In the Middle East – Sun Rises as Oil Sets

October 24, 2017

Records keep falling in solar power production.

Michael Liebreich, Bloomberg New Energy Finance:

You have only to watch half an hour of any business channel to see at least one so-called expert opining on future oil prices. I say so-called, not because they lack credentials, but because they generally lack the successful track record that is the only true test of expert punditry. If these TV stations would research what their talking heads had predicted in the past – before the oil price surges of 2007-2008 and 2011-2012, say, or before the crashes of late 2008 and 2014 – they would realize they might as well interview Bubbles the Chimp. Bubbles doesn’t spend his time tracking tankers, monitoring storage levels at Cushing or listening to OPEC press conferences, but his views on oil prices are rendered no less valid by his intuitive approach.

But what about the long-term forecasters – the International Energy Agency (IEA) and its U.S. counterpart, the Energy Information Administration (EIA)? What about the oil companies, with all their resources and their legions of economists? What about energy ministries, grid operators, treasury departments, academia? From the earliest days of my Summit presentations, I have raised a reliable laugh by comparing their past clean energy forecasts with historical out-turns. There is now a whole internet genre making such comparisons, bringing pleasure to millions. I feel bad about it – many of the authors of these forecasts are friends and clients – but if they don’t want to be mocked for their forecasts, they either need to improve them or stop publishing them.

You can immediately see the problem if you take the first derivative of those IEA solar capacity forecasts: each time, the assumption is that installations have reached some steady state and will no longer grow. The 2016 IEA World Energy Outlook New Policies Scenario shows PV capacity additions flat at around 50GW per year out to 2040. In 2017, just one year later, the world’s PV industry will install around 90GW. And in the boardrooms of the world’s solar suppliers, from ingot to wafer to cell to module, do you think they are planning on staying the same size? Or are they planning to grow? Is there any real doubt that solar manufacturing – despite the nonsense currently going on in the Suniva case in the U.S. – is still in a growth phase?

In wind it’s even worse: the IEA’s latest New Policies scenario shows wind installations falling consistently from the current 60GW per year to 40GW per annum by 2040. Hello? Have they not seen that onshore wind is the cheapest form of bulk new electricity in more and more countries in the world? Are they not following the trends in offshore wind costs? What do they think will happen when new wind and solar become cheaper than running existing fossil fuel plants? When the record low price for either goes below 2 U.S. cents per kilowatt-hour. Because that will happen.

However, there is much more to do. In too many areas the Orthodoxy Window is still tightly shut. For instance, the majority of people I meet still believe the following: the cost of managing intermittency is prohibitive; demand rebounds to eat all the benefits of energy efficiency; industrial processes are inevitably lumbering, inflexible and fossil-fuel powered; long-distance freight can only be carried by dense liquids; those lacking modern energy services would be better off waiting for a centralized grid, rather than using distributed solutions today; advanced biofuels will never work; the answer to every long-term question is hydrogen; self-driving cars will eat the world; England will never win another football World Cup.

Most likely none of those statements will prove true in the long term, except maybe the last one. Though even when it comes to soccer, we may be surprised. And how we need to be surprised! For the past three years, greenhouse gas emissions have been flat, despite a growing world economy. At most, the current orthodoxy – despite its renewable energy, electric vehicles and energy efficiency – will result in flat or gently declining emissions. As the science behind the Paris Agreement has clearly stated, to stay within 2 degrees Celsius of warming from pre-industrial levels, emissions need to reach net zero sometime this century. That is within the expected lifetime of our children.

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2 Responses to “In the Middle East – Sun Rises as Oil Sets”

  1. J4Zonian Says:

    “As the science behind the Paris Agreement has clearly stated, to stay within 2 degrees Celsius of warming from pre-industrial levels, emissions need to reach net zero sometime this century. That is within the expected lifetime of our children.”

    Huh? I thought we knew better here. To have a very good chance (the only acceptable math) to stay below 2 we needed to zero out emissions a decade ago, and massively sequester carbon through forestry and agriculture starting then. Instead, emissions have continued to climb, through fossil fuel burning, deforestation and increasing industrial ag. We’re now trying to stay below 4 or 6, trying desperately to convince those in power that the survival of civilization depends on doing it now, in emergency mode, and not waiting until the end of the century or the time of our children’s children, etc.

    When will people overcome their fear-driven denial and admit this is far more dire than almost anyone is admitting? When will enough people actually start to do something to take over the government of the US by whatever peaceful means it takes–general strike, blockade of all fossil fuel, media, and government offices and homes by millions until all those in power who have collaborated in delaying rational action resign and prosecutions begin. Targeted boycotts, parallel government and business structures, like Gandhi’s/ salt march and production, and Transition Initiatives.

  2. toddinnorway Says:

    The IEA and EIA have traditionally been close friends and allies of the ff industry. Of course this means that they wilfully misinform the general public and the lazy investment community on the promising future of competitors to fossil fuels! This is called regulatory capture. Our regulators do not work for the general good. They work for their incumbent industries, and screw everyone else, especially uppity newcomers like those new-fangled PV and wind players. They usually try to conceal this. But for the EPA, they flaunt it. Same with the Interior Dept.


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