Category Archives: Opinion

Car exhaust pollution (Image: Wikipedia)

Evening Standard Comment: Time to transform London’s air quality

[From 26 May] Today this paper launches a new initiative to encourage Londoners to adopt, develop and promote the kind of green technology that could help clean our air. It is backed by the chairman of  the Committee on Climate Change, Lord Deben, who urges us to embrace change: there are, he says, “a whole lot of things we can do which mean that we can live exactly the same lifestyle at half the impact on the environment”. Electric cars are one example; remote-controlled heating systems are another.

Meanwhile, the Mayor has announced £8 million support for pioneering schemes to improve air quality, such as pollution-absorbing walls and zero-emission car clubs. This coincides with a World Heath Organisation meeting today in Geneva to combat air pollution.

These are excellent moves and signs of hopeful change. Yet they come less than a month after the Supreme Court ordered ministers to come up with a new plan for tackling air pollution. Britain is in breach of EU-mandated pollution levels for both nitrogen dioxide and PM10 diesel particulate (the tiny particles of soot emitted by diesel exhausts). Our filthy air is estimated to cause around 29,000 premature deaths a year in the UK and is a major contributor to lung diseases such as asthma.

London’s problem is how to clean up its air at the same time as meeting the demands of transport in Europe’s largest and busiest city. Despite increasing numbers of Londoners cycling, and increased passenger numbers on public transport, pollution from road transport remains well above EU limits. The Mayor’s long-term solution is the Ultra Low Emission Zone, which aims to encourage drivers of the most polluting vehicles to change their vehicles by charging a new daily levy for those entering the congestion charge zone from 2020.

Yet this represents a watering-down of the Mayor’s original plans in this respect: critics charge that it is too little, too late. Clearly air pollution is no respecter of land boundaries like those of the congestion charge zone. Air pollution readings from test sites outside the central zone — for instance in Brixton — are worryingly high. Other European cities are pressing ahead with more drastic plans for eliminating the biggest culprits in air pollution, diesel engines. Refitting existing bus engines would help too. Above all, the problem simply needs to be given a much higher political priority than it has to date. Air pollution kills: London needs to tackle it urgently.

Source: London Evening Standard

Shell’s Arctic voyage marks beginning of peak oil era

Anglo-Dutch company’s search for resources in the Arctic is a sign that the world is running out of options for new oil reserves

In his critically acclaimed 2005 book ‘Twilight in the Desert’, the prominent oil economist Matthew R. Simmons predicted that Saudi Arabia’s oil wells would soon run dry.

His argument was based on the age of the seven main fields, which the kingdom still to this day depends upon to pump the bulk of its 10m barrels per day (bpd) of crude. These fields in the main have been producing for over a generation and, despite official figures placing Saudi Arabia’s proven reserves at over 260bn barrels, Mr Simmons argued that the kingdom would struggle to increase its output to keep pace with the projected increases in the demand over the next half century marking the beginning of a period known as “peak oil”.

The kingdom, which enjoys some of the lowest production costs in the world, has the capacity to pump 12m bpd if required and shows no signs of slowing down. However, the big question remains whether the Middle East’s energy superpower along with the world’s other major oil producers will be able to keep up with the expected increases in demand over the next 25 years?

Protests won't halt rush for Arctic oil (Image: REUTERS/J. Redmond)
Protests won’t halt rush for Arctic oil (Image: REUTERS/J. Redmond)

By 2040, the Organisation of the Petroleum Exporting Countries (Opec) predicts the world will need to produce 111m bpd of crude to meet world demand. That represents another 20m bpd on top of existing output which means the world needs to find and develop and additional 800,000 bpd of oil a year on average to keep up with supply. To put that challenge into perspective, this figure represents repeating the US shale oil boom all over again, or finding a developing a new North Sea 20 times over.

Although, Mr Simmons was perhaps wrong in focusing on a potential collapse in Saudi Arabia’s oil production he was right in warning about the dangers of “Peak Oil” but too early in predicting its onset. That time is now upon us. Despite, oil prices being forced lower over the last six months the world is entering into a “peak oil” scenario whereby the cost of a barrel could feasibly quadruple to around $200 per barrel over the next 10 years.

Read more: Telegraph

Eight manufacturers to enter Formula E next season

From Formula1 To Formula-E: Car Racing Goes Electric

Jeremy Clarkson may have something to say about it, but the testosterone and fossil-fueled sport of Formula 1 is apparently going green. The former Top Gear presenter would undoubtedly defend a sport in which 8,000 liters of fuel is burnt in a weekend, but as it turns out, Clarkson and other F1ers are dinosaurs: Formula 1 now has competition from Formula E, where, you guessed it, E is for electric.

It doesn’t take a marketing genius to assume that, to a generation brought up with Al Gore’s Inconvenient Truth, 20-odd combustion-engine cars whizzing around a track sucking gas at 375 km/h (233 mph) might appear, well, unseemly. Now there is actually an alternative. Today’s EV technology has reached a point where electric cars are more than just fancy rides for planet-saving celebrities or those who can afford a Tesla.

While F1 cars have effectively been hybrids since 2009, in 2014 new rules were put in place that cut the amount of fuel used by a third, prompting changes in design. Last year the first Formula E championship kicked off in Beijing, the first of 10 cities to host races featuring high-performance EVs.

The teams, backed by “green” celebrities like Leonardo DiCaprio and Richard Branson, race Spark-Renault SRT_01E Formula E cars using technology from F1 teams McLaren and Williams. Unlike regular Formula 1, the cars do not refuel in pitstops; rather, the drivers swap vehicles due to current EV battery limitations. The cars all have an identical chassis and drivetrain, as well as a huge lithium-ion battery that makes up a third of the car’s weight. The familiar roar of F1 engines is replaced by a high-pitched whistling sound, “a bit like a dentist’s drill” described one journalist, covering the first Formula E race in the United States this past March in Miami.

Formula E cars reach a maximum speed of 150 mph, and drivers change vehicles half-way through when the battery in the first car starts to run out.

The greening of motorsport isn’t just confined to electric vehicles, either. In 2008 the world’s first zero-emissions motorcycle race took place on the Isle of Man, UK, featuring electric bikes. A few years earlier, Dutch entrepreneurs built the world’s first fuel-cell-powered go-kart, then raced it in the 2008 Formula Zero Championship, a race series consisting of six universities that competed on a 2-mile mobile race track.

Meanwhile NASCAR, yet another symbol of the combustion engine at the apex of its power, has made strides in making the sport more politically palatable. According to NASCAR Green, the sport has cut its carbon emissions by 20 percent through the use of biofuels, and a “significant number” of NASCAR tracks rely on solar power as an energy source. These include the 3MW solar farm at Pocono Raceway and a 9MW solar facility at Indianapolis Motor Speedway.

Technologies developed for Formula E are also finding their way into mainstream applications, possibly even a supermarket near you. Williams F1, the British Formula 1 motor racing team and constructor, in April “unveiled plans to fit aerofoils developed from racing cars to supermarket fridges so as to save energy, while a fuel-saving F1 flywheel is being tried out in buses. It is even supplying ecologically- correct supercars for the next Bond film,” reported The Telegraph.

The aerofoils redirect the flow of air to stop cold air from escaping from supermarket refrigerators into the aisles. Sainsbury’s, the UK supermarket chain, has used the aerofoils to cut energy use by 30 percent, according to the Telegraph.

Whether Formula E garners the same global following as Formula 1 remains to be seen, but it is clear that the greening of motorsport is aimed at a new demographic where “green is sexy” and new, sustainable technologies are the way of the future. As Alain Prost of e.dams Renault put it,

“F1 is for people over 40.”

Source: Oil Price

Climate March poster on the Underground (Image: T. Larkum)

One magical politician won’t stop climate change – It’s up to all of us

Lots of people eagerly study all the polls and reports on how many people believe that climate change is real and urgent. They seem to think there is some critical mass that, through the weight of belief alone, will get us where we want to go. As if when the numbers aren’t high enough, we can’t achieve anything. As if when the numbers are high enough, beautiful transformation will magically happen all by itself or people will vote for wonderful politicians who do the right thing.

Climate March poster on the Underground (Image: T. Larkum)
Climate March poster on the London Underground (Image: T. Larkum)

But it’s not the belief of the majority or the work of elected officials that will change the world. It will be action, most likely the actions of a minority, as it usually has been. This week’s appalling Obama administration decision to let Shell commence drilling in the Arctic sea says less about that administration, which swings whichever way it’s pushed, than that we didn’t push harder than the oil industry. Which is hard work, but sometimes even a tiny group can do it.

Take San Francisco, population 850,00, which is near the very top for percent of people who believe in climate change, according to a pollster I spoke to recently. I wish that meant that there were 850,000 climate activists in my town, or even 425,000. But I’ve watched for two years (and sometimes joined) the group of people pushing the San Francisco Retirement Board to divest its half billion dollars or so in fossil fuel investments. In April of 2013, the San Francisco Board of Supervisors passed an exhilarating unanimous (but nonbinding) resolution asking the Employee Retirement Board to divest.

Out of the 850,000 San Franciscans, seven or eight dedicated people have kept the divestment initiative alive, while the retirement board balks, stalls and grumbles about how straightforward changes in a modest portion of their portfolio are difficult, impossible, dangerous (even as they lost tens of millions when petroleum and coal stocks crashed). The activists pushing this forward are not one percent of San Franciscans, which would be 8500 people, or .1%, 850, but about .001% of people in the city.
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They’ve come this far by being dedicated, tenacious, deeply informed on the issue and on board policy, and by regularly meeting among themselves and attending most of the meetings. Occasionally they get more people to show up, but they’ve carried the weight for two years. Recently they had a substantial victory, and they may yet win. For all of us. Otherwise divestment might have slipped away in San Francisco. It’s been the same at schools from Rutgers to Stanford: small groups of students and allies have pushed divestment and, sometimes, won. This is the kind of race that tortoises, and not hares, tend to win.

Sometimes small groups matter. Larger groups often do. People have the power, when we choose to use it, to act on it, to dedicate ourselves to change. We have so many stories about how power is elsewhere. As the Obama Administration nears its end, I keep hearing from the bitterly disappointed and the generally bitter, who seem to believe that one man should have reversed the status quo more or less singlehandedly. They blame, credit, and obsess about the 53-year-old in the White House. But Obama is just the weathervane, and he knew it when he was elected.

Then, he implored the great wind that lifted him up and carried him along to keep going. Instead, people believed the job was done when it had just started and went home. Had the exhilarating coalition of the young, the nonwhite, the progressive, the poor who are usually excluded from political power kept it up, had they believed the power was ours, not his, we could have had an extraordinary eight years. The failures are not his alone – we can’t expect more of politicians than of the civil society that could push them. We can expect more of ourselves.

The climate movement is picking up steam – or rather wind. This January you could even see Mitt I-Will-Build-the-KXL-Pipeline-Myself Romney start to waver on the reality of climate change and its causes.

Yes, that’s the same Mitt “I’m not in this race to slow the rise of the oceans or to heal the planet” Romney we heard from in 2012.

In 2004 Senator John McCain actually said, while pushing emissions-control legislation:

“There is strong scientific consensus about the fact that global climate change is occurring, and occurring as a result of human activity.”

By 2008, he was picking a climate denier as his running mate. Corporate wind machines make them spin and spin, these ambitious men.

“Marco Rubio Used to Believe in Climate Science. Now He’s Running for President”, ran a Mother Jones headline.

He knows, as my mother would’ve said, on which side his bread is buttered.

We complain about politicians spinning, rather than recognizing that this is exactly what we want a weathervane — or hey, a wind turbine — to do, or recognizing that it’s up to us to be that wind. That’s why the ordinary people of Richmond, California, managed to beat the candidates mighty Chevron Corporation backed to elect a full sweep of green populists to city government last November. It’s also popular to say that we need to get money out of politics, but the people in that Chevron-refinery-dominated town proved that even money can’t buy everything if people are passionately engaged. As my friend Jamie Henn of 350.org said, we don’t need to get money out so much as we need to get people in (and by that I don’t think he means obediently voting at the end of the process, but transforming the process, inside and outside electoral politics).

Too many of us seem far too fond of narratives of our powerlessness, maybe because powerlessness lets us off the hook. As we head into that most dismal of situations, another unbearably long electoral cycle, many who care about climate change will say that we need an elected official who will represent us or a great majority who agree with us. But we don’t need everyone on board; we don’t need one magic person in office; we need ourselves. To act. It’s the wind, not the weathervanes.

Source: The Guardian

US Crude Oil Consumption Peaked a Decade Ago

A world without crude oil is almost unthinkable. And yet, there are indications that such a transition is happening.

OPEC is jockeying for market share. Russia is increasing production and US tight oil producers as well as their Canadian oil sands counterparts have found themselves priced out of the market.

So what is going on?

As humans, we tend to like to place things in neat little boxes. So we look at coal and natural gas and think electricity generation. We look at crude oil and think transportation sector. And all this is correct. But trends are emerging that are likely to turn this on its head. For instance, on shore wind and solar are gaining traction as viable energy production means. Costs are falling rapidly and Lazard now estimates that onshore wind is the cheapest provider of electricity on a levelized cost basis. Solar is not far behind due to a rapid and precipitous drop in costs and is expected to compete with onshore wind as soon as 2018. This means that coal and natural gas will then be the higher cost producers and almost certainly lose market share for electricity generation. Investment going into new capacity additions is already hinting at this trajectory in that investment in renewable capacity has outpaced hydrocarbons each year since 2011. This is occurring globally. Michael Liebreich, founder of BNEF, recently stated:

“The electricity system is shifting to clean. Despite the change in oil and gas prices there is going to be a substantial buildout of renewable energy that is likely to be an order of magnitude larger than the buildout of coal and gas.”

And 2015 started strong right out of the gate. According to FERC, total new generating capacity additions in January and February amounted to 89% renewables, 11% natural gas. March was even stronger with about 94% of new capacity coming from renewables.

Now you may be wondering what this has to do with crude oil. In a word, everything.

It used to be that nothing could compare to crude oil for transportation use. And yet that is changing now. Electric vehicles (EVs) are already cheaper to run than internal combustion engine (ICE) automobiles. The U.S. Department of Energy, using data from the Idaho National Laboratory, estimates that the cost to run an ICE car is just under 16 cents/mile whereas the cost to run an EV is about 3 cents/mile. And EVs are not anywhere near scale so we can reasonably assume that these costs could fall further.

Now suppose that wind and solar continue to gain market share and costs continue to plunge. Those cost savings will be translated into cheaper electricity costs which in turn makes running an EV that much cheaper. And yet EVs are already about five times cheaper than a traditional car. You begin to get the picture. Simple economics tell us that it is in our best interest to buy an EV rather than an ICE automobile. Hence we do not need crude oil to the extent that we have in the past. And crude oil is overwhelmingly used only for transportation.

Automakers like BMW have grasped this reality and have announced that they will no longer make a stand alone ICE automobile by 2022, a mere seven years away. All of their vehicles will be either pure EVs or hybrids.

Interestingly, crude oil consumption in the US has stalled over the past decade. This is attributed to a large degree to greater fuel efficiencies in vehicles worldwide. Demand has essentially flatlined beginning about 2004-2005. At the same time this was happening, shale production began in earnest in the US. As production ramped up in tight oil, supplies flooded into the international market. But this was a market that was already struggling due to lesser demand. With burgeoning supplies, a tipping point was reached last summer and prices began their current plunge.

Perhaps what is most interesting, however, is that the roles played by major actors in this story have changed dramatically in the past six months. OPEC decided to protect market share and not stabilize prices as they had typically done in the past. Indeed for many decades. So why would they choose to change their policy?

The answer is actually quite simple.

If the world is indeed moving away from hydrocarbons then it makes sense if you have abundant hydrocarbon sources, you would want your source to be last to be used.

Tight oil is expensive to produce. So are deep water and oil sands. These are the marginal producers and can fairly easily be removed from the picture with low pricing. We are seeing this happening right now. Interestingly, however, other producers like Russia, which desperately need cash, have stepped up production. According to the Wall Street Journal quoting the IEA:

“…other non-OPEC producers continue to ramp up production. Russia’s output jumped an unexpected 185,000 barrels a day year-on-year in April and Brazilian production was up 17% in the first quarter…Meanwhile, production in China, Vietnam and Malaysia has also shown persistently strong growth. The IEA expects Chinese oil production to increase by 100,000 barrels a day this year to 4.3 million barrels a day.”

This may prove an interesting phenomenon in that producers worldwide are now locked into a battle for market share in a market that may be dying. Only time will tell. But simple economics like cheaper electricity costs speak loudly to consumers. Combine that with cheaper driving costs too and the combination is that much more powerful. And symbiotic.

The days of crude oil’s strangle hold on the transportation market may be coming to an end as incredible as that may seem. Producers appear to be acting like a snake swallowing its tail. They are dumping more and more crude into a market with less and less demand.

Source: Resilience.org

Climate modelling scenarios out to 2100 (Image: Global Carbon Project)

The awful truth about climate change no one wants to admit

There has always been an odd tenor to discussions among climate scientists, policy wonks, and politicians, a passive-aggressive quality, and I think it can be traced to the fact that everyone involved has to dance around the obvious truth, at risk of losing their status and influence.

The obvious truth about global warming is this: barring miracles, humanity is in for some awful shit.

Here is a plotting of dozens of climate modeling scenarios out to 2100, from the IPCC:

Climate modelling scenarios out to 2100 (Image: Global Carbon Project)
Climate modelling scenarios out to 2100 (Image: Global Carbon Project)

The black line is carbon emissions to date. The red line is the status quo — a projection of where emissions will go if no new substantial policy is passed to restrain greenhouse gas emissions.
Related 6 reasons conservatives should take climate change seriously

We recently passed 400 parts per million of CO2 in the atmosphere; the status quo will take us up to 1,000 ppm, raising global average temperature (from a pre-industrial baseline) between 3.2 and 5.4 degrees Celsius.

That will mean, according to a 2012 World Bank report, “extreme heat-waves, declining global food stocks, loss of ecosystems and biodiversity, and life-threatening sea level rise,” the effects of which will be “tilted against many of the world’s poorest regions,” stalling or reversing decades of development work.

“A 4°C warmer world can, and must be, avoided,” said the World Bank president.

But that’s where we’re headed. It will take enormous effort just to avoid that fate. Holding temperature down under 2°C — the widely agreed upon target — would require an utterly unprecedented level of global mobilization and coordination, sustained over decades. There’s no sign of that happening, or reason to think it’s plausible anytime soon. And so, awful shit it is.

Nobody wants to say that. Why not? It might seem obvious — no one wants to hear it! — but there’s a bit more to it than that. We’ll return to the question in a minute, but first let’s look at how this unsatisfying debate plays out in public.

Read more: Vox

Shell Assures Nation Most Arctic Wildlife To Go Extinct Well Before Next Spill

HOUSTON—Stating that any damage would be limited to just a handful of species that somehow managed to survive that long, officials from the Shell Oil Company assured the public Wednesday that most of the Arctic wildlife living near their proposed drilling site will be extinct well before their next oil spill.

“After conducting several environmental impact studies, we can confidently say that our offshore drilling operations pose absolutely no threat to the Arctic’s hundreds of native species, which will have already been completely wiped out by the time any drilling mishap or crude oil spill takes place,”

said Shell spokesman Curtis Smith, adding that the region’s polar bears, walruses, and bowhead whales will most likely be eliminated by some combination of overfishing, ocean acidification, and melting ice shelves long before the first drops of unrefined petroleum begin gushing into the Chuchki Sea.

“We can assure you that there will be no repeat of the BP oil spill, in which a complex, thriving ecosystem was destroyed. At most, only some algae and maybe a few mackerel will still be around when our rig explodes and spews millions of gallons of oil into their habitat, and we believe those species will pretty much be on their last legs by then anyway.”

Smith added that the environmental hazards associated with the initial installation of the rigs will also go a long way toward ensuring most of the fauna has died off prior to any future spills.

Source: The Onion

Market share (new sales) of electric passenger cars (Image: Business Spectator)

Fuel price turbulence hasn’t pulled the plug on EVs

Among the biggest stories of 2014 was the crash in global oil prices. Just when it looked like the world had started to take $100/barrel oil for granted, prices plunged by 50 percent. Some speculated that lower oil prices would translate into reduced consumer enthusiasm for electric vehicles (EVs). Now that we have EV sales for 2014 tallied up, let’s look at how the story actually played out.

As it turns out, EVs, including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), continued to sell consistently around the world. The EV market share in Norway is still far ahead of other countries, at 13.8% of new car sales in 2014. However, in Sweden, the United Kingdom, Denmark, and China the EV market tripled, while in Austria and Germany the EV sales share nearly doubled. The Netherlands is the only country that saw a big drop in EV sales, from 5.6% to 3.4%, likely due to a decline in fiscal incentives. Electric vehicle market share in other countries, including the US, France, and Japan, remained consistent in comparison to 2013.

Further, compared to the first half of 2014, the dramatic drop in global fuel prices during the second half of 2014 did not have any measurable impact on EV sales, and some markets even saw EV sales spike towards the end of the year. There are two main reasons for this: (1) Savings from fuel/electricity costs are only part of all EV incentives, which mainly consist of a variety of fiscal or non-fiscal benefits, and (2) in some countries, particularly in the European Union, fuel taxes already account for a large share of total fuel price, so even during times of fluctuation in global oil price the price at the pump remains relatively stable.

Market share (new sales) of electric passenger cars (Image: Business Spectator)
Market share (new sales) of electric passenger cars (Image: Business Spectator)

Read more: Business Spectator

While electric vehicles only make up for a tiny percentage of total vehicles manufactured, its popularity is soaring. This is no surprise given the inherent advantages of electric vehicles. Here is a graph illustrating electric vehicle growth over the past six years (Image: Clean Technica)

The Electrification Of The Transportation Industry And Its Implications

Summary

  • Petroleum has been the main transportation fuel for over a century, which has spawned one of the largest industries as a result.
  • Despite petroleum’s pervasive influence on society, the energy industry may be changing irrevocably with the rapid electrification of transportation.
  • The shift toward electric transport will likely happen faster than most anticipate given the inherent advantages of electric transport, leading to several investment opportunities in the electric industry.

For the last century or so, the energy industry has largely been segmented. While energy sources such as coal, natural gas, nuclear, and renewables have primarily been used for electricity generation, petroleum has mainly been used as a fuel for transportation. Ever since oil drilling technologies were invented in the mid-19th century, petroleum has become the superior choice for transportation. Petroleum has become so vital to the transportation industry that oil supermajors, i.e. Exxon (NYSE:XOM), BP (NYSE:BP), ConocoPhillips (NYSE:COP), etc, have become some of the most valuable corporations in the world.

While these corporations also have interests in other forms of energy such as natural gas, petroleum still consists of a huge portion of these companies’ business portfolios. Despite the increasing energy diversification of such firms, the influence that petroleum plays on these companies is undeniable. This is not surprising as the transportation industry is notoriously energy intensive. In fact, only the industrial sector beats out the transportation sector in terms of energy usage in the U.S., with the residential and commercial sectors coming in third and fourth. Overall, transportation accounts for nearly one-third of total energy consumption, making petroleum an incredibly important commodity.

An Inevitable Convergence

With the thousands of trillions of BTU’s used for transportation alone, petroleum has become a huge component of the energy industry. Despite petroleum’s historical and current importance, its relevance may soon be limited. With the rising trend of electric transportation, the transportation industry may start to converge with the rest of the energy industry in terms of fuel sources. As petroleum is not a competitive source of electricity generation in the majority of the world, petroleum may have an increasingly hard time maintaining relevance moving forward.

While this is nowhere near apparent given that the vast majority of transportation is still petroleum-based, a massive shift toward electrical transportation could happen much sooner than most expect. This, of course, would have detrimental effect on companies with heavy crude oil interests, such as the aforementioned supermajors like Exxon. On the other hand, the electrification of transportation will only increase the need for other electricity-based energy sources, raising the prospects of coal companies, natural gas companies, renewable companies, etc.

While the solar PV industry will likely be the biggest winner in the long-run for its own reasons, other electricity-based energy industry’s will also undoubtedly benefit. A paradigm shift towards electric transportation will essentially give traditional electricity-based energy companies a huge influx of demand. To put this into perspective, an average person uses more energy for transportation than for residential purposes. Needless to say, the electrification of transportation will drastically alter the energy landscape.

Signs Of A Transformation

Given that electricity based transportation, namely motor vehicles, have inherent advantages over ICE-based transportation (e.g. superior safety, superior design potential, less pollution, and less noise), the only real debate lies in how fast electric cars will decrease in price. The cost-effectiveness of energy storage technology has always been the major barrier in the mass adoption of electric cars. With Tesla’s (NASDAQ:TSLA) massive investment into energy storage technology, the biggest barrier to mass adoption of electric vehicles should all but disappear in the near/mid-term. This is not to say that Tesla is alone in this pursuit, as many other major corporations are starting to funnel money into electric transportation R&D.

While Tesla itself will likely have a limited direct impact on the electrification of the transportation industry, the rise of the company has catalyzed an industry-wide movement towards electric vehicles. With Tesla’s stunning success thus far, major automotive companies such as General Motors (NYSE:GM) are beginning to put previously unimaginable emphasis on the development of electric vehicles. By proving that electric transportation is not only viable, but a theoretically superior alternative to ICE-based vehicles, Tesla has drastically accelerated the trend towards electric transportation by reigniting interest in this arena.

Industry Shift Likely To Occur Much Sooner Than Expected

Currently, far less than 1% of all transportation is electricity-based, with approximately 800,000 highway-capable electric vehicles sold worldwide thus far. On top of this, only about half of this figure is from purely electric vehicles, as opposed to hybrids. Given this information, it seems ludicrous to assume that a mass transformation toward electric transportation is possible even within the next few decades. While this line of thinking is certainly justified without the context of growth potential and technological advancements, the reality is that the electric vehicle industry is still in its extremely early stages of development. This implies that the electric transportation industry as it currently stands is nowhere near its potential.

The fact is that electric vehicle demand has been dramatically ramping up over the past few years, with the global electric vehicle market growing by approximately 76% in 2014. In addition, growth only seems to be accelerating, which is not surprising given the surge in electric vehicle popularity. What makes this growth even more amazing is that electric vehicles are still not yet cost-effective with ICE vehicles, implying that the inherent advantages of electric vehicles are powerful enough to overcome a severe cost disadvantage in the eyes of consumers. With the acceleration of electric vehicle innovation (mainly in the battery arena), even cost should no longer be a barrier a decade or so down the road.

Given the current roadmap of electric vehicle technological improvements, electric vehicles should easily become cost-comparable to ICE vehicles in a 5-10 year timeframe. In fact, Tesla is slated to unveil a $35,000 electric vehicle with at least 200 miles of range in approximately one years time, showcasing the speed at which electric vehicle technology is improving at. Given all the advantages that electric vehicles hold over ICE vehicles, growth will likely explode once the average price point of electric vehicles reach parity with those of ICE vehicles. While there will still be a huge fleet of petroleum consuming vehicles that will take decades to get rid of, a large-scale electrification of transportation seems inevitable in the mid/long-term. This, of course, will have huge implications on a number of industries, notably the crude oil industry.

While electric vehicles only make up for a tiny percentage of total vehicles manufactured, its popularity is soaring. This is no surprise given the inherent advantages of electric vehicles. Here is a graph illustrating electric vehicle growth over the past six years (Image: Clean Technica)
While electric vehicles only make up for a tiny percentage of total vehicles manufactured, its popularity is soaring. This is no surprise given the inherent advantages of electric vehicles. Here is a graph illustrating electric vehicle growth over the past six years (Image: Clean Technica)

Massive Industry Impact

The mass electrification of transportation will have an enormous and irrevocable impact on several major energy industries as was mentioned before. The petroleum industry will likely be severely crippled as a result of the transportation industry’s shift away from oil. Electricity-based energy industries, i.e. coal, natural gas, nuclear, wind, and especially solar PV, will end up taking in the energy demand of the transportation industry. This implies that at current valuations, oil companies are overvalued while the general electric industry is undervalued. While there is certainly a debate about which type of electricity-based energy source will get most of the benefits in the long run, be it coal, natural gas, solar PV, wind, etc, there is no doubt that the electricity industry as a whole will benefit.

Conclusion

The electrification of transportation may be one of the most impactful transitions in modern day history. Not only will it drastically alter the landscape of the energy industry, but it should also have enormous geopolitical ramifications (think the Middle East). Supermajors like Exxon, Chevron (NYSE:CVX), or any petroleum-based company for that matter will be severely negatively effected by this likely transition. At current, companies will a heavy focus on petroleum are valuated as if oil will make up for the vast majority of transportation fuels for the long-term future (with P/E ratios in the range of 10-20).

This is far from a foregone conclusion given the exploding popularity and inherent advantages of electric transportation. Given the nascent stage of electric transportation, it makes for an opportune time to sell oil holding. Many find it absurd to think that transportation will make a such a large transition in a decade or so, which is completely understandable given the huge and unchanging influence petroleum has played in transportation for over a century. Despite this, only a few basic assumptions about technological progress need to be made in order to take on the thesis that transportation will primarily become electricity-based much sooner than most expect.

Source: Seeking Alpha

Will Tories offer climate policy competence or chaos?

The green economy faces significant uncertainty as a Tory government with a wafer thin majority faces a host of energy and climate policy challenges

[From 8 May] Something truly historic and genuinely shocking has happened in the past few days. That’s right, the National Oceanic and Atmospheric Administration (NOAA) confirmed the monthly global concentration of CO2 in the atmosphere passed 400 parts per million for the first time in human history.

Meanwhile, on a small archipelago off the coast of Europe, David Cameron pulled off the biggest political shock in a generation and is now odds-on to deliver the first Tory majority government since that last electoral surprise in 1992, albeit with a wafer thin majority that may eventually see him long for the parliamentary stability of the Major years.

For all the immense challenges Cameron now faces – delivering his promised EU renegotiation and referendum, holding the union together when it is pulling apart at the seams, identifying the unfunded spending and tax cuts he promised, navigating ever louder (and entirely justified) calls for electoral and constitutional reform – it is the response to the ongoing global climate crisis that will one day be seen to define his generation of world leaders.

There are plenty of climate scientists who reckon by the end of this parliament global greenhouse gas emissions need to be peaking in readiness for a vertiginous decline.

Cameron knows this and in those quieter moments when he is allowed to present himself as the One Nation Tory Moderniser he instinctively remains – and this morning promised to become once again – he is committed to playing his role in delivering the global green industrial revolution. But green businesses and campaigners will this morning look at the result and wonder how many of those quieter moments he will be granted over the next five years. Cameron’s commitment to the Climate Change Act may be solid, but his commitment to the policies required to deliver on it has already been shown to be flaky.

Does he have the nerve, the authority and the political nous to face down climate sceptic backbenchers whose votes could be crucial? That is one of the many unanswered questions of this election for green businesses.

But first, the good news. Even if GDP is not, in the words of Boris Johnson, going gangbusters, there are signs the green economy is. Renewable energy capacity trebled over the past five years and is on track to hit a 20 per cent share by 2020. The electric car market is booming and a host of low carbon infrastructure projects, from new nuclear reactors, to CCS demonstration projects and giant offshore wind farms are in the pipeline.

The Conservatives remain committed to expanding the ultra-low emission vehicle fleet, rolling out rail electrification programmes, delivering smart meters to every building, and enhancing biodiversity protection rules, especially for marine habitats. The Tory manifesto may not have been as overtly green as the Lib Dems or Labour’s, but it is not without its strengths. Moreover, the bulk of the energy industry is celebrating this morning (and share prices are jumping) as the prospect of a potentially investment-disrupting energy price ‘freeze’ is buried with Ed Miliband’s political career.

However, if businesses can see investment and policy certainty on a number of fronts, it is tempered by chronic uncertainty on a host of other important issues.

Whoever takes up the reins at the Department of Energy and Climate Change (assuming of course it is not merged back into another department in pursuit of George Osborne’s steep Whitehall spending cuts) faces one of the most daunting in-boxes in Westminster.

Within the next 18 months they need to finalise a new carbon budget for the late 2020s, secure a new Levy Control Framework for supporting clean energy projects beyond 2020, tackle the ongoing problems with UK energy efficiency policies and the scandal that is fuel poverty, sort out the future of the Renewable Heat Incentive, clarify the detail of the Tory ‘halt’ to onshore wind farms, address fracking protests and planning objections, support the reform of the EU emissions trading scheme, ink the long-awaited deal with EDF to deliver a new nuclear power plant, dish out the similarly long-awaited £1bn of CCS demonstration funding, execute a smart meter rollout that has many informed observers worried, weigh in on debates about the UK’s illegal air pollution, potential airport expansion, and resource insecurity, and represent the UK at an international summit that plenty of people regard as the most important in the history of human civilisation. No pressure, then.

Each of these policy debates could yet be resolved in favour of a more environmentally sustainable, climate resilient, and technologically competitive economy. But there is little doubt the battle will be intense and there are legitimate fears that if the right wing media continues to position action on climate change as an unjustified cost a Conservative government will throw green policies to the fossil fuel addicted wolves. Will the party focus on a competent programme of cost-effective decarbonisation or a chaotic programme of contradictory policies and climate politicking?

These hard policy choices will be further complicated by three over-arching realities that promise to repeatedly dilute Cameron’s best intentions towards the green economy and further undermine investment certainty: Europe, austerity, and the Tory backbenches.

The first two years of the parliament will be dominated by the build-up to an EU referendum and, if the Scottish referendum is anything to go by, the following two years will be dominated by the fallout. Emissions targets, air pollution rules, waste and recycling directives, biodiversity and habitat protections, all face an ambiguous future. The likelihood is the UK will stay in the EU or leave and be forced to keep many of these rules through a trade agreement, but for now uncertainty rules.

Meanwhile, cuts to unprotected departments mean DECC, Defra and related departments such as Transport, Business, and Communities will all face extremely tough decisions over what green initiatives remain and which will be cut. They will all be wary of the backlash that results when cuts to something like flood protection are shown to be ill-conceived.

Finally, every green policy or programme the Conservative government pursues will face vocal opposition from those on its own benches who cling to the idea that anything to do with climate change is a Commie plot. Add in the fact that if Cameron does need additional votes his first port of call is likely to be the DUP and party management becomes as crucial to the Tory green vision as the formation of that vision in the first place. Will the Lib Dems and Labour be responsible enough to work with the Conservative leadership on some of these issues to sideline the few climate sceptic voices in parliament or will they be granted influence that is in complete disproportion to their numbers?

What, if anything, can green businesses do to navigate this uncertainty and deliver the policy victories that will help the low carbon economy build on its recent successes?

As always, more needs to be done to demonstrate that clear majorities of the public support clean technologies and are in favour of decarbonisation. Yesterday may have proven once again that you can form a government with the support of barely a third of voters, but a true One Nation Conservative Party has an obligation to represent the country as a whole on these issues.

Similarly, green businesses need to recognise policy is only part of the story and not get too disheartened if some green policies are shelved. It is a scandal the Conservatives will now scupper a popular, successful and cost-effective industry in the form of the onshore wind energy sector. But the march of clean technologies is a global trend whereby costs are falling and green products are becoming normalised all the time. Divestment, community energy, smart grids, solar cells, these are trends and technologies that continue to go from strength to strength, regardless of the political weather.

Finally, those Conservatives tasked with presenting the party’s green policies in recent months have repeatedly declared that their focus is on cost-effective decarbonisation. Green businesses need to take this at face value, reach out to those remaining green Tories (they may seem as rare as a happy badger this morning, but they do exist) and demonstrate how decarbonisation is already being delivered in a cost-effective manner and will only become more cost competitive in a way fossil fuels will not. They could start by pointing out how the Conservatives are missing a trick in failing to take action on energy efficiency much more seriously. The Tory manifesto says they will improve one million homes over the next five years; Labour claimed to have a plan to upgrade 2.5 million homes at negligible extra cost – regardless of the final result, it is worthy of consideration.

Most of all though, green businesses and campaigners need to cling to the hope that the David Cameron who once declared that climate change is one of the most serious challenges the UK faces, who once declared he wanted the UK to be the most energy efficient economy in Europe, who once declared he would lead the greenest government ever, has it in him to tackle the climate challenge that will one day define the history books of this most unpredictable of political eras.

Source: Business Green