Scientifically speaking, the trend is clear: the Earth is getting warmer. While debate will likely continue over the causes of global warming, the most recent National Climate Assessment released by the Trump administration holds that human activities and emissions of CO2 and other greenhouse gases are “the dominant cause of the observed warming since the mid-20th century”—and most scientists agree.
As a result, momentum has been building around the urgent need to reduce that impact. Scientists have risen to the challenge by developing renewable energy sources that help minimize CO2 emissions and making conventional thermal-power generation based on fossil fuels more energy efficient.
Companies, in turn, have been getting on board with implementing these solutions in increasing numbers. As of April 2017, nearly half of Fortune 500 companies had set targets to shrink their carbon footprints and, by December, 117 companies had pledged to use 100-percent renewable energy by 2020. Many, including Apple, Walmart, Mars and Ikea, are working with members of their supply chains on similar sustainability goals.
That proactivity is not solely about a desire to be good corporate citizens; businesses are also moving toward renewable energy because it’s good for the bottom line. While such complex and cost-prohibitive, today’s technologies are advancing at a rapid rate, bringing down costs and making the energy sources more accessible.
“businesses are moving toward renewable energy because it’s good for the bottom line.”
Here are three areas of development for CEOs to watch.
1. Improving traditional energy. Thermal power stations burning fossil fuels such as oil, natural gas and coal still feed more than 60 percent of electricity demand, and they’re likely to be a substantial part of the future energy mix. But society is increasingly vocal in calling for reductions in CO2 emissions from thermal power generation and significantly higher efficiency, both of which make the planet safer. Gas Turbine Combined Cycle (GTCC) technology is one way to satisfy expectations for greener power. While traditional, simple cycle gas turbine plants average 40 percent efficiency on natural gas and around 25 percent on fuel oil—with the majority of the energy wasted—GTCC technology effectively recycles heat emitted by gas turbines and has increased thermal efficiency to 62 percent, soon to be 65 percent with the next generation.
Similarly, Integrated Coal Gasification Combined Cycle (IGCC) technolgasifying the solid coal fuel before it is fed into the gas turbine to generate electricity. Exhaust heat from the gas turbine is then used to generate electricity by the steam turbine. Plants featuring Mitsubishi Heavy Industries’ IGCC are 10 percent to 20 percent more efficient than existing coal-fired power plants.
Another way to improve the efficiency of fossil fuels is via carbon capture utilization and storage (CCUS) technology, which extracts CO2 from exhaust gases and emissions from power plants and stores it safely away from the atmosphere. Although undoubtedly one of the more expensive solutions to deploy, companies like MHI are working on ways to bring cost down while boosting efficiency.
Recently, two large-scale first-generation projects using MHI’s CCUS technologies have been deployed, including NRG and JX Nippon Oil & Gas Exploration’s Petra Nova project. This project is currently the world’s largest CCUS project on coal-fired flue gas to date. The project removes up to 1.6 million tons of CO2 from coal generation each year and is expected to boost production at West Ranch oil field in Texas from around 300 barrels per day to 15,000 barrels per day.
2. Getting the most out of the earth. The benefits of geothermal power abound; it is sustainable, producing none of the greenhouses gasses emitted by fossil fuels, and is also much more consistent in its generation capacity than other renewables. But only recently have companies begun to make long-term investments in this power source. Geothermal heating and cooling systems, for example, have been gaining popularity. They use underground looping pipes to tap the earth’s constant temperature to regulate building climate, which translates not only to a lower carbon footprint but also to significant savings in gas and electricity bills.
Google’s new Bay View, California campus, for example, will use an underground geothermal system for climate control—without a drop of fossil fuel.
Global demand for geothermal solutions is driving up the market, which will reach $57 billion by 2024, according to Delaware-based Global Market Insights. The U.S. currently has the highest geothermal electricity capacity, but it accounts for a tiny fraction of the country’s energy sourcing. Much smaller countries ROI down the road. Yet wind power has struggled to take off in the U.S., largely because of a reluctance to invest in technology that had not yet reached maturity.
But recent investments in offshore wind farms in the Atlantic around coastal cities in Massachusetts, New York, Maryland, New Jersey and Virginia show that tide may finally be turning. This past October, MHI Vestas Offshore Wind, which has not yet are learning how to depend more on this energy source. For example, geothermal is now the top supplier of electricity in Kenya; and El Salvador plans to get 40 percent of its electricity from geothermal by 2019.
3. Expanding wind. The U.S. Department of Energy estimates that offshore wind in the U.S. has a technical resource potential of 7,200 terawatt-hours (TWh) of electricity generation per year; for perspective, consider that 1 TWh per year can power approximately 90,000 homes. Even if only 1 percent of the technical potential is recovered, nearly 6.5 million homes could be powered by offshore wind energy.
While the upfront price tag for offshore wind development is still high compared with other renewables, the long-term benefits, including a much lower cost of energy, promise a high made a major investment in the U.S., announced it would put $35 million into testing the world’s most powerful wind turbine, the V164-9.5 MW, at South Carolina’s Clemson University. Thanks to current investments in offshore wind, businesses with facilities in coastal cities should benefit from dramatically lower energy costs down the road.
As a result of investment across energy markets, companies will soon benefit from a much more diversified portfolio of energy sources, including renewables and friendlier fossil fuel. The result? Lower costs, greater sustainability, and a healthy planet for centuries to come.