Ten years ago Blockbuster CEO Jim Keyes said he wasn’t worried about digital streaming. “I’ve been frankly confused by this fascination that everybody has with Netflix,” he said. Blockbuster’s head of digital strategy echoed this sentiment, asserting the company was “strategically better positioned than almost anybody out there.” Not long after, Blockbuster went the way of the butter churn, while Netflix became a household fixture. Today, the movie streaming service is worth almost as much as Disney.
To most people, that’s a funny story about the hubris of a technological dinosaur. Imagine, however, if Blockbuster had been a cornerstone of the U.S. economy, that millions of people had been employed in the manufacture and sales of Jurassic Park DVDs, that there were hundreds of cities dotting the South and Midwest where brick-and-mortar video rental was the only job in town. Then, the collapse of Blockbuster wouldn’t be so funny. It would be a catastrophe.
This, experts warn, could be the future of fossil fuels.
Wind turbines, solar panels and electric vehicles are getting cheaper and more abundant by the day, which is hurting demand for coal, oil and natural gas. As demand falls for conventional fuels, so will prices. Companies that laid claim to coal mines or oil wells, won’t be able to turn a profit by digging up that fuel. They will default on their loans, pushing banks to the brink of failure. Prices are likely to crash before 2035, costing the global economy as much as $4 trillion, according to a new study published in the journal Nature Climate Change.
As with everything, there will be winners and losers. Countries that import large volumes of fossil fuels — namely China, Japan and much of Europe — would likely be better off, having transitioned to cheap, renewable power and electric cars. They would likely also be spending more money on clean technology produced at home and sending less money to fossil fuel producers overseas.
Viñuales said a collapse in the price of fossil fuels would likely strengthen China and weaken the United States. China has a lot of incentive to ramp up renewables. It wants to create jobs and cut pollution, but it also wants to gain an edge over its chief rivals, Russia and the United States. Driving down the cost of renewables would undercut the U.S. fossil fuel sector. “The only thing that the United States could do would be to massively invest in renewable energy to be a competitor in the economy of the future,” Viñuales said. Continuing to invest in fossil fuels will only make the United States more vulnerable. “There is no walking out from the energy transition,” he said.
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(Source of both charts above: Nexus Media)
For both power generation and road transport, I am convinced that the transition will be faster than shown in the charts above. I think the 2040 coal number will actually occur by 2030, because (like the authors of the study) I am certain that renewables and storage will be so cheap no one will want to keep their coal power stations running. I suspect their gas forecasts are plausible, though, because gas is an excellent complement to renewables.
For transport, I expect EVs to make up 100% of new sales by 2030. I don't believe petrol cars/lorries will last 10 years before replacement, because EVs will be very cheap to run and buy, so by 2040 the global car/lorry fleet will have transitioned away from petrol/diesel.
Beware the carbon bubble, peeps.