The best president money can buy

 By Robert Matson

Extreme hotspot: what 60 C means for the Middle East

 From Al Jazeera

Food production is expected to be severely affected as a result of climate change with about one-third of arable land in MENA hit by extreme heat [Saudi Desert  Photo by Ahmed Jadallah/Reuters]

The Middle East and North Africa is already the hottest and driest region on the planet but climate change could make some areas uninhabitable in the coming decades with temperatures potentially reaching 60 degrees Celsius or higher.

The repercussions throughout the Middle East and North Africa (MENA) region would be devastating including chronic water shortages, the inability to grow food because of extreme weather and resulting drought, and a surge in heat-related deaths and health problems.

By 2100 about 600 million inhabitants, or 50 percent of the population of the region, may be exposed to “super-extreme” weather events if current greenhouse gas projections hold, one recent study in the journal Nature noted.

Lasting weeks or even months, the scorching heat would be “potentially life-threatening for humans”, it said.

“We anticipate that the maximum temperature during … heatwaves in some urban centres and megacities in the MENA could reach or even exceed 60 °C, which would be tremendously disruptive for society,” the scientists wrote.

George Zittis, lead author of the study, told Al Jazeera higher humidity from increased evaporation of the surrounding seas will increase the danger.

“Heat stress during summers will reach or exceed the thresholds of human survivability, at least in some parts of the region and for the warmest months,” said Zittis.

Major urban centres around the Gulf, Arabian Sea, and Red Sea – such as Dubai, Abu Dhabi, Doha, Dhahran, and Bandar Abbas – would all see severe temperatures on a more frequent basis.

“Cities will feel an increasing heat island effect and most capital cities in the Middle East could face four months of exceedingly hot days every year,” according to the World Bank.

About 70 percent of the world’s most water-stressed countries are in MENA. As the climate warms further, the social and economic fallout will be intense.

More than 12 million people in Syria and Iraq are losing access to water, food and electricity because of rising temperatures, record low levels of rainfall, and drought, which are depriving people across the region of drinking and agricultural water.

Syria is currently facing its worst drought in 70 years. Aid groups described the situation as an “unprecedented catastrophe”.

“The potential intensification of heatwaves in the already harsh, hot and arid MENA environment is expected to have direct negative impacts on human health, agriculture, the water and energy nexus, and many other socioeconomic sectors,” said Paola Mercogliano, CMCC Foundation’s director of hydrogeological impacts.

Increasing water shortages have already been blamed for igniting regional conflicts, and some researchers fear that fighting over scarce resources will intensify throughout the Middle East and North Africa as the world heats up further.

“Societal impacts may be relatively large …  Moreover, the human population of the MENA region is projected to peak around the year 2065,” Mercogliano told Al Jazeera. “Therefore, the threat to water supplies in the region with temperatures rising is very much serious.”

Water scarcity will also be a financial burden with estimates suggesting MENA will suffer the most of any region around the world, costing governments 7-14 percent of their gross domestic product by 2050.

The agricultural sector, which provides the most jobs in the Middle East and North Africa, could be devastated with water availability declining by as much as 45 percent.

Food production is expected to suffer severely as a result with about one-third of the arable land scorched by extreme heat.

With the warming of Earth already well under way, costly adaption measures will be necessary.

“Adaptation is essential for the survival of future generations under changing climate,” Mercogliano said.

Lebanon is developing hill lakes to conserve and store water for irrigation. In Egypt, efforts are under way to build wave breakers to preserve wetlands and coastal installations from seawater intrusion. In Jordan, treated wastewater is now used to irrigate agricultural areas, she noted.

“A project in Morocco is empowering women to harvest water from fog, while in Jordan another aims to empower rural women to help tackle agriculture in the context of climate change,” said Mercogliano.

Solar reaches record low of $10.4/MWh

 From PV magazine:

[O]ne of the projects – the 600 MW Al Shuaiba PV IP project – will sell power at a world record low price of $0.0104/kWh.

$10.4/MWh.  Yes, interest rates are low; yes Saudi Arabia has a lot of sunshine.  But the cheapest-- subsidised!--solar in the US, from the south-west, is $24/MWh.  This suggests US solar LCOEs have much further to fall.  

The previous record was €11.14/MWh (US$16/MWh) last year in Portugal and $13.5/MWh in Abu Dhabi.  In other words, the cost of solar power has fallen 23% in under a year!

Source: Lazard

Extraordinarily cheap renewables

One of the places is to  be expected: Saudi Arabia.  Its solar resources are big—it's mostly desert and it straddles the Tropic of Cancer.  The other is much less likely, at first glance: New York State.

Some of the world’s top green energy players have tabled ultra-low bids under the second round of Saudi Arabia’s renewable energy programme, set to contract a 1.47GW all in all.

The kingdom's Renewable Energy Project Development Office (REPDO) recently identified the firms and consortia shortlisted to develop a slew of solar projects across the country, with some proposing tariffs below the 2-US-dollar-cent-per-kWh threshold.

At 600MW in planned capacity, the Al-Faisaliah PV project is the largest of the lot and will be either contracted to a consortium led by Saudi player ACWA Power, or a rival partnership led by United Arab Emirates-headquartered firm Masdar.

The solar bids of US$0.0162/kWh [$16.20/MWh] now being touted in Saudi Arabia mirror the tariffs of US$0.016953/kWh scored last October by a 900MW project in Dubai. The Middle Eastern solar milestones emerge after similar numbers were reported for PV tenders in Brazil and Portugal.

[From PV-Tech]

New York State governor Andrew Cuomo has revealed the winners of the third tender conducted by the New York State Energy Research and Development Authority, which amounted to 1,278MW of new large-scale solar, wind, and energy storage projects across the state – and all delivered at stunningly low prices.

The new slate of renewable energy projects – some of which are expected to break ground as early as late-2020, and all of which are expected to be completed by 2024 – include 17 new ground-mounted solar projects totaling 1,090MW, and 40MW of battery storage projects.

Additionally, three existing wind farms will be repowered leading to an increase in new renewable capacity of 35.8MW, while a development of a new 145MW wind farm was also awarded a procurement contract.

The 21 projects are expected to generate over 2.5 million megawatt-hours of renewable energy each year – enough electricity equivalent to powering over 350,000 homes and enough to reduce emissions by more than 1.3 million metric tonnes annually, itself the equivalent of taking nearly 300,000 cars off the road every year.

Importantly, bid prices for this third round of procurement included project bid offers 23% lower than bids received three years ago. The weighted average award price for this third solicitation is $US18.59/MWh of production over the 20-year term of the awarded contracts.

[From IEEFA]

These numbers are way below the operating cost of coal power stations ($28-$41/MWh) and way, way below the cost of new coal power stations ($66-$152).   As I discuss here, even without extensive storage, we can still cut the use of coal-fired power by 80%

Source: Lazard
Red rectangle shows cost range for these new contracts.

The enemy of the people

A cartoon by Adam Zyglis.

Oil's sale of the century flops

From The Sydney Morning Herald, hat-tip to ClimateCrocks:

The sale of the century has ended in farce. The modest sums raised from the “privatisation” of Saudi Aramco will barely cover the kingdom’s fiscal deficit for six months. The $US25 billion ($37 billion) haul will not make any impact on Prince Mohammed bin Salman’s Vision 2030, his theatrical plan to break oil addiction and diversify into everything from car plants to weapons production. Nor will it go far to launch NEOM, his robotic half-trillion dollar white elephant on the Red Sea.

At least there was doubt before about the predicament facing the House of Saud. Now there can be none. The regime resorted to tricks just to sell just 1.5 per cent of the shares on the local Tadawul exchange: a “Ritz Carlton” shake-down of princes; doubling the bank leverage limit for Saudi retail customers so that they can buy the stock; and calling in diplomatic chips from the Gulf alliance.

Other foreigners will not touch Aramco, even after the prestige valuation of $US2 trillion was trimmed to $US1.6 trillion – $US1.7 trillion. Theoretical oil reserves are not worth much these days as the climate backlash gathers force, and Aramco carries a special discount as the opaque political instrument of a headstrong master.

Riyadh needs every dollar of current revenue to pay for its cradle-to-grave welfare system, to cover the world’s fourth biggest military budget and the war in Yemen, as well as bankrolling Egypt. This is an extraordinary cost edifice for a middle-income country like Saudi Arabia, with a per capita income similar to Greece.

The regime requires a crude price of $US85 a barrel to balance the books (IMF data) even without losing the dividend stream from Aramco. It has not been that high for five years. Brent is at $US62.

Standard and Poor’s says the fiscal deficit will be 8.1 per cent of GDP this year and stay near these levels into the early 2020s. While the Saudis are no longer running down reserves to cover the shortfall, they are racking up debt instead at a brisk pace. “It’s a fact that Saudi Arabia is gradually running out of money,” said former CIA chief General David Petraeus last week.

To buy shares in a state monopoly that also serves as the regime’s fiscal lifeline is to court fate. If push came to shove, would Prince Mohammed resist siphoning off Aramco revenues through taxes and leave nothing for dividends?

Aramco’s flop is a sobering moment for Opec. The historical window may be closing on the cartel even sooner than they feared. These countries built a spending structure on assumptions of $US100 oil and an eternal Chinese boom. But five years after the 2014 crash, there is no sustained recovery in sight.

[Read more here]

To the last drop

The cover story of the international edition of the Economist, which is headlined “To the last drop”, looks at “Saudi Arabia’s strategy to survive the end of oil”. In a leader article, the Economist says the “oil industry may decline, but it won’t go quietly”. It notes: “Many oil firms still say that production will creep up over the next decade, to slightly above today’s level of 95m barrels per day (b/d), and then plateau. But output will need to drop to 45m-70m b/d by 2050 if the world is to stop temperatures rising more than 1.5-2C above their pre-industrial level.” 

Common sense suggests that “the highest-cost and dirtiest oil firms will tend to go out of business first”, says the Economist. “If so, an industry that has become gargantuan over 160 years will shrink to a core of producers that fulfil the world’s residual demand at the lowest financial and environmental cost.” 

This fits with the strategy and pitch to investors from the Saudi Arabian state oil company Aramco, says the article. “The firm spends just $3 to lift a barrel from beneath the desert, less than almost anyone else. The emissions from extracting Saudi oil are rock-bottom, too. Saudi Arabia has promised investors they will get steady dividends whatever the weather. Implicit in the kingdom’s approach is that, if and when oil demand falters, Aramco will be the producer of last resort.”

Of course, that may all be at lower prices.  It is in Saudi Arabia's interest to persuade the world to reduce CO₂ emissions, because it will be the most expensive and the most polluting producers which close down first, so that falling demand will be offset by falling supply, just not Saudi Arabia's.


(Source: Carbon Brief )

Saudi Arabia Crude oil production
Source: Macrotrends

400,000 Europeans die from air pollution each year

The Shard, in Smog.  Source: Reuters

From Reuters:

Poor air quality caused about 400,000 premature deaths in Europe in 2016, the most recent year data is available, and almost every city-dwelling European is exposed to pollution levels that exceed healthy levels, according to a report on Wednesday.

“Air pollution is currently the most important environmental risk to human health,” the European Environment Agency (EEA), the EU’s health agency, said in the report.

The report’s author, EEA air quality expert Alberto González Ortiz, said that while the level of dangerous particles in European cities was dropping, it was not dropping fast enough.

“We have not yet reached the EU standards and of course we are far from reaching the WHO (World Health Organization) standards,” Ortiz said.

EU law currently requires countries to assess the level, notably in urban areas, of a range of pollutants, including ozone and particulate matter, and take action if certain limits are hit.

Particle pollution in cities has become the target of tougher restrictions after the EU’s top court ruled in June that cities needed to act if pollution levels were exceeded in a single black spot rather than based on an average across a region.

In July, the European Commission, the EU’s executive body, asked the EU’s Court of Justice to take action against Spain and Bulgaria over their poor air quality, warning the countries were failing to protect citizens against pollution.

EU limits are set per pollutant and in 2017, 16 out of the EU’s 28 member states reported at least one case of levels of nitrogen dioxide, a poisonous gas in car exhaust, being higher than the legal EU annual mean concentration. This list includes France, Belgium, the Netherlands, Spain, Germany and Britain.

The sooner we switch our transport fleet to electric, the better.  If terrorists were killing this many people, there would be action.  But dying from air pollution?  Meh.

Switching to EVs would also reduce carbon emissions, and it would reduce our reliance on tyrannical and murderous regimes, such as Saudi Arabia, Russia, and Iran, which we suck up to just because they produce oil. 

Why isn't rapidly transitioning the vehicle fleet to EVs a major objective of government policy in every developed country round the world?

EVs just in time

A very interesting piece from CleanTechnica:

The era of oil is coming to an end, with global oil production set to halve in the next five to six years. To avoid a global economic slump, the transition to 100% renewables worldwide needs to be accelerated. It is feasible and cheaper than the current system, research shows.

2018 was a year of bold ambition and remarkable achievements for renewable energy, according to the International Renewable Energy Agency. Indeed, the production costs of renewables fell to record lows, undercutting the costs of existing coal-fired power plants. Investment in renewables kept rising, with most investment coming from emerging and developing countries. And even in places where politicians try to block the energy transition, for instance in the USA and Australia, numerous private actors, companies, and entire communities increasingly committed to go 100% renewable.

Yet, one important piece of news on the global energy transformation went unnoticed, despite the fact that it came from one of the most influential organizations, the International Energy Agency (IEA). The dramatic message was hidden in a graph on page 159 of the 2018 World Energy Outlook (WEO), the annual edition of the most significant report on global energy developments. 

It shows that with no new investment, global oil production — including all unconventional sources — will drop by 50% by 2025. (Chart above) That means that the global oil supply crunch is likely to happen already in the next five to six years and not in decades, as many fossil fuel companies hope. The global annual oil production is set to decline by approximately six million barrels per day starting in 2020. That means in the coming years the provision of energy related to oil will reduce annually by an amount equal to the total energy demand of Germany in 2014.

Currently, 81% of global energy demand is met by fossil fuels, with a large share of that being oil. Reduction by 50% means that oil will become a luxury resource, and with it, driving and heating in large parts of the world.

Peak oil has been constantly underestimated by media, politics, and companies alike. Energy Watch Group was among the first to warn about it in 2008 in its study finding that the global oil supply is likely to dramatically decrease by 2020.

Instead of offering solutions in line with the Paris Climate Agreement, the IEA recommends “continued investment in oil and gas supply” in line with its policy, constantly overestimating the growth potential of fossil fuels (see the EWG analyses of the IEAs misleading scenarios on Energy Watch Group website).

New investments would be needed due to declining availability of oil at current price levels. But, the immense inv44estments, undertaken since the early 2000s to find new oilfields, have been unsuccessful (Second chart above). On the contrary, the number of oil discoveries have fallen to a historic low. 

By 2014, the oil industry started to roll back investments and rebought their own shares on a large scale. Ever since, the industry has been unwilling to scale up investments again.

The expected expansion of unconventional oil production in the USA will not be able to close the growing gap. Furthermore, within the last years, over six billion US dollars were divested from the fossil fuel energy industry. With an increasing number of investment funds, banks, countries, and companies divesting from fossil fuels, this number is expected to further grow within the next years.

The global community has all the tools at hand to prevent this economic crash and to tackle dangerous climate change at the same time: the transition to 100% renewable energy. However, the current pace of deployment of renewable energies is by far insufficient to compensate for the drop in expected oil supply. The growth of renewable energy sources worldwide provided about 70 million tonnes of oil equivalent (MTOE) in 2017, which is only 22% of the expected oil gap. To close the gap and to stop dependence on fossil fuels, the transition to 100% renewable energy should significantly accelerate.

[Read more here]

Some comments:

1. The IEA has consistently and repeatedly underestimated the growth in renewables.  Whether this represents bias or just incompetence, I don't know.  This underestimation continues with their forecasts of EV take-up, as can be seen in the first chart above.  By 2026, EVs  will make up some 50% of total car & light truck sales, if current growth rates continue.  Those growth rates will continue, because large EVs will reach cost parity by 2022, and small ones by 2025.  So demand will fall much faster than the IEA predicts. 
2. Unconventional oil (i.e., fracking) is likely to tail off fast.  US fracking companies make profits according to their accounts, but they are massively cash negative.  Investors are declining to fund further exploration.
3. I had thought that the decline in demand would lead to falling oil prices, which might reduce the growth in EV demand.  In fact, given the likely decline in supply, the oil price might actually rise, making EVs even more attractive.
4. Whatever they say in public, oil company executives and institutional investors know that demand is likely to decline, which is why they have moved from "explore at all costs" to cash generation and share buy-backs.  Which means that the oil supply situation is not going to change, even if they were to suddenly become better at finding workable (i.e. economic) fields.
5. According to Aramco's data, released as part of their partial flotation, Saudi Arabia's oil fields will last at least another 30 years, and it can produce its oil at a marginal cost of $3 per barrel.  The other Middle Eastern fields also have low marginal costs and long (though not as long as Saudi's) lives.   According to the analysis above, these producers will continue to benefit from oil even as EV demand explodes, because production in the other more expensive producers will run out long before 30 years.
6. EVs have come along just in time to prevent/mitigate economic catastrophe, even if you ignore the global warming and environmental consequences of burning oil.  Their roll-out is essential not just to stop global warming but to plug the oil supply gap.

US now world's largest oil producer

Source: ClimateCrocks

Thanks to the shale/fracking revolution,  the USA is now once again the world's largest oil producer.  The second and third largest producers are Russia and Saudi Arabia respectively. 

Both countries are dictatorships which murder their own citizens, at home and abroad, and destabilise other countries.  Would it not be wonderful if the US, because of its domestic oil production bonanza, and a rapidly increasing fleet of electric vehicles, could stop kowtowing to these dangerous and vile tyrannies and rely on its own oil production?  Would it not be good if their power to do harm were diminished by falling oil demand and prices?  It is no accident that Russia has influenced US elections, and continues to try to do so.  Its budget receipts are dominated by oil, as are Saudi Arabia's.   They do not want to see the EV revolution succeed, any more than domestic US oil billionaires and companies do. 

But it is too late for them to stop the revolution, because China which produces and buys 1/3rd of the world's cars has set an EV target equal to 10% of sales for 2019, one which will rise each year into the future.  It will be China and India which will drive the EV revolution from now on.  And that will have excellent results, reducing our dependence on these autocracies and reducing their influence on world affairs.

Only 1.2%?

At the beginning of major technological or market shifts, most people struggle to see that the nascent changes are going to cause massive disruption.  EV sales are only 1.2% of total car sales, they say.  How can 1.2% influence anything?

Take US EV (electric vehicle) and PHEV (Plug-In hybrid electric vehicles, i.e., those with a hybrid petrol/electric drive but with the capacity to also charge up their batteries from the grid).  Now as at December 2016, EV & PHEV sales made up 1.2% (seasonally adjusted: there is always a December spike in car sales, and weakness in January and February,  which you have to remove via seasonal adjustment) of total car and light truck sales.  The top chart shows EV sales (& PHEV, but I won’t keep on adding that; just remember that it includes both when I say ‘EV’ below) as a percentage of total car sales, and the second chart shows them in absolute terms.  (Source of basic data: Inside EVs)

Now notice a couple of things.

1. 6 years ago, EV sales were negligible.  (Incredibly, Tesla was still only selling the Roadster.)
2. From mid-2014 to mid-2015, sales fell—partly because the oil price collapsed, partly because the market was waiting for new EV models
3. During 2016, EV sales rose by 80%!  

In its Q4 2016 results presentation, Tesla announced that it was planning to produce 1,000 Model 3s a week in July 2017, 2,000 a week in August and 4,000 in September, rising to a peak of 10,000 in 2018.  Total EV sales in 2016 were about 160,000. If we add the likely Tesla Model 3 production in 2018, assuming no increase from any other manufacturer, total EV sales will increase to about 660,000 (a 4-fold increase) which will take EV sales to 5% of the total market.

But, wait, you say—what if Tesla doesn’t manage to sell 10,000 Model 3s a month?  Well, they have nearly 400,000 paid reservations.  OK, but what about Tesla’s production for overseas markets?  I don't know what percentage of Model 3 production Tesla has reserved for foreign markets.  But I suspect that most of the initial deposits were from US customers, and they will get priority.  And, remember, I’m assuming that sales by other manufacturers won’t rise.  But in fact there’ll be a new Nissan Leaf, a new VW e-golf and of course GM’s Bolt, all at around $30-$35K sticker price. It seems that every man and his dog will be offering one (or more) EV/PHEVs.  So I'm pretty comfortable with forecasting EV sales from all manufacturers will equal or exceed 5% of total car sales in the US in 2018.  By 2020, battery costs will be below $100/kW, and the cost of EVs will have fallen another 10 or 15%.  They will have the same or better sticker price as ICEs (cars with an internal combustion engine). So sales as a percent of total car sales will go on rising after 2018.

The key question is: what will this do to petrol (gasoline) sales?  Assuming EV sales rise as a percentage of total car sales by 5% a year, this is roughly what the collapse in demand for petrol sales will be, shown in the table below.  For convenience, I'm treating all sales as if they were of EVs with no PHEVs, but in effect, the expansion in battery sizes will move PHEVs to being EVs for every day and only hybrids on long trips.  I'm assuming a linear not an exponential transition.  Also, this is just for cars, but presumably sales of light and heavy trucks and busses will be affected similarly.  And, it's just for the US, but again, the global trends will be similar.  Electric bus sales are already 20% of total Chinese bus sales, for example.  I'm assuming that the average age of cars and light trucks remains unchanged at 11 years.

In the first year, petrol sales fall just 0.5%.  In 2019, another 1%.  By 2025, sales will be down a cumulative 15%.  By 2030 they will have halved.  But the oil crash will come before that.  As Bloomberg says (in this interesting piece):

We found that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. That would create a glut of oil equivalent to what triggered the 2014 oil crisis.

That's just 5 years away.  Actually, it's potentially worse than that.  Saudi Arabia has the world's largest reserves and the lowest cost of production.  Once it becomes clear to them (and the others in a similar position, such as Iraq and Iran) that it's a case of sell your oil now, or never, they will expand production to its maximum.  Why restrain production to keep the market "orderly" when high price competitors, (like fracking in the US, for example) will gain, and you one day won't be able to sell your oil at all?

I don't know when the oil crash will start, but once it does it will avalanche.  Each year the annual decline in demand will accelerate.  But wait : will falling petrol prices stop EV sales?  Maybe, but I suspect not, because EVs are just so cheap to run and so much more fun too, and they will just keep on getting cheaper.  Anyway, to reduce air pollution and CO2 emissions, some European countries and India plan to ban new ICE sales from 2025 on.

By 2025 or soon after, petrol service stations will start to close, unless they transition to EV charge stations.    By 2030, it will probly become hard to find an old-fashioned service station that still sells fuel.  That's just 13 years away.

In the year that Elon Musk's SpaceX will start the colonisation of Mars, Musk's other business will have shifted the world half way towards zero carbon emissions.  Interesting times.  I hope I live to see it all happen.

New Ideas

It can take a long time for new ideas to percolate. My old geography teacher used to say, "people, you can't tell me that they'll put a man on the moon and bring him back alive". He was uncommonly reserved after the moon landing, with the whole class waiting to see what he'd say.  He never admitted he'd been wrong.

The famous consultancy, McKinsey, said not long after mobile phones started to become widespread, that they would never take off:

Here is a cautionary tale about a telephone giant and a management consultancy. In the early 1980s AT&T asked McKinsey to estimate how many cellular phones would be in use in the world at the turn of the century. The consultancy noted all the problems with the new devices—the handsets were absurdly heavy, the batteries kept running out, the coverage was patchy and the cost per minute was exorbitant—and concluded that the total market would be about 900,000. At the time this persuaded AT&T to pull out of the market, although it changed its mind later.

These days 900,000 new subscribers join the world's mobile-phone services every three days. In eight countries more than a third of the population own mobile phones; among Scandinavian men in their 20s the figure is almost 100%. Almost everywhere ownership is growing relentlessly, and sometimes exponentially. In both France and the Netherlands, for example, the number of mobile phones doubled during 1998. The tipping point seems to be somewhere between 15% and 20% of the population. Below that, people regard mobiles as expensive toys for business people, so it takes a long time to reach that point; but from there on, growth takes off.

(Source)

And The Economist's article was written in 1999! Now there are more mobiles phones than ppl, and most of them are smartphones with computing power millions of times greater than the first IBM machine (the 701) introduced in 1952.

The same learning/experience curves are working in solar panels and their installation, in wind, in concentrated solar power, in batteries and in electric cars and buses. Just like McKinsey in the early 80s, there are many who cannot see that the cost curve declines and the growth in installations are exponential not linear. Something rising by 20% a year doesn't rise 100% in 5 years. It rises by 150%. It doesn't rise by 200% in 10 years. It rises 6 fold.

Renewables are growing by 20 or 30% per annum. That means they will go up at least 6-fold in 10 years. Already, in the world's largest CO2 emitters, the rise in renewables electricity generation each year is greater than the rise in electricity demand. We have passed the tipping point, and the transformation will only accelerate from here.  [Update 7th February, 2022: I was too optimistic here.  A slowdown in China led the country to revert to its traditional stimulus process--pushing the property sector, which is very emissions intensive.  So emissions continued to rise from 2016 onwards.]

And just in case you thought that mobile phones were a special case, here are two photographs of the same New York Street, exactly 13 years apart, taken on Easter 1900 and Easter 1913.  In one, there is just one car, in the other just one horse-drawn vehicle.

(Source: Library of Congress/ National Archives; hat tip to addledlady  who pointed me in the right direction)

In just 13 years the entire technology of personal transport shifted irrevocably. In just 13 years. True, that was at that point only in  the US.   But the rest of the developed world followed over the next 25 years.

Currently EVs form just 1% of world car sales.  But sales are doubling every 18 months (BYD, the world's largest manufacturer expects its sales to double every year for the next 3 years.)  So in 3 years they will form something like 4% of sales, in 6,  something like 16%, in 9, 64% or more.  Sales growth is likely to slow after that as EVs get close to 100% of the market, in a classic S-curve pattern. [Update 7th February 2022: I wrote this in June 2016, and forecast that by 2022, EVs/PHEVs would make up 16% of global car sales, to mocking laughter.  In 2021, EVs/PHEVs made up 10% of global car sales, up 10-fold from the 2016 number.  The year-on-year growth rate of the smoothed series in December was 70%.  So it is entirely plausible that by end 2022, EV/PHEVs will reach 16% market penetration.]

The implications of this shift are huge.  If you are a major low-cost oil producer with huge reserves (say, Saudi Arabia), it makes no sense to restrain production to keep prices higher, because demand is going to start falling by 2% per annum within 5 years and 10% per annum within 10 (assuming the average vehicle lasts 10 years).  You may as well produce as much as you can while you can still sell the stuff.  Expect the oil price to continue its secular decline, even if it has cyclical bounces.  Added to the impending decline in emissions from electricity generation, it also means that global CO2 emissions have prolly peaked and will start falling now, at first slowly but then faster and faster as we switch to the new energy economy.  It also means that conventional car producers and their hangers-on are in strife.  So add them to coal and oil stocks as investments to avoid,

Why oil is not going back to $120

Some quotes from an interesting article:

The recent price decline is expected to have only a marginal impact on global demand growth… Projections of oil-demand growth have been revised downwards, rather than upwards, since the price drop.

Oil demand is falling in rich nations because of ageing populations, improved city design, environmental rules, vehicle efficiency standards and structural shifts, such as the growth of online shopping. Fuel switching towards gas and electric vehicles are also a factor, the IEA says.

Emerging economies are more than offsetting demand reductions in rich nations, says the IEA. They will continue to do so, though the pace of growth will be slower than previously expected.

This phase will see oil demand continue to grow at 1.2 per cent per year to 2020, well below the near-two per cent rate of growth before the global financial crisis.

These shifts are particularly apparent in China, previously a key driver of increasing oil demand. The IEA says it has entered a new, less oil-intensive stage of development. Demand there is expected to grow at 2.6 per cent each year over the six years to 2020, roughly half the rate over the previous six years.

Electric cars are barely mentioned.  Yet they are critical to how the picture is changing.  At the moment (2014) they form just 0.5% of total car sales.  But they are growing extremely fast.  The growth rate is slowing a little from the hectic early days, but given (a) the plunge in battery prices and (b) the clear political will in all the main car producing and consuming countries to cut carbon emissions, the growth rate is unlikely to slide much below a doubling every 2 years (like solar).  Which means that in 4 years (or before) EV sales will be 2% of total car sales.  In six years 4%; in 8 years 8%; in 10 years 16%.  They already  exceed 1.5% in the US.

Source: Bloomberg

What this means is that in just 6 or so years, the rise in the percentage of EVs in the total car fleet will equal 50% of  the growth in total oil demand.  And that's without a carbon tax applied to petrol (gasoline) and diesel, which would cut oil sales, and would be a sensible move by governments seeking a relatively painless way to cut emissions.  And in the next 2 year period all additional "demand" for oil will be satisfied by EVs, as the percentage rises towards 10%. (Assume a car life cycle of 6 years.)

Now the significance of this is that the world's largest oil producer, Saudi Arabia, not only is one of the lowest-cost producers globally but also has the longest reserves (30 years at current rates of production).  In the past Saudi Arabia acted as a swing producer when the oil price collapsed.  This time they haven't.  And they won't, because they can see the writing on the wall.  Oil demand, even without a recession, will soon peak.  And Saudi Arabia can still sell oil profitably down to $20.  Why not sell all you can while you can, if you are still making money?  Especially if you can annoy the Russians and the Iranians and those uppity shale oil producers?  And especially if you know that your market will disappear long before your oil runs out?

Of course, there will be a short-term and prolly not very big rebound in the oil price as shale oil production tails off.  It's currently looking for a bottom, if I judge the technicals correctly.  And the fall in the petrol price will perhaps cause a  short term hit to the growth rate of electric cars sales, though ppl who buy electric cars aren't doing it because they're cheaper than petrol-driven cars but for all sorts of other reasons,  In fact  EVs will be as cheap as other cars in 5 or 6 years as battery costs plummet, not just initial outlay but also running costs (EVs require very little servicing) .

The Saudis have seen the future.  And precisely because of EVs, their reaction to the obvious and inexorable shift to EVs s will prevent any big rise in oil prices.  The real oil price has begun an secular descent as battery costs fall and both market and political forces drive the switch to clean energy.