the balance.
In times of economic stress, businesses tend to cut costs and follow the paths that have led them to previous success. For many corporations, this means continuing to invest in the energy status quo that has powered the last century of economic growth. The energy landscape, however, looks radically different from even 10 years ago.
In 2010, as businesses dug their way out of the Great Recession, renewables were a prohibitively expensive investment to justify. In the intervening 10 years, the cost of solar and wind assets declined 85 percent and 49 percent, respectively. According to BloombergNEF, wind and solar are the cheapest sources of new energy generation across two-thirds of the world. By 2030, they will undercut commissioned coal and gas almost everywhere.
Every investment in fossil fuel infrastructure, from continuing to buy gasoline-powered vehicles for corporate fleets to building new fossil fuel electricity generation, not only locks in decades of carbon emissions but also cements decades of high costs and low or no returns. While slow movers are stuck with outdated infrastructure, those that do transition will benefit as clean energy and mobility become better business propositions every single year.
Skeptics will argue that cheap or negative oil prices negate the benefits of cheap renewable electricity. Negative oil prices, however, do not directly translate into cheap gasoline, and continued EV cost reductions are "much more predictable than oil price fluctuations," according to UBS. Meanwhile, low oil prices have caused the price of natural gas, the largest source of electricity in the United States, to rise as co-production supply decreases.
Those closest to our sources of energy already have realized that recovery requires investment in the future, and that future is clean.
BP CEO Bernard Looney declared that the coronavirus and market tumult have only made the company's commitment to net-zero stronger, and energy giants such as, NextEra have made landmark billion-dollar commitments to energy storage and clean generation.
The coming transition is massive. Over the next decade, increasingly cheap renewables will be unleashed by newly scalable battery storage and connected smart infrastructure that will integrate around-the-clock clean energy across the grid. Meanwhile, maturing technology will enable mass electric vehicle adoption, especially in commercial fleets, while opening the doors for widespread building electrification.
These trends will be accelerated by financial innovations that leverage trillions of dollars towards decarbonization efforts and assets that are already proving to be far better and more stable investments than fossil fuels.
Along with reducing costs for individuals and businesses, this transition will create hundreds of billion-dollar business opportunities, from building long-duration energy storage to optimizing generation assets. Yet even the companies best positioned to take advantage of these opportunities realize that they cannot build the zero-carbon path alone.
For instance, Schneider Electric, which has survived for nearly 200 years, is investing hundreds of millions of dollars in clean energy startups and partnering with firms such as Powerhouse in order to stay on the forefront of innovation in a rapidly changing world.
We will build a path to recovery from the coronavirus, but it won’t be paved with hydrocarbons. Instead of resorting to the familiar, companies must embrace a clean future and eliminate the substantial financial, operational and climate risks that fossil fuels pose to their business.
Our current public health and economic crises only hasten this need, and will serve to more quickly separate the innovators from the rest.