Contributed by Grant McDowell, head of strategy, enosi.energy
The twentieth century was built on cheap abundant hydrocarbons. They lifted billions of people out of poverty and transformed our modern civilisation for the better in so many ways. But fossil fuels have had their time. Their nasty invisible carbon emissions by-product is impacting the delicate global temperature balance. It’s now incumbent on us to embrace the energy transition. The daily energy choices each of us make determine how fast we stem the flow of carbon emissions into the atmosphere.
The next ten years are critical, and each of us has a choice of one of three paths: Fast, Slow and Slowest.
The McKinsey chart clearly illustrates the three path options, adapted here for illustrative purposes.
The Slowest is the do-nothing path and indirectly supports fossil fuels. Slowest chooses to ignore the consequences of burning ‘once through’ fossil fuels and takes no responsibility for the future of our planet. Hardly anyone is willing to admit to being on the Slowest path as the historical trend line above makes life on earth untenable.
The middle path is the Slow Path, and where we land by 2050 is up for debate. The slow path encourages us to believe we have time and supports the idea that Net Zero will get us there. The Slow path is locked in an outdated paradigm of offsets and paper certificates that suggests this is a sound path in the energy transition. The reality is the ‘nothing to see here’ Slow Path is no longer tenable and is on the ‘Wrong Side of History’.
Electricity as our single energy source is the focus for the Fast Path. In round figures energy is responsible for 75% of global emissions, when we include transport. Clean energy is the biggest lever we have to hold the line on 1.5 degrees. This is why our focus needs to be on electrifying everything, our grids, buildings and our transport, in the energy transition.
The Fast Path focuses on the clean electrons, bringing transparency to where carbon-free energy is being generated and consumed across the grid. The Fast Path allows us all to measure and manage our clean energy consumption upward and march fossil fuels out of our mix. Our daily climate emergency headlines reinforce the limited time we have to act. The Fast Path is a shorter journey to True Zero. It’s on the ‘Right Side of History’.
Early pioneers of the Fast Path were a small group of Google engineers who called bullshit on 100% renewables for Google’s operations in 2017. They ran the analysis on clean energy matched to an Iowa data centre and proved there was only a 61% match to the wind energy they had purchased. This simple, but bold, observation set Google on the Fast Path. As a result, they reframed their ambition to power all data centres and operations with clean energy 24/7, every day of the year. They chose the Fast Path.
Google published a framework for 24/7 Carbon Free Energy (CFE) in 2018 and partnering with the United Nations established the 24/7 CFE Compact. The idea took hold and was signed by 30 pioneering organisations at COP26 in Glasgow in 2021. Those Google engineers who were not satisfied by the Slow Path, and asked deeper questions, set many more of us on the Fast Path, and the ‘Right Side of History’.
“Never underestimate the ability of a small group of dedicated people to change the world. Indeed, it is the only thing that ever has.” Margaret Meade
Not everyone is taken by the Fast Path however. The Fast Path is harder, initially, with the benefits of lower cost of clean energy over time. The Fast Path also has risk around achieving the last few percent of the 100% 24/7 carbon free energy ambition. These features have allowed advocates for the Slow Path to craft a narrative that the energy transition is cheap and easy.
GO DEEPER: Episode 53 of the Factor This! podcast features Jesse Jenkins, assistant professor and ZERO Lab lead at Princeton University, who is calling out a leading clean energy trade group for a piece of its green hydrogen agenda.
The Slow Path clarion call is Net Zero. The narrative recognises companies emit carbon emissions during the year, these carbon emissions are totalled up and offset against a range of low-cost certificates and carbon offsets. Total emissions are matched to offsets on paper and achieve a nice round 100% number, today, job done. The Slow Path looks cheap and easy, but it isn’t.
And, by definition, we can’t all get to Net Zero. Net Zero means paying money to take the credit for renewable energy or carbon reductions somebody else actually used. So how does that ‘somebody else’ get to Net Zero? It just kicks the can down the road a bit further and will ultimately delays what we are really aim for – a true zero carbon society.
The Slow Path limitations are also starting to show early signs of risk. The Slow Path champions advocate for the benefits of ‘additionality’, only invest in new solar and wind projects and use Renewable Energy Certificates (RECs) to prove the carbon free energy generation. In principle this approach seems to make sense, if we need more clean energy in the grid, why not fund additional renewables in the dirtiest grid and get more carbon bang for our buck. In the Slow Path framework companies seek to offset their emissions by buying RECs from clean energy generated in other markets, at a lower cost. ‘Additionality’ has morphed into ‘emissionality’ and supports the development of projects outside the grid where the energy is being consumed.
The Slow Path is controlling the narrative in the US with the recent publication by the Clean Energy Buyers Institute (CEBI). Recently CEBI has invited its membership to sign up to the Principles for Purpose-Driven Energy Procurement in which it has buried a poison pill. One of the principles their membership is signing up to;
“(Buying RECS in) …Locations where the marginal emissions reduction to the grid will provide the greatest benefits for climate and human health (i.e., where grid carbon intensity is high)”
There’s the rub. There are real world consequences as electricity consumers end up with stranded assets they can’t match to the grid where their operations are located. An energy buyer from a mid-west steel mill voiced his concern at the Clean Energy Buyers Association Summit in Seattle in May. He recently led his company’s investment into a 30 MW solar farm project in a high emissions grid in another State.
“In the steel industry we plan on 30-year time horizons, now I understand 24/7 CFE I see the risk to the solar project we just invested in, it can’t be matched to the load of our mill. To be honest I’m really angry to learn about this now.”
Electrons vs paper debate will rage on for large energy consumers for some time. The Slow Path seems to have the upper hand in 2023. However, the global energy market, State and Federal regulation and the brute force of low-cost clean energy electrons will tip the scales to the Right Side of History as the realization that the Fast Path is our only choice sinks in.
The hydrogen sector is adopting the Fast Path as regulations from global markets are insisting on a clear path to green hydrogen, within a tight time frame. Support for hydrogen in the UK, the EU, hopefully the US Inflation Reduction Act and the Australian National Reconstruction fund also hold the line that hydrogen will adopt the Fast Path. Carbon free energy provenance supported by certified time matched granular certificates for green hydrogen will become the global standard. Where hydrogen leads, energy intensive products for export will follow. Production of green steel, green ammonia and premium grade green aluminum hold higher margins with high demand.
In other global electricity markets the benefits of clean energy time matching are showing early adoption. The UK will soon enable time-based matching of sub 5 MW solar and wind farm generation to customer loads over the grid. In other markets, Taiwan has adopted load time matching across the grid and Scotland, Iceland and a number of European cities have committed to the Fast Path and declared dates for 24/7 CFE.
At a household level the Fast Path celebrates the ‘electrification of everything’ and delivers enormous cost savings to end consumers. Solar PV, heat pumps and electric cars cut energy costs dramatically for households, in Australia as much as $5,000 a year. Over 33% of Australian households have solar installed plummeting the cost down to <$1/watt installed. The US and other markets with sub 5% rooftop solar penetration can learn from the Australian solar rooftop revolution. Economies of scale and strong regulatory support have made sub five-year payback for household solar the norm in Australia. By contrast, the US holds firm on $3/watt installed as local regulations delay solar roll out locking in the Slowest Path. Solar PV is the cornerstone in the energy transition and slowing down installation rates is a blatant choice for the Slowest Path.
Fast, slow and slowest frameworks bring transparency to the energy transition allowing consumers to choose a path and be measured by it. If you or your organization is doing nothing active about your energy consumption you’re in denial. Without paying attention to the source of the energy you’re consuming you’re allowing the fossil fuel industry to continue to sell its product at robber baron profits, and socialize the cost of carbon emissions. This is a debt society will pay for dearly as our planet continues to break global warming records year on year. If you’re buying certificates to sleep better at night you remain on the wrong side of history. Buying paper is opaque and has an inherent net offset risk which is becoming untenable.
For those choosing the Fast Path, by measuring and managing clean electrons entering the grid, time matched to the load in your households, buildings and transport, your path will stand the test of time. Your choice to buy clean energy from solar and wind farms, and big batteries, will be vindicated as short-term higher costs are rewarded by the long-term lower cost of clean energy.
True Zero is achievable, it’s now a question of choice. For each and every one of us the question of which path we choose will determine which side of history we’re on. Why not ask the questions, take the Fast Path and you will find collaborators seeking to make a difference and accelerate the energy transition.
Grant McDowell is the head of strategy for traceability technology company, enosi.energy
