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      2. Oil Fall

        The Oil Fall series has now completed with the publication of the final installment, Waste Crash. The single title, Oil Fall, which bundles up each section is now available. If you’ve been reading the series throughout 2018, please follow the link here to purchase Waste Crash. Otherwise, new readers are encouraged to now read the single title, Oil Fall

        Purchase Oil Fall

        Electricity is the new oil, and if you’d like to understand better how clean energy, electric vehicles, and grid technology will profoundly impact the oil market, then you should read Oil Fall, a now completed series that shows how wind and solar power will jailbreak the powergrid, and find their way into global transportation.

        In domains from California to Texas, and from Europe and the UK to China, the titanic growth of new power generation from wind and solar is now dominating market share, cutting off growth opportunities for other energy sources. But now the great rollout of electric vehicles, and grid technology, will increasingly exploit this new source of power, depriving oil too of future growth.

        The battle for oil’s future is already being fought, and will not take place among the 100 million barrels of daily consumption, but rather, within the narrow margin of the 1-2 million barrels of annual growth on which the indtry so thoroughly depends. In 2018, when China’s car market lurched suddenly towards electric vehicles, the oil market correctly realized that future demand growth was in peril.

        Oil Fall is composed of three sections. Part one, California ICE, lays out the template by which California’s transportation sector, tranche by tranche, will transition away from oil to electricity. And, becae an electric vehicle es 70% less energy than an ICE vehicle, it will be trivially easy for California to supply all the demand growth EV will need from wind and solar alone. But this is no longer a prediction. The matching of EV growth with new clean energy growth is already underway. In part two, China Sudden Stop, the history of China’s revolutionary policy initiatives forms the groundwork for its next act: the killing of future coal growth, and now, through an aggressive EV adoption strategy, the killing of future oil growth. China is in pursuit of the same formula now rolling out in California, but, at a hyper, accelerated pace. While many forecasts anticipated that ICE vehicle growth would start to peak in China early next decade, that peak may now have jt occurred as the entire market flipped in 2018 towards EV. Finally, in part three, Waste Crash, the Oil Fall series concludes with an accounting of the enormo waste and lost wealth that occurs each day from fossil fuel combtion. Those domains like China, California, the UK, and Europe that are running ahead of the world towards clean energy will be the early winners of a systemic harvesting operation that will secure large efficiency gains, and economic surples. Contrary to current assumptions about costs, it’s no longer clear, in fact, that a global transition towards clean energy, distributed over a 20 year period, has anything to offer but gains.

        Oil Fall is a three part series that published over the course of 2018. ? All rights reserved by the author and TerraJoule Publishing. Fair e of quotes from Oil Fall are permitted, with citation of Oil Fall as the source, and the author’s name, Gregor Macdonald.

        Oil Fall is released in PDF form on the Gumroad.com platform. Length: 105 pages. All sales conducted through Gumroad.com only, and buyers will see a charge from Gumroad on their statements. Oil Fall can be read on any PDF capable device, and renders well in Adobe Reader, DropBox, all browsers, and  the online reader provided at Gumroad.com

        Oil Fall is additionally available in a compressed PDF that also renders well for Kindle, and any PDF capable device. The compressed version makes emailing easy, to a personal Kindle, and displays more easily on mobile devices.

        Both the regular PDF and the compressed PDF are part of the download package at Gumroad.com.

        Purchase Oil Fall

        -Gregor Macdonald

        Oil Fall: Part Two, China Sudden Stop

        If you’d like to understand better how the introduction of electric vehicles will affect the oil market at the margin, then you should read Oil Fall, a three part series that explains how wind and solar power will jailbreak the powergrid, and find their way into global transportation.

        Part Two, China Sudden Stop, is now released and picks up the storyline from part one, California ICE, as China now prepares to kill oil growth in the same manner it killed coal growth, five years ago. China’s domestic war on pollution has already yielded tremendo results and now the country is pressing forward with a plan to divert all future transport growth to electric vehicles. Combined with China’s leadership position in the construction of new wind and new solar, a formula has now been set in motion, raising the risk that peak oil demand will soon arrive.

        From the introductory, first chapter:

        Electricity is the new oil and no country makes more electricity than China. Having optimized its manufacturing base over three decades to churn out exportable products, China produces and consumes more power than the individually, more power than North America combined, and even more power than all of Europe. How China generates this electricity, however, is both a problem and an opportunity. Built on a massive, installed base of coal-fired capacity, China’s powergrid is currently undergoing a revolutionary transition towards wind and solar power. The shift––a response to the public’s anger over extreme levels air pollution–largely began its trajectory as a policy response, but now, as in the rest of the world, is gaining momentum as favorable costs and construction timelines to erect new wind and solar begin to crowd out all other forms of new power generation.

        China’s ability to effect policy-driven change in its indtrial economy, even when constrained by global economic forces, is a capability that’s been put into action several times now. And yet, the world keeps missing this particular China lesson. For example, few if any predicted that China would indtrialize so quickly late last century; or, that the country would do so ing coal. After 25 years of such policies, China pivoted, after 2010, and started to turn its back on coal. In both cases, analysts made a classic forecasting mistake, calling for a continuation of present conditions, and thereby missing a big turn. Here’s why that matters: in the same way few thought China would have the means, or the intent, to halt coal growth after two decades of soaring coal consumption, few analysts today believe China has the means or intent to halt the growth of its oil consumption.

        But China, as it turns out, is in pursuit of the same formula for systemic change now unfolding in California. The country is putting millions of new EV on the road at a time when a soaring build-out of new wind and new solar is generating new and large volumes of clean electricity. This new electricity is looking for a ctomer base, and, has started to find one in the burgeoning market for electric vehicles. Indeed, there is every reason to believe this new fleet of electrics now coursing through China in a great wave will drive round after round of new generation from wind and solar––a symbiotic relationship of support. Batteries, wind, and solar are already working together to smooth the pathway for soaring demand as costs continue to fall, th amplifying the trend of systemic change. The future of oil consumption growth in China is now at risk.

        As highlighted in part one, Oil Fall, California ICE, the analytical target of this series is not, however, to pick the point in time when China’s oil consumption will fall into outright decline. Rather, China Sudden Stop explains how relatively easy it will be for that country of 1.3 billion people to halt the growth of its oil consumption. ing a term from international economics, sudden stop, part two of the Oil Fall series calls upon the history of energy transition itself to argue that China is rapidly nearing a time when, as in the developed world, its oil consumption growth will convert to an extended flatline, oscillating from year to year, but no longer growing.

        Oil Fall is a three part series that will publish over the course of 2018. ? All rights reserved by the author and TerraJoule Publishing. Fair e of quotes from Oil Fall are permitted, with citation of Oil Fall as the source, and the author’s name, Gregor Macdonald.

        Oil Fall is released in PDF form on the Gumroad.com platform. All sales conducted through Gumroad.com only, and buyers will see a charge from Gumroad on their statements. Oil Fall is best rendered at 100% in Adobe Reader.

        Oil Fall: Part Two, China Sudden Stop

        -Gregor Macdonald

        Oil Fall: Part One, California ICE

        If you’d like to understand better how the introduction of electric vehicles will affect the oil market at the margin, then you should read Oil Fall, a three part series that explains how wind and solar power will jailbreak the powergrid, and find their way into global transportation.

        Part one, California ICE, is now released and follows the beginnings of this story from California, which is now producing 20 percent of its electricity consumption from wind and solar power alone, and, which is at the forefront of electric vehicle adoption.

        From the introductory, first chapter:

        We have long assumed the most dangero moment for the oil indtry will arrive when demand for its products enters permanent decline. That’s understandable. However, by the time global oil demand actually enters outright decline, the damage to oil prices and the oil indtry will have been underway for some years. The pivotal moment for the oil indtry—indeed for all capital intensive indtryis not the decline, but rather, the transition from positive annual growth to zero growth, or a flatline.

        Oil Fall is the story of how near we are to that moment of zero growth. For some, the story will seem improbable. For others, inevitable. It’s a story that begins in California, will soon run through China, and eventually will distribute its thermodynamic savings, and economic change, across the world economy. These three phases of the story will be laid out over three short book installments. And the first, which you are about to read, is called California ICE

        …What’s about to happen in California, and the United States, and then the world more generally with China as a foundational leader, is that electricity—long trapped behind an insurmountable wall—is going to find its way into the transportation sector. The reason to tell this story now is that we are poised at that curio moment when, after nothing happening for a long time, everything appears to be happening at once. California is about to trigger an exceptionally powerful formula for breaking the ringfence that oil has long enjoyed over transportation: new wind and solar power constructed across the state, deployed on the back of plunging costs, is finding its way into increasingly affordable electric vehicles.  The implications are exhilarating for the environment, but absolutely devastating for the oil indtry, the existing car indtry, and all the infrastructure that is leveraged to oil and gasoline.

        But let’s not get ahead of ourselves. Oil Fall doesn’t attempt to model or forecast global oil demand declines, which may not come until the mid-point of next decade. While analysts waste their time trying to figure out, for example, when EV will ultimately take all market share of new car sales, for example, this series will concentrate on the first blow: when oil demand growth falls to zero. That single change alone will do plenty of damage— not only to oil, but to the oil indtry’s influence and power.

        Oil Fall is a three part series that will publish over the course of 2018. ? All rights reserved by the author and TerraJoule Publishing. Fair e of quotes from Oil Fall are permitted, with citation of Oil Fall as the source, and the author’s name, Gregor Macdonald.

        Oil Fall is released in PDF form on the Gumroad.com platform. All sales conducted through Gumroad.com only, and buyers will see a charge from Gumroad on their statements. Oil Fall is best rendered at 100% in Adobe Reader.

        Oil Fall: Part One, California ICE

        -Gregor Macdonald

        California Solar Is Ready for EV

        California electricity consumption from all sources is currently running at 255 TWh per year. (For comparison, the United Kingdom is currently running at roughly 335 TWh per year). And, last year, solar provided over 27 TWh of power to California, jt over 10% of the state’s total demand. About a third of that solar was sourced from smaller scale installations—domestic and commercial rooftops, and ground mounted arrays. The other two thirds came from the large, utility scale solar projects now spread across California’s interior. ing Google’s map function, most of these (100+ MW) are listed below, as are a number of planned projects of similar scale.

        Based on the current project pipeline, and the continued integration of small scale solar, total solar output in California should reach approximately 34 TWh this year, 40 TWh next year, 52 TWh in 2019, and 64 TWh in 2020. Would that be enough growth to handle the first meaningful pull on electricity, as the state’s automobile fleet turns more forcefully towards electric vehicles? Indeed it would. More than enough.

        If 10% of California’s current demand for gasoline were to divert to electricity, that would require—at best, and being overly conservative—about 26 TWh of new electricity supply. As it happens, that’s almost exactly as much solar power (27 TWh) as the state produced last year. California is a large producer of wind power as well. Last year, wind power phed California’s wind and solar total to 41 TWh, more than enough to handle the first 10% cut to California’s gasoline demand. By the end of the decade, even if EV were to reach 20% of California’s light duty automobile fleet (they won’t; that adoption rate is too aggressive) growth in California wind and solar power would easily handle that next tranche of demand. If current California gasoline demand was cut by 20% in the transition to EV, that demand could be served by 50-60 new TWh of electricity from wind and solar.

        Now that solar power is the cheapest new form of new electricity on the planet, there is very little risk that broad EV adoption will force energy systems to regress, to coal or natural gas. Moreover, the thermodynamic savings harvested as vehicles transition from combtion to wind and solar created electricity will produce an overall step down in primary energy demand. California solar (and wind) are more than ready for the EV.

        –Gregor Macdonald

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        Further Reading:

        Quora: If all cars in the suddenly become electric, how much more electricity do we need to produce (in percentage)?

        Brattle Group: Electrification – Emerging Opportunities for Utility Growth (pdf)

        Wind and Solar Start To Hit Primary Energy Demand

        Disruption from wind and solar power, until recently, has been largely confined to global powergrids. The two renewable technologies now compose more than 10% of EU electricity, 8% of electricity, and 6% of China’s electricity. But their progress in the broader energy mix has been slower. Dominated by oil, transportation has successfully resisted the impact of wind and solar power—giving the impression that decarbonization will never quite arrive at adequate scale. But data now shows that wind and solar reached 2.77% of primary energy demand last year, and will rise to over 3% this year. Contrary to intuition, those are not small numbers. They are big numbers, full of potential.

        Crowding out coal, and now natural gas, combined wind and solar are becoming the go-to solutions for marginal growth in power systems, owing to their rapidly declining costs and construction speed. Now, in the important domains of China, the EU, and the , electricity is starting to escape from those powergrids into the transportation sector. This process began late last decade with the resurrection of electrified rail transport, but is now being extended through personal electric vehicles and bes.

        Last year, combined wind and solar provided 2.701 quadrillion btu in a energy system that consumed 97.496 quadrillion btu from all sources. This year, combined wind and solar are on course to provide 3.145 quadrillion btu in a year that total energy demand is on track to fall, by about a half a percent, to 97.00 quadrillion btu. As you can see in the chart above, demand for all energy sources ex-wind+solar is currently in decline. Wind and solar are threatening to hit primary energy demand in the same way they began to hit powergrid demand at the start of this decade. Their target? Transportation.

        As shown in a recent report from the ICCT, EV sales have already reached 10% in San Jose, 6% in San Francisco, and 4% in Los Angeles. Transit agencies across Southern California are ordering, and deploying, electric bes. In California, and also in Texas, overnight or off-peak EV charging plans are becoming routine offerings from utilities. The future of public transport in Southern California will be entirely electric, and the transition has already begun. Echoing, or rather leading, the trend is the rapid adoption of EV bes in Chinese cities. Shenzhen’s entire fleet of 14,000 bes will be 100% electric by the end of this year.

        As wind and solar grow globally, primary demand itself will see its growth halted through the harvesting of thermodynamic savings. Work and processes will continue to migrate away from combtion, and its enormo heat loss. Large transit services like LA Metro will increasingly run trains and bes off a powergrid that is rapidly adding cheap wind and solar.

        It took about five years for wind and solar to advance from below 1% of electricity to nearly 3%; and then another 5 years to advance towards 7%, last year. Wind and solar will easily reach 10% of electricity by 2020. Now, it appears wind and solar will trace out a similar path in primary energy demand: 2.77% last year, likely 7% by 2021, and 10% before 2025. When people complain that rate isn’t fast enough, here is a question: what is your model for the rate of plaible, systemic change?

        –Gregor Macdonald

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        What Next for Oil Demand?

        oil consumption peaked twelve years ago in 2005, at 40.3 quadrillion btu. And, since the great recession ended, oil consumption has made a weak recovery from lower levels. Last year, oil consumption reached 36.02 quadrillion btu; still more than 10% below the 2005 peak. None of this is surprising. Nor is it news.

        What has surprised, of late, is that oil demand has flattened out in 2017. Through the first ten months of the year (OK, call it 43 weeks), the EIA data series covering?weekly product supplied shows no growth at all compared to 2016. Bloomberg’s Liam Denning started noticing this flattening early last month. A comparative review of the EIA data series covering monthly motor gasoline supplied, through the first eight months of the year, also showed no growth vs the same period of 2016. Perhaps oil demand will get going again in the final eight weeks of the year. Or, the vario EIA data series will be revised upward.

        One comparison that might illuminate where oil demand is headed next is the recent evolution of Light Duty Vehicle (LDV) sales growth, and changes in motor gasoline consumption. LDV sales absolutely soared coming out of the great recession with very strong YOY demand growth. That progression slowed greatly, however, from 2015 to 2016 as total LDV sales rose to a final peak. In 2017, LDV sales are falling, and are expected to fall for the next two years.

        The chart shows the year-over-year growth rate of LDV sales, compared to the year-over-year growth rate of motor gasoline demand, from 2010 through the first 8-9 months of 2017.

        We might plaibly say the following: coming out of the great recession, LDV sales, feasting on rock-bottom interest rates and incentives, largely replaced existing autos, and did not place new upward pressure on gasoline demand as the overall economy was still very weak, during 2010 through 2012. However, starting in 2013, the continued growth of LDV sales and a recovering job market started to impact gasoline demand. During the four years through 2016, even as the growth rate of LDV sales was softening, the growth of gasoline demand put in a solid run. So, what next?

        An extended LDV sales growth cycle has now certainly come to an end. Electric vehicles in the , by contrast, will enjoy stainable growth. The EIA has jt put out a new reference case that projects global petrol demand from LDV to start falling after a peak next year, 2018.?In the UK meanwhile, oil indtry consultant Harry Benham is observing that?petrol demand is now slightly down, or flat, compared to last year—even though VMT (vehicle miles travelled) has continued to rise. This leads directly to a phenomenon that many oil market observers either don’t know, or don’t want to know: even without fast EV deployment rates, the continued march of fuel efficiency in cars has already curtailed petrol demand growth, and will continue to do so.

        Whether 2016, 2017, or 2018 sees a second, lower peak for oil demand won’t make much difference in hindsight. What does matter, however, is that the global oil indtry was jt starting to get comfortable with the idea that OECD oil demand had finally stabilized. Combined with continued oil demand growth in Asia, the prospect for a market rebalancing, therefore, had been the indtry expectation for the past 12 months. Now, jt as that story seems to have come together, it seems likely that oil demand growth could turn down again—not swiftly perhaps, but steadily—shrinking once again the remaining regions where the indtry had hoped to find the next leg higher of oil e, and adoption.

        –Gregor Macdonald

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        Further reading: EIA Liquid Fuels Outlook,?STEO.

        Superconvergence to Lower Global Fertility Rates

        Nearly half the world’s population resides in the five most populo countries. China, India, The United States, Indonesia, and Brazil contain 3.518 billion people. And, as it happens, there is a superconvergnece to a lower fertility rate in each, albeit from different starting points sixty years ago.

        Wealth, and advances in health, are the twin drivers of lower fertility rates becae together they allow parents to invest a greater amount of resources in a fewer number of children. When adults become confident that risks of child mortality will stainably decline, those forward looking expectations trigger different decisions about family formation.

        Becae population growth rates have impact on economic growth, interest rates, and natural resource consumption, the issue of population has for many decades been included in most discsions of planet-level limits. Imagine, for example, placing yourself in the above chart between 1965 and 1970—with no data about the future to come—and you can readily see why population fears were rampant during that era.

        We are no longer living in 1967. If, in 2017, half the world’s population is converging towards a low fertility rate (and it’s more than half, when you include Rsia, Japan, and the rest of the OECD) then you are not going to be able, through higher rates in other countries, to halt the decline on a global level. Indeed, if we calculate a population weighted average of the big five countries, we are already at a 2.03 fertility rate. Why? Becae China, with the highest population and a crashing rate,?pulls down the average of the top five, in the same way the top five pull down the average globally.

        As you might have guessed, the final domain where population alarmists are making their stand is in Africa. According to the UN Population Revision 2017 (the source of the most recent data) Africa, collectively, has a fertility rate of 4.72 through 2015. But which way do you think it’s headed? True enough, the UN is currently projecting that fertility rates will head lower in Africa—but not quickly. Indeed, one of the most outlying projections the UN makes is for population growth in Nigeria, from 185.99 million currently to 410 million by mid-century, and finally to 793 million by the end of the century.

        The UN’s population projection for Nigeria, a medium variant, seems highly improbable. One would have to assume that advances in health care, nutrition, wealth and the deployment of solar power and technology will completely pass over this West African nation. Moreover, when we look at a comparative size of Nigeria, overlaid on the mid-Atlantic states, it would seem quite unlikely to hoe nearly 800 million people in such a territory. One would have to further assume that, in Nigeria, all advances in technology will be leveraged to have as many children as possible. That’s jt not the human experience.

        More realistically, the challenge the world will increasingly face in the years ahead is slow population growth. Framed in this way, we should ask ourselves a higher level question: what can we do to more equitably distribute resources which are, increasingly, not scarce but quite obtainable.

        –Gregor Macdonald

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        Further reading: This 26 October Twitter thread by @Noahpinion on the topic of population. Also, this post by Dave Roberts at Vox: I’m an Environmental Journalist But I Never Write About Population. Here’s Why.

        Further charting: Here is an interactive, Datawrapper version of the first chart in this post, ing the same timeframe and data.

        The Last Oil Cycle is Now Behind

        If you wanted to make a case that oil demand was threatening a new, upside breakout, a good place to begin would be the year 2000, the beginning of the new millenium. The country was ing 6% more oil that year than it is today. More tellingly, the population was 12% lower. Since that time, the has added over 40 million people. If oil demand growth is so noteworthy, so enduring, so healthy, then why isn’t demand back at least to the levels of 17 years ago?

        (The chart shown here is from Datawrapper and is eful becae it’s responsive. Go ahead, move your moe over the chart.)

        The reason oil’s vulnerability begins now—why the oil indtry is no longer protected from further downside price risk—is that the market is already in a weakened price-position as it heads into a series of major, demand growth challenges. Interestingly, some believe another one to two oil cycles still lie ahead of . The problem with this view is that oil has finally run out of time.

        For example, it’s no longer likely that sales of internal-combtion engine (ICE) vehicles will return to growth in the United States. There will still be many ICE vehicles driven in the for a long time. But already, EV sales are growing and ICE sales are declining. By the time sales of ICE vehicles are ready to mount a recovery, say by 2020, EV will have been taking market share for several years, and will be ready to compete head to head with ICE, on price.

        More broadly, it’s now possible to ask where, in what large markets, will ICE vehicles enjoy further growth compared to EV? China—leaving aside its recent plan to ban ICE cars by 2040—is already set to roll out new restrictions on ICE vehicles in 2019. As the world’s largest car market, and largest EV market, one could make the argument that ICE cars still have a few years left of growth in China. But EV sales growth trends, and policy initiatives, are already underway right now, in China.

        The problem is that the number of domains where the oil indtry can find new growth is shrinking. India was the standout last year, growing demand at 8.3%. But China’s demand growth, at 2.7%, was doubly concerning. A high rate of ICE adoption would imply a much, much higher rate of demand growth in the world’s most populo nation. More revealing was a research note jt published from IEA in Paris, pointing out that in 2016, more than a half-million bpd of China’s demand was likely due to stockpiling. Here is the key quote from IEA, “Therefore, China effectively acted as a price setter from 3Q15 to 1Q17, when it stored away much of the global oil overhang.” In other words, even at flat global production rates, there was still oversupply in the market and China took up that overhang and stored it.

        A new oil cycle globally would imply a brand new phase of oil er adoption, concurrent with a new round of supply growth–and firmer prices. But global oil supply, after lifting off (crazily enough, on the back of lower prices) starting in 2015, has been roughly flat. At the current 80.5 mbpd of production, the market has been able to satisfy the lower rate of demand growth at a fairly stable $50 price level. If you believe in a new oil cycle, you would have to believe the current equilibrium mt be disrupted in order to bring new oil supplies forth, at higher prices to the world economy.

        The global oil indtry and the global auto indtry now face the same challenge: not the current level of demand, but finding a new, higher level of demand. Tedioly, those who want to argue about future demand growth often, erroneoly, point to current levels of market penetration. That misses the point. For global oil demand to go higher, global sales of ICE vehicles need to go higher from here. When you look at all the changes taking place at the margins of both indtries, it becomes quickly apparent that the next growth leg isn’t coming, and neither is another, new oil cycle.

        –Gregor Macdonald

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        The Clock Ticks Down on Gas Powered Cars

        You are probably thinking recent, aspirational announcements by Britain, Germany, India, and China to eventually phase out the sale of gas-powered cars is the kind of shock to the system that will roe the global auto indtry into action. The indtry is of course already on high alert to the threat from EV, shared transport, and autonomo mobility. So, phase out targets that don’t arrive until 2030, 2035, or even 2040 provide more than enough time for the indtry to adjt. Instead, automakers face a more immediate problem, already bearing down in 2017: sales growth of ICE vehicles (internal combtion engine) may have already peaked.

        If ICE vehicles never return to sales growth, then automakers mt now confront the task of managing gas-powered vehicles as a legacy biness, while finding their?role in the new, broader area of mobility. How is it possible that ICE vehicles are already a legacy biness? Becae ICE sales growth in the , for example, is expected to fall for 2-3 years starting this year. More crucially, by the year 2020, electric vehicle models will be falling into the price affordability window. If gas-powered cars are already losing market share to EV starting this year (EV sales are growing from a tiny base, ICE sales are falling from a large one) then how will ICE sales growth mount a recovery in 2-3 years time?

        The tiny, almost hard-to-detect market share growth of EV is reminiscent of the buildout of wind and solar power and how market share growth of fossil fuel in electricity generation was halted. Ten years ago, combined wind+solar stood at jt 0.84% share of total power generation. In the first half of this year, that share reached a full 9.00%. (the forecast for the full year is ~8.57%). But in an overall system that has been running with zero demand growth, at about 4000 TWh per year, the entry of wind+solar has been a zero-sum game. What are the eful lessons here for the auto indtry?

        Neither the auto, nor the solar and wind indtries, are digital binesses. The deployment rates for wind and solar, therefore, are directly applicable to the encroaching advance of electric vehicles. These are slower-moving, capital intensive endeavors and reaching the first 1% of market share—for wind+solar, or EV—requires heavy lifting. Indeed, EV sales are finally expected to cross the 1% sales share in 2017, as EV are expected to sell 214,000 units in an overall market that is falling from 17.47 million units last year to 16.84 million total sales this year.

        The forecast depicted above, for total market light duty vehicle sales (LDV), es only the most modest decline from this year’s auto-indtry analyst forecast of 16.84 million sales in 2017, and 16.75 million sales in 2018, to 16.5 million sales in both 2019 and 2020.

        The progression of EV sales from 2016 through 2020, however, is quite reminiscent of wind and solar’s advance in a comparable period from 2007 through 2011. Both technologies required five years to climb from jt below 1% to over 3.5% of sales share.

        Current consens is that autonomo vehicles (AV) are a near term threat and EV are a current, but slow moving threat to the auto indtry. Neither of these views is likely correct. Full AV is likely much farther away from a deployment threshold that would threaten market share of personal auto ownership. EV, however, now present a credible risk that by 2020 numero models will fall into an affordability window that combines price, range, and lifetime maintenance and fuel costs. In some states like California, we have already reached the point where a basic model Bolt or Leaf is a comparable choice to an ICE car. What chance do ICE now have, in the at least, to return to growth?

        –Gregor Macdonald

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        Photo by author: Lobby of Guardian Building, Detroit, May 2017.

        Balance Point: The Cruises Towards (Net) Energy Independence

        The is now exporting so much crude oil, petroleum products, coal, and natural gas (both by pipeline and LNG), that the country’s net energy dependency has now fallen below 10% of its total consumption, in the first five months of 2017. The trend towards (net) energy independence is a retort to the historic assumption of vulnerability in fulfilling its energy needs.

        In jt the past ten years, the country’s energy deficit—its net imported energy as a percent of total consumption—has fallen from 30% in 2006 to this year’s average of 9.2%. With further export growth of natural gas a certainty; a stained lack of growth in domestic energy consumption; and soaring production from new wind, solar, natural gas and oil; it’s now possible to ask the following question: when does the reach its balance point, when all imports are matched by exports?

        To express this net dependency in terms of data, the consumed a total of 40.236 quadrillion btu (quads) of energy through May of this year; imported a total of 10.805 quads; but exported a total of 7.098 quads of energy during the same period. In the balance sheet calculation, we take the difference of the export and import figures (10.805 – 7.098 = 3.707), and divide the result by total consumption (3.707/40.236 = 9.2%) to produce the net dependency percentage.

        Many will point out that underneath this calculation lies a continuing dependency on imported oil. That’s true. But even here, the trend is pretty clear: with consumption of oil currently still below levels of the year 2000, the country is expected to achieve new, all time highs of domestic oil production near 10 mbpd next year, according to EIA forecasts. oil production is bolting higher. oil consumption is not.

        The Energy Information Agency (EIA) is already forecasting that oil consumption will enter decline starting in the year 2020. That also happens to be the year that the price of Electric Vehicles (EV) will start to arrive in the affordability window, competing more directly with gas-powered cars. The steady upward march of fuel efficiency in light duty vehicles, and, modern building codes—delivering a new round of efficiency gains—are also playing a role.

        All that’s required for the to reach the balance point in energy is the continuation of current trends: exporting surples of rising natural gas production; dialing back the growth of oil consumption; increasing oil production; adoption of EV at the margin of the automobile market; and last but not least: soaring new electricity supply from sourced wind and solar.

        To the extent that new electricity supply from wind and solar is already making its way into transportation, through EV, the now possesses the formula to attack transportation demand at the margin ing domestically sourced energy. It’s a certainty that EV charging will take advantage of wind power surples (at night for example, in states like Texas) and eventually solar surples mid-day, in states like California. The is going to reach its balance point easily by the year 2025, if not sooner. Indeed, by 2025, the may have already turned net energy exporter.

        –Gregor Macdonald

        (This post is adapted and updated from the Augt 1, 2017 TerraJoule. Newsletter)

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