Future of energy is electric, and increasingly green

Print Friendly, PDF & Email

The future will not only be electric, but green electric, and the transition will happen a lot quicker than most people think.

share
Print Friendly, PDF & Email

There are disagreements on the when of the future of energy being electric, not the if

It should not come as a surprise to anyone that advanced economies tend to rely on electricity for a larger portion of their total energy demand.

With increased interest to move towards a low carbon future, this trend will only accelerate because electricity can be generated from a variety of sources including abundant and increasingly cheap renewable resources.

Putting the two together, the future will not only be electric but green electric. This not only has major implications for energy but on geopolitics of energy. No need to shed blood for oil.

That, in a nutshell is the message of a Special Report on the geopolitics of energy, which appeared in the 17 Mar 2018 issue of The Economist, titled The New Power of Superpowers. In an Op-Ed in the same issue, The Economist writes:

“Oil shaped the 20th century. ….. But the 21st century will see the oil’s influence wane. Cheap natural gas, renewable energy, electric vehicles and coordinated efforts to tackle global warming together mean that the power of choice will be electricity.”

As The Economist notes, the transition of the global energy system to electric and that of electricity to renewable resources is not going to be easy, nor immediate but – as supported by a number of articles in this issue – the transition is already underway and seems inevitable. The only remaining arguments are about how widespread and how soon.

Speaking of the disagreements, on the one extreme are incumbent fossil fuel and auto industries – some of whom may still be in a state of denial and/or disbelief.

Those in this camp argue that such a transition simply isn’t feasible – given our current overwhelming dependence on fossil fuels – and even if it were, it will be a very slow and protracted transition over many decades. They claim that the industry’s assets are sound, and investments won’t be stranded.

An example of this line of reasoning is the following quote attributed to Rex Tillerson, the former CEO of ExxonMobil and the former US Secretary of State before President Donald Trump abruptly fired him via an early morning tweet.

“When coal came into the picture, it took about 50 or 60 years to displace timber. Then, crude oil was found, and it took 60, 70 years, and then natural gas. So it takes 100 years or more for some new breakthrough in energy to become the dominant source. Most people have difficulty coming to grips with the sheer enormity of energy consumption.”

We get it. In the energy sector, things don’t happen overnight. But if anybody thinks the transition to green electricity is going to take 100, or even 50 years – as suggested by Mr. Tillerson – this editor’s advice is to think again.

Things that used to take 50 years or more now happen in 5-10 years. Volkswagen, among the world’s biggest automakers, for example, is planning a major overhaul of its manufacturing in the next 5 years, not 10 or 20 (article on page 3). In 10 years, VW, like many other major automakers is going to look significantly different than it does today.

Similarly, there are those who like to – repeatedly – remind us that globally, renewables account for a miniscule percentage of our current energy consumption.

True, in 2017, electric vehicle (EV) sales in the US were a mere 1% of the total. But all indications are that those numbers will rise, and once a tipping point is reached, they will move mainstream, and before you know it, internal combustion engines (ICEs) may be banned and/or phased out.

The Economist wrote the ICE’s obituary in Aug 2017 when it put a picture of an internal combustion engine on its cover with Roadkill above it (visual on front page). In an Op-Ed, it said,

“The internal combustion engine has had a good run – and could still dominate shipping and aviation for decades to come. But on land, electric motors will soon offer freedom and convenience more cheaply and cleanly.”

It referred to a prediction by UBS, a major international bank, suggesting that EVs could make up 14% of global car sales by 2025. Perhaps not 2025, and perhaps not 14%, but many expect the current 1% figure to grow to double digits by 2025.

Few cities and countries have proposed to ban the sale of ICEs as early as 2030, others, including a couple of oil majors are now looking at 2040 scenarios as the date when ICE sales may be restricted or banned as reported in the April 2018 issue of this newsletter.

The point?

To refute Mr. Tilleson’s assertion that the transition will take a very long time. Fundamentally, everyone agrees that things won’t happen overnight.

At the same time, the speed with which things are happening today suggests that this transition will happen a lot faster than the Tillerson generation is used to.

Source: EEnergy Informer. Reproduced with permission.

Print Friendly, PDF & Email