It has been another exciting week in the transition asylum, with feelings running high in all sorts of directions. There’s been righteous outrage but there’s been hope too, as well as some bewilderment at unforeseen and apparently unforeseeable developments.
In the “Outrage” ward we find former U.S. “climate tzar” — I’ve no idea who comes up with these titles — John Kerry shaking his fist at asset managers for “turning away from science”.
Kerry was apparently rattled by a decision by several asset managers to quit the Climate Action 100+ alliance and attributed said decision to “disinformation and politics”. I guess we should be grateful he didn’t attribute it to climate change.
“Anyone who is pulling away today is turning away from the science and responding to political and ideological pressure that is not based on facts, not based on science,” Kerry told the FT. Powerful stuff. I’m sure it will make PIMCO, State Street, and JP Morgan return into the Climate Action fold.
A dose of more diluted but no doubt equally genuine outrage comes from Reuters, which wonders aloud why the World Trade Organisation has not made climate change its central topic of discussion at a recent gathering – in Abu Dhabi of all places.
Apparently, the chairwoman of the WTO wanted “to put climate change at the heart of its work as part of an effort she is leading to get the watchdog to square up to some of the world's most pressing challenges.”
A noble goal, no doubt, but the rest of the WTO is not interested, judging by Reuters’ disappointment in reporting that “the sole paragraph in a 56-page draft agreement that explicitly addresses the topic is stuck in an annex.” A terrible deed comparable to putting Baby in a corner.
Moving along, we pop into the “Incessant demands” ward, where Stellantis is asking the UK government to do a better job of convincing people to buy electric cars. Apparently, the company has plans to convert a local van factory into an EV factory but first it needs assurances that there will be someone to buy those EVs.
Remember the old times when you could count on markets to do that? When it was all about design, performance and, of course, lots and lots of advertising? Good times. In the new post-market world, buyers need additional convincing and the head of Stellantis’ European operations is ready to help with advice.
“There must be clear advice: if you buy a [battery electric vehicle], it’s good. Then it makes sense to contribute to more BEV production in Britain,” Uwe Hochgeschurtz told the FT. Sound advice. I, for one, want to go out and get an EV right now because “it’s good”.
Next, we come to the “Shattered dreams” ward, where we learn with a shocked gasp that sales of heat pumps in Europe have declined. For the first time in ten years. Because of cheaper gas. And high interest rates. And something Bloomberg calls “political backlash”. It is truly amazing the European Heat Pump Association did not throw in climate change among the reasons. Seriously, these people are getting lazy.
Anyway, heat pump sales were down by a horrific 5% last year after a decade of growth and now the industry is warning there will be job losses and investment cuts. Because of a 5% sales decline. What a healthy industry heat pumping must be if a 5% drop in sales prompts such radical reactions.
Indeed, it is so healthy that it is blaming a reversal of subsidy plans for the sales decline. Of course, the biggest culprit is Germany, where the constitutional court ruled last year that a pandemic pot of 60 billion euro could not be used to fund the energy transition. In case anyone’s interested when the ruling was made, it was in November. But sure, it’s the court’s fault that European heat pump sales are dropping and not, perhaps, market saturation.
Leaving the “Shattered dreams” ward with heavy hearts, we head towards “Hope springs eternal”, where the European wind industry has reported that 2023 was a year of great improvements and the EU has a chance of hitting its transition targets as investment rebounds.
That rebound – I imagine from governments – prompted an increase in new installations of a record 16.2 GW, most of it onshore, too! Now all that Europeans in the vicinity need to do is learn to aesthetically appreciate the wind turbines in the fields. Tragically, even at the current strong pace of additions, the EU will fall short of its 2030 goal of having 425 GW in wind power capacity installed. Let’s shed a tear and move on.
Our next stop is the “Utterly annoying interference” ward where the patients are probably throwing soup at the walls because that BP activist investor that pressed the company to get more serious about its core business is at it again, and I don’t mind telling you it was the dose of hilarity I needed this week.
Bluebell Capital Partners is happy with what BP has done so far but it wants the company to do more – and the more in this case is open talk about refocusing on its core business and shrinking its wind, solar and miscellaneous transition stuff exposure. Yep. Those unsung talents at Bluebell want BP to stand up and say out loud it will be investing less in so-called renewables and more in oil and gas. Wanted: Balls. Urgently.
The investors are making a perfectly valid point, by the way. They argue that if other investors are unaware of BP’s pivot away from wind and solar because it is doing it on the quiet, they wouldn’t know to buy some shares and the stock price will remain depressed.
That’s why BP needs to talk openly about its plans and desires, they said, and get some more buyers for its stock. Essentially, these clueless climate deniers are saying that there are still people out there willing to invest in oil and gas, which is a perfectly outrageous and unacceptable idea.
Next, we pop in with the “Let the sun shine in” contingent, where there are indications that the daily doses of copium need upward adjusting. First, and less important, is the news that Shell is selling some of its solar operations in the United States. It’s not much. Only a quarter. A teensy 10.6 GW.
“The total value of the assets, located in the northeast, southeast and west of the United States, was unclear. Project valuations often depend on power prices where they are located,” Reuters tells us. Adorable. By the way, we’re talking about a business that Shell only acquired in 2021. It must be doing so well that Shell wants to cash in on the investment.
In other solar news, I urge everyone without an ounce of irony to read this article in Time, graciously sent to me by Ken Mull. The article exposes a lot of residential solar developers in the U.S. as literal scammers doing exactly what mortgage issuers did back in the 2000s. I mean, exactly. Residential solar is turning into The Big Short-2, and fast.
Before we conclude our tour, let’s check in on the “Whatever it takes” crowd in the IEA, which earlier today served a grim surprise to the rest of the patients by reporting that global emissions last year broke the record again.
Despite the massive wind and solar installations in Europe, the U.S. and China. Despite the billions in subsidies for even more wind and solar. Despite record-high EV sales.
Despite all this, emissions rose to another record, driven by Asia in general and China and India in particular. These people simply do not understand the meaning of “climate catastrophe” and insist on having affordable energy and supply security for some unfathomable reason.
To wrap, I invite you all to stop by my Brag Corner, where I’m pleased to say that just a week after I wrote Carbon massacre, Bloomberg is reporting, well, the same, subheading it with “The region’s power system is cleaning up so fast it’s destroying demand for emission permits”.
If only, oh, if only anyone could have seen this coming. Alas, it was utterly impossible to see this coming because it was perfectly normal to expect emitters to keep buying carbon permits whether they needed them or not.
I mean, I buy shoes even though I already have quite a lot of them. I just like shoes. And gas and coal generators like carbon permits for the sake of carbon permits, presumably, so them not buying said permits at the previous rate has “surprised observers” the way me refusing to buy shoes would surprise my husband. It would make him worry there’s something wrong with me and it might be serious.
Thank you for taking this tour of the transition asylum. We hope to see you again soon.
Seen elsewhere: imagine a World with only BEVs where an exciting new technology is announced - internal combustion engines. Cars are half the cost and half the weight, do a quarter of the damage to roads, take 1/10th of the time to refuel, have a range of 400 miles, and huge amounts of toxic waste are not produced in their manufacture. They’d sell like hot cakes.
The lockdown wing of the Transition Asylum is inhabited by the TSLA homies on X and YouTube. For some stupid reason, I follow the latter for entertainment purposes. Just yesterday, a well known channel posted a video in which Tony Seba predicted EVs will be available for $5000 by 2030, due to amazing technological advancements. The two TSLA cult members on the video were literally gushing about such a development. This enticed me to comment as follows:
"You both seem to be really excited by what you discuss here. I'm highly confused by this. In the 3rd quarter of 2022 TSLA delivered 344,000 cars, had automotive revenues (less credits) of $18.4 billion and reported gross profit of $5.2 billion. Those numbers imply (by simple math) an average selling price of $53,500 and average gross margin of $15,100.
If these numbers are wrong or if I have made some other mistake, I will apologize and correct. However, if I am even remotely correct, how can the two of you be so giddy about the prospect of a $5000 car? It should be obvious why I just asked."
Of course, neither one of them replied. However, I did receive an almost immediate, highly researched comment from someone else that said "Because it confirms that EVs are the future." Another genius soon noted that "Cars will be an irrelevant source of income for Tessy in a few years, additionally making your concern moot." I told the second one to keep his blinders on, keep believing and I'll see him on Mars.
Finally, pertinent to this excellent post, you can skip to the 2:20 point in the following classic:
https://youtu.be/VlrQ-bOzpkQ?si=KZrJ_4qhQSPNNrvb