-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
mspohr
Well-Known Member
‘Carbon bubble’ coming that could wipe trillions from the global economy – study
Macroeconomic simulations show rates of technological change in energy efficiency and renewable power are likely to cause a sudden drop in demand for fossil fuels, potentially sparking a global financial crisis. Experts call for a “carefully managed” shift to low-carbon investments and policies to deflate this “carbon bubble”.
Such a sharp slump in fossil fuel price could cause a huge “carbon bubble” built on long-term investments to burst. According to the study, the equivalent of between one and four trillion US dollars could be wiped off the global economy in fossil fuel assets alone. A loss of US$0.25 trillion triggered the crash of 2008 by comparison.
Macroeconomic simulations show rates of technological change in energy efficiency and renewable power are likely to cause a sudden drop in demand for fossil fuels, potentially sparking a global financial crisis. Experts call for a “carefully managed” shift to low-carbon investments and policies to deflate this “carbon bubble”.
Such a sharp slump in fossil fuel price could cause a huge “carbon bubble” built on long-term investments to burst. According to the study, the equivalent of between one and four trillion US dollars could be wiped off the global economy in fossil fuel assets alone. A loss of US$0.25 trillion triggered the crash of 2008 by comparison.
mspohr
Well-Known Member
Nice to see XOM doubling down on their losing bet. Sets them up for a bigger fall when the end comes.
Individual nations cannot avoid the situation by ignoring the Paris Agreement or burying their heads in coal and tar sands,
TheTalkingMule
Distributed Energy Enthusiast
BTW, I was motivated to extract this nugget by carrying on a Twitter discussion with a certain well respected oil analyst. This guy is telling as story where the father is fossil fuels and the mother is wind and solar. In his story, the public, infantile in its understanding of energy matters, is choosing the mother over the father and that this can only lead to a disastrous outcome. He became very uncomfortable with me asking why he equates fossils with masculinity and renewables with femininity. He explain that the father is distant, capricious and prone to anger. The naïve child seeks the comfort and protection from this father. So I suggest that he might want to kill his father and get on with the whole Oedipal narrative. This analyst then becomes angry and condescending to me for the suggestion that actually this in Freudian thinking is how the child grows up. I also suggested that perhaps the fear of a fossil free future could be castration anxiety. More condescension issues.
So now I am contemplating whether to post this Freudian stage theory to help him better locate where fossil interest may be fixated. Any suggestions?
Sometimes a wind turbine is just a wind turbine.
TheTalkingMule
Distributed Energy Enthusiast
No, your confusing the energy that goes into the ground with the energy that comes out of the ground. These are all about extracting messy stuff out of a cavity in the ground. That messy stuff must be processed and cleaned up to be useful, otherwise all we have is dirty lump of coal or glob of crude, not energy, but a substance that can be transformed into a useful fuel.
Wind, sunlight and water, on the other hand, create useful energy by stimulating a phallic- or clitoral-like receptor. This is more about the excitation of electrons directly from the environment. Fossil fuels can only get electrons flowing if they are combusted and harnessed by an engine of some sorts. So it is much less direct path to the ancient environment that created the surplus biological energy in the first place (the oral stage). In the phallic stage, Frued is more focussed on masturbation and pleasure seeking rather than coitus and procreation. The later is the genital stage.
Also in the phallic stages (age 3-6), Freud develops the Oedipus and later Electra complex. Here the child is afraid that the father will punish the son for interest in the mother. This fear is castration anxiety. So in our metaphor here we could talk about the anger of the fossil industry trying to take away our means to harness energy form the environment (earth, mother). This oil analyst is actually acting out that anger and patronizing those who would want to possess the environmental energy directly, rather than as mediated through the fossil industry. He is basically saying to a child, "Don't you dare diddle with those wind and solar things. They are bad, very bad. Or I will get angry and take them away from you." So as the child find more agency, he must "kill" or put down this jealous father. Otherwise, the child gets stuck in dependency and fails to grow into maturity. Likewise in this metaphor, humans could get stuck in dependency on fossil fuel, unable to transition to a more sustainable future. This oil analyst is expressing just how much he fears this energy transition. He would prefer people to remain docile, infantile consumers of the fossil industry that he identifies with. The paternalistic fossil industry would like to possess exclusively the earth and withhold her from her children.
So I seem to be identifying our present moment of energy development as primarily the phallic stage. Intellectually, I'd like to jump ahead to latency wherein the battery enable us to direct renewable energy into useful things like EVs and making steel. Latency is quite fitting for batteries in that batteries solve intermittency challenge of wind and solar. One needs to be able to store that energy to put it into something else at a later time. The Latency stage is age 6 to puberty. The Genital stage, in my imagination, represents a level of energy development wherein all the energies are so finely integrated that deep decarbonization is possible and the climate can be repaired.
/freuds-stages-of-psychosexual-development-2795962-5b61cd3dc9e77c007be4124d.png)
What Are Freud's Stages of Psychosexual Development?
mblakele
FSD Beta (99)
At the risk of posting something on-topic:
The world is investing less in clean energy
[...]
Last year the Chinese government slashed investment subsidies. In April it said it would give priority to wind and solar projects that can generate power at the lowest prices. (China also has a third of the world’s wind turbines.) This has contributed to a fall of 60% in Chinese investment in renewable energy in the past two years (see chart). American clean-energy investment has also declined. In Europe, greenish countries such as France, Germany and the Netherlands are spending less, especially on relatively expensive projects such as offshore wind.
[...]
Although investment in clean energy is down, production of it continues to rise. A dollar’s worth of solar-power investment yields about four times as much capacity as it did ten years ago. The capital costs of wind energy have fallen similarly. Over the decade, renewable-energy capacity has quadrupled. Half of that increase was from solar. Yet renewables are still a long way from replacing fossil fuels. That is especially true of coal in Asia. Despite China’s efforts to go green, it remains the world’s biggest consumer and producer of coal, which still accounts for three-fifths of its energy mix. India is building lots of coal-fired power plants; in South-East Asia the share of coal in electricity generation is on the rise. The world’s fuel palette still has too much black and too little green.
The world is investing less in clean energy
[...]
Last year the Chinese government slashed investment subsidies. In April it said it would give priority to wind and solar projects that can generate power at the lowest prices. (China also has a third of the world’s wind turbines.) This has contributed to a fall of 60% in Chinese investment in renewable energy in the past two years (see chart). American clean-energy investment has also declined. In Europe, greenish countries such as France, Germany and the Netherlands are spending less, especially on relatively expensive projects such as offshore wind.
[...]
Although investment in clean energy is down, production of it continues to rise. A dollar’s worth of solar-power investment yields about four times as much capacity as it did ten years ago. The capital costs of wind energy have fallen similarly. Over the decade, renewable-energy capacity has quadrupled. Half of that increase was from solar. Yet renewables are still a long way from replacing fossil fuels. That is especially true of coal in Asia. Despite China’s efforts to go green, it remains the world’s biggest consumer and producer of coal, which still accounts for three-fifths of its energy mix. India is building lots of coal-fired power plants; in South-East Asia the share of coal in electricity generation is on the rise. The world’s fuel palette still has too much black and too little green.
Ok, let's see if I can refine this a bit before taking it to Twitter.
Freudian Stages of Energy Development
Oral -- Biologic, food, wood, biomass
Anal -- Fossil, coal, crude, gas
Phallic -- Electric, water, wind, solar
Latency -- Storage, battery, EV, power-to-gas
Genital -- Sustainability, deep decarb, repair of climate
Maybe this is a little better.
Leaving out nuclear because it easily distracts from the core issues.The key problem with fossils is that they are messy. Nuclear is so anal-retentive there are no emissions!
Characterizing phallic as electric to avoid confusion with phallus as symbol of male power. Electricity is the form of energy that can be most efficiently directed to purpose, e.g., an electric drivetrain is more efficient than an ICE. So at first, we get turned on to electricity and focus on generating, but later focus more on using it intelligently. Latency may also be thought of as electrification of everything. Genital may also be thought of as intelligent integration.
Freudian Stages of Energy Development
Oral -- Biologic, food, wood, biomass
Anal -- Fossil, coal, crude, gas
Phallic -- Electric, water, wind, solar
Latency -- Storage, battery, EV, power-to-gas
Genital -- Sustainability, deep decarb, repair of climate
Maybe this is a little better.
Leaving out nuclear because it easily distracts from the core issues.The key problem with fossils is that they are messy. Nuclear is so anal-retentive there are no emissions!
Characterizing phallic as electric to avoid confusion with phallus as symbol of male power. Electricity is the form of energy that can be most efficiently directed to purpose, e.g., an electric drivetrain is more efficient than an ICE. So at first, we get turned on to electricity and focus on generating, but later focus more on using it intelligently. Latency may also be thought of as electrification of everything. Genital may also be thought of as intelligent integration.
The larger context here is that investment in the whole energy sector is declining from a peak in 2015. But even with this aggregate decline, energy markets are still teetering around being oversupplied, which in turn is why investment keeps declining. Additionally, as I posted upstream the cost of debt has been declining across the sector too. So the decline in investment is not for lack of capital. Energy capital is abundant; it's just not needed so much to keep the global economy well supplied with energy.At the risk of posting something on-topic:
The world is investing less in clean energy
[...]
Last year the Chinese government slashed investment subsidies. In April it said it would give priority to wind and solar projects that can generate power at the lowest prices. (China also has a third of the world’s wind turbines.) This has contributed to a fall of 60% in Chinese investment in renewable energy in the past two years (see chart). American clean-energy investment has also declined. In Europe, greenish countries such as France, Germany and the Netherlands are spending less, especially on relatively expensive projects such as offshore wind.
[...]
Although investment in clean energy is down, production of it continues to rise. A dollar’s worth of solar-power investment yields about four times as much capacity as it did ten years ago. The capital costs of wind energy have fallen similarly. Over the decade, renewable-energy capacity has quadrupled. Half of that increase was from solar. Yet renewables are still a long way from replacing fossil fuels. That is especially true of coal in Asia. Despite China’s efforts to go green, it remains the world’s biggest consumer and producer of coal, which still accounts for three-fifths of its energy mix. India is building lots of coal-fired power plants; in South-East Asia the share of coal in electricity generation is on the rise. The world’s fuel palette still has too much black and too little green.
So it should be no surprise that investment in renewable energy would also decline, though not as much as it is for fossil fuels. It's also economically healthy in the longer run for governments to be pulling back on incentives for renewables and really all energy. In China, both wind and solar are becoming cheaper (unsubsidized) than coal (also cheaper than gas). This is part of why China is backing off on incentives. They aren't needed, and they would be better deployed elsewhere, like building up the transmission grid. Without making conscious choices like this, unconscious incentives can easily lead to malinvestment that become a drag on the economy and slow environmental progress.
I suspect that the decline in renewable cost per unit is a big part of what is causing the contraction in energy sector investment. In aggregate we are getting more energy per dollar invested each year. I believe this technology-led deflation will continue for quite a long time. The fossil industries seem to be trying to lock in investments as fast as they can. What would really accelerate the transition would be for fossil investments to decline at an even faster rate. But for now fossils are flooding the market, diluting the value of investments into renewables.
World’s Top Oil Trader Sees Oil Prices Weakening This Year | OilPrice.com
I think Vitol is a fairly reliable source for out look on oil. They do price neutral trading.
It's interesting how just a few years ago demand growth was typically expected to be about 1.6mb/d each year. But now Vitol is looking it will pick back up to 0.8mb/d for 2020.
Also ExxonMobil is expecting--and telling investors to expect--annual growth out to 2025 to be just 0.7%/y or about 0.7mb/d per year.
So it looks like over the span of about 5 years expected growth had declined about 50%. To be sure, much of the stated angst is about trade US war with China. But hey, it's not like Trump is unwilling to take a call from oil elites, if they had a problem with his trade antics. And if he wasn't agreeable, nobody is forcing the oil elites to keep bankrolling his re-election bid. Maybe they know that would be futile. ICE vehicles sales are falling off a cliff, but it is a convenient narrative to just chalk it up to silly trade wars. Am I too cynical?
I think Vitol is a fairly reliable source for out look on oil. They do price neutral trading.
It's interesting how just a few years ago demand growth was typically expected to be about 1.6mb/d each year. But now Vitol is looking it will pick back up to 0.8mb/d for 2020.
Also ExxonMobil is expecting--and telling investors to expect--annual growth out to 2025 to be just 0.7%/y or about 0.7mb/d per year.
So it looks like over the span of about 5 years expected growth had declined about 50%. To be sure, much of the stated angst is about trade US war with China. But hey, it's not like Trump is unwilling to take a call from oil elites, if they had a problem with his trade antics. And if he wasn't agreeable, nobody is forcing the oil elites to keep bankrolling his re-election bid. Maybe they know that would be futile. ICE vehicles sales are falling off a cliff, but it is a convenient narrative to just chalk it up to silly trade wars. Am I too cynical?
mspohr
Well-Known Member
Oil and gas companies undermining climate goals, says report
Oil and gas companies undermining climate goals, says report
Major oil and gas companies have invested $50bn (£40.6bn) in fossil fuel projects that undermine global efforts to avert a runaway climate crisis, according to a report.
Carbon Tracker, a financial thinktank, found that ExxonMobil, Chevron, Shell and BP each spent at least 30% of their investment in 2018 on projects that are inconsistent with climate targets, and would be “deep out of the money in a low-carbon world”.
Andrew Grant, the author of the report, said: “Every oil major is betting heavily against a 1.5C world and investing in projects that are contrary to the Paris goals.”
“Investors should challenge companies’ spending on new fossil fuel production. The best way to both preserve shareholder value in the transition and align with climate change goals will be to focus on low-cost projects that will deliver the highest returns,” Grant said.
Oil and gas companies undermining climate goals, says report
Major oil and gas companies have invested $50bn (£40.6bn) in fossil fuel projects that undermine global efforts to avert a runaway climate crisis, according to a report.
Carbon Tracker, a financial thinktank, found that ExxonMobil, Chevron, Shell and BP each spent at least 30% of their investment in 2018 on projects that are inconsistent with climate targets, and would be “deep out of the money in a low-carbon world”.
Andrew Grant, the author of the report, said: “Every oil major is betting heavily against a 1.5C world and investing in projects that are contrary to the Paris goals.”
“Investors should challenge companies’ spending on new fossil fuel production. The best way to both preserve shareholder value in the transition and align with climate change goals will be to focus on low-cost projects that will deliver the highest returns,” Grant said.
TheTalkingMule
Distributed Energy Enthusiast
There's a Mckinsey report (orig podcast form) on peak energy and peak oil designed for executives. All the numbers and projections seem to be about 6-9 months behind. Normally that wouldn't be a big deal, but reality has set in A LOT in this calendar year.
Growth for 2019 going from 1.6Mb/d to something like 750k destroys pretty much any analysis performed prior to May and really highlights the impact of this IEA disinformation campaign. Everybody started with 1.6Mb/d(plus another 1+Mb/d for 2020), that is all now out the window. We may see 1.5Mb/d of growth across BOTH years, and that's IF a global recession doesn't hit.
I positively refuse to believe large investors aren't aware of this reality. My guess is they will absolutely insist on slashing capex for "exploration" to zero in very short order. You are not too cynical, this is reality with tons and tons of conscious and unconscious denial wrapped around it.
Nice. So now they are looking at the project level to point out over investment in fossils. But there can be duplication of investment across multiple companies. So the whole industry could be over spending in aggregate well in excess of these identified projects, 30% of investments.
My big worry is that the fossil industries are over spending now just to lock in a larger share energy markets for decades to come. This is not sound investing, but rather value destroying anti-competitive behavior. It's also dumb. In the near term, oversupply kills profitability for everyone, and in the longer run the low carbon alternative will come on while there is an investment overhang. I think this is largely a flaw in collective human behavior to try to defend "territory," but it could pretty much seal the deal on a carbon bubble.
E-bus on Bangkok roads
A new electric bus runs on Bangkok roads during a test run by the Bangkok Mass Transit Authority. — (Pattarapong Chatpattarasill 21:36)
E-bus on Bangkok roads
A new electric bus runs on Bangkok roads during a test run by the Bangkok Mass Transit Authority. — (Pattarapong Chatpattarasill 21:36)
E-bus on Bangkok roads
Here's a dandy little chart I put together. BP Review provides both real oil prices and crude production, multiply the two, annualize, and voila you have the real market value of crude. Basically this is the size of the market in 2018 USD that all oil producers are competing for.
I think this is how demand ought to be measured. It indicated how much money the global economy is willing to throw at the upstream oil industry.
Not surprisingly, peaks in market value tend to precipitate bad economic conditions for oil. Note the peak around 1980, this precipitated stagflation. The peak in 2008 precipitated the great recession. The peak in 2011-2014 was a serious drag on economic recovery and precipitated the oil glut of 2014-2016.
Could 2012 at $3.84T actually market peak demand for all time? Perhaps. After the glut, market value recovered to $2.47T, but this is still sharp fall off from the peak, a $1.35T decline in oil revenues. Looking forward to 2019, even if Brent holds a $65/b average price for the year, crude value comes in at $2.27T. At $60 Brent, this would be $2.09T. It seems out of the cards that either 2019 or 2020 will come in above $2.5T. So I think we are on a downward trend.
Could we see a new peak in excess of $3.84T in 2018 dollars? Well, sure, but that would require oil prices above $120/b sustained for a year or more. I shudder to think how much damage that would wreak on the global economy. But on the way up, higher oil prices would also fire up investments in EV makers, batter supply chain and renewables. So hopefully, this investment would prevail to defend the global economy.
Similar threads
