Last month Barclay’s Bank put out a report titled “Transition Realism: Financing Energy Systems That Work”. It begins…
A gap is emerging between the rhetoric of climate objectives and the operational realities of current energy systems. So far, the debate has centred on goals and timelines; it now needs to focus on implementation.
All stakeholders are also reassessing earlier expectations. The idea of a smooth transition, implying a near-frictionless shift from one global energy system to another, is being replaced by a more grounded view of the economic and security implications.
A couple of highlights:
- Energy addition not substitution: Despite record renewable deployment, global fossil fuel consumption has never been higher… Any investment strategy predicated on rapid substitution is ignoring the data.
- Energy hierarchy not trilemma: When energy systems are under pressure, priorities become clear: security of supply comes first, followed by affordability, with sustainability addressed once the basics are assured.
There is another gap, Western Virtue Signaling transfers pollution to the rest of the world. Is imported oil less polluting than local oil? Miracle of miracles!
The Captain
PS: Answer to the above question: No, but local costs rise.
What a load. This is red-herring-itis at its best. Transitions nearly always cost money in the short run . If someone was predicting “Oh this will be cheaper immediately” then they weren’t being honest or very knowledgable.
It cost more to transition from propeller aircraft to a jet fleet and fares went up - and then down when the benefits were realized (more passengers, more flights, v lower seat costs). The change from state highways to the Interstate Highway System cost untold billions, but it changed the infrastructure of America for the good. (It took 25 years, arguably it’s still going on today.)
How many times did your cable company have to dig up your lawn to add channels, or transition from analog to digital, and include wifi or other changes? What do you suppose it cost to get rid of all of Edison’s DC infrastructure and change it to Nikola’s superior AC system? What is it costing to change from simple “timed” traffic signals to AI systems to improve traffic flow? What about all that copper left in the ground or overhead that’s been replaced by fiber-optic?
Any transition has costs - the question is “Is it worth it in the long run”. There will always be short term disruption (and naysayers), yet our current society wouldn’t be where it is today without this kind of creative destruction.
Progress has its costs. It has also brought untold wealth and productivity to us, and so it is, and will be with renewable energies. Not every one will be successful, but many will offer benefits over and above “price”. People who pretend we’re going back are just, in my view, grumpy idiots.
Quite true. The question is, have they been adequately taken into account? What we’ve been watching in New York tells us the answer is no.
And the recent Progressive Policy Institute’s report on New Jersey, “Ambitious Goals Meet Reality”, found that New Jersey’s overly ambitious climate goals "are on a collision course with the unyielding realities of grid reliability, supply chain constraints, and — most importantly — ratepayer affordability and political sustainability.”
Since we ARE an economics board, let me state the simple and obvious fact
without a clear price signal that oil/gas is NOT the future, an infinite amount of “policymaking song and dance routines” was inevitable to fill the vacuum.
Any one surprised by this fact (well known from 1990 or so on, and loudly proclaimed by all except the big oil corps as evident fact) is… silly.
I guess that depends on your ability to predict the future. Republicans were against the Interstate System until Ike changed the “sell” from “Autobahns” to “national security”. It was costly, but who would have predicted the kinds of changes and improvements it made to the country? (Lots of small town folks were against them because “no traffic” to rip off the tourists. Ah well.)
The fight between Edison and Tesla is legendary, yet the advantages of AC power were enough - over the long run - to triumph over Edison’s DC plans.
Here’s my prediction for the future: oil is finite. That doesn’t mean it won’t last a long time, I hope it does, but we’re not making any more of it. Solar is infinite (for the next 5 billion years, anyway.) Wind is infinite. (Ditto). Nuclear too, but with some risks. Petroleum will always have volatile price swings; solar, wind, water will not (within reason.)
The transition is going to happen. It won’t be total, it won’t be absolute, but it is essentially unstoppable. The more power we get from renewables, the longer the petroleum derivatives (which have some substantial advantages, at least now) will last. There’s nothing wrong with this picture except those determined to “stand athwart history” or however that saying goes.
People are standing in the way of progress to continue to line their own pockets. The cost of fossil fuels is far outstripping the costs of alternatives and renewables.
Thanks for sharing. Focusing on implementation is difficult when there are still so many who argue that the transition isn’t necessary.
I found this part interesting -
“Enabling the transition to succeed will require massive and sustained investment in grid resilience, mining, industrial capacity, and flexible generation.”
This is a major roadblock on both the massive and sustained investment front. If we think that private investment is going to finance this historic transition, we’re deluding ourselves.
Sounds like some possibilities for long-term METaR investing.
Out of the UK six months ago…
One government insider said: “There is a choice about what price you’re willing to pay for the next [renewables] auction round, which is key to hitting 2030. If it comes to a choice between hitting the target and overpaying, or missing it and keeping costs down, we will miss it.”
Earlier that month Greek Prime Minister Kyriakos Mitsotakis, writing in the Financial Times, argued in favor of a more pragmatic energy transition.
“If we must accept some emissions for a bit longer to save our industries or to maintain social cohesion, so be it,” he wrote. “We must have these debates honestly. We cannot begin with climate neutrality and hope everything else falls into place.”
And, yes, Greece did veto a European Union proposal to place a carbon fee on shipping emissions. The prime minister said, “We want to be ambitious about the energy transition, but we must be realistic, not undermine the competitiveness of European industry, and certainly not cause social unrest by imposing unbearable costs on our households and businesses.”
Looking back a few years, in 2018 protests spread across France after an increase in the fuel tax (the yellow vest movement).
I’m not so sure. Lots of new Direct Current high voltage transmission lines being built because the line losses (i.e. friction) are less.
{{ from AI: High-Voltage Direct Current (HVDC) transmission lines are seeing a major resurgence in development, particularly for long-distance projects, because they are significantly more efficient and economical than Alternating Current (AC) lines over long distances
. By reducing line losses—often referred to as “friction” in the form of resistive, inductive, and capacitive losses—HVDC allows for transmitting more power to customers, especially when connecting remote renewable energy sources to urban centers. }}
OK, this is a little different. Now - with the advent of superior electronics and the ability to transform DC into super-high voltage it is better for long long distance. But for the first 100+ years it was not because the technologies did not exist to make it usable in those times. Edison’s version(s) required a power station every mile or so because the DC, sent at the current he could produce, sputtered and died, whereas Westinghouse’s (Tesla’s) AC could be sent for hundreds of miles - yes, with some losses, but DC couldn’t even get 10 miles without being dead.
It kind of proves the point: now that we’re able to use a superior technology thanks to, uh, technology, we’re also retiring power and transformer stations to take advantage of it, instead of sticking to an old, tired model just because we’re used to it.
We’re still using AC for regional distribution and grids, we’re superimposing DC for (very) long distance transmission thanks to its lower losses.
(I’m ignoring the uses of DC in batteries and hand held devices; that has always been true. I used to stick a square DC battery in a lantern flashlight when I was a kid, not to mention the D cells in stick-flashlights. That’s different and a special case because obviously there was no technology to produce AC current in devices that small.)
The difficulty with DC are the conductors which need to be superconductors. It won’t work with room temperature copper. They are now using “high temperature” superconductors which are cooled with liquid nitrogen.
I have lost enough money on the technology to be cured for good.
Tres amigas interconnect
Google AI:
The Tres Amigas SuperStation was a proposed (and later canceled) 2009 project designed to connect the three major, independent North American electrical grids—the Eastern, Western, and ERCOT (Texas) interconnections—to facilitate renewable energy transfer, with Wikipedia and High Country News reporting its intent to enable a “national supergrid” using HVDC technology. High Country News
