Excellent article! Many thanks for sharing your insights!
You state:
"But perhaps no report has been more weaponized by "climate only" politicians, academics, and activists than the Net Zero by 2050 report declaring no new oil and gas fields would be needed in order to meet the IEA’s net zero by 2050 scenario.
It's too strong to call this blatant misinformation. Forecasting and scenario analysis is tough business. We can speak from personal experience having made many wrong calls of our own. It is the weaponization of that report, hardly a shocking development, we are calling out. We were never on-track for that scenario of a 2019 peak in oil demand or circa 75 mn b/d of oil demand in 2030. In fact, the IEA's more recent "Oil 2023" report now calls for 105 mn b/d of oil demand in 2028, a remarkable 40% higher than its "Net Zero by 2050" advocacy (Exhibits 1 and 2).
The notion that oil and gas is a sunset industry has weighed on investor sentiment."
I know you write for a large audience with widely held views, but I have the luxury of being more explicit. The world left the Stone Age a long time ago, but the modern world consumes massively more stone (aggregates) than any past civilization.
Modern societies require massive consumption of dispatchable, affordable energies, and modern societies require the products that can only be abundantly and affordably provided by hydrocarbons -- plastics, fertilizer, petrochemicals, etc. The world will NEVER give up the miraculous resources of hydrocarbons. The essential requirements of modern societies were, are, and will be—built and installed by, operated by, and maintained by, the products and energies which hydrocarbons provide.
Much continues to be written with the claim that hydrocarbon investments will be "stranded assets". For examples:
The stranded assets in the energy field are going to be all of the "Green Lie" junk energies and junk products promoted by grifters seeking government subsidies and government mandates. Grid wind and grid solar only go, wherever they go, by government mandate, government requirement, and government subsidy. "Sustainable Fuels" are only sustained by government subsidies. "Green Hydrogen" is only green if there is enough government money flowing. Tidal power is power by the ebbs of flows of government subsidies. The list goes on and on.
For "Green Stranded Assets"...the list is growing significantly, and those stranded green assets were only created in line with increasing government green-- Crescent Dunes, Solyndra, Ivanpah, Sunnova, Rivian, Fikser, Proterra Bus, Drax wood chip burning power plant, not to mention the billions of dollars lost by Ford, GM, VW, etc. on their EV idiocies.
Even if another energy source comes along which is "better" than hydrocarbons, (and that possible energy source will NOT be wind or solar), that new energy source will simply be added on top of the cumulative demand for evermore energy consumption. The world still burns massive amounts of dung as a cooking fuel!
Great analysis. My one criticism is you are assuming people will be rational. Quite often they are not. If Venezuela were rational they wouldn’t be where they are. We could easily go down a similar path where the Climate-Only Cultists drive the bus off the cliff. Last century was riddled with mass delusions and tens of millions of deaths. I don’t see the Cultists compromising or being reasonable.
But, I’m not betting on it either, simply because my investing strategy for decades has been “If the world is going to end, then I’m going to end with it. At least I’ll have a few billion people as miserable as I am.”. 😊
Thanks ever so much. Personally, I tend to believe James Hansen et al on climate risks. But I also resent the obvious gaslighting on energy and critical minerals coming from activists, the IEA, and elsewhere.
I am pleased to see you now use the phrase “move to a healthier energy evolution” rather than referring to an “energy transition” since there is no known available energy source to transition to. I do have a further question: What if there is no “healthier” energy evolution? What if those calling for reduction in CO2 emissions based on the supposition that CO2 is bad for the environment as though it is a given that it is some form of pollution, what if they are wrong? Just suppose CO2 emissions - not particulates or other foreign matter, but CO2 itself; the gas plants breathe - are not bad at all - what then? What if it turns out that CO2 is actually good for the planet? It may be viewed as heresy, but has anyone asked that question and what it would imply? It doesn’t necessarily mean other forms of energy cannot be examined and pursued if they make sense for economic and other reasons, but it would meaningfully change the direction and priorities if it were no longer taken as a given that CO2 emissions were viewed as “pollutants” to be minimized at all costs.
Mellis, I am pleased that you ask these many questions. There would be nothing better for total life on earth than higher atmospheric and hydrospheric CO2 levels. Massively more life on earth would be easily sustained if CO2 levels were much higher, say 1500 ppm vs. the current 430 ppm.
It is such an easily verifiable and observable truth...life on this earth needs massively more CO2 in our atmosphere and hydrosphere for life to thrive.
Except for the rare chemotrophs, all life on earth depends upon the net primary energy that comes from photosynthesis...the more CO2, the more photosynthesis...the more life on earth.
The earth has had much higher levels of CO2 in our atmosphere and hydrosphere, 2,000+ ppm vs. the current very sub-optimal levels for photosynthesis of about 430 ppm, and life on earth thrived.
Second, wind and solar junk energies will NEVER be replacements for the wondrous and wonderful hydrocarbons. Modern societies require massive consumption of dispatchable, affordable energies, and modern societies require the products that can only be abundantly and affordably provided by hydrocarbons -- plastics, fertilizer, petrochemicals, etc. The world will NEVER give up the miraculous resources of hydrocarbons. The essential requirements of modern societies were, are, and will be—built and installed by, operated by, and maintained by, the products and energies which hydrocarbons provide.
The world will NEVER transition to hopelessly dilute, hopelessly intermittent, hopelessly non-dispatchable, and hopelessly expensive, wind and solar junk energies.
Every single grid connected wind turbine and solar array came into being by government subsidies, government requirements, and government mandates. There is no natural market demand for wind and solar junk energies. Remove the police power of the state from energy markets and the wind and solar industries die tomorrow.
Every single one of the wind/solar grid installations is an impoverishment vehicle to the societies installing it. If you want to find the highest power prices in the world simply go to those societies pursuing the idiocies of Net Zero.
Arjun, you've written before about how countries with domestic coal supplies will use that resource to ensure their energy security. In his substack note yesterday, David Hay was commenting that China's EV push together with usage of coal to power electrical generation is a way to reduce dependence on oil. I've heard others like Michael Kao make a similar point. Won't such energy security based strategies, particularly for large oil users like China and India, eventually impact the global demand for oil?
James, yes, for sure. The basic variables are GDP growth, efficiency gain, and substitution. The GDP component reflects a combination of populaiton and wealth gains. The wealth gain component boils down to how rich do the other 7 billion people become? and over what time frame relative to maturity in OECD.
Excellent point on African oil. It’s far easier to tell poor people what to do than to curb oil in your own country where consumption supports a high standard of living. It’s lazy. And not a little racist.
Todd, great to hear from you. I am a big fan of some of your recent posts/articles I have come across. The Euro/US mindset on how to address climate is just not something I can get on board with when it de facto means leaving 7 billion (+/-) people behind. No way that happens. And the 7 billion would benefit from and will need all new technologies that can scale at cost.
Yes, it’s funny with oil scenarios like the IEA’s. Climate activists accused the oil industry proponents of misusing the current policy scenarios to justify further development (so the IEA was told to get rid of it) and oil industry proponents accuse the climate folks of misusing the net zero scenarios to justify calling for no new development. I think they’re both right. Scenarios are not forecasts nor prescriptions. They’re a tool to help users organize and constrain (or expand) their thinking and planning. If you’re going to point to a current policy scenario one should highlight that policy can change. If you’re going to point to a net zero scenario one should highlight that you can’t take one aspect of it (no new FF development) and turn it into a policy prescription in isolation (ie. without the corresponding alternative energy investment and development).
100% Jason. It's why it was the weaponization of the IEA NZ0 that I find more problematic than the scenario itself...but I might opine it was willfully done in an effort to change the narrative. That can even "work" to a degree but requires a recognition that high and volatile oil prices will be an outcome...something that would be helpful to lessening oil demand...but politicians hate because citizens hate high and volatile prices...and rightly so as it is bad for economic growth.
Excellent article! Many thanks for sharing your insights!
You state:
"But perhaps no report has been more weaponized by "climate only" politicians, academics, and activists than the Net Zero by 2050 report declaring no new oil and gas fields would be needed in order to meet the IEA’s net zero by 2050 scenario.
It's too strong to call this blatant misinformation. Forecasting and scenario analysis is tough business. We can speak from personal experience having made many wrong calls of our own. It is the weaponization of that report, hardly a shocking development, we are calling out. We were never on-track for that scenario of a 2019 peak in oil demand or circa 75 mn b/d of oil demand in 2030. In fact, the IEA's more recent "Oil 2023" report now calls for 105 mn b/d of oil demand in 2028, a remarkable 40% higher than its "Net Zero by 2050" advocacy (Exhibits 1 and 2).
The notion that oil and gas is a sunset industry has weighed on investor sentiment."
I know you write for a large audience with widely held views, but I have the luxury of being more explicit. The world left the Stone Age a long time ago, but the modern world consumes massively more stone (aggregates) than any past civilization.
https://elements.visualcapitalist.com/visualizing-one-year-of-sand-gravel-and-stone-consumption-in-the-us/
The world left behind wood as the primarily energy source, but the world consumes massively more wood now than at any time in history.
All energy sources have proven cumulative, and not substitutes. The world will consume far more hydrocarbons 100 years from now than it does now.
https://www.visualcapitalist.com/visualizing-the-scale-of-global-fossil-fuel-production/
Modern societies require massive consumption of dispatchable, affordable energies, and modern societies require the products that can only be abundantly and affordably provided by hydrocarbons -- plastics, fertilizer, petrochemicals, etc. The world will NEVER give up the miraculous resources of hydrocarbons. The essential requirements of modern societies were, are, and will be—built and installed by, operated by, and maintained by, the products and energies which hydrocarbons provide.
Much continues to be written with the claim that hydrocarbon investments will be "stranded assets". For examples:
https://www.thecooldown.com/green-business/stranded-fossil-fuel-assets-investments-taxpayers/
https://www.lse.ac.uk/granthaminstitute/explainers/what-are-stranded-assets/
Utter nonsense!
The stranded assets in the energy field are going to be all of the "Green Lie" junk energies and junk products promoted by grifters seeking government subsidies and government mandates. Grid wind and grid solar only go, wherever they go, by government mandate, government requirement, and government subsidy. "Sustainable Fuels" are only sustained by government subsidies. "Green Hydrogen" is only green if there is enough government money flowing. Tidal power is power by the ebbs of flows of government subsidies. The list goes on and on.
For "Green Stranded Assets"...the list is growing significantly, and those stranded green assets were only created in line with increasing government green-- Crescent Dunes, Solyndra, Ivanpah, Sunnova, Rivian, Fikser, Proterra Bus, Drax wood chip burning power plant, not to mention the billions of dollars lost by Ford, GM, VW, etc. on their EV idiocies.
Even if another energy source comes along which is "better" than hydrocarbons, (and that possible energy source will NOT be wind or solar), that new energy source will simply be added on top of the cumulative demand for evermore energy consumption. The world still burns massive amounts of dung as a cooking fuel!
https://www.skynews.com.au/business/energy/energy-experts-blast-failed-billiondollar-dept-of-energy-solar-power-project-as-financial-boondoggle-disaster/news-story/9095b183774eaec40184604fc3f57715
https://www.solarinsure.com/the-complete-list-of-solar-bankruptcies-and-business-closures
https://www.power-technology.com/features/solar-failed-projects-struggling/
https://apnews.com/article/climate-clean-energy-investments-trump-solar-wind-349e80c0d9c2cc768e63de9d48813d31
Thank you Tom!
Arjun,
Great analysis. My one criticism is you are assuming people will be rational. Quite often they are not. If Venezuela were rational they wouldn’t be where they are. We could easily go down a similar path where the Climate-Only Cultists drive the bus off the cliff. Last century was riddled with mass delusions and tens of millions of deaths. I don’t see the Cultists compromising or being reasonable.
But, I’m not betting on it either, simply because my investing strategy for decades has been “If the world is going to end, then I’m going to end with it. At least I’ll have a few billion people as miserable as I am.”. 😊
Thanks ever so much. Personally, I tend to believe James Hansen et al on climate risks. But I also resent the obvious gaslighting on energy and critical minerals coming from activists, the IEA, and elsewhere.
exactly!
Thanks for putting numbers to the situation in Africa vs the West. That was very helpful and mind blowing.
thank you Six Bravo!
I am pleased to see you now use the phrase “move to a healthier energy evolution” rather than referring to an “energy transition” since there is no known available energy source to transition to. I do have a further question: What if there is no “healthier” energy evolution? What if those calling for reduction in CO2 emissions based on the supposition that CO2 is bad for the environment as though it is a given that it is some form of pollution, what if they are wrong? Just suppose CO2 emissions - not particulates or other foreign matter, but CO2 itself; the gas plants breathe - are not bad at all - what then? What if it turns out that CO2 is actually good for the planet? It may be viewed as heresy, but has anyone asked that question and what it would imply? It doesn’t necessarily mean other forms of energy cannot be examined and pursued if they make sense for economic and other reasons, but it would meaningfully change the direction and priorities if it were no longer taken as a given that CO2 emissions were viewed as “pollutants” to be minimized at all costs.
Mellis, I am pleased that you ask these many questions. There would be nothing better for total life on earth than higher atmospheric and hydrospheric CO2 levels. Massively more life on earth would be easily sustained if CO2 levels were much higher, say 1500 ppm vs. the current 430 ppm.
It is such an easily verifiable and observable truth...life on this earth needs massively more CO2 in our atmosphere and hydrosphere for life to thrive.
Except for the rare chemotrophs, all life on earth depends upon the net primary energy that comes from photosynthesis...the more CO2, the more photosynthesis...the more life on earth.
The earth has had much higher levels of CO2 in our atmosphere and hydrosphere, 2,000+ ppm vs. the current very sub-optimal levels for photosynthesis of about 430 ppm, and life on earth thrived.
Love CO2...the more the better.
https://www.youtube.com/watch?v=wQ8Ws8ZrleE
Second, wind and solar junk energies will NEVER be replacements for the wondrous and wonderful hydrocarbons. Modern societies require massive consumption of dispatchable, affordable energies, and modern societies require the products that can only be abundantly and affordably provided by hydrocarbons -- plastics, fertilizer, petrochemicals, etc. The world will NEVER give up the miraculous resources of hydrocarbons. The essential requirements of modern societies were, are, and will be—built and installed by, operated by, and maintained by, the products and energies which hydrocarbons provide.
The world will NEVER transition to hopelessly dilute, hopelessly intermittent, hopelessly non-dispatchable, and hopelessly expensive, wind and solar junk energies.
Every single grid connected wind turbine and solar array came into being by government subsidies, government requirements, and government mandates. There is no natural market demand for wind and solar junk energies. Remove the police power of the state from energy markets and the wind and solar industries die tomorrow.
Every single one of the wind/solar grid installations is an impoverishment vehicle to the societies installing it. If you want to find the highest power prices in the world simply go to those societies pursuing the idiocies of Net Zero.
https://richardlyon.substack.com/p/on-the-edge-of-a-cliff?r=dy4o9
https://richardlyon.substack.com/p/the-physics-of-net-zero
https://x.com/BjornLomborg/status/1874787199767728205
Arjun, you've written before about how countries with domestic coal supplies will use that resource to ensure their energy security. In his substack note yesterday, David Hay was commenting that China's EV push together with usage of coal to power electrical generation is a way to reduce dependence on oil. I've heard others like Michael Kao make a similar point. Won't such energy security based strategies, particularly for large oil users like China and India, eventually impact the global demand for oil?
James, yes, for sure. The basic variables are GDP growth, efficiency gain, and substitution. The GDP component reflects a combination of populaiton and wealth gains. The wealth gain component boils down to how rich do the other 7 billion people become? and over what time frame relative to maturity in OECD.
Excellent
Excellent point on African oil. It’s far easier to tell poor people what to do than to curb oil in your own country where consumption supports a high standard of living. It’s lazy. And not a little racist.
Todd, great to hear from you. I am a big fan of some of your recent posts/articles I have come across. The Euro/US mindset on how to address climate is just not something I can get on board with when it de facto means leaving 7 billion (+/-) people behind. No way that happens. And the 7 billion would benefit from and will need all new technologies that can scale at cost.
https://open.substack.com/pub/toddmoss/p/we-cant-afford-for-everyone-to-live?r=402od&utm_medium=ios&utm_campaign=post
Yes, it’s funny with oil scenarios like the IEA’s. Climate activists accused the oil industry proponents of misusing the current policy scenarios to justify further development (so the IEA was told to get rid of it) and oil industry proponents accuse the climate folks of misusing the net zero scenarios to justify calling for no new development. I think they’re both right. Scenarios are not forecasts nor prescriptions. They’re a tool to help users organize and constrain (or expand) their thinking and planning. If you’re going to point to a current policy scenario one should highlight that policy can change. If you’re going to point to a net zero scenario one should highlight that you can’t take one aspect of it (no new FF development) and turn it into a policy prescription in isolation (ie. without the corresponding alternative energy investment and development).
100% Jason. It's why it was the weaponization of the IEA NZ0 that I find more problematic than the scenario itself...but I might opine it was willfully done in an effort to change the narrative. That can even "work" to a degree but requires a recognition that high and volatile oil prices will be an outcome...something that would be helpful to lessening oil demand...but politicians hate because citizens hate high and volatile prices...and rightly so as it is bad for economic growth.