Beware of the unintended consequences but before I say something and ideologues jump down my throat I very much look forward to the day when fossil fuels are an element of history. Now however this is not possible.
Due to divestment, not just of share portfolios, but restrictions in capital as banks, especially Euro domiciled, there is no green or brown field investment the rate of reserves is now plummeting and resource companies are being cut off from capital markets on both the equity and the debt side.
We at present do not have the technology to generate, let alone store, the energy that fossil fuels provides. There is an irrevocable nexus between energy conversion and quality of life/GDP/mortality and a range of factors many would consider rather important.
Further complicating affairs is that should we somehow possess by instant miracle the technology and the capacity based on existing core technologies then we have NOWHERE near the resources to build it anyway. Oh and BTW many of these resources that we do possess are located in China and Russia.
So a further consideration of engagement over divestment one also needs to consider the benefit of engineering possibility and practicality over ideology and twitter trend following of the uninformed masses.
The way things are going $140/barrel oil is not even on the expensive end of where energy prices can go. Whilst demand is flatlining due to efficiency and some greener energy options it is the precipitous cliff of supply that will determine prices in the next 5-10 years.
Just watch Germany crumble if Putin cuts off the gas, they have divested coal and nuclear, cut of France (nuclear) from their grid and relied on renewables and gas. This one factor has greater short term financial risks to the globe than the invasion of Ukraine, humanitarian issues notwithstanding.
I wish for a cleaner better world, I just want to be able to cook the kids dinner and read them a book by bedlight in the evening.
Interesting, thank you, Klement! I wonder about the overall effect, though: If Shell stops to produce oil, will that really lead to higher oil prices and (therefore) lower consumption or will other oil companies fill the gap?
The most likely scenario is that Shell would sell its oil operations to another company, isn't it? So there probably isn't much to be gained for the environment here, is there?
And let's make the (wild) assumption that all publicly traded companies stop producing oil: Wouldn't private equity fill that gap as long as there is demand for oil? Granted, PE might look for higher margins which would probably lead to higher prices (unless they can buy oil operations for cheap).
My current understanding is that reducing oil consumption (e.g. by pushing forms of transport that use less or no fossil fuels) is more effective than making individual oil companies change their way of doing business. But maybe I'm wrong. :)
You are not wrong. What is happening is that private oil companies like shell are selling their oil assets to sovereign wealth funds and national producers in Abu Dhabi and other countries that are not answerable to public pressure. And that’s it. The stuff is still around and oil is still being produced m, just not answerable to the public anymore.
Thanks again, Klement! One new thought I had this morning: If Shell sells their oil assets to Abu Dhabi and uses the money to invest in renewable energy, that new energy supply has the potential to crowd out some fossil fuels, doesn't it?
So let's say that Shell now produces solar energy that can be used to speed up the transition from conventional to electric cars. Since electric cars seem to be more environmentally friendly, that would be a benefit for the environment, wouldn't it? Or am I missing something?
(By the way and somewhat related: bi-directional charging of electric cars could help to solve the energy storage issues we currently have with renewables.)
Yes and no. You implicitly assume that the investment in renewables would not be made had Shell not sold its oil assets. But that is not true. The push to invest in renewables happens whether Shell does it or not, simply because electricity generated from solar and wind is the cheapest energy anywhere. This means that all marginal investments are made in renewables anyway because it is not economical to invest in new oil exploration.
Beware of the unintended consequences but before I say something and ideologues jump down my throat I very much look forward to the day when fossil fuels are an element of history. Now however this is not possible.
Due to divestment, not just of share portfolios, but restrictions in capital as banks, especially Euro domiciled, there is no green or brown field investment the rate of reserves is now plummeting and resource companies are being cut off from capital markets on both the equity and the debt side.
We at present do not have the technology to generate, let alone store, the energy that fossil fuels provides. There is an irrevocable nexus between energy conversion and quality of life/GDP/mortality and a range of factors many would consider rather important.
Further complicating affairs is that should we somehow possess by instant miracle the technology and the capacity based on existing core technologies then we have NOWHERE near the resources to build it anyway. Oh and BTW many of these resources that we do possess are located in China and Russia.
So a further consideration of engagement over divestment one also needs to consider the benefit of engineering possibility and practicality over ideology and twitter trend following of the uninformed masses.
The way things are going $140/barrel oil is not even on the expensive end of where energy prices can go. Whilst demand is flatlining due to efficiency and some greener energy options it is the precipitous cliff of supply that will determine prices in the next 5-10 years.
Just watch Germany crumble if Putin cuts off the gas, they have divested coal and nuclear, cut of France (nuclear) from their grid and relied on renewables and gas. This one factor has greater short term financial risks to the globe than the invasion of Ukraine, humanitarian issues notwithstanding.
I wish for a cleaner better world, I just want to be able to cook the kids dinner and read them a book by bedlight in the evening.
Interesting, thank you, Klement! I wonder about the overall effect, though: If Shell stops to produce oil, will that really lead to higher oil prices and (therefore) lower consumption or will other oil companies fill the gap?
The most likely scenario is that Shell would sell its oil operations to another company, isn't it? So there probably isn't much to be gained for the environment here, is there?
And let's make the (wild) assumption that all publicly traded companies stop producing oil: Wouldn't private equity fill that gap as long as there is demand for oil? Granted, PE might look for higher margins which would probably lead to higher prices (unless they can buy oil operations for cheap).
My current understanding is that reducing oil consumption (e.g. by pushing forms of transport that use less or no fossil fuels) is more effective than making individual oil companies change their way of doing business. But maybe I'm wrong. :)
You are not wrong. What is happening is that private oil companies like shell are selling their oil assets to sovereign wealth funds and national producers in Abu Dhabi and other countries that are not answerable to public pressure. And that’s it. The stuff is still around and oil is still being produced m, just not answerable to the public anymore.
Thanks again, Klement! One new thought I had this morning: If Shell sells their oil assets to Abu Dhabi and uses the money to invest in renewable energy, that new energy supply has the potential to crowd out some fossil fuels, doesn't it?
So let's say that Shell now produces solar energy that can be used to speed up the transition from conventional to electric cars. Since electric cars seem to be more environmentally friendly, that would be a benefit for the environment, wouldn't it? Or am I missing something?
(By the way and somewhat related: bi-directional charging of electric cars could help to solve the energy storage issues we currently have with renewables.)
Yes and no. You implicitly assume that the investment in renewables would not be made had Shell not sold its oil assets. But that is not true. The push to invest in renewables happens whether Shell does it or not, simply because electricity generated from solar and wind is the cheapest energy anywhere. This means that all marginal investments are made in renewables anyway because it is not economical to invest in new oil exploration.