Tech Companies Lead Exodus Away From Fossil Fuels
As the costs associated with renewable energy continue to fall, tech companies like Amazon and Google are leading a transition away from fossil fuels to renewable energy resources. The industry leaders are putting pressure on other companies to divest themselves of fossil fuels and invest in renewable energy infrastructure.
A recent report released by the Business Council for Sustainable Energy suggests that the United States’ use of clean energy has doubled over the past decade, going from 9% to 18%. This change was somewhat driven by government policies, but it was primarily tech companies which pursued the aggressive expansion of the renewable energy sector, seeing its economic potential.
Tech Companies Commit To Renewables
The offices and facilities of companies like Google and Amazon are increasingly being powered by wind and solar energy. The largest corporate users of renewable energy in the world, during 2017, were Amazon, Apple, Google, and Microsoft. At the end of last year, Google announced was running every one of its data centers and facilities on electricity generated by renewable resources.
In 2015 Amazon pursued the construction of a new data center based in Northern Virginia. At the time, Amazon had recently made a commitment to utilizing 100% renewable energy for the center, vowing that it would only run the data center on energy coming from solar power or wind power. A power company based in Richmond Virginia, Dominion Energy, wasn’t able to provide all the energy that Amazon needed on solar power alone, so it negotiated an agreement with a company based in Seattle to provide the 100% renewable energy. More recently, Microsoft said that it would be making the the largest corporate purchase of solar energy ever through the energy generated by a massive solar plant in Virginia. Microsoft also stated that it would be doubling Virginia’s solar capacity.
Other Companies Are Following Suit
Companies like Amazon, Microsoft, and Google are industry leaders. Other companies follow in their footsteps, and as such it’s quite likely that even more tech companies will commit to 100% renewable energy in the future. It’s not just tech companies that are committing to renewable energy, other sectors are as well. The practice of pressuring power companies to offer alternative, renewable energy options has gone beyond the tech industry and is now being picked up by many other sectors. Companies like Budweiser, GM, and even Walmart have committed to powering more and more of their operations with renewable resources.
Recently, HSBC announced that it would cease funding gas or oil projects in the Arctic, stop all tar sand projects, and cease funding most coal projects. HSBC is the largest bank in Europe, and therefore one of the biggest banks in the world. Daniel Klier, the head of Sustainable Finance at HBSC, says that the decision was made as part of a commitment to the 2015 Paris agreement. The 2015 Paris agreement set out to limit global temperature rise to below 2°C, and last year the US withdrew from the Paris agreement.
In addition to ceasing the funding of almost every fossil fuel project, the new HSBC policy states that it will no longer fund new large-scale hydro-dams that do not abide by the World Commission on Dams Framework or new nuclear projects which failed to comport with International Atomic Energy Agency (IAEA) standards.
Environmentalist activists have responded positively to the news, with the director of the Sierra Club’s Beyond Dirty Fuels Campaign, Kelly Martin, saying that the decision was an important step forward for Europe and its largest bank. Martin also says that the decision is a sign that the “era of fossil fuels is coming to a close”. Still, Matin says that further steps must be taken and other major banks in the world must be ready to divest themselves from fossil fuel projects when there are “cheaper, cleaner, more reliable energy solutions” available for use.
Sustainable Energy Tech Is Only Getting Cheaper
Power companies have made some substantial policy changes to keep up this increased demand. Frequently these changes involve reducing reliance on fossil fuels as they invest in renewable resources. This shift is even happening in heavy fossil fuel areas such as the coal mining state of West Virginia.
This translates to even less reliance on the coal industry, which is already struggling despite promises by the current administration that the industry would recover under its watch. The nation’s leading coal producers have mainly seen a substantial drop in the percentage of US power generated by coal in the last decade. While the US government may not be discouraging the mining of more coal, the energy marketplace is only getting more competitive as the green energy sector begins to meet an ever larger portion of the US energy demand.
The continued growth of the renewable energy sector is all but assured, as improvements in technology have led to ever cheaper renewable energy infrastructure. An internal analysis conducted by the Kaiserwetter Energy Asset Management group based out of Germany has found a that the cost of renewable energy has fallen lower than the cost associated with fossil fuels. The data they analyzed was taken from various sources like Bloomberg, the UN Environment index and the Frankfurt school.
The Kaiserwatter energy analysis found that costs for fossil fuel energy generation were around $49 to $174 per MWh within the G20 energy markets last year. This compares with the cost of renewable energy production ranging from about $35 per MWh and $54 per MWh. The data analysis also found that renewable energy sources may beat out nuclear power plants when it comes to their cost.
Kaiserwtter’s CEO, Hanno Scoklitsch, underlined the importance of the tech field in driving the adoption of renewable energy, saying that the Internet of Things and Smart Data will be decisive factors in achieving the Paris Climate Agreement objectives.
Says Kaiserwetter about the reasons for the decreasing cost of renewable energy:
“These include technological improvements and the competitive simplicity of renewables, through a broad base of project developers, especially investment funds and banks, optimistic about the unstoppable future of a market whose profitability continues to skyrocket even once the subsidies have ceased, backed by a great social and political support.”