The 2024 Energy Looney Bin Awards

Hello everyone and welcome to this year’s Energy Looney Bin Awards. It’s the first but certainly won’t be the last edition of the awards, what with so many hard-working hopefuls in the most intense race in the world.

Without further ado and in no particular order, here are the winners, as of July 2024. We may need another edition at the end of the year but we’ll see how things go.

Canada and the EV subsidy underestimation

The Canadian federal government is a big fan of EVs and to prove its fandom, it allocated the quite impressive sum of C$46.1 billion to match investments pledged by companies active in EV activities to engage in said activities in Canada.

However, it turned out that this sum was not enough to stimulate equal investments from the private sector, so the Trudeau gang actually had to pledge C$52.5 billion, per Ottawa’s Parliamentary Budget Officer, no less. There’s just no making some people happy, is there?

The UK may have to do the same for offshore wind developers, by the way, per the most reputable opinion of so-called think tank Ember, which has urged the government to offer higher prices for offshore wind electricity or else developers won’t develop offshore wind.

New Zealand and the awkward oil and gas ban

In 2018, New Zealand banned all new oil and gas drilling in the country. Given the importance of New Zealand as a massive oil and gas producer, the news was a devastating blow for energy investors. Okay, it’s not massive but 10-20 million barrels annually is more than many other countries produce, so there.

Anyway, the current government this year introduced legislation aimed at cancelling the ban because it wanted to attract investments in the country’s oil and gas industry, who knows why. Maybe because oil export revenues in 2022 were a nice NZ$900 million or because royalty revenues topped NZ$200 million. Sure, not a lot in the context of Big Oil’s billions but New Zealand is not a huge country. A billion in budget revenues is always welcome.

California and Big Bad Oil profits

The people currently in charge of California really detest the oil and gas industry. They’d much rather import oil from places such as Saudi Arabia and Ecuador with all its sensitive ecosystems than produce its own. And they are on a crusade against the industry.

So far this has included regular accusations of price-gouging and threats of investigations into said price-gouging which have so far yielded zero evidence of such practices, along with regular excise duty hikes, which have made Californian fuels the most expensive in the country.

Now, the state has decided to go for Big Oil’s throat. As part of a lawsuit alleging that oil companies knew about climate change but didn’t tell anyone, state AG Rob Bonta wants to claim some of their profits, based on consumer protection laws that suggest this might be possible. Good luck to them and good luck to Californians when petrol jumps to $10 per gallon. Should be good for EV sales.

Europe and the coal embarrassment

Europe hates coal with the same vengeance that California hates oil. It has been very proud of retiring scores of coal power plants and switching the rest to gas. Too bad gas has got to be rather expensive so this winter Europe would need to switch back to coal.

That’s according to Reuters’ LSEG analysts who said that gas prices will likely motivate many power generators in Europe to switch from gas to coal because it’s cheaper — despite the higher costs for carbon permits because coal plants require more of these to cover their emissions.

Too bad some countries have phased out all their coal plants and have limited gas-fired capacity to make a meaningful switch. Still hilarious, though, and increasingly likely as gas prices keep climbing and heating season keeps drawing nearer. Those gas sanctions the EU bragged about last month were just perfectly timed.

Germany and the windosolar subsidy overhaul

For over 20 years, German governments incentivised, as it’s called these days, wind and solar power builders by guaranteeing them a minimum price for the electricity they produce for a period of, well, 20 years. But money must have tightened because the current government has now decided to change the mechanism.

There will no longer be a two-decade price commitments for wind and solar developers in Germany. Instead, they would be given a certain sum upfront to use as they see fit in funding their projects. "The goal is to shift the expansion of new renewable energy sources to investment cost subsidies," per the government which has been enjoying a hard-earned reputation as the wisest transition government in world history when it comes to energy policies.

The same government wants 80% of the country’s electricity demand covered by wind and solar by 2030. Apparently, it believes this could happen by cutting off the minimum guaranteed price and replacing it with a grant to cover some of the initial investment. German windosolar growth slowdown in three, two, one…

Volkswagen and the e-tron miscalculation

Volkswagen has spent tens of billions on its shift to electric vehicles. Its now former CEO Herbert Diess wanted to dethrone Tesla from the number-one place in the EV manufacturer ranking and spared no effort or euro in this pursuit, which appears to have ended with him going from current to former CEO.

Anyway, one of the company’s most promising — from their perspective — models was the Audi Q8 e-tron model family, manufactured in Belgium. The promise is dead. VW is considering a shutdown of the factory because people are not buying the Audi Q8 e-tron at the expected scale. Sound familiar? That’s right, VW is losing money on its high-end EVs. Might as well nix them while these losses haven’t mounted.

The VW case is symptomatic of the whole EV industry, with Fisker recently folding, which was always only a matter of time since its founder recklessly bet on the unproven assumption that ever more people would want expensive EVs. In fact, it seems ever fewer people want an EV at all and this is a real tragedy but life goes on.

I will be taking a week off the energy circus because even laughing can be exhausting. Our regular programme will resume on July 22 if the world’s still around.