A perspective on fossil fuel divestment

[Gilgongo]

Until now, I've watched the fossil fuel divestment debate from the sidelines while holding both BP and Shell. This is because I assume (and for now continue to assume) that those companies will sensibly diversify into renewable energy in time.

However, to what extent are renewables going to destabilise the wider global economy if prices continue to fall as they are? I recently read this summary of what could happen if fossil fuel assets are stranded, together with some recent statistics about the state of play which makes me think that perhaps the oilers in my portfolio won't have the time to respond:

https://www.theguardian.com/environment ... tudy-warns

https://jeremyleggett.net/2018/09/07/a- ... in-the-uk/

Note that unlike the latter summary, the former predicts that renewables will become so economically attractive that withdrawal of state subsidies will not affect the market for them.

I'm filing it under "keep an eye on this".

[schober]

For unbiased views in the area of energy, with detailed analysis (& numbers!); I suggest you take to perusing some of the articles here -

Energy Matters | Energy, Environment and Policy
http://euanmearns.com/

[odysseus2000]

Until now, I've watched the fossil fuel divestment debate from the sidelines while holding both BP and Shell. This is because I assume (and for now continue to assume) that those companies will sensibly diversify into renewable energy in time.

However, to what extent are renewables going to destabilise the wider global economy if prices continue to fall as they are? I recently read this summary of what could happen if fossil fuel assets are stranded, together with some recent statistics about the state of play which makes me think that perhaps the oilers in my portfolio won't have the time to respond:

https://www.theguardian.com/environment ... tudy-warns

https://jeremyleggett.net/2018/09/07/a- ... in-the-uk/

Note that unlike the latter summary, the former predicts that renewables will become so economically attractive that withdrawal of state subsidies will not affect the market for them.

I'm filing it under "keep an eye on this".

Probably the biggest threat to carbon technologies imho is taxation. Until recently there has been no alternative to hydrocarbon transport fuels & so politicians have had to allow their use. But now that renewables, electric cars, electric storage etc are expanding in use there is an alternative & whether global warming is fact or fiction enough politicians believe it for them to want to accelerate the transition to clean renewable power & one easy way to do that is with more taxes on hydrocarbons & this brings the bonus of more revenue.

I personally believe that the transition to renewables & electric car will happen much more quickly than most of the oil majors believe & there is the likelyhood of many new entrants into the market. Leafing technology companies are now often 100 % renewable powered & they can lever their knowledge to enter the generating & storage markets.

Regards,

[odysseus2000]

For unbiased views in the area of energy, with detailed analysis (& numbers!); I suggest you take to perusing some of the articles here -

Energy Matters | Energy, Environment and Policy
http://euanmearns.com/

I would be very wary about basing investment decisions on experts views. Often these views are over thought.

Market participants think simply & react to price caring little for detailed investment research.

Regards,

[OhNoNotimAgain]

Probably the biggest threat to carbon technologies imho is taxation. Until recently there has been no alternative to hydrocarbon transport fuels & so politicians have had to allow their use. But now that renewables, electric cars, electric storage etc are expanding in use there is an alternative & whether global warming is fact or fiction enough politicians believe it for them to want to accelerate the transition to clean renewable power & one easy way to do that is with more taxes on hydrocarbons & this brings the bonus of more revenue.

I personally believe that the transition to renewables & electric car will happen much more quickly than most of the oil majors believe & there is the likelyhood of many new entrants into the market. Leafing technology companies are now often 100 % renewable powered & they can lever their knowledge to enter the generating & storage markets.

Regards,

Not taxing EVs and loading road taxes onto internal combustion engined is cars is fine as long as the first remains small and the second stays large. But if you are right and there is a large switch the numbers will quickly fall apart and taxes will need to be imposed on EVs. Then the economics will start to look very different.

[odysseus2000]

Probably the biggest threat to carbon technologies imho is taxation. Until recently there has been no alternative to hydrocarbon transport fuels & so politicians have had to allow their use. But now that renewables, electric cars, electric storage etc are expanding in use there is an alternative & whether global warming is fact or fiction enough politicians believe it for them to want to accelerate the transition to clean renewable power & one easy way to do that is with more taxes on hydrocarbons & this brings the bonus of more revenue.

I personally believe that the transition to renewables & electric car will happen much more quickly than most of the oil majors believe & there is the likelyhood of many new entrants into the market. Leafing technology companies are now often 100 % renewable powered & they can lever their knowledge to enter the generating & storage markets.

Regards,

Not taxing EVs and loading road taxes onto internal combustion engined is cars is fine as long as the first remains small and the second stays large. But if you are right and there is a large switch the numbers will quickly fall apart and taxes will need to be imposed on EVs. Then the economics will start to look very different.

Yes, if electrical propulsion & renewables becomes the dominant energy mode there will have to be re-alignment of taxation policy.

The Inland Revenue have been good at finding new taxes since the Napoleonic wars & I doubt they will struggle.

But we will have renewable power & clean transport so not a bad swap.

Regards,

[tjh290633]

Some of the time you may have renewable power. On a windless dark night you will need some backup source.

That electrical energy will not be tax free.

TJH

[odysseus2000]

Some of the time you may have renewable power. On a windless dark night you will need some backup source.

That electrical energy will not be tax free.

TJH

Currently when demand is low such as overnight, power is produced but it has no market. If large scale storage happens there will then be a market for power produced which now can't be sold, this should be a windfall for the generators.

The bigger taxation issue will occur if, as I believe is likely, hydrocarbon use plummets and the treasury is no longer blessed by the tax it levies on petrol and diesel.

If this starts to happen I expect the treasury to find some other revenue stream which may be a tax on renewables, electric cars or some unrelated areas.

Regards,

[schober]

Well, I've not bothered to pay $9 for the report
https://www.nature.com/articles/s41558-018-0182-1
They are using a model!
THe 1st rule of modelling is that the predictions reflect the beliefs and prejudices of the modeller

However Dr John Constable & Professor Gordon Hughes have read it and this is their report

https://www.thegwpf.org/content/uploads ... Babble.pdf

.......... This paper is essentially an op-ed piece in academic garb. It is
not a research paper, since it produces no new empirical information, and simply reports the
output of a black box modelling exercise using data that is poorly documented and without
any evidence of forecasting reliability. Whether the graphs and other outputs tell us any-
thing useful about the future depends very much on whether the reader accepts the reliance
that the authors place on
• their selection of input data
• the formulation and calibration of their model.
The predictions made are on the largest scale imaginable and entirely misrepresent ....................................... more

Why I wonder did Ms Harvey not ask Mercure or Vinuales any critical questions?

[dspp]

Messrs Dr John Constable & Professor Gordon Hughes and the spin machine known as the GWPF are not exactly neutral commentators in this area.

regards, dspp