Although America’s 2022 Inflation Reduction Act has supported many solar and wind energy projects, renewable energy production is still falling short of goals and expectations. While boosting green sector manufacturing is an essential part of President Biden’s climate initiative, as well as COP28, the 2023 United Nations Climate Change Conference, there is a growing imbalance between waning renewable energy production and increased power demand in the United States.
The White House website states that:
“President Biden has set an ambitious U.S. goal of achieving a carbon pollution-free power sector by 2035 and net zero emissions economy by no later than 2050”.
Such ambitious goals are necessary in order to limit global warming to 1.5 C above pre-industrial levels (the ultimate goal of international climate agreements) and the United States has indeed taken strides to increase green energy production.
Fossil fuel outpaces renewables by far
According to the 2024 Sustainable Energy in America Factbook, an annual report produced by BloombergNEF and the Business Council for Sustainable Energy, while installations of wind and solar grew by 13.5% in 2023, actual renewable electricity generation only rose by 0.9% last year.
Natural gas, which while not renewable is cleaner than coal or oil, is America’s leading energy source. In 2023, natural gas made up 43% of the nation’s electricity generation, increasing its share from 39.4% in 2022. In comparison, renewables now produce 23% of the nation’s electricity, up from 22% the year before. Coal and nuclear produce 16% and 18% respectively, with coal’s share declining steadily every year and nuclear remaining steady.
Electric car sales, battery production soaring
Other key green sector initiatives, namely electric vehicle (EV) sales, and battery manufacturing have met even the most optimistic expert predictions. According to the BloombergNEF report, 1.46 million EVs were sold in 2023, a 50% increase in just one year. Investments in battery cell gigafactories over the last few years have let to North America becoming the global leader in this industry’s growth.
However, the power required by all those EVs and manufacturing centers will not be provided by renewable energy production anytime soon. While projects to create 60 gigawatts of renewable power production are pending this year, they are not expected to be completed on time.
According to The New York Times,
“Wind and solar projects are facing lengthy waits to connect to the nation’s clogged electric grids, and it can take a decade or more to get permits for new high-voltage transmission lines and build them”.
Clean energy investments down
This fact, along with uncertainty over future U.S. policy with the forthcoming election, has reversed several years of steady investment into generating renewable energy.
LSEG Lipper, a resource for fund performance research, finds that:
“funds that invest in renewable energy stocks had an outflow of $4.8 billion in the first quarter of the year [2024], marking the largest quarterly withdrawal to date”. Furthermore, “the S&P Global Clean Energy index, comprised of major solar and wind power companies and other renewables-related businesses, is down nearly 10% this year, while the oil and gas-heavy S&P 500 Energy Index is up 16.3%”.
Energy demand on the rise
Forecasts for energy demand in the United States vary greatly, but the clear trend is that the country’s energy demand will soar after two decades of little growth. But demand isn’t just coming from EVs and battery gigafactories – technological advances, new industries, and societal changes (e.g., remote work) are all contributing to this surge in energy demand. The burgeoning cannabis industry is already responsible for approximately 1% of US energy consumption, and cryptocurrency mining is estimated by the US Energy Information Administration to use as much as 2.3% of national consumption. Then there are data centers, which are set to triple or even quadruple energy consumption in many areas of the country.
Hyperscale data capacity, of the sort needed by giants like Google, Amazon, and Microsoft for their cloud platforms, is dominated by the United States. According to a 2022 report from Synergy Research Group, the state of Virginia alone “has far more hyperscale data center capacity than either China or the whole continent of Europe”. These data hubs proliferate in areas where population centers converge with significant telecommunication and energy infrastructure. Renewable energy infrastructure, on the other hand, is most often relegated to distant rural areas. Until the transmission issues of America’s clogged electrical grids are addressed, the construction of nuclear and natural gas plants is the only practical means to power the huge electricity demands of massive data centers.
But, if the United States wants to meet its own emissions goals, it needs renewable energy production – not natural gas plants, experts note. In fact, by 2030 the US will need to add between 70 and 126 gigawatts of renewable energy capacity every year, in addition to a vast infrastructure of transmission cables and more efficient electrical grids. It is an immense undertaking, and time is running out.
