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The International Energy Agency (IEA) has just published what it is calling the first comprehensive roadmap for transitioning the world to a net zero energy system by 2050. Turns out, it's only going to take a complete overhaul of pretty much everything to hit this important target. We are going to need to start investing some $820 billion each year (starting in 2030) on our electrical grids to support the electrification of the global economy. 90% of electricity generation is going to need to come from renewables, with 70% likely coming from solar PV and wind alone. 60% of global car sales will need to be electric by 2030. We'll need to completely halt the sale of internal combustion engine vehicles by 2035. And by 2040, we will need to have retrofitted at least half of our existing building stock.
Make no little plans. For a copy of the report, click here.
Two things struck me today.
First, I read Bloomberg Green's daily newsletter (Nathaniel Bullard) and came across the following statistic. In 2001, the world installed 290 megawatts of solar generating capacity. This year, the world is likely to install more than 100 gigawatts of solar -- that's 350x more per year than we were installing 19 years ago. You can also see how things have changed by looking at the above chart showing wind and solar asset financing per year.
Earlier in the week, I came across this post (via Fred Wilson), arguing that rapid technological progress is causing systemic deflation in the broader economy.
Here’s a chart that illustrates the author’s point:
What is happening here is that despite advances in technology and increases in productivity, real wages have been stagnant for decades. (This chart is for the US, but it likely applies to many other countries.)
This is an interesting paradox. For a long time, increases in productivity were met with corresponding increases in income. So why the divergence?
The author believes that it’s because the gains brought about by “extreme technological progress” are being unequally applied to the economy. In other words, they do not benefit the majority of people. He then goes on to argue that we could be entering an entirely new macroeconomic era:
The International Energy Agency (IEA) has just published what it is calling the first comprehensive roadmap for transitioning the world to a net zero energy system by 2050. Turns out, it's only going to take a complete overhaul of pretty much everything to hit this important target. We are going to need to start investing some $820 billion each year (starting in 2030) on our electrical grids to support the electrification of the global economy. 90% of electricity generation is going to need to come from renewables, with 70% likely coming from solar PV and wind alone. 60% of global car sales will need to be electric by 2030. We'll need to completely halt the sale of internal combustion engine vehicles by 2035. And by 2040, we will need to have retrofitted at least half of our existing building stock.
Make no little plans. For a copy of the report, click here.
Two things struck me today.
First, I read Bloomberg Green's daily newsletter (Nathaniel Bullard) and came across the following statistic. In 2001, the world installed 290 megawatts of solar generating capacity. This year, the world is likely to install more than 100 gigawatts of solar -- that's 350x more per year than we were installing 19 years ago. You can also see how things have changed by looking at the above chart showing wind and solar asset financing per year.
Earlier in the week, I came across this post (via Fred Wilson), arguing that rapid technological progress is causing systemic deflation in the broader economy.
Here’s a chart that illustrates the author’s point:
What is happening here is that despite advances in technology and increases in productivity, real wages have been stagnant for decades. (This chart is for the US, but it likely applies to many other countries.)
This is an interesting paradox. For a long time, increases in productivity were met with corresponding increases in income. So why the divergence?
The author believes that it’s because the gains brought about by “extreme technological progress” are being unequally applied to the economy. In other words, they do not benefit the majority of people. He then goes on to argue that we could be entering an entirely new macroeconomic era:
Second, I read about Fred Wilson's SunPower Solar system and how, since May, he has been able to satisfy 91.5% of his home's electrical needs via solar (this includes an electric vehicle). In fact, during the month of May when temperatures were a bit cooler, he had a surplus. He was producing more than he was consuming, and so he was selling that excess production back into the grid. It wasn't until the summer months and higher AC usage that he started having a shortfall.
Now I don't know where his house is located or what its roof looks like, but it is interesting to consider both the macro and micro scale. 91.5% signals to me that it shouldn't be much longer before many people and many homes no longer need to draw any power from the grid. That's going to be a game changer.
Chart: Bloomberg Green
“Economic growth may be over soon, at least in absolute terms. On the other hand that will be at least partially offset by the technological deflation. So instead of the decline of the innovation it will be just the opposite, the explosion of the innovation that will turn the economy to the decline. And moreover, it will not be a tragedy since we will be able to produce higher standard of living with fraction of the GDP today. Few adjustments needs to be done into our economic system to cope with the change for sure.”
When you read things like this it makes the idea of a “basic income guarantee” seem far more palatable.
The other chart that stood out to me was this one below, which shows the declining cost of solar panels and the rise of global solar panel installations.
It’s a great reminder that it’s only a matter of time before we wean ourselves off of oil. And, that we could be headed towards some sort of third industrial revolution where the marginal cost of energy is almost zero. Already about 25% of Germany’s electricity comes from renewables.
On that note, I am going to end with a fantastic interactive chart from The Economist (screenshot below) that outlines oil reserves around the world by country. If you click through to their website, you can then toggle the price of oil (per barrel) to see how much of those reserves are actually viable.
With the price of oil where it is today ($27.88 per barrel as of January 20, 2016), there are only a handful of countries with profitable oil. I am sure you could have guessed which ones.
What will happen if, or should I say when, that oil is no longer needed?
Second, I read about Fred Wilson's SunPower Solar system and how, since May, he has been able to satisfy 91.5% of his home's electrical needs via solar (this includes an electric vehicle). In fact, during the month of May when temperatures were a bit cooler, he had a surplus. He was producing more than he was consuming, and so he was selling that excess production back into the grid. It wasn't until the summer months and higher AC usage that he started having a shortfall.
Now I don't know where his house is located or what its roof looks like, but it is interesting to consider both the macro and micro scale. 91.5% signals to me that it shouldn't be much longer before many people and many homes no longer need to draw any power from the grid. That's going to be a game changer.
Chart: Bloomberg Green
“Economic growth may be over soon, at least in absolute terms. On the other hand that will be at least partially offset by the technological deflation. So instead of the decline of the innovation it will be just the opposite, the explosion of the innovation that will turn the economy to the decline. And moreover, it will not be a tragedy since we will be able to produce higher standard of living with fraction of the GDP today. Few adjustments needs to be done into our economic system to cope with the change for sure.”
When you read things like this it makes the idea of a “basic income guarantee” seem far more palatable.
The other chart that stood out to me was this one below, which shows the declining cost of solar panels and the rise of global solar panel installations.
It’s a great reminder that it’s only a matter of time before we wean ourselves off of oil. And, that we could be headed towards some sort of third industrial revolution where the marginal cost of energy is almost zero. Already about 25% of Germany’s electricity comes from renewables.
On that note, I am going to end with a fantastic interactive chart from The Economist (screenshot below) that outlines oil reserves around the world by country. If you click through to their website, you can then toggle the price of oil (per barrel) to see how much of those reserves are actually viable.
With the price of oil where it is today ($27.88 per barrel as of January 20, 2016), there are only a handful of countries with profitable oil. I am sure you could have guessed which ones.
What will happen if, or should I say when, that oil is no longer needed?
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