Oil is a dirty product and has caused more wars than sexy women and short men combined. In the 1980s, the countries against whom the United States ran the biggest trade deficits were Libya, Algeria, Saudi Arabia, and Venezuela. These countries had the back gold and the U.S., the world's largest consumer needed to protect these interests as a fat kid looks after his cupcake. John Paul Getty made billions out of oil, but it appears that the party is winding down and the cool kids are starting to leave. Ten years ago we have engaged the debate over peak oil theory – the theory that oil is a finite resource that is not replenished. We were locked in the phobia that we would run of oil and would be left stranded on the side of the freeway with our thumbs stuck out and in danger of being picked up by a serial killer or even worse a Republican. This fear has evaporated quicker than a puddle of lukewarm lager in the Australian outback.
Oil spills are more frequent that you would like to think. The International Tanker Owners Pollution Federation Limited (ITOPF) is a not-for-profit organization established on behalf of the world's ship owners to promote an effective response to marine spills of oil, chemicals, and other hazardous substances. Any industry that has its federation to clean up its mistakes is neither clean nor responsible – it is a big pile of horse excrement. According to the federation, in the 1990s there were 358 spills of 7 tons and over, resulting in 1,134,000 tons of oil lost; 73% of this amount was spilled in just 10 incidents. In the 2000s there were 181 spills of 7 tons and over, resulting in 196,000 tons of oil lost; 75% of this amount was spilled in just 10 incidents. In the nine years 2010-2018, there have been 59 spills of 7 tons and over, resulting in 163,000 tons of oil lost; 92% of this amount was spilled in just 10 incidents. One incident is responsible for about 70% of the quantity of oil spilled this decade. There seem to be champagne corks popping and cocaine sniffing in the federation. They are in party mode. They take great pride in the fact that a large portion of the oil spilled is isolated to a small number of disasters. They seem to think that as a planet, we would rather have 10 mega spills than 100 small spills. I would say that one spill is one spill too many and the fact that there were 59 spills of 7 tons and over between 2010 and 2018 is a shocking record and the sooner that we can wean ourselves off this noxious liquid the better!
So what is going to happen between now and 2050?
1) Cheap Renewables – Turning Electricity on its Head
As of 2017, two-thirds of the world's electricity was supplied by fossil fuels. We can expect this number to be turned on its head by 2050 at which point two-thirds of the world's electricity will come from renewables. Wind and solar alone will fire up 50 percent of the world. This will bring to an end the dominance of fossil fuels. Dr. Jack Kevorkian will be arriving in black coats, rubber gloves, and hypodermic needles. Fossil fuels will be tagged, sedated and their lifeless cadavers will be flung into the darkest corners of the world and left to the pleasure of the vultures and tow truck drivers.
2) Total Investment in New Power Generation to 2050 - $11,500,000,000,000!
This is quite a sizeable chunk of change and works out to around $255 billion per year. The most interesting part of this total spending is the percentage to be assigned to zero-emissions technology - a total of 87 percent. The bulk of this will be to wind and solar. The Cambridge Dictionary is going to have to change its definition of "blowing hot air" from "empty, exaggerated talk" to "the power source of the future". Return on investment is also going through the roof. By 2030 we will be getting more than twice the renewable capacity for every dollar spent than we got in 2018, and between 2030 and 2050 that number will double again.
3) Solar panels – Sunshine Reggae
Solar panels (also known as photovoltaics or PVs for the chronically lazy) are now cheaper than a fake Rolex at a Rastafarian flea market. Between 2010 and 2018 costs declined 84 percent. Between 2018 and 2025 costs are expected to decline a further 52 percent which means that soon the manufacturers of PVs are going to be paying the users to take them off their hands! This is a classic case of supply overtaking demand. This means it will no longer necessary to pawn granny’s Louis XIV chair to install solar panels on your roof.
4) Wind – Cheaper than a Flatulent Swamp Donkey
Costs of turbines are down 32 percent between 2010 and 2018. At the same time efficiency is up. If you google "cheaper and more efficient" there are 135 million results. I looked through the first 10 pages and all the results dealt with renewable energy. Not surprisingly there were no results for banks, financial services or government. Solar and wind are now cheaper than building new coal and gas plants in major markets like India, Germany, Australia, China, and the United States. By 2030 we reach the tipping point where this will be the case in almost every market. The reason why this tipping point is not reached sooner is that natural gas prices are softer than a biscuit that has managed to survive 20 minutes in junior’s paddle pool. The explosion of fracking in the Permian basin has brought excess gas online where producers are giving it away to consumers that are prepared to collect it. The other alternative for frackers is to burn the oil – but that tends to get the Green Peacers grumpy.
5) Cheap Batteries – Keeping Housewives Happy since….
The biggest challenge when it comes to renewable energy is that it is linked to the weather. Weather is about as reliable as a relapsing junkie. Battery prices have already declined 79 percent between 2010 and 2018 and prices are expected to decline an additional 67 percent to 2030. Cheap batteries, in addition to pleasuring millions of dissatisfied housewives, will also allow us to store renewable energy until required. Wind and solar will increasingly be able to run when the wind is not blowing and the sun is not shining – that sounds like a line from an Earth, Wind and Fire song.
6) The Electricity Model – Flipping the Light Switch
In the old days, when stockbrokers were rich and pedestrians were nervous, electricity systems were structured in a way where large plants ran around the clock and smaller units lent a hand during peak hours. In the future, this is going too turned on its head and cheap renewables will form the base supported by conventional plants running at lower capacities. But what happens if the world enters a Bill Withers scenario where his girl leaves him for weeks and there "ain't no sunshine when she's gone and only darkness every day"? There are limits to what renewables and batteries can do. There is still demand for peaker gas as a back-up. These will be smaller and more nimble installations as opposed to large scale combined cycle gas turbines.
7) Global Power Demand – Lighting Up the World’s Darkness
Global power demand will increase by 57 percent in the 30 years to 2050. This equates to a growth of 1.4 percent per year. This growth will be driven by the electrification of emerging markets in Africa, the Middle East, and Southeast Asia. McMurphy, in the 1975 movie "One Flew over the Cuckoo's Nest" had some interesting insight into electrification: "They were giving me ten thousand watts a day, you know, and I'm hot to trot! The next woman takes me on's gonna light up like a pinball machine and pay off in silver dollars!" Emerging markets are going to be lighting up like a pinball machine. Demand in developed markets is expected to be muted or even begin to decline on account of increased efficiency and modest economic expansion.
8) EVs – Driving Demand
By 2050 it is expected that 9 percent of total energy demand with come from electric vehicles. Outliers will be countries like Germany where 24 percent of total demand for electricity will be for EVs as they take to the autobahns and drop the pedal.
9) Air-conditioning – Cranking up the 20,000 BTUs
Trump turns out to be wrong about global warming which in turn takes him to 0 – 50. Emerging countries in Asia, Latin America, and Africa crank up their aircon during the daytime which will change the intraday load profiles. If you have ever go Monterrey Mexico in July you will find heat that will strip the paint off your tuck box.
10) Coal – The Biggest Loser
Coal gets set adrift into the vast ocean of nothingness to be exposed to scurvy, seafaring vultures and marauding Somalian pirates. The global demand for coal is falling. In 2018, 38 percent of the world's energy was generated with coal. The biggest consumers were India and China using coal for 66 percent and 79 percent respectively. It is believed that demand for coal will account for a mere 11 percent in 2050.
11) Asia Pacific – Hey Big Spender
Shirley Bassey said it best when she said: "The minute you walked in the joint, I could see you were a man of distinction, A real Big Spender, Good looking, so refined, Say, wouldn't you like to know what's going on in my mind?" The Asia Pacific will spend almost the same as the rest of the world combined in the energy sector as they whip out the Benjamins. China and India alone will spend $4.3 trillion with China accounting for 49 percent and India 29 percent of total regional investment respectively. Seventy-five percent of the cash goes to wind and solar.
12) U.S. and China - Giant Turnips disguised as Kobe Beef.
They say that after three days, both fish and house guests start to smell worse than a pair of flannel underpants from the Seven Year War. The two countries that are stinking up the environment the most are China and the U.S. but this is changing. The U.S. is starting to replace aging coal plants with cheaper gas and renewables, much to the distress of Trump. By 2050 coal plants are expected to be scarcer than sobriety in Dublin on St Patrick’s Day. Renewables will reach 55 percent of installed capacity in 2050. China will grow its renewable capacity from 7 percent in 2018 to 46 percent in 2050.
13) The Middle East and North Africa
Solar and wind will undercut cheap domestic oil and gas and move to 50 percent zero-carbon by 2050. Oil, on the other hand, will decline to a paltry 7 percent as the oil sheiks trade in their Lamborghinis and tigers for battery-powered scooters and Chihuahuas.
14) Power Emissions - Peaking in 2027
We will continue with our cacophony of sneezing, spluttering, projectile vomiting and nasal trumpeting until 2027. It is on this date that the amount of filth we belch into the atmosphere peaks at 13.6 billion metric tons and then declines by 2 percent per annum until 2050. This is largely due to China going cold turkey on coal.
15) Getting Rid of Coal is not Enough
The Paris Agreement aims to limit the global temperature increase to 2 degrees. Removing coal-fired plants will get us closer to 2 degrees but we need to do more. On top of the list would be new zero-carbon technologies that can decarbonize gas on a large scale basis.
forecasts provided by Bloomberg New Energy Finance
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