At what point does a new technology cause an existing industry to start losing significant value?

Writing in The New York Review of Books, Bill McKibben reviews two recent papers on climate change. The first is by Kingsmill Bond, a UK financial analyst. It is titled: “2020 Vision: Why You Should See the Fossil Fuel Peak Coming.

The central question Bond asks in his paper is this: “At what point does a new technology cause an existing industry to start losing significant value?”

McKibben says that “this may turn out to be the most important economic and political question of the first half of this century, and the answer might tell us much about our chances of getting through the climate crisis without completely destroying the planet. Based on earlier technological transitions—horses to cars, sails to steam, land lines to cell phones—it seems possible that the fossil fuel industry may begin to weaken much sooner than you’d think.”

He goes on to say: “Major technological transitions often take a while. . . . But the economic effect of those transitions can happen much earlier . . . as soon as it becomes clear to investors that a new technology is accounting for all the growth in a particular sector.”

As I consider the implications of this paper, I see the possibility that investors will be alert to all of this, and will bail out very quickly once the precipitous downward slope of the graph is definitive: they will cut their losses and run. This, along with other climate-related indicators will undermine the confidence of the super-wealthy, prompting them to protect their wealth in ways that create a destructive feedback-loop leading to unprecedented economic disruption and societal collapse. Read more . . .

Introducing an Important New Web Site: George Monbiot’s “Natural Climate Solutions”

An important new web site was launched by George Monbiot today. It is one of the most impressive and encouraging efforts I have seen. The Guardian published an excellent summary of it HERE. I have included links to all the Natural Climate Solutions Allies on the right-hand side bar of this blog. Please take some time to explore Natural Climate Solutions and its accompanying references. And don’t miss Monbiot’s Guardian Opinion piece HERE.

“Today, a small group of us is launching a campaign for natural climate solutions to receive the commitment and funding they deserve. At the moment, though their potential is huge, they have been marginalized in favour of projects that may be worse than useless, but which are profitable for corporations. Governments discuss the climate crisis and the ecological crisis in separate meetings when both disasters could be addressed together. We have set up a dedicated website, produced an animation and written a letter to governments and international bodies signed by prominent activists, scientists and artists.”

George Monbiot

“Our aim is simple: to catalyse global enthusiasm for drawing down carbon by restoring ecosystems,” said Monbiot, who has written a report for the website. “It is the single most undervalued and underfunded tool for climate mitigation.”

Damian Carrington


REPORT: A New World: The Geopolitics of the Energy Transformation

A 94 page report by the International Renewable Energy Agency (January 2019)

Excerpts from the IRENA report:

“This ongoing transition to renewables is not just a shift from one set of fuels to another. It involves a much deeper transformation of the world’s energy systems that will have major social, economic and political implications which go well beyond the energy sector.

The global energy transformation will have a particularly pronounced impact on geopolitics. It is one of the undercurrents of change that will help to redraw the geopolitical map of the 21st century. The new geopolitical reality that is taking shape will be fundamentally different from the conventional map of energy geopolitics that has been dominant for more than one hundred years.

The majority of countries can hope to increase their energy independence significantly, and fewer economies will be at risk from vulnerable energy supply lines and volatile prices. Some countries that are heavily dependent on exports of oil, gas or coal will need to adapt to avoid serious economic consequences. Many developing economies will have the possibility to leapfrog fossil fuelbased systems and centralized grids. Renewables will also be a powerful vehicle of democratization because they make it possible to decentralize the energy supply, empowering citizens, local communities, and cities.

“Global power structures and arrangements will change in many ways and the dynamics of relationships within states will also be transformed. Power will become more decentralized and diffused. The influence of some states, such as China, will grow because they have invested heavily in renewable technologies and built up their capacity to take advantage of the opportunities they create.

“By contrast, states that rely heavily on fossil fuel exports and do not adapt to the energy transition will face risks and lose influence.

The supply of energy will no longer be the domain of a small number of states, since the majority of countries will have the potential to achieve energy independence, enhancing their development and security as a result.

“The transition will generate considerable benefits and opportunities. It will strengthen the energy security and energy independence of most countries; promote prosperity and job creation; improve food and water security; and enhance sustainability and equity. Some states will be able to leapfrog technologies based on fossil fuels. The number of energy-related conflicts is likely to fall.

“Countries must prepare for the changes ahead and develop strategies to enhance the prospects of a smooth transition. At the same time, the energy transformation will generate new challenges. Fossil fuel-exporting countries may face instability if they do not reinvent themselves for a new energy age; a rapid shift away from fossil fuels could create a financial shock with significant consequences for the global economy; workers and communities who depend on fossil fuels may be hit adversely; and risks may emerge with regard to cybersecurity and new dependencies on certain minerals.

2020 Vision: why you should see the fossil fuel peak coming

The peak in fossil fuel demand will have a dramatic impact on financial markets in the 2020s. This is one of the major reasons we will see a societal collapse in the 2020s. The transition to renewable energy sources is a minefield of risks, dislocations, and oscillations for investors and nation states.

The global energy system is transitioning from a system mainly based on fossil fuels to one mainly based on renewable energy sources. The shift will involve near-term peaking of fossil fuel demand, an S curve of renewable growth, and the endgame for fossil fuel demand.


The amounts at risk are colossal –
Investors face three types of risk from the energy transition – systemic, country, and stock specific. The systemic risk to investors comes from the fact that the fossil fuel sector has $25 trillion of fixed assets which is increasingly vulnerable to stranding as the energy transition progresses.

Kingsmill Bond

Read full report HERE. View video interview below.

Kingsmill has worked as a sell-side City equity analyst and strategist for over 20 years, including for Deutsche Bank, Troika Dialog and Citibank in London, Hong Kong and Moscow. He has written strategy on emerging markets and global themes, including the wider significance of the shale revolution. He worked for many years in Russia, which is the world’s largest exporter of fossil fuels, and deeply impacted by the transition.
Kingsmill has an MA in History from Cambridge University, trained as an accountant (CIMA), and is a Chartered Financial Analyst (CFA).

Wealth, Poverty, and Global Carbon Justice

“One of the most contentious issue that complicated global efforts to address the problem of too much carbon has to do with the fact that it was precisely through carbon-intensive fossil-fueled growth that the global North was able to achieve its advanced levels of wealth and development. And, in so many instances, this wealth and development depended on colonizing nations and peoples around the world, devastating their populations and limiting their ability to replicate the carbon-intensive path pursued by the North. This history, within which the few have consumed and polluted far beyond their fair share, simultaneously leaves the world’s poor and marginalized, those least responsible for climate change, bearing the devastating brunt of its impacts.” – Kate Ervine, Carbon (Polity Press 2018), p6.

Kate Ervine is Associate Professor of International Development Studies and Faculty Associate of the School of the Environment at Saint Mary’s University

Some Questions: Who has a right to the carbon that remains in the global carbon budget? At this late stage of climate disruption, is there anything left in the global carbon budget? Are we already in the red? And, of equal importance, will our proposed solutions to climate change repeat previous injustices vis a vis wealth and poverty? If we treat carbon as a market, as a commodity to be traded, will this not ipso facto build in the same historic injustices? Are nation-states the best agencies to address climate change?

For an informative podcast in which Ervine discusses her book Carbon (50 min.), see the link below. Note that in this podcast she often says “We should do this or we should do that.” In each instance, ask yourself: Who is this ‘we’? If you do this, you will begin to see the real difficulty.

Podcast: Interview with Kate Ervine

Under Water

People tend to respond to immediate threats and financial consequences – and Florida’s coastal real estate may be on the cusp of delivering that harsh wake-up call. Read THIS RECENT ARTICLE from The Guardian and, for a more detailed analysis, the following report by the Union of Concerned Scientists: Under Water: Rising Seas, Chronic Floods, and the Implications for US Coastal Real Estate (2016). According to the report:

Properties will not be the only things to flood. Roads, bridges, power plants, airports, ports, public buildings, military bases, and other critical infrastructure along the coast also face the risk of chronic inundation. The direct costs of replacing, repairing, strengthening, or relocating infrastructure are not captured in our analysis, nor do we account for the indirect costs of flooded infrastructure, including disruptions to commerce and daily life (Neumann, Price, and Chinowsky 2015; NCA 2014; Ayyub and Kearney 2012). Taken together, these costs of chronic flooding of our coastal built environment—both property and infrastructure—could have staggering economic impacts.

Oil and gas investments are increasing

Thanks to Nick Garland for alerting me to this important and disturbing article from The Economist, February 9, 2019: “ExxonMobil gambles on growth” Read it and weep.

Here are a few  take-aways from the article : On February 1st ExxonMobil announced its annual results, declaring itself on track for ambitious growth. By 2025, oil and gas production will be 25% higher than in 2017. Note also that, in 2017, renewable energy shares fell for the first time. In 2018, carbon emissions in America grew by 3.4%. New York’s pension fund will not divest from ExxonMobil because it generates such good returns. The shareholdings of the world’s 20 largest institutional investors in big oil companies climbed from 24% in 2014 to 27% in 2017, according to the International Energy Agency.

This is the capitalist system at work: BAU = Business As Usual. Should we expect a sacrifice from anyone, or a recognition that this is all unsustainable?

Nevertheless, I agree with  Mr. Woods, Head of ExxonMobil, when he maintains that any change to the energy supply will be gradual. He says: “I don’t think people can readily understand just how large the energy system is, and the size of that energy system will take time to evolve. . . .”

Yes, the energy system is large, it is gargantuan, and will not evolve or be transformed in time to avert a catastrophe. Thank you, Mr. Woods, et al.