Dear Editor,

Depending on your perspective, last year was... emotionally combustible, politically indigestible, economically paradoxical or scientifically incomprehensible. Despite these harbingers of infamy, 2020 may have been a historic turning point for climate politics. I’ve always felt that the focus on consumer-led change as opposed to systemic change was one of the great failures of climate advocacy. Last year, industrial and technological dynamics were surprisingly hopeful. 

Peak Oil? - A year of hunkering down to avoid Covid-19 led to the sharpest drop in oil consumption since the Model T. At one point in 2020 oil use was down 29 million barrels per day. British producer BP Plc recently updated its annual forecasts to suggest that oil consumption would never regain 2019 levels. Others were less aggressive about timing (OPEC said 2040, Bloomberg 2035) but industry consensus is that the pandemic has accelerated our date with peak oil.

Renewables - Electricity production accounts for 27% of US greenhouse gas emissions. Guided by cost improvements, investor appetite for renewables soared in 2020. Large ‘clean energy’ companies (NextEra, Enel, Orstad, Iberdola) now have market capitalizations that match or exceed traditional oil and gas competitors. The average cost for onshore wind ($46/MWh) and concentrated solar ($51/MWh) for grid utilities is now half the cost of coal ($112/MWh). Led by China (85 GW added) and the US (29 GW added), newly installed renewable energy grew 4% last year, reaching almost 200 GW. The IEA forecasts a 10% jump in newly added renewables in 2021 driven by a surge in India.

Electric Vehicles - Transportation accounts for 28% of US greenhouse gasses. Led by Tesla, EV sales defied gravity and Covid. EV companies accordingly became the hottest stocks of 2020. In Q3 EV’s accounted for one new car out of every 10 sold in the EU. New regulations were drawn last year to support the shift. California (20 million cars sold/year) and the UK (21 million/year) banned the sale of new gas-powered cars beginning 2035, joined by countries Sweden, Denmark, Ireland, Netherlands, Scotland and Israel targeting 2030 and Norway targeting 2025.

Batteries - Battery technology plays a key role in EV adoption, and some crucial milestones were met in 2020. Several companies achieved $100/KWh battery manufacturing. Analysts say that threshold puts EV production costs at parity with gas. Scale and cost are inversely correlated. As production scales, EV’s will become cheaper than conventional cars.

Several battery companies also announced they’d solved a leapfrog technology in 2020 - solid state charging. Solid state batteries promise a step function increase in energy density, leading to lighter batteries, reduced fire risks, increased EV range, decreased charge time, and longer battery life. Investor interest caused massive valuation jumps across the sector. One significant contender - Solid Power - is a Colorado company headquartered in Louisville.

‘Net Zero’ Pledges - In 2020, ‘Net Zero’ replaced ‘Carbon Free’ in climate vernacular. Carbon free is impossible, both technically and economically. It also promotes a pedagogical purity that excludes carbon sequestration and other forms of geoengineering from consideration. Hopefully 2020 was when we cast aside religious orthodoxy in favor of practical solutions.

The most beneficial result of changing vernacular might be the adoption of ‘Net Zero’ pledges by the most unlikely: China (2060), BP (2050), Shell (2050), Total (2050). Details vary, but the fact that Net Zero has become the standard of demarcation is a big change, for China particularly. It is number one in greenhouse emissions and the biggest producer and consumer of coal. For decades China has demanded that ‘developing’ nations have the right to uncontrolled carbon emissions. The only publicly shared road map for the new policy defers the hard work of actually reducing emissions for 15 years, so the actual impact remains to be seen.

An unsung Covid victim was Exxon’s plan to implement CO2 sequestration at its LaBarge facility in Wyoming. LaBarge produces natural gas, helium and CO2. Since the CO2 isn’t cost effective to sell, the company vents it. The $260 million CCS project would have pumped all that CO2 back into the ground. At 1% of their 2020 capital budget the project is theoretically modest, but the Covid market collapse deferred it indefinitely.

 From politics to public health, 2020 was the annus horribilis. However, when the wrecking ball stops we might discover a new set of opportunities taking shape. The root definition of ‘disruption’, after all, is ‘rending asunder’. Painful, but every venture capitalist knows you can’t build something better without disrupting the existing system.

Derek Ridgley
Nederland