Kingsmill Bond - Myths of The Energy Transition, COP24 Poland
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Presentation delivered by Carbon Tracker's Kingsmill Bond and Rachel Carr at COP24 Katowice, 06 Dec 2018 Link to Carbon Tracker Myths of the Energy Transition series by Kingsmill Bond: https://www.carbontracker.org/myths-of-the-transition-renewables-are-too-small/ Link to event livestream: https://unfccc-cop24.streamworld.de/webcast/action-hub-morning-session-5th-december (from 59mins)
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Kingsmill Bond - Myths of The Energy Transition, COP24 Poland
- 1. Kingsmill Bond, CFA Carbon Tracker Initiative December, 2018 kbond@carbontracker.org Myths of the energy transition. Don’t lie in ignorance Presentation at COP 24, Katowice
- 2. 2 Index • A. What is going on: technology disruption • B. The myths. • C. The counter • 1. Too small to matter • Too slow to matter • 2. Incumbent forecasts. • 3. Too expensive. • 4. Intermittent. • Hard-to-solve • 4. Help the poor. • Emerging market demand growth • D. Reality: stranded assets; stranded lives; stranded thinking.
- 3. 3 What is the energy transition
- 4. 4 The key driver - technology-driven disruption
- 5. 5 S curves of growth
- 6. 6 This is how S curves work
- 7. 7 Peaking demand for fossil fuels in the 2020s
- 8. 8 Dramatic financial market impact GE share price
- 9. 9 The myths…
- 10. 10
- 11. 11 The Myths: Too small to matter - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2000 2002 2004 2006 2008 2010 2012 2014 Thermal Nuclear, hydro, biomass Solar and wind European electricity supply TWh Source: BP
- 12. 12 European electricity sector write-downs
- 13. 13 Too slow to matter Global coal demand mtoe Source: BP
- 14. 14 Peabody share price Peabody share price $ Source: Bloomberg
- 15. 15 The peak comes before the fall 0 1 2 3 4 5 6 1890 1900 1910 1920 Horse Car Horses and cars in US transport (m) Source: Geels
- 16. 16 Infrastructure is not sufficient protection
- 17. 17
- 18. 18 Myth 2: Incumbents are right
- 19. 19 The latest forecast Source: IEA, BP Annual solar additions (GW)
- 20. 20 Costs - hope and reality US LCOE $/ MWh Source: IEA WEO 2018, BNEF 2018
- 21. 21 This is no rounding error Change in electricity supply (TWh) Source: BP
- 22. 22 Renewables are too expensive!!
- 23. 23
- 24. 24 Myth 3: Too expensive US LCOE 2018 $/ MWh Source: Lazard
- 25. 25 The second inflection point Source: Carbon Tracker Share of global coal fleet where new renewables are cheaper than coal operating costs China Europe
- 26. 26 Costs over time Source: Our World in data, BNEF, Carbon Tracker Electricity costs $/ MWh Lots of subsidy Renewables start to compete Game over
- 27. 27 India LCOE India LCOE 2018 Source: BNEF
- 28. 28
- 29. 29 Myth 4: Intermittency Source: IEA, Carbon Tracker annotation The phases of Transition
- 30. 30 What has been done 0% 10% 20% 30% 40% 50% 60% Denmark Portugal Ireland Spain Germany Lithuania Greece UK Italy Romania Solar Wind Share of electricity from solar and wind 2017 Source: BP
- 31. 31 The rest of the world has a long way to catch up Share of electricity from solar and wind 2017 Source: BP
- 32. 32 Hard-to-solve sectors: not that big Share of total primary energy demand 2017 Source: IEA
- 33. 33 Fitting into the endgame The last 20%
- 34. 34 There are prospective solutions Mission Possible 2050 energy mix in hard-to-solve sectors Source: Energy Transitions Commission
- 35. 35 The world is electrifying Share of primary energy used by electricity sector Source: BP
- 36. 36
- 37. 37 Myth 5: Help the poor Source: Carbon Tracker Share of global coal fleet where new renewables are cheaper than new coal Vietnam Philippines Ukraine
- 38. 38 Pollution Source: World Health Organisation Global air quality
- 39. 39 The emerging market energy leapfrog Solar capacity GW EV sales 000 Source: BP Source: BP
- 40. 40 Emerging market demand Share of capacity additions in emerging markets Source: BNEF
- 41. The real driver of resistance: Stranded assets 41
- 42. 42 The merchants of doubt
- 43. 43 Carbon Tracker The myth series • Too small to matter. October 2018 • Intermittency. November 2018 • Hard-to-solve. December 2018 • High costs. January 2019
- 44. 44 Now over to you • Which of these have you encountered most frequently? • Are there any other myths you’ve encountered? • Do you still see any of these as a genuine obstacle? • Are you a merchant of doubt?!
- 45. 45 Appendix: There are not enough minerals Source: Amory Lovins
- 46. 46 Fossil fuel jobs Source: Engie Location of energy sources
- 47. 47 Peak fossil fuel demand in the 2020s
- 48. 48 Electricity is small Global incremental energy demand EJ Source: BP, Carbon Tracker estimates
- 49. 49 No transition in electricity Share of global electricity supply from coal
- 51. 51 Where does the money go
- 52. 52 Market risk
- 54. For more information please visit: www.carbontracker.org @CarbonBubble If you are interested in knowing more, please get in touch: kbond@carbontracker.org
Notas del editor
- .
- Myth: there are not enough of various minerals. Rare earths, cobalt, nickel, copper are common candidates. This is a perennial argument and comes from three fallacies. First to assume you need everything at once Technology reduces the need for the most expensive metals Price brings forward supply
- Myth: Fossil fuels provide lots of well-paying jobs. Fossil fuels are by the few for the few. Small number of jobs and a large amount of money going to a small number of people. Fossil fuels are in a very small number of locations. About 90% of the world’s oil is controlled by 5% of its population. Solar and wind are everywhere. Renewable based systems have far more local jobs than fossil fuel systems. There are 11 million jobs in fossil fuel extraction and 10 million in renewables.
- There are of course a number of other assumptions that one can make. Energy demand growth is likely to be 1-1.5% Solar and wind supply growth is likely to be 15-20% This gives a range of peak fossil fuel demand from 2020 to 2027. So it is reasonable to say that the 2020s will be the peaking decade.
- Myth. Electricity is small and not that important. Only 20% of end demand. This is true but irrelevant. There is an error at the heart of most energy calculations. People compare electricity which is high quality and can be used at once with fossil fuels which need conversion and suffer inevitable thermodynamic losses As a result 43% of all energy supply is needed to make electricity. And because the world is electrifying, nearly three quarters of the growth ins supply comes form electricity This is like those who said cars are not horses or mobile phones are not landlines.
- The argument is that the share of coal in electricity supply is the same today as it was 30 years ago. So there has been no change and will be no change. Look at the detail. All the growth came from China. The era of rapid coal demand growth in China is over. Other countries will not pick up the slack because they have cheaper cleaner alternatives It is a mistake to look backwards not forwards
- Disruption requires simplicity. Detailed models struggle to model radical change. Peak fossil fuel demand in total means that each sector has to peak. All fossil fuels are subject to regulatory pressure Fossil fuels compete with each other and with renewables. Technology and the markets are encouraging this.
- Fossil fuels are by the few for the few 8 out of ten people live in countries that import fossil fuels
- Transition risk impacts not just the producers of fossil fuels, but related sectors, from electricity to automotive, from fertilizers to capital goods. These sectors comprise up to a quarter of global equity indices. According to Fitch, 25% of bonds are in sectors impacted by the transition. Moody’s recently released a report where they identified $2.2 tn of bonds which have significance exposure to the transition
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