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
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?
Dec 2, 2023·edited Dec 2, 2023Liked by Arjun Murti
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.
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
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
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
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."
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
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
Another amazing write-up! Thanks for the same Arjun. Could you share details on recent voluntary oil output cuts and the impact of these ?
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?
Great read! Keep them coming.
The paragraph which discusses your views on IEA is spot on.
Excellent article top to bottom. Thanks
Excellent, excellent analysis. But where is nuclear? It seems like the only viable long term solution.
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.
Congratulations on two years. You provide a much appreciated commentary. Best of luck in the future.
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.