Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Monday, October 24, 2016

40 years on

About 40 years ago--in 1978, I think--I was listening to a program on the radio about global warming, The program was on Woman's World on the SABC, and if I left work early enough I used to make a point of listening to it.  It was always interesting and even though it often discussed complicated and difficult topics it never talked down to its listeners.

At the end of the program the interviewer asked the scientist what we could do about the global warming he'd just warned us about.  His answer was very gloomy: every economic activity we did used fossil fuels, from switching on the light to growing our food.  You could almost hear the shrug.  And I remember thinking cynically, oh well, no one is going to do anything about it, then, are they?  No one is going to take a cut in living standards to prevent a future catastrophe.  And they didn't.  Since then, atmospheric CO2 has risen from around 330 ppm to over 400--and the trend is visibly accelerating.  Since then, global temperatures have risen 1 degree centigrade.  And again, to my untutored eye, the rate of increase in recent years has accelerated.

Yet, at about that time, some of the solutions to our fossil fuel dilemma began to be developed.  In Denmark, the first commercial wind turbine was built--and it's still operating, 40 years later.  It was built by volunteers with donated parts.  It's much less efficient than modern turbines. Its capacity factor (the amount of power it generates over a year compared to its nameplate or nominal capacity) was around 7%.  These days Danish wind turbines have capacity factors of 30%.  Today 50% of Denmark's electricity comes form wind.

And then, the first commercial solar panel was created.  It cost US$76,700 per kW in 1977. It would have cost  $384,000 to put 5 kW of solar panels on your roof, ignoring the costs of the transformer and the electrician.  Now, in Australia, you can put 5 kW on your roof for US$4000.  All inclusive.  Industrial scale solar has fallen even faster in cost than rooftop.

How did this happen?

It's called a "learning curve".  Hardly anyone could afford the first solar panels, but there were some uses.  Remote telephone substations.  Calculators.  (Remember those calculators with tiny solar panels which didn't need to be be plugged in because they charged themselves from the ambient light?)  Well, as sales increased, the costs fell, which led to further sales increases, and further cost declines.  The chart below shows how this process worked with the model-T Ford.   Now notice that this is a double-log scale.  Both the horizontal and verticals axes are logarithmic,  Every time cumulative sales rose 10-fold, the cost of the model-T fell a bit more than 25%.  Between 1909 and 1923 cumulative production rose from 10,000 to 10 million.  And the price, in real terms, fell from $3500 to $950. (Click on the chart to get a more readable version)

This is what happened and is still happening with wind and solar.  So solar costs have fallen from $76.70 per watt to under 50 cents.  And wind has fallen roughly 8 fold since the early 80s.  This isn't just more efficient manufacturing.  It's individuals and systems (including companies) learning how to do better.

So renewables started out much, much more expensive than fossil fuels,  After all, fossil fuels moved down their learning curve a century ago.  But two or three years ago, the cost declines in solar and wind finally reduced costs to below new fossil fuel plants.  Old generating plants are cheap because they're fully depreciated.  But they're also, by definition, old.  Which means they will have to be retired at some point.

So rapid and extensive have the cost declines been that is a middle-ranking developing economy like South Africa, wind and PV are now nearly half the cost of new coal.  And that's true in most places right around the world.  And the cost declines aren't over.  Wind is expected to fall another 24-30% by 2030 and 35-41% by 2050.  And wind is already cheaper than coal.  Solar is likely to fall 90% by 2030.  And solar (except near the poles) is already as cheap as or cheaper than coal.  Meanwhile, the costs of storage are also falling dramatically; not just battery storage but also concentrated solar power with molten salt storage (CSP).

Something else started in 1978: explosive growth in China.  In 1978, China was just 1% of the world economy.  Now it's closer to 20%.  Chinese stats are getting better but they're not exactly 100% accurate, so we're not 100% certain just how big it is.  But it's BIG.  For example, it's the largest consumer of raw materials in the world, and also the world's largest emitter of CO2.  It produces half the world's coal, and still needs to buy more.  China has contributed mightily to the rise in global atmospheric CO2.  And up until a few years ago, you could have complained that no matter what we did about reducing CO2 emissions, it would make no difference, because China's were exploding.

But that's changed.  China is the world's largest installer of wind and solar:

  • China installs more than one wind turbine every hour.
  • Generation from wind and solar rose by more than total electricity demand in 2015 (admittedly a low industrial growth year)
  • Half of all wind and a third of all solar new capacity globally was added in China.  And China now has 19% of total solar and 34% of total wind capacity in the world,
China also heavily subsidises electric car sales.  25% of new car sales are EVs.  25%!!!!  This is up from nothing 5 years ago.  The world's biggest electric car company is not, as you might expect, Tesla.  It's the Chinese company BYD, which is also the world's biggest electric bus manufacturer.

In 2009 at Copenhagen, the Chinese scuttled the climate change talks.  This time they were big supporters of the Paris talks.  So why the change of heart?  

  1. In 2009 renewables were still much more expensive than coal.  Now they're not, and they're getting cheaper every year.  (That's why everyone is now much more comfortable supporting renewables.  The Paris agreement didn't happen in a vacuum)
  2. Chinese air pollution is horrendous. It can even be seen from space.  4000 people a day die from it.  That's the equivalent of 10 jumbo jets (Boeing 747s) crashing every single day.
  3. China sees a market opportunity.  Among the top 10 wind turbine and solar PV manufacturers, 5 in each listing are Chinese.  And the growth of EVs means that new Chinese manufacturers have a chance to seize market share, 'cos the existing car heavies are still not moving fast enough to switch their businesses from petrol-driven cars to electric ones.  There's a learning curve in EVs too.  Tesla and BYD are today's Ford.
  4. It provides energy security.  How could the US, for example, stop the sun shining or the wind blowing?  And just imagine not having to import oil from unstable geo-political regions.  Having your own wind turbines, your own solar panels, your own electric cars and busses means that you are energy independent.
  5. And, last but not necessarily least, China knows perfectly well that global warming is happening.  The effects of drought and floods and of rising sea levels on cities like Shanghai and Shenzhen are, I think, well understood by Chinese officials.  They have no grumpy oil-soaked plutocrats to fund denialist websites.  They are not afraid of collective action to achieve goals.  They have no Republican Party.
So what I see now, 40 years after I first heard about global warming, is that we have started an inexorable and irresistible shift towards a green energy system.  This shift is now being driven  not just by steady and sustained declines in the costs of renewables but also by public policy, because no one (except the venal or the demented) can deny that global temps are rising too fast for comfort.  And public policy is likely to get tighter and become more insistent and aggressive as global temps keep on rising.  Despite the denialists, the coal and oil barons seeking so hard to obfuscate the truth and to delay the switch, the vested fossil fuel and generating interests, the inertia and fear of change, the change will happen anyway.  

That scientist from 1978 would be wrong if he were to say today that we use fossil fuels for virtually every economic activity we undertake.  We don't, and every year that goes by we'll use less.  One day, we won't use any.

Saturday, October 22, 2016

Dotty, dishonest or dumb?

Marco Rubio, one of Florida's two senators, continues to deny climate change even as Miami's streets are flooded by what the US call a "king tide" (what other English speakers call a "spring tide")

Sen. Marco Rubio refused to acknowledge human-caused climate change at a Florida Senate debate Monday even as a foot of water inundated city streets and sewers throughout South Florida, driven by the annual king tide combined with rising seas. 
With the unmistakeable evidence of climate change right before them, 15 Florida mayors—including Republicans—earlier this year requested a meeting with Rubio to discuss the risk faced by their communities. The meeting never took place. 
Asked by CNN's Jake Tapper during a primary debate in March if he would honor the Miami mayor's request to acknowledge climate change, Rubio responded, "There has never been a time when the climate has not changed." He has called the investigation into Exxon Mobil's knowledge about climate change "nothing but a left-wing effort to demonize industries in America." 
According to the website Dirty Energy Money, Marco Rubio, who grew up in West Miami, has accepted $637,273 from oil and coal companies and those who promote carbon-based business.

Read more here

Wednesday, October 19, 2016

Arctic sea ice

This shows the 12 month average October to September each year.  (Source)

The data have been estimated back to 1850 by Walsh & Chapman and plotted against the satellite records, using January to December averages:


The red box at the end represents the time span the denialists like to show.

Read more here.

Sunday, October 16, 2016


Alex Jones talking about how Obama and Clinton are demons.

Dotty, demented, batty, loony, crazy, sick, silly, pathetic.

But these ppl vote!

Tesla sales soar

All the way along, since that first quarter when Tesla sold just 321 cars, naysayers have been declaring that the whole project will fold, that no one will want to buy a Tesla, etc, etc.  Yet the latest quarterly sales totalled 24500, or nearly 100,000 per year.   The chart clearly show the classic S-curve flexion point.  And that's before the Tesla 3 starts production in late 2017.  400,000 people have paid $1,000 in (refundable) deposits to put their name down for the new Tesla model.  My guess is that by 2018, Tesla quarterly sales will be 100,000, 4 times what they are now.

EVs will have become mainstream.


Monday, October 10, 2016

Global warming is happening

A Tom Toles cartoon. Note that the cartoon was drawn in 2004. And the denialists are still making these "points", 12 years later.  Still denying and obfuscating and lying.  And meanwhile the world just keeps getting hotter.


Sunday, October 9, 2016

Bringing electricity to the poor

Another of the false claims of the dotty denialists is that by discouraging the expansion of coal mining and coal-fired power stations, somehow we are denying poor people the right to the benefits we enjoy of on demand electricity.  The problems with that point of view are, though, that it's not the absence of generation capacity which keeps electricity from poor people, but the absence of a grid; and that the poor and poor countries will be the worst affected by climate change.

So what can be done?  A piece in IEEFA"s blog discusses the roll-out of solar to the poor in Bangladesh.  In Bangladesh, 25% of the population does not have access to the grid.

In rural Bangladesh, especially the coastal southwest, it is common to see tiny solar panels embedded even in humble thatch-roofed huts. This is mostly the work of Infrastructure Development Company Limited (Idcol), a government-backed Bangladeshi energy and infrastructure group that claims more than 90 percent of the country’s booming home solar market. 
Since 2003, Idcol has installed solar panels in 3.95 million off-grid homes, reaching 18 million people. In terms of individual units served (rather than total wattage), 
Bangladesh has become one of the world’s largest markets for home solar systems. 
Since electricity — even in small doses — powers lamps, cellphones, fans, water pumps, health clinics and equipment for businesses, it is critical in improving the lives of the poor. 
Mahmood Malik, chief executive of Idcol in Dhaka, calls its arrival for the rural poor “a silent revolution you can’t feel sitting in the city.”

Read more here.  Of course, the obvious benefit of distributed generation is that you don't need the grid.  Unfortunately, as this article points out, Bangladesh itself is not doing enough to transition to a green grid.

Incidentally, Bangladesh which is situated on the alluvial delta of the Ganges, is the most vulnerable country in the world to rising sea levels.  16% of its land area would disappear into the sea with just a 1.5 metre rise in the sea level.