In America, Tesla shareholders voted through a $2.6bn merger deal with SolarCity, approving CEO Elon Musk’s vision by an 85% majority, despite Wall Street scepticism. Musk has now created the world’s first EV-battery-solar conglomerate. Others will not be far behind, I predict. In October Mercedes-Benz unveiled its latest EV at the Paris Motor Show, and parent Daimler announced it will be building a €500 million battery factory in Germany. In November Mercedes-Benz announced plans to introduce a residential energy storage product to the US market in 2017, and set up a new energy company, Mercedes-Benz Energy Americas, to market it.
As for where the electricity comes from for EVs going forward, renewables seem set to win on simple economics. In some southwestern American states, new wind farms can be built today for just $22 a megawatt-hour and solar projects are less than $40 a megawatt-hour. The average lifetime cost for US natural gas plants is $52 and for coal $65. Trump may want to dig coal, but who is going to pay to burn it?
All this may seem obvious to converts to renewables in the utility industry. But most of the oil and gas companies continue to dig in and try to find ways to justify and defend the status quo. Shell boss Ben van Beurden is among the oil leaders who are lobbying for a major role for gas far into the future. He came out with a remarkable example of tunnel vision this month. The ability to make money from renewables "has been remarkably absent", he told a conference in Paris. In attendance was the CEO of Saudi renewables developer Acwa Power, Paddy Padmanathan. "I did talk to him for a few minutes as he was leaving to point out that we are investing and we are making profits," Padmanathan said. "And we are making profits with solar energy priced at $0.05 per kWh."
Sometimes one has to wonder about the kind of advice people like van Beurden are getting. Why would he discount the developments at Dong Energy, for example? That former-oil-and-gas now-renewables company undermines every oilman who likes to say that oil companies cannot profitably entertain major changes in their business model.
And of course the oil industry hardly stands up to close inspection when it comes to profitability, as my blogs spanning 2016 have chronicled. As the Wall Street Journal has put it, oil companies are "binging on debt" – not least Shell – and often borrowing money just to pay dividends.
As well as increasingly unattractive economics, the oil and gas industry faces a burgeoning catalogue of environmental problems. Previous blogs this year amount to a depressing story, notably when it comes to gas leakage. In November, one little noticed development was particularly instructive of the winds of change, I would suggest. In Monterey county, California, the citizens voted on November 9th to ban fracking completely. There have been other such bans, both in the US and abroad. Two things made this one singular. First, Monterey is a county long extolled as a major oil target. Second, the oil and gas industry engaged in a multi-million dollar lobbying blitz to defeat the proposed ban. My prediction is that there will be ever more of this kind of adverse citizen reaction to their routine operations around the world, as the clean energy transition becomes ever more tangible and credible to the public, and as the environmental problems routinely associated with oil and gas operations become ever more exposed.
But now comes the fate-of-civilisation question. Will the continuing collage of progress that we have seen in November, as in all the other months of 2016, be enough to beat the climate change clock? This month the North Pole reached a scarcely credible 36 degrees F (20˚C) warmer than normal for the time of year, with the extent of Arctic ice at an unsurprisingly record low. This sits most uncomfortably alongside UNEP’s warning to the world this month, in its Emissions Gap report, that nations will have to go much further with emissions reductions plans than they have, before 2020, if there is to be any chance of keeping below the 1.5˚C global warming that the Paris Agreement aims at. Even 2˚C, the upper limit of ambition, is very questionable.
Yet China is still burning way too much coal, according to reports in November by Bloomberg, Carbon Tracker, and others. At the same time, it has scaled back solar and wind ambitions. With Trump in the wings, the world needs Chinese leadership badly. As I describe in The Winning of The Carbon War, there has been much evidence of that since 2014: China has worked very closely with Obama’s America both in delivering the Paris Agreement, and shepherding it into force. Now they have to go it alone.
The same disparity between Paris commitments and policy action can be found in Europe, where, for example, officials are mulling removal of priority access for renewables to the grid ahead of other forms of energy. In the UK, the numbers of civil servants working on climate has been cut, even as the government bends over backwards to support shale drillers and waste billions attempting a nuclear renaissance.
