Study: Stock market to crash due to looming “carbon bubble”

From the UNIVERSITY OF CAMBRIDGE and the “peak carbon” department, comes this gloom and doom study which is just a thinly veiled “divest from fossil fuels now” strategy like the one Bill McKibben and 350.org keeps pushing.

‘Carbon bubble’ coming that could wipe trillions from the global economy — study

Fossil fuel stocks have long been a safe financial bet. With the International Energy Agency projecting price rises until 2040, and governments prevaricating or rowing back on the Paris Agreement, investor confidence is set to remain high.

However, new research suggests that the momentum behind technological change in the global power and transportation sectors will lead to a dramatic decline in demand for fossil fuels in the near future.

The study indicates that this will now happen regardless of apparent market certainty or the adoption of climate policies – or lack thereof – by major nations.

Detailed simulations produced by an international team of economists and policy experts show this fall in demand has the potential to leave vast reserves of fossil fuels as “stranded assets”: abruptly shifting from high to low value sometime before 2035.

Such a sharp slump in fossil fuel price could cause a huge “carbon bubble” built on long-term investments to burst. According to the study, the equivalent of between one and four trillion US dollars could be wiped off the global economy in fossil fuel assets alone. A loss of US$0.25 trillion triggered the crash of 2008 by comparison.

Publishing their findings today in the journal Nature Climate Change, researchers from Cambridge University (UK), Radboud University (NL), the Open University (UK), Macau University, and Cambridge Econometrics, argue that there will be clear economic winners and losers as a consequence.

Japan, China and many EU nations currently rely on high-cost fossil fuel imports to meet energy needs. They could see national expenditure fall and – with the right investment in low-carbon technologies – a boost to Gross Domestic Product (GDP) as well as increased employment in sustainable industries.

However, major carbon exporters with relatively high production costs, such as Canada, the United States and Russia, would see domestic fossil fuel industries collapse. Researchers warn that losses will only be exacerbated if incumbent governments continue to neglect renewable energy in favour of carbon-intensive economies.

The study repeatedly ran simulations to gauge the outcomes of numerous combinations of global economic and environmental change. It is the first time that the evolution of low-carbon technologies has been mapped from historical data and incorporated into ‘integrated assessment modeling’.

“Until now, observers mostly paid attention to the likely effectiveness of climate policies, but not to the ongoing and effectively irreversible technological transition,” said Dr Jean-Francois Mercure, study lead author from Radboud University and Cambridge University’s Centre for Environment, Energy and Natural Resource Governance (C-EENRG).

Prof Jorge Viñuales, study co-author from Cambridge University and founder of C-EENRG, said: “Our analysis suggests that, contrary to investor expectations, the stranding of fossil fuels assets may happen even without new climate policies. This suggests a carbon bubble is forming and it is likely to burst.”

“Individual nations cannot avoid the situation by ignoring the Paris Agreement or burying their heads in coal and tar sands,” he said. “For too long, global climate policy has been seen as a prisoner’s dilemma game, where some nations can do nothing and get a ‘free ride’ on the efforts of others. Our results show this is no longer the case.”

However, one of the most alarming economic possibilities suggested by the study comes with a sudden push for climate policies – a ‘two-degree target’ scenario – combined with declines in fossil fuel demand but continued levels of production. This could see an initial US$4 trillion of fossil fuel assets vanish off the balance sheets.

“If we are to defuse this time-bomb in the global economy, we need to move promptly but cautiously,” said Hector Pollitt, study co-author from Cambridge Econometrics and C-EENRG. “The carbon bubble must be deflated before it becomes too big, but progress must also be carefully managed.”

One of the factors that may contribute to the tumult created by fossil fuel asset stranding is what’s known as a “sell-out” by OPEC (Organisation of the Petroleum Exporting Countries) nations in the Middle East.

“If OPEC nations maintain production levels as prices drop, they will crowd out the market,” said Pollitt. “OPEC nations will be the only ones able to produce fossil fuels at the low costs required, and exporters such as the US and Canada will be unable to compete.”

Viñuales observes that China is poised to gain most from fossil fuel stranding. “China is already a world leader in renewable energy technologies, and needs to deploy them domestically to tackle dangerous levels of pollution. Additionally, stranding would take a higher toll on some of its main geopolitical competitors. China has a strong incentive to push for climate policies.”

The study authors suggest that economic damage from adherence to fossil fuels may lead to political upheaval of the kind we are perhaps already seeing. “Mass unemployment from carbon-based industries could feed public disenchantment and populist politics,” Viñuales said.

The authors argue that initial actions should include the diversifying of energy supplies as well as investment portfolios. “Divestment from fossil fuels is both a prudential and necessary thing to do,” said Mercure. “Investment and pension funds need to evaluate how much of their money is in fossil fuel assets and reassess the risk they are taking.”

“A useful step would be to expand financial disclosure requirements, making companies and financial managers reveal assets at risk from fossil fuel decline, so that it becomes reflected in asset prices,” Mercure added.

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The study: https://www.nature.com/articles/s41558-018-0182-1

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Good Lord you’re right you jolly clever Cambridge people!
Just look how energy prices are tumbling in Germany and Australia where clean energy adoption is most advanced.
Quick lets all go short on carbon – after you sir!

Tom Halla

And if someone develops batteries with the performance of Robert Heinlein’s Shipstones, it will disrupt all energy markets. And if pigs fly, one would need to carry an umbrella.

Hot under the collar

When they say Looming “carbon bubble” does that mean as carbon based life forms we are all going to balloon up like Michelin man and then burst?

Hans-Georg

Oxford and Cambridge were once elite universities, nowadays only the professors are among the imaginary elites. On studies, which come from these two universities and have the ever popular topic of man-made climate change, I would not set a cent. Nothing comes out of these facilities anymore, other campuses have far outstripped them. Oxford and Cambridge are to a certain extent the dinosaurs of research, old and immovable.
I say philsalmon is right, while talking and talking about money destruction by fossil energy in an imaginary future scenario, the economies of Europe lose annually some 100 billion real Euro by the physically and economically non-functioning energy transition by “government order”.

Bitter@twisted

As an alumni of Cambridge I’m ashamed that idiots like this are now in post.

Leo Smith

+1

Michael Bates

An alumnus, surely – or perhaps not?

LdB

I can’t go short on Carbon I am already long on Rossi and the E-cat ./sarc

John Harmsworth

If these idiots had the courage of their convictions they would be losing their shirts shorting oil and oil stocks. In reality, demand is headed upward and prices are headed upward and production is following price. Just as it’s supposed to do in a market economy.
If they were investment advisors they would be looking at malfeasance charges.

knr

Question although EV are not ‘directly ‘ powered by fossile fuels , doe anyone known how many products of the oil industry are used within EV’s

MarkW

There are lubricating oils and plastics.

Regardless, most EV’s are powered by electricity that was generated by coal.

john

Everything*

The glass uses a polymer type coating and even the paint has petroleum based coloring, hardeners and clear coat. Plastics and foam for bumpers, polymers for seats, cushions, interior panels and carpet. plastics for radio, dash, inner door panels and handles, plastic for wire insulation etc.etc…

Body and other fasteners are plastic type ‘push pins’. Plastic bushings in shocks and steering/syspendion components and on and on…

Any metal such as steel needs carbon added and gas for smelters.

Even the new fuel cell cars use PEM fuel cells…Polymer Exchange Membranes. Even the battery case is…plastic.

Carbon fiber body and other components use petroleum derived hardeners.

*Aluminum engine blocks and a few minor components are the only exception besides lead in traditional batteries.

However, the mining of aluminum consumes a lot of fuel.

john
john

Since EV’s need to be lightweight, even more plastic is needed.

A typical car requires 100 or more gallons of oil to make its plastic components.

https://www.google.com/amp/s/amp.livescience.com/5449-chemistry-life-plastic-cars.html

Walter Sobchak

“However, the mining of aluminum consumes a lot of fuel.”

Quibble. Refining metallic aluminum from its oxide ore bauxite, consumes enormous quantities of electricity. Bauxite is essentially a type of clay. Mining it is the least energy intensive part of the production of aluminum.

Jtom

And they are transported from the manufacturer to overseas markets on huge shipping vessels, powered by carbon-based fuels (I wonder how big a battery, and how long the charging times, would be needed to power electric replacement motors). For that matter, did the study suggest what would replace fossil fuels used for cargo and container ships, or jet fuel?

I dismay at the number of people who think oil, gas, and coal would no longer be needed if we all had electric vehicles, and power was from solar and wind (the former could be mandated, but the latter is simply not feasible).

The only thing that could crash the markets is if the lunatic alarmists get their way.

Old England

Seems this report has bought wholesale into the Green ‘Energy’ propaganda that it is cheaper than fossil fuels.

Modelling the future from a false premise will only produce false predictions; just as climate models have.

Leaving that aside I suspect the death of EVs etc will come from people voting to save their pocket and I doubt the models considered the political fallout and political casualties that are lining themselves up on a “Green” bandstand.

JBom

“Lewdzer” report.

Ja ja ja

Ian Magness

“Publishing their findings today in the journal Nature Climate Change” – that well-known and highly respected investors’ journal. Says it all.
Is this why Brent Crude has almost tripled in price since the start of 2016 (perhaps coincidentally just after the Paris accord was drafted)? Investors and traders are clearly keen to strand these assets, it seems.

Joseph Murphy

“…that well-known and highly respected investors’ journal.”

You got me cracking up with that! Thank you.

Today’s date? April 1st? Nope, that’s not it.

Jacob Frank

I used to hear words like “Study from Cambridge.. Harvard… Yale” and think cool the smart people are talking. Now when I hear those words I cringe for the impending hilarious stupid squawking nonsense. Hysterical communists have to be the most destructive force ever known.

Repeatedly ran simulations- that’s that then

drednicolson

the momentum behind technological change in the global power and transportation sectors
Do they mean the momentum coming from governgreens pushing the (electric) car up the (market) hill, with a solar panel and windmill on a trailer in the back?

jorgekafkazar

“Momentum” behind any change is almost always based on financial advantage. Currently, the “technological change in the global power and transportation sectors” they speak of is based on massive amounts of woo. The paper is an irresponsible fable.

MarkW

If lightning did somehow strike and large numbers of EVs hit the streets, then the price of oil would drop.
However if that happened, then oil would become competitive with coal and natural gas when it came to powering plants that generate electricity.
Not only that, but plummeting oil prices would reduce the operating costs of ICE vehicles to the point where they would be much, much cheaper to own.

One constant with these professors. They have absolutely no concept of how the real world works.

wws

“A useful step would be to expand financial disclosure requirements, making companies and financial managers reveal assets at risk from fossil fuel decline, so that it becomes reflected in asset prices,”

That quote put in mind of what you just wrote – “they have no concept of how the real world works”.
They apparently have no clue that the energy business has *always* been a boom and bust business, right from the day that Spindletop blew in over a century ago. Because of that, everyone who has *ever* invested in this area has *always* known that price risk, and the accompanying asset revaluations, is one of the greatest factors in determining long term price horizons.

This “genius” is proclaiming a “great insight” something that the investing world figured out well over a century ago.

Gary

From Wikipedia: An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset’s intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.

Fossil fuels will be in a bubble situation? Not likely, since their pricing is highly consistent with supply and demand, not speculation. Alternative energy technologies are another matter, of course.

MarkW

Even if electrics did start taking a significant share of the car market, it’s not something that would happen rapidly.
Plenty of time to adapt if and when EVs become popular without major subsidies.

Lock Hughes

Hehe… The most popular electrics by far is the battery-electric bicycle. In 2014, China estimated 200 million on their roads… the Germans last year bought about 720,000… Today in “bike-friendly” the Netherlands, one quarter of all their bikes now ride with a power-assist. Cities and countries all around the world are now throwing money at electric bikes and trikes as tax incentive/rebates for purchasing. As of last February, Sweden is subsidizing the purchases of electric bicycles by 25%, up to a maximum of 10.000 krona (€1000)… In Canada, the city of Laval is offering a $400 subsidy to buy an electric bike. As book author Wm. Gibson pointed out, the future is already here but not evenly distributed. North Americans hope for a future with roads clogged with electric cars… So the same property damages, the same injuries and deaths, but in a more “eco-friendly” way. Good stuff… can’t wait!

On target, Gary!

This research might’ve taken as long to produce as the slime piece against Dr. Crockford; i.e. hours and days.

“Such a sharp slump in fossil fuel price could cause a huge “carbon bubble” built on long-term investments to burst.”

“Detailed simulations produced by an international team of economists and policy experts”

Amazing! Economists that do not understand market “bubbles”.

That claim is in there because they have “policy experts” helping the alleged scientists.

It’s all about scare words to hype fears of the ignorant and gullible.

Robert of Texas

What? This study is making no sense to me. The U.S. has vast deposits of shale oil and gas, let alone coal. If the prices of these commodities drops and we are using them, then our electricity is even cheaper. If fewer countries take these as exports, then we have more years of reserves. How the heck do these reserves ever become worthless short of regulated to death?

Do the authors of this study understand that much of the chemical and plastics industries require fossil fuels as feed stock for their production? Do we assume these industries disappear? Or are they concentrated in countries that have adequate reserves of raw materials thus enriching those nations?

I just read an article (Wall Street Journal) that stated that some shale oil fields can now remain profitable at $30 to $40 per barrel of production, while OPEC requires $40+, so how exactly does OPEC crowd out our local production? Shale oil production continues to become more efficient year-by-year using new techniques and technologies so “it ain’t going away”.

The only scenario I see where the U.S economy is slammed is one where a bunch of green lunatics legislate and regulate it into a self-made disaster.

MarkW

A lot of the “cost” of shale was in setting up the infrastructure.
Most of that infrastructure is now in place.

joelobryan

Fracking existing Permian Basin wells and using Enhanced oil recovery with CO2 injection can produce oil at < $40/bbl. This is being done.

And getting it to an export market where it can compete with world traded Brent Crude is the problem. Pipelines are at capacity. Rail is at capacity.

Thus West Texas Intermediate (WTI) in Midland-Odessa is selling at a steep discount to Brent Crude.
Today, Monday morning, 4 May, WTI is $65.02 and Brent is almost $76, an $11/bbl differential. The problem is that the pipelines to push that crude to Houston for export are at capacity. Even getting it to tank farms in Cushing, OK is a problem.

secryn

Robert, you are correct of course. I think they mean that alternatively-generated energies are poised to become SO efficient, SO cheap and SO widespread, that only a moron would bother with fossil stuff anymore. Any day now.

Robert W Turner

Ah, the cushy life of not actually producing anything meaningful, with repercussions, or merit — academic armchair econometricians.

joelobryan

As correctly observed above by “knr”, there are a lot of useful products that can be made from petroleum as a feedstock chemical and from natural gas as a precursor molecule that don’t directly involve using them as energy.

Plastics, fertilizers, epoxies used in composites, oxidation to pure carbon to form carbon fibers from petroleum and natural gas.

Also valuable are Phenolics and benzenes from coal and coal tar (anthracene) and used are in modern technology (circuit boards, dyes, tracers, cleaning solvents in circuit board production).

And a carbon tax is just another hoped-for revenue stream for socialists to spend OPM in furtherance of their political power schemes.

commieBob

This bloviation reminds me of a classic scene from The Princess Bride.

The predictions of economists are mostly a waste of breath/paper/bandwidth.

Mickey Reno

As my old dad used to say, never bet on the other man’s game.

But you have to admit, when it comes to tirelessly propagandizing for his cause, that weepy Bill McKibbon fella is one tirelessly dogged little prickly pear.

J Mac

Development of anti-gravity technology will be even more disruptive! We should start careful planning now to minimize the coming collapse of the gravity bubble, to include divestment in bicycles, motorcycles, autos, airplanes, trains, horses, burros, mules, and carabao, lest they become valueless stranded assets. /s

One should take the gravity of this situation seriously……

John Harmsworth

I’m looking to invest in property less than 4 feet high, to protect myself from the vast damage due to low flying cars as we approach the now inevitable “tipping point”. I got my 97 Volkswagen almost a foot off the ground last week. Top speed and a speed bump! Good thing it doesn’t have air bags! Quite a landing! I was going 87 mph to avoid the other time travel “tipping point” at 88mph.

Jacob Frank

Funny

drednicolson

That’s only one part of it, you’d also need a flux capacitor and 1.21 gw of electricity to power it. 🙂

Red94ViperRT10

Great scot!

MikeP

When I saw the title, I first thought that they’d jumped on the LENR (low energy nuclear reaction) bandwagon. However, it turns out to just be more green-swoggle.

Latitude

….and that’s why they are all rich

the study confirms we should use the oil now before it becomes worthless.

paqyfelyc

This deserves a massive LOL, and kicking of ass out of institutions.
The provided mechanism:
technological change in the global power and transportation sectors -> dramatic decline in demand for fossil fuels in the near future -> fossil fuel asset written off -> huge “carbon bubble” built on long-term investments to burst
just doesn’t make economic sense, even if fossil fuel were turned to zero value (and they wont, they would still have chemical value). The value would just move to the substituting assets, and consumers, and the global value would increase.

Where does this BS come from?
Oh ye
“Detailed simulations”
“produced by an international team of economists and policy experts”
“Publishing their findings today in the journal Nature Climate Change”.
Because, that’s the place to publish some dummy stock market analysis, of course…

Go to Walmart and shop for an electric bicycle. It is way simpler to make an electric bike than an electric car. There should be a huge market for electric bikes if the were practical. Yet if anything the market shows the technology is still years away.

Roger Knights

The Luna Cycle e-bike kit is $800 (and hard to assemble, lacking decent instructions). But it is given a positive review of its performance by Kevin Kelly (of Whole Earth fame), here:
http://kk.org/cooltools/luna-cycle-e-bike-kit/

Jacob Frank

I have an ebike that can go 50mph or 50 miles, moved to Denver which is flat and would much rather just pedal

nvw

Interesting that the study concludes: “China has a strong incentive to push for climate policies.”

Compare to the the often cited statement by DJT that climate change is a hoax pushed by China.

Latitude

“China has a strong incentive to push for climate policies.”..in all other countries

LdB

+100

You left out Russia has strong incentive to push Germany for climate policies while selling them more and more gas.

John Harmsworth

Countries such as China and France that have no fossil fuels to speak of make a strategic choice to promote “green energy” so as to put competitor countries at an equal disadvantage in terms of energy cost. This is a real thing. Just like Russia trying to denigrate fracking to reduce productive competitiveness in the West.
It is stupid since higher costs elsewhere in the world reduce the capital surplus that would be available for investment in those countries, but nobody ever accused either of those countries of an acute understanding of free market economics.

Jerry Henson
BillP

China has a strong incentive to sell solar panels to gullible halfwits.

The panels are constructed using energy from coal.

ResourceGuy

It is precisely the miscalculation of market shifts, policy mistakes, and the misallocation of resources and investment that leads to short-term shortages and resource price spikes. At least we have more efficient markets today compared to the 70s and 80s to sort through these issues. Governments and advocacy groups have learned nothing. They still play by separate rules of engagement with media spin to reinforce their mistakes and prolong the distortions.

David S

I’m beginning to wonder why the left now speaks of “carbon” instead of carbon dioxide. Is it their intent to demonize all carbon and stir up the uninformed populace against it? Carbon is in pencil leads, diamonds, plastics and makes up 18% of our human bodies as well as most other living things. Its part of DNA. Are they really trying to turn people against all living things? There is probably a huge supply of dingbats on the left who would go along with it.

secryn

It’s not that complicated. For carbon, think soot, black, stuff scraped off the inside of the chimney, ick and yuk. Bad. Much scarier than a colorless odorless benign gas that feeds plants. Not so bad, good even. So the alarmists concentrate on all the “bad” correlations in our minds. The same reason when they criticize power plants, they always show the steam billowing hugely out of the cooling towers, rather than the modest and barely visible effluent coming out of the combustion stacks. And they call it all pollution.

Roger Knights

“I’m beginning to wonder why the left now speaks of “carbon” instead of carbon dioxide.”

The innocent explanation is that it is an umbrella term that encompasses methane (and a few other minor actors) too. The Guilty explanation is that it is a “boo word” because of its connotation of “soot.”

Bruce Cobb

In their dreams.

William Astley

The gentleman and ladies at Cambridge appear to be living in an academic bubble, a CAGW echo machine.

Green energy does not work if ‘work’ is defined to be the significant reduction in anthropogenic CO2 emissions.

It does not matter (except for the billions and billions wasted) as the planet has started to cool.

UK

http://www.cityam.com/285893/mps-warn-dramatic-collapse-clean-energy-investment-reaches

MPs warn of “dramatic collapse” in clean energy investment as it reaches 10-year low

MPs have warned of “dramatic and worrying collapse” in clean energy investment after the Environmental Audit Committee published a report showing a significant decline in the last years, this year reaching the lowest it has been since 2008.

For the third year in a row, clean energy investment has been suffering a decline reaching the lowest point in 10 years. In 2016 investment fell by 10 per cent followed by 56 per cent last year.

The committee found that the government’s Clean Growth Strategy is not doing enough to meet legally binding climate change targets, even if it was to deliver fully on all its policies.

https://www.technologyreview.com/s/601514/germany-runs-up-against-the-limits-of-renewables/

Germany. Same story for Australia, Denmark, and so on.

Germany Runs Up Against the Limits of Renewables

Even as Germany adds lots of wind and solar power to the electric grid, the country’s carbon emissions are rising. Will the rest of the world learn from its lesson?

I predict a stock market crash also, when interest rates rise uncontrollably. ‘Quantitative easing’ (government creates more money to ‘stimulate’ economy) just pushed the can down the road.

Robert W Turner

Any sane economist would conclude that it is wind and solar that are in a bubble, but they are so small that it would more accurately be described as a popcorn poof.

drednicolson

I’d describe it as a whoopee cushion.

Robert W Turner

Do they even understand what an economic bubble is?

An economic bubble exists when the market value of a product (the artificial value) is much higher than the true intrinsic societal value of that product. Now correct me if I’m wrong, but it appears to me that the entire value of fossil fuels is accounted in their energy density which society uses for everything, considering everything relies on transportation.

What exactly do they imagine is driving an inflated artificial value over its intrinsic value? Is it government mandates on all levels dictating that large percentages of energy come from fossil fuels? Nope, that’s renewables. Is it subsidization, where each unit of energy sold at retail is paid for using tax dollars in order for the seller to make any profit? Nope, that’s renewables.

Gee, it sounds like it’s the exact opposite to me, where renewable energies are the market that has a high artificial value compared to their intrinsic value. This will become even more evident than it already is to us here as wind farms are already reaching their expected life expectancy, and the industry will have an even more difficult time taking new market share while keeping what it already has. And the EV market is completely dependent upon the lithium market — I wonder what their simulation showed about lithium prices when the EV market had to expand by 20,000% in order to make up for their simulated oil market crash. Or electricity prices for that matter when the ca. 30,000,000,000 gallons of daily fuel supply disappeared and everyone was charging their vehicles instead. Maybe their model assumed infinite lithium and unicorn farts powering the grid.

But ignoring the alternatives, is the fossil fuel market a bubble? Are they claiming that the ca. 1.4 million kilocalories, countless plastic products, and pharmaceuticals in a barrel of oil is not worth $60-70 and is somehow being inflated by some societal level fervor to get their hand on them? On what grounds can they make such an absurd claim, when the system of energy gathering and distribution is so efficient that the average daily wealth of a person has gone from three loaves of bread per day to thirty loaves of bread per day since its becoming the backbone of the economy?

Well it actually says in the abstract. Their entire paper is built upon the assertion that “current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels1,2,3,4.” And their four citations supporting this assertion — all from UN organizations involving renewable energy. So their entire paper is engendered from UN organization pamphlets, not a peer reviewed publication nor from an energy industry review such as BP.

Meanwhile back in reality, global oil consumption will soon surpass 100,000,000 barrels per day, natural gas consumption will surpass 125 Trillion cu. ft, and coal consumption is steady at 3.75 billion tonnes oil equivalent.

jorgekafkazar

Baghdad Bob is alive and well and is a faculty member at a well-known UK university.

markopanama

RWT is on the right track here. It’s like Groundhog Day, with the same flawed logic coming around again and again. It was figured out in 1850 as Jevon’s Paradox, applied to coal.

As the price of an energy commodity decreases, the marginal use cases increase. Often it is not a linear relationship – a 10% decrease in price of fuel could spark a +20% increase in demand, as the energy value is leveraged to create profit.

This is the conundrum for renewables – every unit of energy they produce reduces the price for an equivalent unit of fossil fuel, making FF cheaper and better able to compete with the renewable for new applications. This stalls the spread of applications for renewables and explains why they have not had the market penetration predicted.

Robert Noyce, co-founder of Intel, was fond of saying that a true revolution required a 10X improvement in performance/cost/value. Anything else was just incremental improvement and would not change the fundamental market dynamics. Renewables are currently in the -X improvement range.

John Harmsworth

Also known in classic economics as supply and demand, with the price action always at the margin. It is as inevitable as any normal human interaction.

John Harmsworth

Is this the RW turner from “C” Engineering in Edmonton?

Alan Tomalty

“China and many EU nations currently rely on high-cost fossil fuel imports to meet energy needs. ”

I didn’t look for other lies cause the article is mostly about stupid predictions. however the above comment stood out. China has the 3rd most proven reserves of coal in the world and they are the highest producer of coal. They are financing coal plants all over the world so that they can sell their coal. This is actually a good thing cause it will put more CO2 in the air NOT less.

Dr. Bob

Aircraft will be the last to move away from fossil fuels or at least hydrocarbon fuels as these fuels have the most energy per mass and volume making all other alternative significantly more expensive to implement. Railroads will also not move from fossil fuels until electrification of the entire rail system becomes a reality. Not easy to do in the US, especially the west.
Automobiles used for inner-city transportation could be electrified, but at great cost and a significant increase in production and delivery capacity of electricity to those areas. Cost competitiveness with hydrocarbon fuels will still determine what source of energy prevails (assuming the government doesn’t mandate a solution). And in terms of air pollution, current emissions regulations already make gasoline and diesel vehicles cleaner than ambient air so there is no reason to change fuel and energy sources to “clean up the air”.
As long as there is ample crude available, it will dominate the transportation sector in terms of energy supply.

Hans-Georg

The efficiency of new coal-fired power plants in Germany is around 35 percent. Wholly new ones create 38 percent. Line losses in Central Europe are about 6 percent, in the United States 10-12 percent due to older and longer lines. Nuclear power brings it to 75 percent, the star of the “renewable”, the hydropower to 35 percent.
Wind power has an efficiency of 4%, solar power 1.6%.
The more “renewable”, the less energy-efficient the generation.
comment image
http://www.pnas.org/content/early/2015/08/18/1408251112

Actually, the efficiency of production makes it clear what a huge mischief “renewable” energy is. Especially if one assumes that one day they will take over 100 percent of the energy production.

markl

Fossil fuels becoming “stranded assets” is so far into the future considering how widely they are incorporated into every nook and cranny of modern life it’s a fool’s bet. When oil/gas supplies starts to wane with a true “peak” coal will become the primary carbon energy and manufacturing source. We have centuries of fossil fuels remaining for man’s use and centuries to develop replacement energy sources. Right now wind and solar are not replacements. Only hydro and nuclear can provide it. ‘They’ know it and want to stop its’ use so ‘they’ can gain energy control and stop the West’s prosperity.

Lokki

As I understand, the prediction of doom has shifted from running out of oil, et al, to having so much that prices will fall. I find that amusing. I also doubt that demand will fall much simply because there are half a billion Indians, half a billion Chinese, and probably a billion Africans/ non-Chinese Asians who currently use comparatively little carbon fuel or plastics but who would love to do sO. As their economic circumstances improve, and -if prices really do start to fall- they are waiting in the wings to absorb all the excess production capacity that the first-world has.

It’s a very parochial view of the world to think that if the French start driving only electric cars in 2030, demand for oil will slump.

jorgekafkazar

Correct. But “parochial” falls far short of the reality. “Abysmally stupid” is a little closer, but not much.

Roger Knights

“new research suggests that the momentum behind technological change in the global power and transportation sectors will lead to a dramatic decline in demand for fossil fuels in the near future.”

But the momentum toward BEVs like Tesla’s depends greatly on subsidies (e.g., Tesla’s high sales in high-subsidy Norway vs. its much lower sales elsewhere in Europe). Further, Mazda (search for “SkyActiv-X”) and GM will be within a year with gasoline engines that are 30% more efficient (and therefore as “green” all things considered as a BEV). And Bosch promises a near-zero-emissions (except CO2) diesel soon, which it will license. (See http://bit.ly/2I1MRC1.) These will blunt the BEV momentum. So will improved hybrids coming from the Toyota/Mazda factory in Alabama, due in two years.

M Courtney

They suggest that if renewables like wind and solar become cheaper than fossil fuels then demand for fossil fuels will fall. And thus the price of fossil fuels will fall.

That seems reasonable.

However, they then note that the market isn’t factoring in a price cut in fossil fuels. From which they conclude that the market is making a mistake. All the experts in the city can’t possibly know more about the subject than authors in the esteemed journal Nature Climate Change.

That does not seem reasonable.
There are a lot more people who have correctly predicted the failure of renewables to compete with fossil fuels so far. And they are getting paid a lot more for their proven expertise than these academics.

A far more reasonable conclusion is that fossil fuels will continue to out-compete renewables for the foreseeable future and thus investing in wind and solar is just throwing money away.

Edwin

China, India, and Japan are not building fossil fuel power plants only to stop feeding them a decade from now. Only government regulation can drive the EV economic bubble train these folks are on about.

James Snook

“A useful step would be to expand financial disclosure requirements, making companies and financial managers reveal assets at risk from fossil fuel decline, so that it becomes reflected in asset prices,” Mercure added.

After the ´research´, and having pocketed their grant money, the leader author pops up with the right-on conclusion that all the Greenies want to hear.

All involved are parasites with an alarmist agenda.

Ozonebust

This latest paper calculating the influence of CO2 on temperature is getting closer to the mark, practically zero effect.It gets better every day. As earth cools during the current phase the accuracy of this paper accelerates.
Note that sea ice volume in the Arctic is now above the 2014 level and close to the mean value.
Regards

http://notrickszone.com/2018/06/04/atomic-physicist-human-co2-emissions-have-an-equilibrium-climate-sensitivity-of-a-not-important-0-02-k/

http://ocean.dmi.dk/arctic/icethickness/images/FullSize_CICE_combine_thick_SM_EN_20180603.png

Bill Illis

The stock market has no interest at all in climate change and carbon whatevers. People are making money and losing money and spending money and investing money.

Climate change just never gets brought up at all.

John Sandhofner

It is obvious this report is design to scare the investors of the large pension funds. They are the ones with the biggest bucks to invest in fossil fuels. Certainly don’t buy all the arguments they make.

Steel is cheap and no one says good let’s takes advantage of cheap steel. If oil is cheap the same logic says don’t take advantage of it. There must be entrepeneurs out their keen to turn a good profit from cheap steel and oil and so keep the price from collapsing too much while developing the world more quickly. Who are the blockers?

JR

So let me see if I can get this right:

1. Global warming will heat the planet.

2. Global warming will cool the planet.

3. Peak oil means we will run out of oil.

4. We have too many fossil fuels which will lead to fossil fuel asset stranding.

5. The answer to 1-4 is give the government control of the means of production.

To quote Lewis Carroll: “Contrariwise, if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”

JR

nw sage

Show me the cheapest available energy and I’ll show you the money! Have you any suggestions for a substitute to fossil energy? Cheapest AND available when needed of course.

michael hart

The authors should publish a list of stocks, prices, and dates for investors to buy and sell.
That is how other people claiming to know the market are judged.
Doesn’t even have to be a .pdf. A simple text file will suffice, please, Cambridge.

Wallaby Geoff

Aw, come on you guys. The esteemed professors must have said something right in this article.

lescanne

The only thing that can trigger such event is nuclear fusion and in 2035 many of production units of all sized will be operational
curiously, nuclear fusion is not mentioned, well well well

Phil Rae

I commented here early in the discussion …..when there were no other comments visible, I think, but it just vanished with a System Error 500

Phil Rae

HELP!

Hi folks! What’s going on? I see duplicate copies of the same WUWT email showing up in my email inbox now. Anybody else seeing this problem?

Louis LeBlanc

Dictionary police: Prevaricating??? Maybe they meant procrastinating?

Meanwhile, ignore the $1 trillion student loan bubble that has financed nonlinear patriarchal cisgender antitransfluid bathroom power dynamics studies, safe-spaces, and idiotic “detailed simulations” like that in the opening post.

Crispin in Waterloo but really in Ulaanbaatar

China is not manufacturing renewables to reduce pollution.

StephenP

Are they ‘short selling’ fossil fuel stocks, hoping to buy them back cheaply?