The transition to a lower carbon economy has been long promised but the reality remains elusive. There is no doubt that the costs of renewables — led by solar and onshore wind — are now materially cheaper than they ever have been, having fallen respectively to the point at which the International Energy Agency in its latest short term outlook sees prices falling to between $20 and $50 per megawatt hour. That means they can compete with other fuels, even if some of the costs of providing back up to cover the intermittency of renewable supplies are included. In some markets, neither subsidies nor protected market shares will be necessary. Why then is the pace of change in the sector, especially in the developed world, so slow? Hydrocarbons continue to dominate with oil, gas and coal providing over 80 per cent of energy supply. Most serious long term forecasts suggest that dominance will decline only slowly and that renewables will still be providing little more than 15 per cent of the world’s electricity needs in 20 years’ time. The challenge is investment and the economics of the industry. Readers might like to take a moment to consider the composition of the funds which provide their pensions or hold their savings. Unless you are a committed and active investor, most of those funds are likely to hold shares in the major oil and gas companies rather than in enterprises developing wind or solar power. The reasons are straightforward. The energy majors continue to generate high yields. Despite price volatility, the returns look secure — the industry has successfully adapted to low oil and gas prices and most of the companies continue to generate plenty of new investment projects. For investors, the choice is easy. Financial Times