Gilding: The End (of fossil fuels) is Nigh

The stubborn inertia of our political and energy systems in the face of stark climate change realities has been the great frustration of the past decade (or three), and is at the root of the discouragement and despair that’s growing in many of us.  Our society seems intent on waiting too long to act.  But Paul Gilding has become a leading voice for an alternate view, one that sees the past decade as prelude to a tipping point we can embrace rather than dread.  His book, The Great Disruption, laid out his view that when push came to shove with climate change, the market and the big-monied economic elites would spur a WWII-scale refocus of the economy toward carbon-neutral energy.  For the past couple of years, he’s updated the book’s themes with fresh analysis every few months, based on the latest global developments.  He’s now convinced that 2015 is the year that the “Dam of Denial” breaks, and his latest missive offers further encouragement that the long-sought disruptions are at hand:

For over a hundred years, energy markets have been defined by physical resources, supplied in large volumes by large, slow moving companies developing long life assets in the context of slow moving shifts in markets. The new emerging energy system of renewables and storage is a “technology” business, more akin to information and communications technology, where prices keep falling, quality keeps rising, change is rapid and market disruption is normal and constant.

If you haven’t tuned into Gilding before, this is a great place to start.  The new piece includes links to several of his key articles over the past two years, and will likely leave you feeling a tad—or a lot—more optimistic about our prospects.  Read on here for a few more nuggets from this most recent article:

A key element of Gilding’s point of view is that these rapidly shifting market drivers will spur an exodus of money from oil and gas development and into renewables and storage; he calls the conventional wisdom that our energy system will remain carbon-centric until 2050 “delusional.”

As I argued early 2014 in “Carbon Crash Solar Dawn”, the industry’s condition is terminal and once everyone wakes up to that reality, it will die faster because the market will discount it, taking away capital and shifting it to the future winners. This process will drive scale deployment and innovation of renewables while denying capital to fossil fuels, constraining their options.

If you think this is all far into the future, then think again. In the USA, coal companies have lost around 75% of their value in the past few years while the Dow Jones went up nearly 70%! And electric car maker Tesla, producing less than 40,000 cars per year, is valued at over half of GM which produces 9 million cars per year! The market can smell death and knows that fast beats slow.

It’s important to notice that energy storage is really central to this shift, providing the electricity grid with a vast store of readily dispatchable power.  Many have seen electric cars as a major disruption in storing power, but Gilding takes this a step farther, and expects utilities to actively participate in a rapid acceleration of electric car adoption:

Utilities facing the much discussed death spiral triggered by solar will find the motor vehicle fuels market very appealing. This would then unleash a huge political and commercial driver for growth in electric cars with the utility sector providing infrastructure to use their product, locking in customers with long term supply deals backed by renewable power and lobbying for electric cars (to also protect the grid). Within a decade, electric cars will be more reliable, cheaper to own and more fun to drive than oil driven cars. Then it will just be a matter of turning over the fleet. Oil companies will then have their Kodak moment. Coal will already be largely gone, replaced by renewables.

The incumbents won’t respond in time. They are steeped in their analysis that they are the underpinning foundation of the economy – which of course they have been. This is so deeply ingrained in their worldview they can’t see their error. Energy is the essential foundation of the economy but we now have a better, cheaper way of producing energy.

There’s much more in Gilding’s article; if you’re intrigued, check out his full series of essays.

Bonus tip: Another voice for hope on carbon and climate is Jeremy Leggett, a former oil geologist turned Greenpeace activist and then solar entrepreneur.  His The Winning of the Carbon War is a serialized book, begun in 2013 and slated to continue through the Paris climate talks in December (you can read posts at that link, or download the book as it stands at the current moment). In this recent interview, Leggett shares some of the back story; here are a couple of snippets:

One of my big themes is that the pace at which everything’s gone in the past is no guide at all to what can happen once we really get going with some of this stuff. So one of the top things making me optimistic is the pace of disruption from technology. It’s very hard to conceptualize, but there’s that famous picture of Fifth Avenue in 1901 and 1913. There are no cars in the first picture, and no horses in the second. It just happened so quickly. So of course, it’s an optimistic book that I’m writing, but I won’t finish writing it until December. It’s an epic drama, the whole thing.

It’s the action on all the fronts—creating the great sense of what I call the winning of the carbon war. You’ve got the financial argument about the [fossil fuel industry’s] spectacular cost inflation, the narrative about costs going down in clean energy technologies, particularly solar and storage. And now there are policymakers who care about this issue, including the U.S. president and the Chinese leadership. There are big, surprising things almost on a daily basis now, (like) the G7 announcement that they plan to be out of fossil fuels by the end of the century, and I think even more importantly, talking about cutting fossil fuel use by 70 percent by 2050—35 years from now. That really is the first definitive statement from the industrial governments to the [fossil fuel] incumbency, ‘Guys, your days are numbered. We’re going to zero.’ That will send a huge signal into industry, into the business world.

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