A new groundbreaking report , Wells, Wires and Wheels, shows a huge capital-efficiency advantage of solar and wind over oil. The report introduces “the concept of the Energy Return on Capital Invested (EROCI)…a metric that allows for the comparison of the energy yielded from a given level of investment in different energy sources,” as it applies to vehicles—cars, light and heavy vehicles.
If you thought things were beginning to look bad for the oil industry, they just got a whole lot worse. In this post, Jeremy Leggett uses a 4-minute slideshow to summarize the findings of the report.
From Bad to Worse for Big Oil
In this potentially game-changing report, BNP Paribas shows how “the economics of oil for gasoline and diesel vehicles versus wind and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.”
Wells, Wires and Wheels follows recent headlines that paint a dismal future for Big Oil. Norway Is Walking Away From Billions Of Barrels of Oil. Frackers Face Harsh Reality As Wall Street Backs Away. ‘Oil’ and “Gas Become Dirty Words in FTSE Rebranding. And there’s more, a lot more.
Jeremy’s conclusion: This really is seismic stuff, with huge implications for all the issues that depend on solar and other survival technologies accelerating faster, and the incumbency—Big Oil—fully retreating from its planet-wrecking civilisation-imperilling rearguard defence of oil and gas.
Where We Are In The Clean Energy Revolution
“White Elephants” – Canada, US, UK Wasting Billions On Energy Projects
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Sorry for the length —
At first glance, 2C’s brief post of this “potentially game-changing report,” which emphasized “the dismal future for Big Oil” appears to be a good fit for 2C’s purpose.
I respectfully suggest, however, that 2C may have missed an opportunity to share with it readers some important facts about BNP Paribas, the major multinational corporation that published this report.
For example, it might have drawn attention to the fact that it was BNP’s Asset Management division that prepared the report. In BNP’s own words: “We will maintain an unwavering focus on achieving long-term sustainable returns for our clients.”
Having skimmed the 40-page report myself, 2C might have echoed my impression that BNP’s 40-page report reads like one very long sales pitch for renewables, possibly targeting prospective investors, surely not 2C’s readership. The report is teeming with economic jargon, a cognitive challenge for me and perhaps others.
In fact, a cursory glance at the report’s opening paragraph, might have prompted 2C to share this passage with its followers, reflecting the report’s very narrow frame of reference: “In this report, we focus on the EROCI [Energy Return on Capital Invested] for a $100bn outlay on oil and renewables where the energy is being used specifically to power cars, other light-duty vehicles (LDVs), and other light and mid-heavy vehicles.”
2C’s readers may have been interested in knowing the educational background of the two authors featured in the post: Jeremy Leggett has a D.Phil., is a British social entrepreneur, writer, and director of an international solar solutions company. Mark Lewis, the author of the BNP report, has a BA in Modern Languages and Economics, and an MA.
Given BNP’s primary capital investment business interests, the report’s narrow focus for a likely target audience of prospective investors, would it not be fair to say that BNP had a vested interest in tailoring the content of its product accordingly?
Turning to Jeremy Leggett’s 11-slide precis of the BNP reports, 2C could have drawn attention to these three remarks by a very astute reader:
“First; until someone builds a self-replicating solar/wind power installation – i.e. one capable of powering all the processes, from mining to refining to smelting to transport to fabrication, needed to build and run itself with no fossil inputs – no-one will know what wind/solar really cost in hard-energy terms.
Second: A significant chunk of BNP Paribas’ business is vehicle leasing, where the current market is 95+ combustion vehicles leased for every new EV. One doesn’t have to be a genius to work out that mass private motoring was developed primarily as the most efficient means of turning concentrated energy from oil into living standards that are unbelievably high compared to those of pre-fossil societies that ran on ‘current account’ solar energy. Anyone who thinks green motoring will be anywhere as big as combustion motoring really isn’t connecting the dots.
[Third]: Having been in the auto industry for 30 years, I’m sure players like BNP Paribas have a very shrewd idea of how large (read: small) the private vehicle market will be when it’s fully electrified. But BNP et al will be very grateful for the opportunity to finance all the combustion vehicles they can, down to the bitter end of oil-fired mass motoring.”
Thanks for that input. I typically follow cost per barrel of oil and no more. Tony Seba makes a prediction on a $10/bbl energy cost equivalent, in the next few years, based on several factors, one being solar sourced energy.
Frank – no apologies needed for length of response. It’s full of great information and suggestions. Some readers will find it quite interesting.
As Les alludes to in this thread, Tona Seba is quite confident that solar energy and batteries will displace the combustion engine in a few decades or less. Of course that remains to be seen.
And thanks for the mini-analysis you did of the BNP Paribas report, something I did not do in my time-constrained world of managing a website/blog with no staff.
An ongoing thank you for your ongoing feedback.
Awesome article Rolly … I recall when Leggett pointed out ARAMCO’s potential decision to go public with a market share. And explained to someone like me that’s an early indicator of fossil fuel investment risk. If the market takes out fossil fuel, that’s a short term win anyway. A huge win, but human behavior’s still out there, consuming 1.74 biosphere’s annually (Overshoot day). 🙂
Les – I share your concern that human behavior must change for energy conversion to renewables to become “a huge win”. A clean energy platform will not solve the problems of overshoot, over-development and over-consumption.
Thank you Les. I appreciate the feedback.