Gosplan revisited

There’s some real bollocks being peddled in Britain’s Daily Telegraph by Ambrose Evans-Pritchard ahead of the climate jamboree in Paris:

The fossil fuel industry has taken a very cavalier bet that China, India and the developing world will continue to block any serious effort to curb greenhouse emissions, and that there is, in any case, no viable alternative to oil, gas or coal for decades to come.

Why might that be?

Both assumptions were still credible six years ago when the Copenhagen climate summit ended in acrimony, poisoned by a North-South split over CO2 legacy guilt and the allegedly prohibitive costs of green virtue.

Presumably these issues have been overcome, as Mr Pritchard will explain.  Or rather, he doesn’t.

At that point the International Energy Agency (IEA) was still predicting that solar power would struggle to reach 20 gigawatts by now. Few could have foretold that it would in fact explode to 180 gigawatts – over three times Britain’s total power output – as costs plummeted, and that almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Installed.  How does one “install” electricity?  Being old-fashioned, I assumed electricity was either generated or consumed.  Of course, there is a reason why this definition is being used:

Installed capacity, sometimes termed peak installed capacity or rated capacity, describes the maximum capacity that a system is designed to run at.

If for example, a solar farm has an installed capacity of 24 megawatts, the system will have the ability – the components and hardware – to produce a maximum of 24 megawatts with optimal sun exposure.

And if the sun is not shining, or the solar panels are dusty, then the actual capacity could be as low as zero.  So the statement:

almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Doesn’t tell us anything about what was actually generated.  For good reason, I suspect.

Back to the original article.

Any suggestion that a quantum leap in the technology of energy storage might soon conquer the curse of wind and solar intermittency was dismissed as wishful thinking, if not fantasy.

Six years later there can be no such excuses.

At which point Mr Pritchard elaborates. In a way.

155 countries have submitted plans so far for the COP21 climate summit to be held by the United Nations in Paris this December. These already cover 88pc of global CO2 emissions and include the submissions of China and India.

Presumably this is the “quantum leap” in technology he is on about: countries submitting plans to the UN.  Who needs nuclear fusion when we have plans?

Taken together, they commit the world to a reduction in fossil fuel demand by 30pc to 40pc over the next 20 years, and this is just the start of a revolutionary shift to net zero emissions by 2080 or thereabouts.

How?  Mr Pritchard doesn’t say.  One would have thought, at this juncture, the technological details were quite important.  But alas, all we get is more politics:

“It is unstoppable. No amount of lobbying at this point is going to change the direction,” said Christiana Figueres, the UN’s top climate official.

True, lobbying won’t put the brakes on the grand plans of the global political elite.  But raw physics might, not to mention economics.

Yet the energy industry is still banking on ever-rising demand for its products as if nothing has changed. BP is projecting a 43pc increase in fossil fuel use by 2035, Exxon expects 35pc by 2040, Shell 43pc and Opec is clinging valiantly to 55pc.

Remember folks: these predictions are made by people who have billions invested in their being correct.  What skin do the authors of these grand plans have in the game?

These are pure fiction.

Predictions are fiction?

The Intergovernmental Panel on Climate Change (IPCC) may or may not be correct in arguing that we cannot safely burn more than 800bn tonnes of carbon (two-thirds has been used already) if we are to stop global temperatures rising two degrees above pre-industrial levels by 2100. I take no view on the science.

But this is the goal accepted by world leaders.

Then who cares about the science, economics, or reality? What is important is that “world leaders” – many of whom preside over nations where you can’t drink the tap water – have accepted the figures on how much carbon we can burn.

It is solemnly enshrined in international accords, and while it might once have been possible for energy companies to dismiss these utterings as empty pieties, to persist now is to trifle with fate.

Political goals are now fate? This sounds like a rehash of Marx’s inevitability of history that would result in a glorious Communist society.  How did that work out, again?

“This is a world apart from where we were going into Copenhagen. The centre of gravity has fundamentally and irreversibly shifted,” said Mark Kenber, head of the Climate Group.

Remember when this article started off with the promise of technological revelations?  That seems an awfully long time ago.

China switched sides several years ago, not least because it faces a middle class insurrection that has shaken the Communist Party to its core. An estimated 100m people viewed the anti-pollution video “Under the Dome” in just 24 hours before it was shut down by horrified officials in February.

Nothing demonstrates China changing its mind over climate issues like the shutting down of opposition videos.

The IEA says China invested $80bn in renewable energy last year, as much as the US and the EU combined.

Hang on.  Weren’t you boasting earlier that:

almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Now we find that this is considerably less than $80bn worth of investment (I use that term charitably).  ExxonMobil’s yearly CAPEX is $37bn, and we’re in the middle of the most severe downturn in a generation.  Sorry, but $80bn isn’t going to change the world.

It is blanketing chunks of the Gobi Desert with solar panels, necessary to absorb the massive surplus production of its own solar companies.

Sorry, weren’t you calling this “investment” in the previous paragraph?  Now it seems they’re installing these things for no other reason than somebody has instructed their factories to churn them out regardless.  Why is a “massive surplus production” of solar panels considered anything other than a disaster in terms of opportunity costs?

It is patently obvious that China is not about to sabotage a climate deal.

They didn’t sabotage the last one: they just insisted that the West shoulder the heavy lifting while they get a free pass to do as they please.  Are things going to be different this time around?

Its submission to the COP21 summit aims for peak greenhouse emissions by 2030, if not before. It plans 200 gigawatts (GW) of wind and 100GW of solar by then, and a reduction in coal use from 2020 onwards.

It’s a veritable Great Leap Forward.

The text makes it very clear that China considers itself “among those countries that are most severely affected by the adverse impacts of climate change” and is pushing for a far-reaching COP21 deal in its own defence. Going green with a vengeance is one way that China wishes to reposition itself as a global “soft power” force, as will become clear during its presidency of the G20 next year.

Going green, and building artificial islands with which to bolster its claim to the South China Sea.  There’s nothing like a bit of soft power projection via windmills to establish one’s place in the world order.

The last hold-outs are increasingly lonely as China, the US, Europe, Japan and Mexico all flaunt their good intentions.

And that’s what’s important, right?  Good intentions.  And I’m glad to see the Mexicans are on board, we couldn’t possibly envisage a global response to an impending disaster without those masters of organisation and governance providing their input.

India has shifted safely into the middle ground, dashing the last hopes of those who thought COP21 would wither on the vine.

Then why have the summit at all if everyone is already in agreement?  A chance for the global elites to stock up on foie gras and Louis Vuitton handbags, perhaps?

India invoked “our planet Mother Earth”, Mahatma Gandhi, and the ancient practices of yoga in its poetic submission, pledging to raise renewables to 40pc of power output by 2030 (mostly solar) and to soak up three billion turns of carbon dioxide in new forests.

Remember, ExxonMobil’s investment forecasts are “pure fiction”.  By contrast, poetry and yoga form a sound basis on which to develop global energy policy.

It plans to cut the energy intensity of GDP by a third from 2005 levels, no easy task for an economy on the cusp of an industrial surge.

I assume they’ve decided not to continue with that industrial surge.  The wealthy western tourists always did like the rugged charm of the shanty towns, anyway.

India’s green think-tank TERI called it an “unprecedented” shift.

Purposefully hobbling your economy?  Oh no, this has been done before.

There is still a North-South haggle over money – erupting in terse words last week in Bonn –

Oh.  Now there’s a surprise, eh?

but this dispute has become ritualistic, increasingly hollow in a world where China is now a creditor.

So the Chinese are just going to pony up the cash?  This sounds very un-Chinese.  Methinks a certain Mr Pritchard is going to be in for one hell of a shock once this summit gets going.

It revolves around $100bn of annual funds pledged by the rich countries long ago. “It’s peanuts,” said Mrs Figueres.

When it’s taxpayers’ money, any sum is peanuts.  But weren’t we being asked to applaud China’s $80bn investment in renewable energy a few paragraphs back?

The sums are trivial set against the $90 trillion of new energy investment that the IEA deems necessary by 2030 just to keep the global juggernaut on the road.

Which does rather make the case that $80bn of unwanted Chinese solar panels littering the Gobi desert is nowt but a drop in the ocean and, perhaps, ExxonMobil and chums might be onto something after all.

The IEA says the COP21 pledges imply will require $13.5 trillion of energy-saving and low carbon investments alone over the next fifteen years. New emissions will “slow to a crawl” by 2030.

Where’s this money going to come from, exactly?

Global energy intensity will rise three times faster than hitherto, and 70pc of all new power added will come from low-carbon sources.

It will, because we say so.  The Revolution will find the roads to solve the problems!

Markets will do the job under the right terms and they are already making the switch

Then why do we need governments to intervene?

as they discover a potentially lucrative new home for the world’s glut of excess savings and capital.

Sorry?  What glut of excess savings and capital?  Isn’t every country either utterly skint or holding junk bonds of a country that is?  One minute we need to raise taxes on the rich to pay for more nurses.  The next we have trillions just sloshing about to be hosed on renewable energy schemes.

A Carbon Tracker forum in the City this week was packed with bankers and fund managers itching to find a way into the biggest investment boom of all time, which is what the Paris accord promises to ignite.

Or were they eager not to miss out on a chance to connect a hosepipe to the giant reservoir of taxpayers’ money these supposedly impoverished nations are about to unveil?

The COP21 emission targets imply an assault on multiple fronts at once. Fossil subsidies worth $600bn a year – or $5.3 trillion under the International Monetary Fund’s elastic definition – are already sliding fast. They will inevitably fade away.

Good luck persuading Gazprom and PDVSA on that one.

Shell says a carbon price of $40 would bring CCS into play under current technology – some say $80 – but that in itself would shift the balance of advantage further in favour of renewables just as the cross-over point arrives. In large parts of Africa it already has: it is cheaper and quicker to install micro-grids based on solar power than to bother with power stations.

A blast furnace in every garden!

The old energy order is living on borrowed time. You can, in a sense, compare what is happening to the decline of Britain’s canals in the mid-19th century when railways burst onto the scene and drove down cargo tolls, destroying the business model.

I doubt the owners of the GWR talked much about “installed capacity” and included references to yoga in their sales pitches.

Technology takes no prisoners.

Yes, but this does more to demolish your case than support it.

Nor does politics.

As the Soviets discovered to their detriment, politics does not trump economics.

World leaders have repeatedly stated that they would defend the line of a ‘two degree planet’,

Just as the Politburo repeatedly stated they would defend tractor production targets.

and now they are taking the concrete steps to do so.

Concrete steps consisting of…what, exactly?  Meaningless guff?

Fossil investors have been warned.

I assume he means the Natural History Museum.

Believe it or not, this garbage appears in the Economics section of the Daily Telegraph.

“History is on our side!”


2 Responses to Gosplan revisited

  1. Dan says:

    ‘What is important is that “world leaders” – many of whom preside over nations where you can’t drink the tap water – have accepted the figures on how much carbon we can burn.’

    Excellent. (A great fisk all round IMO.)