Climate change is the root driver of electricity prices

One part of ITK’s business is forecasting electricity prices. Our motto is “ all forecasts are wrong but some are useful”.

Our hero is Steve Bradbury and our mantra is “maintenance leads to insight”.

When we get right down to it we forecast electricity prices in a different way to most others. We start with a view that supply will be forced into the system and work out the price from there.

We start with this foundation because we think that electricity policy will be driven by decarbonization – not just in Australia, a minor contributor even to Scope 3 emissions, but globally. Most people just don’t get the scale of change.

Previously we’ve remarked that the global wellhead/minemouth annual production of oil, gas and coal is about US$ 3.5 trillion per year and, in our view, half of that, is likely to go away in the next 15 years.

Of course, if you are not a greenie or a scientist, that is such an extreme view that you certainly won’t be taken seriously. If you are a Chinese coal generator or policy maker what you see is so much wasted investment in coal generation over the past 15 years as to be totally unthinkable.

Fortunately, ITK’s NEM and regional forecasts year to year, quarter to quarter, only require that policy push in that direction.

We’ll be revising down our forecasts for the next 3 years, but in the end I doubt if it changes the end point, just the way we get there. The global imperative gets stronger every year and more and more obvious. This is not being stubborn, but – like Ray Dalio says – you have to confront problems not give into them.

So, and this is the point of this note, it’s helpful to look at the climate change data so that when we get the “when is the world going to end” question at least there are a few facts.

“Hear no change, see no change, speak no change.”  hang on who are you calling a monkey?

In this regard there is a first class summary at CarbonBrief  State of the climate.

Every policy maker in the world should read that article several times. The instant highlight point is the 8.5cm rise in global sea levels since 1990.

However, the more I read the article the more I was captured by the ocean heat content chart.

This vertical axis is  in Zettajoules. I’d never heard of a zettajoule but Google tells me its 10²¹joules and was including in the standard units lexicon in about 1970. Put in units I’m more used to 1 Zettajoule = 1 million peta joules.

So the ocean heat content has increased about 400 Zettajoules since around 1950 or over the past 70 years. Let’s keep rounding and call that an average of 6 zettajoules per year, even if it seems to be accelerating.

Figure 1 Global Ocean Heat Content. Source: Carbonbrief

The figure of course also shows that the deeper water, below 700 metres, has a lot more energy in it than it used to.

It’s very hard for me to understand whether 400 zetajoules in total or 6 zettajoules a year is a big number or not. After all, there is a lot of water in the world’s oceans. In fact there seems to be about 1.26 zetta litres of water in the world’s oceans and waterways.

So for context what I have is world energy consumption of fossil fuels, sourced from BP Statistical review:

Figure 2 Global fossil fuel consumption. Source: BP Statistical Review 2018

Ocean heat increase each year is about 12X the energy contained in oil, gas and coal consumed each year

So there we have it.

The amount of heat energy going into the world’s oceans each year is about 12X the energy the world’s global population of 7.8 bn people consume in total from fossil fuels. As most of the heat content has been generated since 1960 the data measurements are likely to be reasonably reliable.

As is discussed by John Englander in easy to understand language it takes a lot more energy to melt ice, that is increase its temperature by 1 deg C than it does to heat the resulting water. The bonds in ice are stronger than the bonds in water.

Finally it seems that it takes 4184 joules = 1 calorie  to raise the temperature of 1 gram of water 1 degree or 4.2 MJ to heat a litre of water 1 c. We are adding 5 joules a year per litre to the world’s oceans, if I’ve done the sums correctly or about 350 joules cumulatively so it will take a while to lift the world’s water 1 C.

Note this is not surface temperature but all the water in the world’s oceans.

Presumably, just guessing here, the surface of the water will heat much quicker.