The Age of Abundance: Revelation of reality, or revolution of green?

Author: Aundene Szmolyan

Source: http:/www./

Publish Date: Tuesday, February 6, 2018

“The future is one of abundance rather than scarcity.”

“Technological revolution is redefining energy and energy markets.”


By Aundene Szmolyan

London, UK – Forty-five perspectives, nine panels, one full day. The Economist’s Energy Summit, held in London, UK on November 28, 2017 offered a deep look into the transition in the world of energy. Titled “The Age of Abundance,” the event promised to cover the many technological revolutions taking place simultaneously in the energy markets which envision a future of abundance, rather than scarcity.

Electric cars, solar energy, thermal heating – all would be addressed. Every alternative to the dastardly capricious, pervasive universe of fossil fuels was in fact on full show. But upon the close of this one-day conference, this writer could not help but contemplate: Was this conference really about a world in transition playing out on global proportions? Are we indeed in the green future? Or is it hyperbole?

If you entered this conference with knowledge equal to that of the average Joe or Jane, you would undoubtedly be walking away with a bullish perspective on green energy. Electric cars are up; Volvo announced in July 2017 it is eliminating internal combustion engines from its vehicle lineup effective 2019.

Solar is cheaper (almost) than traditional energy sources. California, the idealist state with 40 million people committed to pushing the vanguard of green energy, is saying they can source 50 per cent of the state’s energy requirement through non-fossil sources within the next 22 years. Heck, with these promises and numbers, no one should fault you if you had bet the house – shorted future fossil based energy stocks, and rode your riches on a trajectory in line with Bitcoin.

However, conference attendees are neither average, nor uneducated, and clearly cannot align blindly with the vision of eight of the nine panels. Especially given the keynote panel, titled “Emerging Stronger,” which included Ahmad Al Khowaiter (photo at left) chief technology officer of Aramco; David Eyton, group head of technology at BP; and Paul Horsnel, head of commodities research at Standard Chartered, London; they offered a vision that starkly contrasted from the promises above.

Khowaiter noted a rebalancing is underway in oil markets as inventories deplete and demand is forecast to increase. At the same time, he shared a word of caution. Lagging capital investment is risking a supply imbalance down the road.

“If we examine the supplies needed in the coming years, we (as an industry) must meet not only demand growth, but also make up the natural decline of legacy fields,” Khowaiter said. “A conservative figure for demand growth and natural decline to be offset over the next five years stands at some 20 million barrels per day.” 

While the short-term market points to a surplus of oil, supplies required in coming years are falling substantially behind. Horsnel told summit participants that about $1 trillion in oil and gas investments have been deferred globally since 2014, which equates to between 5 and 10 million barrels per day of oil supply that otherwise would have materialized.

Saudi Arabia’s Vision 30 goals, which call for the diversification of Saudi Arabia’s national economy, has Saudi Aramco’s priority being set to maintain a robust crude oil program, both in exploration and maximizing reservoir yield, and substantially expanding downstream operations in refining and chemicals.

These keynote panelists were the show, none perhaps more so than Khowaiter, who closed with the final statement: “Ninety per cent of the world’s energy will be fossil based in 2040.”


Probing the truth about the green revolution

Are we in fact in the middle of a green revolution? Are the promises upon which so many of the panels revolved anything more than mere Kool-Aid which we have been sipping at for the past 20 years? Are the advances we see coming to fruition merely drops in a bucket full of water, doing little to dilute the global problem that is fossil fuel reliance?

As is to be expected, the truth is somewhere in the middle. Yes, we are in the midst of a green revolution, but it should not come as a shock that the goals we consistently talk about are going to be missed; many of the idealistic visions will not materialize in the next 30 years.

Mark Jacobson (photo at left), professor of civil and environmental engineering and director of the Atmosphere Energy Program at Stanford University, who was on the “The World If” panel, addressed the success of heating a single Stanford building from thermal sources – as if it was a readily transferable initiative that could solve all our problems in the next 30 years.

On the other hand, Jacobson’s career has focused better understanding air pollution and global warming problems, and developing large-scale, clean, renewable energy solutions. Development and application of three-dimensional atmosphere-biosphere-ocean computer models and solvers to simulate air pollution, weather, climate, and renewable energy has enabled Jacobson to produce roadmaps to transition states and countries to 100-per-cent clean, renewable energy for all purposes. Computer models examine grid stability in the presence of high penetrations of renewable energy.

Having served on an advisory committee to the U.S. Secretary of Energy, Jacobson is the politically astute co-founder of The Solutions Project; he addressed it as a nexus of the citizen movement behind America’s commitment to clean, renewable energy.

Since launching in 2011, with support from Rabobank, the Dutch multinational bank financing food and agricultural, The Solutions Project has laid out the framework for how the U.S. transitions to meeting its entire energy needs through renewable energy sources by 2050. It is a culturally relevant organization. It is interesting that Mark Krapels, RaboBank’s executive vice president, had signed on to help actor Mark Ruffalo fight oil and gas industry fracking in the Marcellus shale.

So what is the middle? The consensus among the panels, even among the first panel and then among the following eight, was clear. Alternative energy costs are going down, way down. Solar and wind capture and distribution has seen a drastic reduction in cost. Home solar panels and wind generators are rapidly on the rise, and the costs associated with installation and maintenance have inversely begun to fall.


Confronting the dilemmas

However, taking away from these gains is a range of dilemmas that ultimately continue to promote the dominance of fossil fuel energy sources.

First, there are the large regulatory problems across an un-unified United States. Panel No. 5 – “Wither the World After America’s Retreat?” – addressed the significant challenges regulatory disunity causes to emerging energy businesses. Heck, it is still illegal in almost 25 states to even sell your own electricity back to the grid. As for storing that electricity, the fact is that lithium-ion batteries using cathodes with nickel and cobalt as well as solvent-based electrode processing take a long time to recharge, and, according to a U.S. Environmental Protection Agency report, can have serious environmental impact including ecological toxicity while also contributing to global warming.  

Tesla is committed to fully recycling most of their batteries’ components but they still take a long time to recharge. Tesla’s DC charger can add approximately 170 miles (about 270 kilometres) worth of electricity to its cars’ batteries within 30 minutes. Using a standard charger, a full charge takes several hours. Toyota is betting that long recharge times will not be amenable to consumers. They’ve put their efforts behind hydrogen fuel cells.

Enter Panel No. 6: “Volts Wagons: The Rise of Electric Vehicles,” and StoreDot, a promising young Israeli company whose sole goal is to reduce battery charge times to five minutes. Backed by a PhD-laden, 20-person team, StoreDot employs nanotechnology to craft new organic materials that charge and discharge faster than standard lithium-ion batteries. They anticipate their batteries being ready for electric cars by 2020. But this is an incredibly crowded space – Panasonic holds 39 per cent of market share for electric car batteries; LG Chem and Samsung SDI are also rallying for first position in what Lux Research sees as a US$30- billion market by 2020.

While this writer cannot fault the knowledge and determination of those helming the StoreDot startup, it is consistently seeing the large mountains that need to be overcome which creates the realization that the Aramco prediction may be right.

Maybe the world will still be run on 90 per cent fossil fuels in 2040. If so, we can all kiss the Paris Accord’s 2ºC global temperature rise commitment goodbye.


Breakthrough needed in energy storage

If there was one constant that emerged among the panels it was this: battery and storage capacity is the missing key if large-scale industrialization and utilization of green energy is to ever be possible.  

Let’s be clear: this is a problem almost unanimously raised by all panel participants, and the consequences are being felt on both micro and macro scales.

Consumers are limited by the practicality that the good offers, a practicality that is inversely related to its storage capacity. Macro-producers concurrently are limited in production by the constraints of market supplies and the limits of market technology.

Municipalities also face tough questions of how to better utilize, transfer, and store energy supplied from green sources. The lack of easy solutions, along with the lack of political will, often results in green projects being passed over and replaced with conventional energy sources – dangerously short-sighted unless carbon capture technology becomes part of the mainstream.  

As such, if there is one certainty to take away from the Economist’s Energy Summit, it is this: if a company can break through and create an efficient, industrial-size energy storage system, one that can be implemented at the macro and micro scales, then go ahead and bet the house. Until then, the promise of the green revolution cannot be realized.


In the meantime, natural gas and what else?

As we continue to chug along towards solving our green energy problem, another fossil fuel industry has emerged with the potential to be a giant. It offers a short-term solution to reducing carbon dioxide and other pollutants from conventional oil sources, but it inversely poses a long-term threat of increasing infrastructural reliance on another fossil fuel source.

Panel No. 4, “All Hail Shale,” addressed the significant investments anticipated in 2018 given production costs have fallen dramatically aided by innovation, especially in the United States.

Panelist Susan Packard LeGros (photo at left), president and executive director of the Center for Responsible Shale Development, is committed to raising standards. She’s got some credibility. She started as attorney for the U.S. Environmental Protection Agency (EPA), before being in-house counsel at international corporations and advising on environmental management, compliance and litigation; before federal and state environmental agencies, she advised on renewable energy policy development and finance. Panelist David Carroll, president of the International Gas Union through 2018, advocates for natural gas as an integral element of a sustainable global energy system. He promotes the political, technical and economic progress of the gas industry.

Environmentalists, however, view natural gas as a bridge fuel until approximately 2030 when concentrated solar power, geothermal, biomass and biogas take over; others view gas as offering few short-term benefits over coal as long as natural gas infrastructure leaks methane. As of 2014, the EPA increased attention on methane leaks conducting a series of studies, publishing congruent white papers.

However, the Trump administration announced in December 2017 it would suspend or delay key requirements of an Obama-era policy to reduce methane emissions from oil and gas operations on federal lands. California subsequently sued the administration over the move.


Counting carbon: Carbon Tracker Initiative’s success

In true disruptor mode Panel No. 8, “Counting Carbon,” addressed the success of the Carbon Tracker Initiative, an economic, environmental watchdog.

Founded by UK fund manager Mark Campanate, and first chaired by Jeremy Leggett (photo at left; he stepped down last year), historian, futurist, author and blogger, Carbon Tracker is an independent financial think tank carrying out in-depth analysis on the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels. Carbon Tracker has cemented the terms “carbon bubble,” “unburnable carbon” and “stranded assets” into the financial and environmental lexicon.

Leggett is also founder and former board chair of Solarcentury, an international solar solutions company, as well as founder and executive chair of SolarAid which is building solar lighting markets in Africa.

Given a prominent position in this summit, partially due to its recent track record of success, Carbon Tracker is committed to providing critical economic information to the political contingent of a country, to properly encourage and induce green-shifting at the highest levels of government.

In its most recent report, consolidated through complex algorithmic formulae created by its economic analyst teams, Carbon Tracker notes: “Under a 2D scenario (2ºC warming by 2035), global oil demand could decline by 23% over a 15 year period . . . Accordingly, under a 2D scenario, the industry is likely to see major rationalisation with many players exiting the market rather than haemorrhaging cash. Our analysis implies rationalisation equivalent to 25% of 2016 capacity.”

Carbon Tracker’s outstanding success has enabled the expansion of their team; their goal: replicating their success in other nations.

In speaking with Jeremy Leggett, it became clear that the short-term focus of the initiative, and delivering similar results around the globe as it did in the UK, will significantly contribute to hitting the Paris Accord goals.

That brings me to my next point: the correlation of the short-term focus, and where natural gas fits in. How do the short-term goals, the so-called plucking of the low hanging fruit, relate to the shared global long term version?

Carbon Tracker has quietly created, with little investment or groundbreaking technological developments, one of the UK’s best contributions to helping fight climate change. It utilized resources available, connected the dots, and presented an immediately applicable solution. In doing so, it has delivered a tangible result.

Seeking redress, stimulus to action via the courts

Post-holidays, New York City Mayor Bill de Blasio (photo at left) announced that “New York City is standing up for future generations by becoming the first major U.S. city to divest our pension funds (US$5billion) from fossil fuels and sue the world’s most powerful oil companies over their contribution to dangerous global warming.” BP, ExxonMobil, Chevron, ConocoPhillips and Shell are being taken to federal court for their contribution to climate change – and with a win may potentially remedy New York City and State for the billions it has committed and will continue to have to commit to remedying the suffering and impacts on the state and its people as a result of climate change. The Guardian notes this is putting “the costs of protecting the city from climate change impacts back on to the companies that have done nearly all they could to create this existential threat.”

            In California in July 2017, San Mateo and Marin Counties, and Imperial Beach in San Diego County, sued 37 oil, natural gas, coal and trade groups, including Chevron, ExxonMobil, BP, ConocoPhillips, Shell, Arch Coal, the American Petroleum Institute and the Western States Petroleum Association, alleging their actions intensified climate change exacerbating sea-level rise.

But let’s be clear: international shipping and aviation are not ‘bound’ by the Paris agreement; will they be next in court?

International shipping produces 2.4 per cent of global greenhouse gas (GHG) emissions. The International Maritime Organization forecasts CO2 emissions from vessels rising anywhere between 50 per cent and 250 per cent by 2050 in its “business as usual” case while economies grow and trade increases. India and Brazil, which expect their shipping volumes to increase over the next few decades, blocked specific targets to curb emissions growth.

Total aviation activities produce approximately two percent of global GHG emissions, with international flights accounting for 65 per cent of that figure.

It is an age of abundance. Technology does exist to reframe the energy equation, but we’ve still not yet discovered a technology capable of replacing carbon-based propulsion systems, nor have we developed an alternative to carbon-based fuels.

Renewable energy on the ground 24/7 is technically and economically viable; it just requires the right policy and commercial investment, and an interconnected smart grid over a large area. Security of supply and economic efficiency require grids being upgraded and capable of handling decentralized inputs. It is only a lack of political will that holds back a clean energy infrastructure. Perhaps the stimulus to action will have to live in the courts.

            For David Keith, professor of applied physics and public policy at Harvard University, carbon capture entrepreneur and author of A Case for Climate Engineering (MIT Press), it is clear that technology has upped the ante for those using the atmosphere as a waste dump. With carbon taxes at $30 per ton – not addressed at this summit – plus revenue from CO2-enhanced oil recovery, the right projects – as Robin Mills, petroleum economist and author of Capturing Carbon: The New Weapon in the War Against Climate Change (Columbia University Press), notes – should be approaching commercial viability. Let’s put those projects forward.  

Alberta’s Climate Leadership Plan is arguably the most potent climate policy directed at the hydrocarbon sector anywhere in the world. In the U.S., the plan is seen as having helped Prime Minister Justin Trudeau confront environmental activism and approve Kinder Morgan’s Trans Mountain pipeline expansion project.

Let’s now focus on those carbon capture and storage projects and green bonds, while the Alberta oil industry’s manufacturing efficiency is rebalanced and restored.

Aundene Szmolyan is a law school student at Pepperdine University School of Law in Malibu, California.


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