As a first time reader, I appreciate the measured language as you lay out, what to me seems obvious, that the transient will not happen smoothly or quickly. In fact, every headline I read that explains how Germany is tearing down a wind farm to mine more coal simply reinforces the process and causes a chuckle. I look forward to more analysis of this nature. thanks
I have noticed a major shift in the narrative regarding the possibilities of a phasing out of fossil fuel within the next few decades. People are finally beginning to understand the very low probability of success and the very negative consequences of attempting to do so.
What has not happened is people realizing that there is a much better alternative to the Green energy policies. I believe my Progress-based energy policy is that alternative. You can read more here:
Arjun, Your work appeals to me as being both knowledgeable and trustworthy. Thank you for the balance in contrast to what's unfortunately the agenda-driven propaganda from the mostly non-scientific leaders of the "climate crisis/catastrophe" messaging machine. Greta, Al Gore, the EIA Director, MSM, and so many more. For the time being they're being additionally motivated by enormous sums of big government dollars filling their and their like-minded comrades' coffers from our tax dollars. Regardless of how large our national debts are reaching. Over $33 Trillion in our case here in the US. And despite that our administration is sending money in every direction it "feels" brings it favor, as it's doing again now at the COP28. $3 more Billion from US taxpayers' pockets promised for rather non-specific "gifting" to "poor" countries that'll not be tied to any measurable outcome and consequently be fraught with fraud and influence peddling. Would be such a breath of fresh air if all these recipients of fund flows from central planners went about their mission similar to the way Henry Ford did, with little to no government sweeteners and demonstrated whatever disruptive benefits they may have on their own merits. You've correctly pointed out so well how 2023 demonstrated even with massive big government funding so many of the companies and projects result in "demands" from the recipients that "we need more $$$s or we'll have the terminate the project."
Another great write-up and start to the holiday season.
Agree 100% with your note and the need for all modals of energy source to be utilised over the next few decades at a minimum.
Governments need to get out of the target dates and just acknowledge that the transition is going to take time.
Would love more commentary in Year 3 around the prospects for residential solar, offshore wind, and the realistic adoption of EV’s in the developed world ie The Lucky One Billion and impact on the energy transition.
Not looking for specific company investment ideas, but more around areas of focus e.g. pipeline, refiners, drillers, etc..
I love this comment in the article which shows just how out of touch western elites are:
“Sometimes the national debate shows there are people in the country who are not progressive,” said Mathilde Bord-Laurans, head of the climate division at the French Development Agency
thank you Robert for passing along. Whatever anyone thinks of coal...love, hate, indifferent...it almost certainly has the highest confidence growth trajectory of any traditional fuel as its use has basically been eliminated in the OECD and it is by far the cheapest fuel in the developing world.
Thank you Ketan! I do track oil S/D reasonably closely but don't make the short-term items a major feature of Super-Spiked. No doubt there is some build in spare capacity...cutting supply at a time of "non-trough" pricing is typically a sign of near-term weakness, which can be driven by a combo of less-than-expected demand or higher-than-expected supply (from those not cutting)...right now it seems a bit more of the latter given strong US shale growth, growth from Iran, and other non-OPEC growth.
LCOE always seemed a bit suspicious to me when it came to solar and wind. Since they are intermittent you have to have either battery storage ( super expensive ) or high availability backup ( usually a NatGas plant ) to account for that intermittency. Shouldn't that backup power source's capital cost ( or at the least the part of the capacity that is excess to provide standby coverage ) be somehow attributed to the LCOE of the renewable facility?
Perhaps a future topic could be a dive into the newer nuke technologies that are so different from 3 Mile Island. Would be great to get a breakdown of the technologies, what the barriers are to each (cost, scale, tech risk, waste, etc) and where each might be applicable. Maybe not all nuke should be for mass scale public utilities. If you can fit one on a submarine or a ship, why not for a large scale process plant?
Thank you Steve C. My colleauge at Veriten Brett Rampall is the nuke expert. Not quite sure that is for Super-Spiked but he is the right person to break down the current and future state of nuclear power vs the ones built 50 years ago. Some big differences indeed.
Speaking of content, an idea for future posts to explore (?): the deeper psychology of how to think about energy, the behavioural finance-type deep dive into why this topic is so intensely controversial, why people have such radically different worldviews about it (and why this may generate excellent investment opportunities). I think we all start out as analysts looking at the industry, CAPEX, financial statements, business plans, etc. but after a while we begin to realize that these are impacted by decision makers who are people, and many of the real reasons people make decisions are psychological rather than whatever rationale people give publicly (or even believe themselves). Heck, it takes a lifetime to even understand our own personal psychology, much less figure out why other people think and act so differently from us.
For most issues (the energy transition is a perfect example) people's psychological predispositions are so predictable we even have shorthand names for the groups: 'conservative', 'degrowth', 'permabull/bear', 'liberal', 'religious right', 'climate-only' etc. I often get very nervous if a person's view falls neatly and predictably into a particular category, it's very likely that their views are just an inkblot-projection of their personal psychology, not the result of a painstaking assessment of reality! I appreciate Super Spike is careful to avoid this type of thinking, but lots of influential people indulge in it and that creates all kinds of bizarre policies and opportunities for investors.
Excellent piece as always Arjun. Hopefully our politicians will evolve to the idea that we need to consider tradeoffs -- economic growth with mitigation strategies and multiple energy sources (renewable and non-renewable) instead of reduced emissions at all costs.
Just discovering this Substack, great stuff
Thanks so much Energy Matters.
As a first time reader, I appreciate the measured language as you lay out, what to me seems obvious, that the transient will not happen smoothly or quickly. In fact, every headline I read that explains how Germany is tearing down a wind farm to mine more coal simply reinforces the process and causes a chuckle. I look forward to more analysis of this nature. thanks
Thank you Andy!
Excellent overview.
I have noticed a major shift in the narrative regarding the possibilities of a phasing out of fossil fuel within the next few decades. People are finally beginning to understand the very low probability of success and the very negative consequences of attempting to do so.
What has not happened is people realizing that there is a much better alternative to the Green energy policies. I believe my Progress-based energy policy is that alternative. You can read more here:
https://frompovertytoprogress.substack.com/p/we-need-abundant-affordable-and-secure
thank you Michael.
Arjun, Your work appeals to me as being both knowledgeable and trustworthy. Thank you for the balance in contrast to what's unfortunately the agenda-driven propaganda from the mostly non-scientific leaders of the "climate crisis/catastrophe" messaging machine. Greta, Al Gore, the EIA Director, MSM, and so many more. For the time being they're being additionally motivated by enormous sums of big government dollars filling their and their like-minded comrades' coffers from our tax dollars. Regardless of how large our national debts are reaching. Over $33 Trillion in our case here in the US. And despite that our administration is sending money in every direction it "feels" brings it favor, as it's doing again now at the COP28. $3 more Billion from US taxpayers' pockets promised for rather non-specific "gifting" to "poor" countries that'll not be tied to any measurable outcome and consequently be fraught with fraud and influence peddling. Would be such a breath of fresh air if all these recipients of fund flows from central planners went about their mission similar to the way Henry Ford did, with little to no government sweeteners and demonstrated whatever disruptive benefits they may have on their own merits. You've correctly pointed out so well how 2023 demonstrated even with massive big government funding so many of the companies and projects result in "demands" from the recipients that "we need more $$$s or we'll have the terminate the project."
Thank you Barry for your comment.
Arjun,
Another great write-up and start to the holiday season.
Agree 100% with your note and the need for all modals of energy source to be utilised over the next few decades at a minimum.
Governments need to get out of the target dates and just acknowledge that the transition is going to take time.
Would love more commentary in Year 3 around the prospects for residential solar, offshore wind, and the realistic adoption of EV’s in the developed world ie The Lucky One Billion and impact on the energy transition.
Not looking for specific company investment ideas, but more around areas of focus e.g. pipeline, refiners, drillers, etc..
Very happy you are enjoying personal success.
Happy Holidays.
Steve
thank you Steve! Yes, I think those are all good areas to elaborate on.
Just ran across this WSJ article this morning that makes the exact point that you're making:
Billions in U.S. Funding Hasn’t Convinced Developing World to Ditch Coal
South Africa and Indonesia are backtracking on commitments to burn less of the dirtiest fossil fuel
https://www.wsj.com/world/billions-in-u-s-funding-hasnt-convinced-developing-world-to-ditch-coal-f11ffa57?st=l5377xkltu8vofz&reflink=desktopwebshare_permalink
I love this comment in the article which shows just how out of touch western elites are:
“Sometimes the national debate shows there are people in the country who are not progressive,” said Mathilde Bord-Laurans, head of the climate division at the French Development Agency
thank you Robert for passing along. Whatever anyone thinks of coal...love, hate, indifferent...it almost certainly has the highest confidence growth trajectory of any traditional fuel as its use has basically been eliminated in the OECD and it is by far the cheapest fuel in the developing world.
Another amazing write-up! Thanks for the same Arjun. Could you share details on recent voluntary oil output cuts and the impact of these ?
Thank you Ketan! I do track oil S/D reasonably closely but don't make the short-term items a major feature of Super-Spiked. No doubt there is some build in spare capacity...cutting supply at a time of "non-trough" pricing is typically a sign of near-term weakness, which can be driven by a combo of less-than-expected demand or higher-than-expected supply (from those not cutting)...right now it seems a bit more of the latter given strong US shale growth, growth from Iran, and other non-OPEC growth.
Thank you sir !
LCOE always seemed a bit suspicious to me when it came to solar and wind. Since they are intermittent you have to have either battery storage ( super expensive ) or high availability backup ( usually a NatGas plant ) to account for that intermittency. Shouldn't that backup power source's capital cost ( or at the least the part of the capacity that is excess to provide standby coverage ) be somehow attributed to the LCOE of the renewable facility?
100%!
Great read! Keep them coming.
thanks so much Paul!
The paragraph which discusses your views on IEA is spot on.
Excellent article top to bottom. Thanks
thank you Douglas!
Excellent, excellent analysis. But where is nuclear? It seems like the only viable long term solution.
Thank you Tom. It is implicitly in "power generation"! I am a big fan of nuclear.
Perhaps a future topic could be a dive into the newer nuke technologies that are so different from 3 Mile Island. Would be great to get a breakdown of the technologies, what the barriers are to each (cost, scale, tech risk, waste, etc) and where each might be applicable. Maybe not all nuke should be for mass scale public utilities. If you can fit one on a submarine or a ship, why not for a large scale process plant?
Thank you Steve C. My colleauge at Veriten Brett Rampall is the nuke expert. Not quite sure that is for Super-Spiked but he is the right person to break down the current and future state of nuclear power vs the ones built 50 years ago. Some big differences indeed.
Hi Arjun,
Speaking of content, an idea for future posts to explore (?): the deeper psychology of how to think about energy, the behavioural finance-type deep dive into why this topic is so intensely controversial, why people have such radically different worldviews about it (and why this may generate excellent investment opportunities). I think we all start out as analysts looking at the industry, CAPEX, financial statements, business plans, etc. but after a while we begin to realize that these are impacted by decision makers who are people, and many of the real reasons people make decisions are psychological rather than whatever rationale people give publicly (or even believe themselves). Heck, it takes a lifetime to even understand our own personal psychology, much less figure out why other people think and act so differently from us.
For most issues (the energy transition is a perfect example) people's psychological predispositions are so predictable we even have shorthand names for the groups: 'conservative', 'degrowth', 'permabull/bear', 'liberal', 'religious right', 'climate-only' etc. I often get very nervous if a person's view falls neatly and predictably into a particular category, it's very likely that their views are just an inkblot-projection of their personal psychology, not the result of a painstaking assessment of reality! I appreciate Super Spike is careful to avoid this type of thinking, but lots of influential people indulge in it and that creates all kinds of bizarre policies and opportunities for investors.
thank you Investor as always for your thoughtful comments. Much appreciated, Arjun
Sometimes I'm long-winded, I know, but it's because the material is so interesting!
never! always good to hear what you think and appreciate your engagement.
Congratulations on two years. You provide a much appreciated commentary. Best of luck in the future.
thank you Martin!
Excellent piece as always Arjun. Hopefully our politicians will evolve to the idea that we need to consider tradeoffs -- economic growth with mitigation strategies and multiple energy sources (renewable and non-renewable) instead of reduced emissions at all costs.
thank you Weston!