Energy & Climate Change
Oil, gas and coal are no longer competitive
Renewable electricity is now the cheapest form of energy. In addition electric motors and heat pumps are much more efficient then their fossil counterparts. Markets will react: demand for fossils is to peak before 2030, and drastically decline thereafter.
Controlling fire is what distinguished humans from other species. It allowed us to survive and thrive in colder climate. Making a fire is age-old technology.
When using fire in technological applications, transforming heat energy to movement, the efficiency is limited by the laws of thermal physics to roughly 35%. Electricity in contrast, has an energy-to-movement efficiency of 100%. Making a fire might be romantic, but is not very efficient.
Renewable energy is now the cheapest from of energy in human history – at a cost of 40% of the cheapest form of fossil electricity generation (gas). The efficiency of electric appliances is between 2-5 times greater than fossil counterparts.
Fossil fuels are no longer competitive.
The International Energy Agency (IEA) predicts that global demand for oil will peak between 2025 and 2027 due to cheaper alternatives. When demand starts to decline, prices start to fall. The demand-supply-equitation kicks in: over-capacity will lead to price competition, further putting pressure on revenues and profit margins.
It is highly likely that demand for, and revenues generated from fossils will decline somewhere between significantly and drastically after 2030.
Investors, beware: fossils are no longer competitive
- The markets for renewables and electricity-powered consumption have reached momentum that is now unstoppable. It’s simple economics: Renewables are – by a large margin – more efficient and cheaper.
- Market developments flush more investments in R&D, production and installation – everything renewable and electric will become even cheaper in the near future. The outlook suggests half the cost in the next 10 years, redoubling market dynamics.
- As a consequence, fossils and fossil-powered consumption are no longer competitive. Demand for oil will peak between 2025 and 2027, and therefore start to decline, slowly at first, and faster over time. Demand, revenues and profits for and from fossils will decline in accordance.
- The renewable transition will happen faster than the “mainstream” is currently expecting.
- Demand for oil will decline after 2025. And drastically so after 2030 – even assumed a business-as-usual scenario with no or very limited climate change-forced policies.
- Policies and targets induced by climate change (e.g. incentives and financing framework for renewables, and taxing of fossils) are likely further accelerating market dynamics. It is highly likely that the demand for fossils will be a fraction of today’s, maybe close to zero by 2040.
![Download the Report: [download id='9887']](https://solability.com/wp-content/uploads/2023/11/Fossils-no-longer-competitive_cover-400x533.jpg "Fossil fuels are no longer competitive")
Fossil fuels are no longer competitive
2’778 Billion.
The Cost of Not Having a Renewable Energy Infrastructure: Fossil vs. and Renewable Energy Infrastructure Costs to 2040
This report presents the research of a close examination of past, current and expected future costs of energy on a global scale under two different, but equally realistic scenarios: a business-as-usual scenario under which policies continue as they are, and a “Marshall“ scenario (derived from the “Marshall Plan” under which Europe’s economy was re-built after WW II in record time and much more successfully that anyone had anticipated).
All data and prices up to 2013 is based on World Bank, IMF and BP data. Forecasts are based on BP & IEA Energy Outlooks, and technology adaption rates that define future cost of energy systems under a business-as-usual approach and a policy-induced high investment and approach. Key findings include:
- The lack of a meaningful alternative to the fossil energy system gives fossil energy carriers a monopoly situation.
- Renewable energy is fast becoming cost competitive, and in some cases (wind power), is already cheaper than fossil alternatives.
- Renewable energy cost of other technologies, including storage, could be reduced drastically with economics of scale (investment-induced mass production and application)
- At the same time, fossil energy carriers have to be extracted from more challenging locations (tar sands, ultra-deep sea, fracking, arctic drilling, etc.), i.e. costs of fossil fuels are rising.
- This lack of alternatives to the fossil energy system led to increased global energy expenditure from 0.86% of World GDP in 1995 to 1.43% in 2013 due to higher fossil energy costs.
- Had we initiated an energy infrastructure transition in the 1995, we would have an alternative by now. The opportunity cost of not having made those investments (i.e. additional cost of the fossil infrastructure incurred since 1995), 0.57% of World GDP, is equivalent to U$ 2’778 billion. In 2013 alone.
- Not investing in large-scale renewable energy development and infrastructure NOW will cost us and additional U$ 500 billion in 2020, in excess of U$ 2’500 billion by 2025, and more thereafter. Every single year.
Download the report (32 pages, PDF, 2.8 MB):
Global Energy Scenarios to 2040: The Cost of Fossil Vs. Renewables
Climate Change, Energy Constraints, and Businesses: Cost Implications to 2040
Climate Change is a reality. The cost of fossil fuels – the main current energy source – is increasing. This report presents to analyis of cost implications of the climate-energy nexus on different industry sectors, based on the analysis of currently available facts and forecasts:
- The scarcity of fossil energy sources and the decline of easily accessible and exploitable oil fields implies the end of a century of cheap oil. The lack of investment, increasing demand from emerging economies, and commodity speculation suggests that cost of fossil energy resources will further increase in the near future.
- There is no reason – neither technical nor financial – why the world economy should not be powered by renewable energy technologies and sources by 2040. However, a comprehensive energy infrastructure transformation would require political consensus within, and in between countries.
- The complete absence of vision and leadership amongst politicians around the globe suggst that this possibility is indefinitely small, i.e. there will be no national or international framework to adequately tackle energy infrastructure transformation and climate change.
In the face of these challenges, businesses will need to develop their own strategy to deal with the increasing impacts of climate change (mainly the increase of frequency and ferocity of extreme weather events) and rising energy costs.
Highlights of the research findings include:
- The combined cost of physical impacts of climate change, business disruption, and rising energy prices complete changes the cost structure of certain industries.
- For some sectors, additional cost in 2040 amount to nearly 100% of current cost
- On the other hand, new opportunities arising from climate change and scarcity of fossil resources is still grossly underestimated
The report also shows that a business-as-usual approach (the BAU scenario) to energy-climate change challenges will be far more expensive than a Marshall approach
Download the report (PDF, 60 pages):
Energy, climate change, and businesses: 3 scenarios to 2040
