Published: 21 November 2023
Contributors: Celeste Lagana, Alexandra Jonker
Renewable energy is energy generated from natural sources that are replenished faster than they are used. Also known as clean energy, renewable energy sources include solar power, wind power, hydropower, geothermal energy and biomass. Most renewable energy sources produce zero carbon emissions and minimal air pollutants.
Renewable energy sources emit nearly no greenhouse gas emissions, are more accessible and more reliable. For these reasons, it's urgent to move toward using renewable energy and alternative energy technologies, such as wind and solar. According to the US Energy Information Administration, as of 2021, 29% of the world’s energy consumption is already fueled by renewable sources.1
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In the late 1700s, the Industrial Revolution ushered in an age of technological breakthroughs that included the use of new energy sources—primarily, fossil fuels. Fossil fuels (oil, coal and natural gas) are formed from the breakdown of organic materials and are burned for fuel. As technology evolved, fossil fuels became more readily available and less expensive to produce, increasing usage. Today, they supply about 80% of the world’s energy.2
However, when fossil fuels are burned, they release greenhouse gases (GHGs) like carbon dioxide (C02), methane (CH4) and nitrous oxide (N20) into the atmosphere. When GHGs build up in the atmosphere, they trap the sun’s radiation and prevent it from being released into space, warming Earth’s surface. As a result, fossil fuels have become the main driver of today’s climate change crisis and its primary consequence, global warming.
Global warming might cause harmful, long-term changes to the Earth’s climate and weather patterns, resulting in stronger storms, hotter, drier summers and changes to natural ecosystems.
Many organizations use carbon accounting—the practice of measuring and tracking the amount of direct and indirect GHGs emitted during normal operations—to help progress an energy transition and reach the goal of achieving net-zero emissions. Incorporating renewable energy sources with low- to zero-carbon emissions can help organizations achieve these goals, reducing GHG emissions and environmental impact.
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These are the most common sources of renewable power:
Hydro
Hydropower is one of the oldest forms of electricity generation and currently tops the list as the largest contributor to renewable electricity worldwide. It involves using marine and tidal power, the flow of streams and rivers, reservoirs and dams to move turbines that generate electricity. As technology evolves, the International Energy Agency (IEA) forecasts that hydroelectric power will increase generation capacity approximately 17% by the year 2030.3
Solar
The conversion of sunlight to electrical energy happens in two ways, through solar photovoltaics (PV) and concentrating solar-thermal power (CSP):
PV is the most common conversion method and used for smaller-scale applications. Sunlight is collected by using solar cells on solar panels, converted to solar energy and stored in batteries that can power our homes, cars and businesses.
CSP uses mirrors that reflect and gather sunlight onto fluid-filled receivers. The sunlight heats the fluid to a high temperature, generating thermal energy. This energy is used to power engines or spin turbines, which then generate electricity to power plants or supplement power grids. CSP is used mainly for utility or industry-sized applications.
Solar power generation grew 26% in 2022 and it’s projected that solar power production will surpass that of coal and natural gas by 2027.4
Wind
Humans have been harnessing the kinetic power of the wind to generate energy for centuries. Today’s wind turbines can generate electricity on a small to large scale, depending on the size of the turbine used. As the size of the turbine increases from small (for a single home) to utility scale (offshore wind farms), so does the planning, power output, efficiency and maintenance complexity. As of 2021, wind energy accounts for 24% of the world’s power generation.5
Geothermal
Geothermal energy systems use steam from deep within the Earth to operate turbines that generate energy. However, the geothermal reservoirs required for production are located a mile or two beneath the Earth’s surface and aren’t widely available. As of 2021, 27 countries have geothermal power generating plants.6
On a smaller scale, geothermal heat pumps (GHPs) are used to heat, cool and provide hot water to some commercial buildings, schools and residential homes. While without the same depth requirements as its larger-scale counterpart, GHP installation still depends on multiple factors including climate, type of soil, accessibility to water outlets, land and installation costs.
Biomass
While not always considered renewable due to negative environmental impacts, biomass energy uses organic materials and byproducts to generate electricity, biofuels—including biodiesel and ethanol—and heat. Use of bioenergy causes low-level greenhouse gas emissions and land changes including deforestation.
These impacts cast doubt on its renewable status even though bioenergy accounts for approximately 11% of global energy usage and offers the largest source of physical material in the world.7
Is nuclear energy renewable?
Even though nuclear power is considered a clean energy due to its low- to zero-carbon emissions, it’s not renewable. Nuclear energy requires uranium, which needs to be mined from the ground and exists only in finite amounts in specific locations. Regardless, nuclear power makes up 10% of the world’s electric supply and, when combined with hydro, provides three-quarters of the world’s low-carbon energy generation overall.8
Renewable energy sources possess benefits beyond just reducing emissions.
National power grids that incorporate various sustainable energy sources can be more resilient. Not only are sources of renewable energy less prone to failure and fluctuation, but you can switch between them if any issues arise, which helps ensure consistent power delivery to homes, businesses and transportation systems.
Switching to renewable energy helps lower energy costs and keep them consistent. Renewable energy sources are usually cheaper than fossil fuels and there is less volatility in clean energy markets so price fluctuations don’t occur as often or as drastically. This keeps costs stable and easier to forecast and budget on an individual and enterprise level.
The shift to clean energy in tandem with global organizations and nations working toward net-zero emissions might create millions of renewable energy-related jobs worldwide. As decarbonization progresses, workers from the fossil fuel industry and others can transition to the renewable energy industry. This has the potential to cause positive economic effects on supply chains and related industries.
There are various ways organizations can integrate renewable energy into their portfolios:
- Green electricity certificates: These certificates are purchased from existing plants but don’t promote the growth of renewable infrastructure in the market.
- Corporate Power Purchase Agreements (CPPA): These contracts are fixed price supply agreements that can trace renewable energy sources to a specific solar or wind farm.
- Renewable energy asset investments: Organizations can install onsite solar panels or wind turbines to generate power.
Additionally, there are clean energy incentives that encourage and accelerate the adoption of renewable energy projects and equipment including:
- Carbon taxes: A carbon tax levy applies to any export, product or service that causes carbon emissions from fossil fuels during production or use. The tax increases the price to help encourage a move to clean energy and reduce CO2 emissions.
- Feed-in tariffs (FiT): FiTs guarantee anyone who produces and provides small-scale renewable energy (including small business owners, farmers and homeowners) above-market prices for the energy they supply back to the grid.
Once renewables are integrated into a business’s portfolio, effective energy management improves energy efficiency by streamlining processes and maximizing output while reducing consumption, GHG emissions and waste.
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Simplify the capture, consolidation, management, analysis and reporting of environmental, social and governance (ESG) data.
Carbon accounting allows organizations to quantify greenhouse gas emissions, understand climate impact and set goals to reduce emissions.
Net zero is the point when the amount of GHGs released is balanced by the amount removed.
Decarbonization is the reduction and removal of GHGs from the atmosphere to mitigate climate change.
Energy management helps businesses monitor and optimize energy consumption to reduce energy costs.
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Footnotes
1 How much of world energy production and consumption is from renewable energy? (link resides outside ibm.com), US Energy Information Administration, 2021
2 Fossil fuels (link resides outside ibm.com), Environmental and Energy Study Institute, 22 July 2021.
3 Hydroelectricity (link resides outside ibm.com), International Energy Agency, 11 July 2023.
4 Solar PV (link resides outside ibm.com), International Energy Agency, 11 July 2023.
5 Top 5 Fastest-Growing Renewable Energy Sources Around the World (link resides outside ibm.com), Earth.org, 10 March 2021
6 Geothermal explained (link resides outside ibm.com), US Energy Information Administration, 20 April 2023.
7 Renewable Energy (link resides outside ibm.com), Center for Climate and Energy Solutions, accessed 26 October 2023.
8 Nuclear Power in a Clean Energy System (link resides outside ibm.com), International Energy Agency, May 2019.