A New Climate Reality
Our planetary future is uncertain. But we might still change course in time.
In 2019, when David Wallace-Wells released his novel, The Uninhabitable Earth: Life After Warming, there was one word to describe the world’s future: Apocalyptic.
By century’s end, scientists could see Earth’s temperatures rising by 4 to 5 degrees Celsius. That’s bad enough to create a food crisis, economic strife, and in the most extreme case, “warnings of civilizational collapse.”
But only three years later, Wallace-Wells has slightly moderated his prediction. Although the world’s temperature has already risen 1.2 degrees since pre-industrial times, some scientists now believe that warming this century will most likely not exceed 3 degrees.
Reports of Earth’s climate-driven demise may be premature—or at least, not as severe or as fast as expected.
That’s not a big shift, but it’s something. A U.N. report in 2019, suggested we would hit 3.2 degrees of warming by that date. But a United Nations World Meteorological Organization (WMO) report just released puts the estimate closer to 2.5 degrees Celsius by 2100. This is still more than the 1.5 degrees established by the 2015 Paris Agreement as the maximum increase that the planet can handle before catastrophic climate change occurs.
“The greater the warming,” notes WMO Secretary-General Prof Petteri Taalas, “the worse the impacts.”
Wallace-Wells argues, however, that real progress is underway. “Those numbers may sound abstract,” he notes. “But what they suggest is this: Thanks to astonishing declines in the price of renewables, a truly global political mobilization, a clearer picture of the energy future and serious policy focus from world leaders, we have cut expected warming almost in half in just five years.”
In terms of climate change, scientists have four different scenarios, ranging from current actions, to promised and optimistic settings. Source: Climate Action Tracker.
Long-Term Coal Phase Out?
For two decades, the bad boy of the environment has been coal. According to the World Health Organization (WHO), coal produces 44 percent of U.S. electricity, but accounts for 80 percent of power plant carbon emissions.
“Burning coal leads to soot, smog, acid rain, global warming, and carbon emissions,” WHO notes. “It also generates a great deal of waste, including sludge, toxic chemicals, and heat…and pollutes during every stage of the energy production process, from mining and transportation to storage and burning.”
Such findings have helped drop worldwide demand for coal down to historic lows. From 2005 to 2020, use of the product in the U.S. for electricity generation dropped from 50 percent to 23 percent; the U.S. Energy Information Administration (EIA) adds that global coal consumption fell by a record 4.3 percent in 2020
The pandemic and Russia’s war with Ukraine have since pushed demand up by almost 7 percent over the past two years, but that is expected to be a temporary spike, according to a report by the International Energy Agency (IEA).
While coal declined, natural gas moved into the forefront. Since 2015, the “bridge fuel”—so named because it’s a cleaner burning fossil fuel that can ease the world’s transition to carbon neutrality—has risen from 19 percent to 38 percent of the U.S. energy market. “It’s hoped that innovations in the energy sector, such as the conversion of gas-driven power plants to even cleaner burning hydrogen, will help the transition away from natural gas in the long-term,” the EIA notes.
Opponents of natural gas hope that “long term” is actually another way of saying “very soon.” A report from Enova Energy notes that drilling and extraction, and transporting of natural gas in pipelines, can leak methane, which is 35 times stronger than carbon dioxide at trapping heat. Land disturbance for gas and oil drilling also harms ecosystems through erosion and pollutants that leak into nearby streams, the report adds.
And then lower-priced solar and wind power came along, topped off by improved lithium battery technology. Wallace-Wells notes that since 2010, the cost of solar power and lithium-battery technology has fallen by more than 85 percent, and the cost of wind power by more than 55 percent.
In addition, the IEA has predicted that solar power would eventually become “the cheapest source of electricity in history,” and a report by Carbon Tracker found that 90 percent of the global population lives in places where new renewable power would be cheaper than new dirty power.
“Consider that the price of gas was under $3 per gallon in 2010,” Wallace-Wells notes. “This means that these price decreases are the equivalent of seeing gas-station signs today advertising prices of under 50 cents a gallon.”
America’s coal plants have been transformed into cleaner burning—but not perfect—natural gas facilities. Source: U.S. Energy Information Administration
Appliances as a Bellwether of Change
If there’s any housing-related market that will enjoy a post-pandemic boom period, it’s the one for energy efficient appliances. Euromonitor International reports that after a lackluster 2020—during which the market grew by a mere 0.3 percent—it rebounded a year later with a more-robust 3 percent rate. Things were flat in 2022 and should cool in 2023 due to a higher interest rate environment and the fact that much of the major appliance demand was fulfilled during the past two years.
“Consumers had an interesting two years with on-and-off lockdowns to consider the appliances they wanted to have at home,” the report notes. “In the early part of 2020, the focus was on food storage and hygiene- related appliances. Starting from mid-year, as consumers experimented with cooking at home, the focus shifted towards cooking appliances, small and major.”
In 2021, consumers continued their cooking at home experience, with many exploring new recipes from their social media feed, the report notes. High-growth sectors shifted from major appliances to small appliances, predominantly in the food preparation and hygiene areas.
Heading into 2023 and beyond, Euromonitor International expects the following trends to have a major impact on the industry:
There will be a renewed focus on sustainability. With the focus on hygiene gradually fading after two years of the pandemic, companies are refocusing on long-term environmental sustainability in their products and operations. The near-term goal includes being carbon neutral in their own operations, while the long-term goal is to reduce their products’ impact on the environment. For consumers, Environmental, Social and Governance (ESG) has become a key buying criterion.
Moving forward, consumers can be expected to have a more seamless experience when creating their smart homes. Consumers may not face the pitfalls of incompatibility between devices from different brands.
There is growing disagreement in the U.S. over the use of natural gas in new homes and commercial buildings. This has led to states enacting laws for and against natural gas piping to homes and commercial buildings. Ultimately, in the longer term, consumers are trending towards induction and vitroceramic built-in hobs.
Market research firm Technavio backs up Euromonitor’s findings—to a point. It notes that the major household appliances product segment (which held the largest appliance market share in 2020) grew largely because of the growing disposable income and changing lifestyle of the population–such as a move toward all-electric homes, coupled with rising urbanization.
For the next few years, a growing number of dual-income households across the emerging and developing economies are anticipated to drive the sales of climate-friendly household appliances, including refrigerators, air conditioners and washers.
But in its housing market appliance forecast for 2021-2025, Technavio also takes a somber view. “The market is fragmented, and the degree of fragmentation will decelerate during the forecast period,” the company notes. “Competitors have to focus on differentiating their product offerings with unique value propositions to strengthen their foothold in the market.”
To make the most of the opportunities and recover from post pandemic impact, market vendors should focus more on the growth prospects in the fast-growing segments, while maintaining their positions in the slow-growing segments, Technavio adds.
Will Solar Save the Day?
As the cleanest form of energy, solar continues to make strides with consumers. Data from the Solar Energy Industries Association (SEIA) bears this out: In 35 years, the conversion efficiency of photovoltaic panels has increased from 20 percent to 33 percent.
Meanwhile, the per-watt cost of solar energy was about $300 in 2006; by 2019 it dropped to $3—largely due to new federal solar tax credits. And between 2010 and 2017, utility companies saw the cost of solar-generated electricity drop from 28 cents to 6 cents per kilowatt-hour (kWh), according to the U.S. Department of Energy (DOE).
This reduction also meant a 52 cent to 16 cent per kWh decline for homeowners.
Overall market growth has been strong. IBISWorld reports that solar industry revenue hit $10 billion in 2019—making for an annual growth rate of 36 percent annually over five years. The U.S. market is expected to hit $22.9 billion by 2025.
Other data from SEIA reinforces the expectation that solar energy will continue to head for bigger and better things in 2023 and beyond:
Installations will more than triple in solar capacity over the next five years, surpassing 300 gigawatts by 2027. A key factor will be the Inflation Reduction Act, which includes 10 years of investment tax credits.
Demand for solar will continue to increase as more businesses embrace it and report energy savings. The yearly growth rate will hit 40 percent by 2027.
Solar installations will increase across all market segments through 2023 among non-utility businesses and developers looking to take advantage of federal tax credits.
Energy investment models pioneered by Fortune 500 companies will continue to attract big investors.
Improvements in solar battery technology will continue among researchers. Current home solar batteries typically provide 10 kWh of capacity. These batteries, which have a lifespan of up to 15 years, can be stacked to increase capacity as scientists aim for greater efficiency.
Declining prices for solar panels and batteries will continue, attracting new buyers who want to save on otherwise uncertain energy costs.
Over 96 percent of net new energy generation capacity in 2023 will come from solar and wind sources, according to Deloitte.
Solar construction costs fell by 37 percent from 2013 to 2017.
Demand will increase for a broad range of solar products such as solar-powered generators, portable smartphone chargers, outdoor motion sensor lights, backpacks, and cookers.
Roofing: A Hot Commodity
Easier and more cost effective solar energy planning will supercharge roofing projects over the next few years. Information vendor Research and Markets forecasts that the market for solar roofing products in the U.S. will rapidly increase to 716,000 squares, valued at $965 million in 2025.
A key driver will be the expanding impact of solar-friendly policies in a growing number of states and localities nationwide, particularly in the large California market, where revisions to the state building code will mandate almost all new buildings to install solar products as of 2023.
Other growth factors, according to Research and Markets, include:
Rising awareness of the energy-efficiency benefits of solar roofing systems.
The attractive appearance of solar roofing compared to traditional solar arrays.
Growing availability, affordability, and accessibility of solar roofing products.
Expansion of local, state, and federal incentives to install solar roofing products.
Meanwhile, the regular global roofing market is expected to rise from $79.3 billion in 2020 to $101.9 billion by 2027, for a 3.7 percent annual growth rate. The data, from ReportLinker’s 2022 Global Roofing Industry market report, also projects asphalt shingles as reaching a 3.4 percent growth rate and $31.5 billion in sales by 2027. The metal roofing segment, meanwhile, will grow by 4.5 percent annually over the next seven years.