One Percenter Grantham: Wind, solar to replace fossil fuels within decades

[kristopher]

Grantham: Wind, solar to replace fossil fuels within decades

By Giles Parkinson on 11 February 2014

Legendary hedge fund investor Jeremy Grantham says there is no doubt that solar and wind energy will “completely replace” coal and gas across the globe, it is just a matter of when.

...

“Even in the expected event that there are no important breakthroughs in the cost of nuclear power, the potential for alternative energy sources, mainly solar and wind power, to completely replace coal and gas for utility generation globally is, I think, certain.

...

Grantham says it could happen quicker than even he believes, and will have major implications for new investments in the fossil fuel industry – a topic very much in mind for project developers and bankers in Australia.

“I have felt for some time that new investments today in coal and tar sands are highly likely to become stranded assets, and everything I have seen, in the last year particularly, increases my confidence,” Grantham writes.

“China especially is escalating rapidly in its drive to limit future pollution from coal and gasoline and diesel powered vehicles....

So who is Grantham? I'd never heard of him before reading the above article. Here are a couple of references I found.

Invest like a legend: Jeremy Grantham
DAVID BERMAN

The chief investment strategist at global asset manager GMO has managed to dodge recent bubbles and scoop up opportunities on the cheap. But he’s getting increasingly worried about the environment, which bodes ill for Alberta. And don’t get him started on the Fed…

What’s your feeling about the state of the world?
In the short term, we’re jogging along okay. In the longer term, I worry about the inability of many countries to come to terms with environmental issues. There is little sign that anyone gets the point that we can’t afford to go on burning coal unless we want to end up with a miserable, dystopian future.

Environmentalism crops up quite a bit in your thinking these days. To what extent are you arguing as an environmentalist versus an investor?
It’s very hard for me to separate them. It leads to some clear conclusions: Coal and tar sands will be stranded assets, in that they won’t get their money back. The coal industry is seen increasingly as dangerously polluting and contributing to global warming. The pollution in Chinese cities may be the single-biggest driving factor on that.

You’ve been critical of Canada’s oil sands in particular. Why?
The tar sands is a particularly dirty and expensive form of fossil fuel. It doesn’t bubble out of the ground like it does in Saudi Arabia. If we burn an appreciable chunk of your tar sands, we’re toast. We’re in this boat together, and the boat is leaking.

You’ve been warning of a potential stock bubble, followed by the third bust since 2000.
....

http://www.theglobeandmail.com/report-on-business/rob-magazine/invest-like-a-legend-jeremy-grantham/article16617287/

See also: http://en.wikipedia.org/wiki/Jeremy_Grantham

And for the inevitable tangental expressions of anger at "capitalism" - for the purposes of this conversation I frankly don't care what your feelings are about it.

I'd agree with most criticisms of the system and the greed of the 1%. But, that is the system we have and right now I'm focused on moving the planet away from CARBON. I also happen to believe that an energy transition to a system of distributed renewables is one of the most effective things we can to to level the global economic system and that working to make that transition a reality is job one until it is accomplished.

To that end, I've long maintained that only when the economic winners of taking action outnumber the economic losers of that action will climate change solutions accelerate to the pace we must see it reach.

IMO this is one indicator that this economic 'tipping point' is approaching.

[msongs]

1. energy corporations will do anything they can to gouge us and try to prevent this from happening nt

[kristopher]

3. True, but that's only part of the point.

The other part is that their is substantial momentum being developed against the dark influence of the "energy corporations".

I'd suggest that you need to find a new shorthand for those you are calling the "energy corporations" as that term is preparing to lose the meaning you've employed. It makes sense to think of fossil fuel companies, owners of large scale centralized thermal plants or vertically integrated utilities in terms of Big Oil etc.; but talking about solar and wind in way simply doesn't make sense when we are all energy producers. I mean, we can certainly expect that most ownership in the final system is going to be local and small scale and also, that the manufacturers of the equipment to produce energy will have no more control over their output than a company manufacturing TVs or stereos has over the entertainment industry.

[Fumesucker]

2. "We’re in this boat together, and the boat is leaking."

Wish more of the 1% realized that.

[kristopher]

4. I think a lot of them are thinking like that.

The problem is control of resources. In this realm it doesn't accomplish as much to control IT products likeGoogle, for example, as it does to control fossil fuel products like coal and oil.

[kristopher]

5. Goldman Sachs says coal-export terminals are a bad investment

Goldman Sachs says coal-export terminals are a bad investment
By David Roberts

No less an investor than the mighty Warren Buffett has proclaimed that the decline of coal in the U.S. will be gradual but inevitable. Given flat demand for electricity, cheap natural gas, burgeoning renewables, rising efficiency, and future carbon regulations, new coal-fired power plants are bad bet, which is why they aren’t getting built.

To save their bacon, U.S. coal mining companies want to export their coal to hungrier markets, mainly Asian markets. OK, mainly China. Demand for coal in China is a crucial justification for the export infrastructure coal companies want to build in the Pacific Northwest — export terminals in Oregon and Washington that would handle coal shipped by train from the Powder River Basin in Wyoming and Montana. (Activists are battling those plans, with some success. A similar fight is happening in British Columbia.)

But overseas demand for thermal coal — the kind used in power plants — has been overestimated. New investments in thermal coal infrastructure, unless they come online quickly, will miss a rapidly closing window for profitability. In coming years, there won’t be enough demand growth to justify such investments.

That’s the explosive conclusion of a report recently issued by analysts at Goldman Sachs. (It’s not public, so I can’t link to it.) The implication for coal-export projects in the Pacific Northwest is clear: They are bum investments. You don’t need to share concerns over climate change to see it. Just economics.

——

For roughly the past decade, thermal coal has been on a global growth spree, mostly driven by meteoric demand out of China:

Over the period 1990-2011, global demand [for thermal coal] increased by 2.5 billion tonnes, equivalent to an average annual growth rate of 3.0%. However, growth was highly concentrated in just two countries: China alone accounted for 72% of the global increase in coal burn, while India accounted for an additional 17%. Excluding those 2 countries, global consumption was only growing at an annual rate of 0.7% per year.

<snip>

http://grist.org/climate-energy/goldman-sachs-says-coal-export-terminals-are-a-bad-investment/