Kingsmill Bond, Energy Strategist at Carbon Tracker, is one of the very best analysts of the energy transition. (Listen to a podcast here with David Roberts of Volts). With his permission, I have attached below the text of an email he sent out this morning (October 13th 2021) after the IEA press conference.

The IEA press conference this morning was a tour de force, and well worth watching even the first 20 minutes. In the same way as it is much more profitable to buy an unloved stock where management turns it around, the impact of the IEA’s analysis is all the more powerful because they have moved over the course of the last couple of years from supporting continuity of the fossil fuel system to embracing renewables. And why not - when the facts change, you change your mind after all; I look forward to a similar change of view from those who followed the old IEA approach.
https://www.iea.org/events/world-energy-outlook-2021
So a few points from the press conference by Fatih Birol, Laura Cozzi and Tim Gould. The new heroes of the energy transition...
* We are moving to a new energy economy.
* It will be better than the fossil fuel economy. Cheaper, cleaner, fairer, more resilient, safer. With higher GDP growth.
* This is a key turning point in human history. Rising energy demand but falling fossil fuel demand is possible.
* Even if we don’t hit all the climate goals, the fossil fuel sector will be radically disrupted.
* This is the decade of disruptions. Coal demand has already peaked and oil and gas demand will likely peak by 2025. 2019 thus was the peak in fossil fuel demand, and we are bouncing along the plateau.
* There is a lot that we can do at no economic cost to reduce emissions this decade. By 6Gt extra in total. And we can deploy 800 GW of new solar and wind at no economic cost as they are cheaper than the fossil fuel alternative.
* A new geopolitics of energy will emerge as trade shifts from fossil fuels to minerals and hydrogen.
* New energy is a huge market opportunity, with demand increasing tenfold to over $1tn and a new opportunity bigger than oil today.
* Since Paris, we have reduced expected global warming in 2100 from 3.6 degrees to 2.6. We now need to use Glasgow to get it down to 2.1 degrees and ratchet lower. At Glasgow policymakers need to send the world a message: we will do this. If they do that, solutions will happen faster.
* We have to triple clean energy investments and get them out into emerging markets.
* If you continue to invest in dirty energy you may well lose money. You will make profits from the clean energy economy.
* There will be volatility at the top. But we need to plan for it and to build renewables quicker. Governments should have ‘people’ strategies as well as hydrogen strategies, to manage change.
* Technology costs of new energy will keep falling and this will help to solve the hard to solve sectors.
* The high fossil fuel prices in the last few months are caused by the demand bounceback in the middle of continuing COVID disruptions. Not by renewables. We need to build more renewables to solve this issue.
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It is also worth highlighting some of the many old fossil fuel arguments that they have just bankrupted. With the ‘new’ IEA answer in bold.
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The old fossil fuel arguments
*Energy transition means degrowth. No – it means higher growth
*Decline rates mean you have to keep investing in oil and gas. No - you need some maintenance capex but no new fields
*Peak demand for fossil fuels is highly unlikely. No – peak demand is now the central scenario.
* It will take ages for fossil fuels to be disrupted because they are so big. No – this is the disruption decade.
* Energy transition is not just. No – it is fairer, cheaper, local, and cleaner.
* Inertia will stop change. No – we have already bent down the curve of fossil fuel demand from rapid growth to no growth, and decline is in our sights
* Renewables are tiny and irrelevant. No – they are big enough to disrupt incumbents
* Renewables can’t grow rapidly. Yes they can and this is the central scenario
* Energy transition is expensive. No – it is much less expensive than inaction. And 40% of the necessary actions to speed up change have no economic cost. Household energy costs will be cheaper if we transition than if we do not.
* Fossil fuel demand always rises by some special law of history. Not any more. This is a historic turning point.
* We don’t have enough minerals to do this. Yes we do. They even worked out how big trade will be in 2050
* There is not enough land. No - land availability is no constraint. It just means trade in hydrogen.
* Intermittency stops change. No - this is soluble if you increase flexibility. They even worked out flexibility solutions for 2050 in detail.
* Hard to solve sectors stop change. No – change happens anyway. Hard to solve sectors are simply the last area to change. And anyway, falling renewables costs will make all this easier
* There will be job losses from the transition. No there will be net job gains of from 13 to 24 million. And 75% of them will be local.
* CCS will enable us to continue with business as usual. No – CCS is for the last 10% of emissions or so. You have to curb fossil fuel demand and supply.
* EVs are tiny. No – they are big enough to drive a peak in oil demand by 2025.
* Electricity is too small to matter. No – electricity is the key driver of change as it increases from 20% of final consumption to 50%. In any event, final consumption is a misleading metric because electricity is a much more efficient technology than fossil fuels.
* We don’t have all the technologies we need for a transition by 2050. Of course not, we are in 2021. But we do have everything we need for this decade.
* The gilets jaunes will stop the change. No – the benefits of change for the people are overwhelming. Governments need to figure out people centred strategies to find solutions for those at risk from change.
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Not all will be rosy. There are some import and accurate caveats they make to their newfound optimism:
* This is not going to be easy. Because of inertia and incumbency and so on.
* There will be volatility at the top. There will be some losers from change. We need to help them out or they will seek to block it.
* We need to increase the capital flowing into renewables. (I see this as a policy issue not a capital issue)
It is of course possible to criticise the analysis; falling casts mean that change is likely to be cheaper and easier and so on. But this is still a big step forward.