This week we mainly focus on the challenges and opportunities for de-carbonizing the economy. We conclude with electric vehicle (EV) news from Tesla and Ford. By the way, for those who have not kept an eye on their calendars, this is National Drive Electric Week in the US.

Decarbonizing: The focus of many industries like ours is on the mitigation of carbon emissions. A World Resources Institute (WRI) report points out that while mitigation is necessary, it not sufficient to stay within the Paris Agreement’s targets. Instead, we will also need to move to net negative emissions—the removal of more carbon from the atmosphere than is being produced. WRI has published a series of 3 papers looking at options for the US to create a net negative carbon emissions’ economy: CarbonShot: Creating Options for Carbon Removal at Scale in the United States.


MIT has also looked at the issue of deep de-carbonization, releasing a study on cost-effective solutions to bring down global carbon. Focusing on costs, it concludes it will be necessary to use low carbon solutions (natural gas, nuclear energy, hydro and carbon sequestration) in combination with “variable renewable resources” (solar and wind), and “fast burst resources” (batteries and demand pricing). MIT estimates that this approach will reduce decarbonization costs by 62%. (“The Role of Firm Low-Carbon Electricity Resources in Deep Decarbonization of Power Generation”.)

Peak Oil—2023?

We have discussed various projections for peak demand for oil; the International Energy Agency predicts peak oil in 2040, whereas BP’s central forecast is mid 2030’s. DNV GL, an energy advisory firm, released a report that peak oil will occur 10 years earlier than BP’s forecast. Central to DNV’s forecast is that:

  • EV’s will reach price parity with the internal combustion engine (ICE) by 2023 and represent 50% of new car sales by 2033;
  • Non-fossil fuels will represent 50% of global energy production by 2050;
  • Natural gas will be the largest energy source by 2026; and
  • Wind and solar will meet two-thirds of global energy demand by mid-century.

Echoing the WRI report, they conclude that even this accelerated timetable will not be enough to keep rising temperatures within the Paris Agreement. Bloomberg News (“Oil Demand Seen Peaking by 2023 While Climate Targets Missed”.)

Zero-Sum Game

Reducing carbon emissions is often seen as costly to the economy and jobs—a zero sum game between the environment and the economy. A report by the Global Commission on the Economy and Climate, backed by the World Bank’s CEO, seeks to rebut that argument. It concludes that political leaders are vastly underestimating the benefits of the green economy:

  • Quicker action on climate change could add $2 trillion a year to the global economy over the next decade;
  • Increasing investment in renewables would add $26 trillion to global output by 2030.


Business Insider (“The world economy could grow $26 trillion in a decade if governments and businesses focus on climate change”)

Dead Man Walking

Forbes posits seven reasons why the ICE is on borrowed time:

  1. China Says So. China wants to move to an EV future and be the center for EV production. As the World’s largest car market (and growing), OEM’s have read the writing on the wall and are responding to demand.
  2. Battery Costs are Falling. Batteries are a significant component of the overall cost of an EV. By 2020, battery prices will have fallen 90% in 10 years and will keep falling.
  3. Battery Capacity is Increasing. Lithium Ion battery energy capacity has been increasing by 5-8% per annum. The solid-state batteries, when they come on line, will significantly up that capacity and charge significantly faster.
  4. EV’s last a long time. While limited to Tesla experience, after 160,000 miles, EV batteries still have 91% capacity. The promise of solid-state batteries is to significantly increase battery life.
  5. EV are more reliable. The average ICE has over 2,000 moving parts. An EV has 20. The main maintenance items on an EV are tires and brakes. With regenerative braking, brakes wear considerably slower than those on an ICE.
  6. Cheaper to Fuel. EV’s are significantly more energy efficient than ICE’s and in no state in the US is gasoline cheaper than electricity (even Hawaii)—on average, EV’s are half the cost to run versus an ICE.
  7. Resale Value. If all the above is true, then prices for second hand ICE’s will fall over the next 3-4 years. We are seeing some evidence of this already—Telsa’s have one of the best resale values in the used car market.

Forbes (“Seven Reasons Why The Internal Combustion Engine Is A Dead Man Walking [Updated]”.)

Those seven reasons are all true. But don’t underestimate that EV’s are also more fun to drive. The new Tesla roadster goes 0-60 mph in 1.9 seconds, has a range of 600 miles and a top speed of 250 mph. Tesla Roadster Enough car to satisfy any petrol head.


EV News

While the press continues to report on senior management defections at Tesla and Elon Musk smoking dope (literally), the Telsa 3 moved into the top spot for US car sales in August by revenues and fifth by number of units sold.


Ford is finally putting some teeth behind its already announced $11 billion investment in EV’s. It announced that its first flagship EV will be the Mustang Mach 1. Struggling in the key markets of Europe and China and seeing little growth outside of SUV’s and pick-up trucks, Ford previously announced that it was going to terminate production of all sedans other than the Mustang. It has not announced many details of its planned restructuring and EV strategy, but by picking the Mustang as its entry into EV’s, it is picking a low risk model to get started.


The Verge (“Ford’s big electric push will start with this Mustang-style crossover”.)