The energy transition is coming. Not maybe someday. But certainly and sooner than most people think. Energy industry insiders know it. Big Wall Street types know it. Judging by his new energy plan, Joe Biden knows it. Anybody who didn’t know it before the coronavirus should know it now.
However, few Americans seem to have noticed, and it’s important that more of us do. We here in Midcoast Maine should be getting ready to play a part in speeding the process along, to help save as much as we can of our climate -- and to make sure the transition unfolds our way, not in the way Wall Streeters and post-oil corporate giants prefer. It’s both practical and possible to raise our pre-virus ambitions.
The pandemic has both sped up the energy transition and brought its inevitability into sharper relief. Back in March transition optimists, myself included, were suggesting that global oil demand this year might fall by 3% or so from 2019 levels amid virus-related economic closures. Now, even the relatively conservative US Energy Information Administration is forecasting 2020 drops of roughly 8% worldwide and 10% in the US. That’s huge considering that demand had been growing by only 1%-2% per year before.
Natural gas and electricity use are down, too. With less electricity needed, and renewable capacity still growing, solar, wind and hydro’s combined share of total electricity soared to 23% in the US in April and hit 80% in parts of the windswept plains, Reuters reports. Partly as a result, coal use is set to tumble by a whopping 30% for 2020 as a whole -- under a president who has repeatedly vowed to save the “beautiful” fuel.
The question now in energy circles is whether oil, gas and/or coal demand will ever regain 2019 highs or whether the all-time peak in fossil fuel consumption is behind us. Forget the “peak oil supply” that deceased Houston investment banker and part-time Rockport resident Matt Simmons and other free thinkers in the oil industry explored a decade ago. Now the question is when oil demand will dry up, making remaining oil reserves worthless.
It’s now widely accepted that solar and wind are not only the cheapest way to generate electricity in most of the world, but that they will soon become cheapest across the US, as well, where low natural gas prices put renewables at a unique disadvantage. Coal first and soon natural gas are becoming the losers.
Oil hasn’t been used much to generate electricity for decades. Transportation is where most of our oil goes. Here it’s a question of when and whether air travel fully recovers and of electric vehicles. EV sales fell worldwide during the economic shutdown, but they are back on the rise, and now it’s their prices that are falling. Top EV maker Tesla this month became worth more on the stock market not just than GM, Ford and Volkswagen, but than world-leading carmaker Toyota, as the conventional carmakers struggle to catch up in EVs.
These trends have continued while oil, gas and coal use has been depressed by Covid-related economic closures, explaining why energy and investment insiders are questioning whether fossil fuel demand will ever make it back up to pre-crisis levels.
Corporate responses in play before the virus struck are also accelerating. Under pressure from climate-savvy investors – including the likes of giant fund managers Vanguard and Black Rock -- European oil companies as big as BP, Shell and France’s Total over recent months have all declared their intention to go nearly or fully carbon-neutral by 2050.
That will take some doing, since virtually their entire business hinges on emitting carbon. They may fail and end up going the way of buggy makers. But they’re trying, upping previously meager investments in renewable power and other low- or no-carbon activities. US oil companies still lag, although Chevron has begun tepidly acknowledging the need to change, leaving Exxon Mobil as the only proclaimed true believer among the oil majors in oil and gas growth for decades to come.
One of the things this means is that Maine’s goal of reducing greenhouse-gas emissions by 80% by 2050 -- and Governor Janet Mills pledge to make Maine carbon-neutral by 2045 -- are anything but radical. The state has promised to do no more than many of the world’s largest oil companies. Indeed, presumed Democratic Party presidential nominee Joe Biden has come out with a campaign document promising to get fossil fuels out of power generation by 2035 – not the same as cutting all greenhouse-gas emissions, but still a more ambitious promise than Maine has made.
Shouldn’t our Midcoast Maine towns and communities be willing and able to do more than oil companies to save the climate?