Expectations for COP29 and Insights from the IEA World Energy Outlook 2024
This week on the podcast, Peter and Jackie discuss what they are watching for at the upcoming 29th Conference of the Parties to the UN Framework Convention on Climate Change, better known as COP29. The conference will take place in Baku, Azerbaijan, from November 11th to 22nd, 2024.
Next, they delve into the IEA’s recently released World Energy Outlook 2024. This annual report is widely read and used for discussions on the future of energy. They review some key points that caught their attention, including an outlook for abundant energy supply in the latter part of the 2020s, peak fossil fuels by 2030, electricity’s growing role, and the adoption of EVs.
They also consider a few new EV labels: extended-range electric vehicles (EREVs) and range-extended electric vehicles (REEVs).
They also introduce Peter’s recent article on the proposed cap on Canada’s oil and gas emissions.
Content referenced in this podcast:
- UN Emissions Gap Report 2024: No more hot air…please! (October 2024)
- UN “It’s Climate Crunch Time” video about three future scenarios, including game over scenario (October 2024)
- IEA World Energy Outlook 2024
- Peter Tertzakian’ s commentary “It’s time for a carbon policy time-out (November 2024)
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Episode 259 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Welcome back. Well, it’s getting repetitive, Jackie. We can’t seem to stop talking politics, and especially today, the day of the US election. The election may be over. We don’t know how it’s going to end as we record this, but the talk about politics and its implication to everything, including energy policy, is not going to cease anytime soon.
Jackie Forrest:
And we’ve had plenty of recent breaking news with provincial elections in Canada. We’ve got BC, New Brunswick, Saskatchewan. Nova Scotia is now having an election, and we’re hearing rumors about a possible Ontario election too. So there’s so much to talk about, but we want to hold off on sharing our views on those Canadian elections, along, of course, with the US election results, which we don’t know about yet, because our next podcast, we’re going to focus all about elections, both Canadian and US election.
Peter Tertzakian:
And we’ve got a great guest coming on that one.
Jackie Forrest:
So this week we also had more details on Canada’s oil and gas emissions cap. It’s a very complex policy sitting on top of an existing, somewhat dysfunctional and complex, carbon policy. And Peter, you wrote about that in your article this weekend on the Hub titled It’s Time for a Carbon Policy Time Out. So we will put a link to that in the show notes, and we will talk about it in a few weeks when we’ve had time to absorb all the details. So for today, since we won’t be talking about that, we are going to talk about some interesting topics. We don’t have a guest today, but there’s a couple of things coming up we wanted to go over. The big COP meeting is going to happen November 11th to 22nd in Baku, Azerbaijan. And then we also had this new IEA World Energy Outlook that came out for 2024, and we always like to look at that. It’s really something like a 400-page document. So we wanted to go over some of our impressions from looking at that. But let’s start with COP.
Peter Tertzakian:
Well, it’s coming up. What date does it start again?
Jackie Forrest:
November 11th, so right away, and it ends on the 22nd. So there’s a couple of things we’re watching for, but I think the most important thing actually is going to be the results of today. The results of the US election I think are really going to affect the level of ambition. If Trump is elected, he’s talking about things… He already pulled out of the climate change agreement in the past. I think it’s going to change the level of ambition quite, and distract people from the topics of the meeting.
Peter Tertzakian:
No, for sure. If we wind back to 2016 when Donald Trump won the election back then, the first thing he did on day one was to shred the Paris Agreement, or the American side of the Paris Agreement. So it’s likely that he’s probably going to pull the US out of the whole Paris Agreement and all those sorts of proceedings, in my opinion. But he hasn’t won yet as of the ballot counting right now, we’ll see what happens.
Jackie Forrest:
Well, and I think also people maybe don’t appreciate how much pressure the US does put on other countries to have more ambition. Obviously, if Trump’s not there, or if Trump is elected and the US delegation is not making commitments or not pressuring others, I think that also results in less ambition.
Peter Tertzakian:
Well, I think ambition is going to be difficult to ratchet up given the complexities of the world situation with the energy insecurity in the world, with the two hot wars that we’ve got going on, we’ve got inflation. Yes, it’s eased off a bit, but the whole affordability issue, the kitchen table is not eased off at all. So I just think that adding yet more carbon policy on top of existing carbon policy is not likely to happen. And we’ll see what happens, because next year is the 10th year anniversary. The next COP will be on the 10th year anniversary of adopting the Paris Agreement. And at that point, we’re supposed to also have another review of the targets, aren’t we?
Jackie Forrest:
Yeah, and I think that was supposed to be a big part of this meeting is getting ready for next year, COP 30. So the Paris Agreement requires countries to have a new goal and it must be updated every five years. So right now most countries have these, we call them national determined contributions, which is really their reduction goal for 2030. Most countries haven’t made a hard goal beyond that, and the desire is next year that there’ll be new goals for 2035. And the UN on October 24th released a new paper called Emissions Gap Report 2024: No More Hot Air… Please. And this was probably the most strongest word report in terms of an update, just basically acknowledging the fact that no one’s on track, very few countries are on track, if any, to meet their goals. And they had a video, which I’m going to put a link to in the show notes.
It’s very short, but it was called It’s Crunch Time. It came out with the report titled No More Hot Air… Please. They talked about a world, if we got into scenario one, we win. And it’s like a nice world, kind of like the world we live in today at 1.5 degrees of warming long term. Scenario two is two degrees of long-term warming, and it’s not enough. And we have heat waves and floods. We survive, but human race struggles. Scenario three is if we get to the 2.6 degrees C and beyond, we face dangerous heat, ecosystems break down, lives are lost, and then it’s game over. And it’s quite dramatic.
And I just want to remind you, we’re going to get into the scenarios about the future from the IEA, but the steps IEA scenario, which is I would say their base case, and I think it’s actually a bit optimistic in terms of its outlooks for fossil fuel demand, it’s about 2.6 degrees C scenario. So that’s the track we’re on today. So I know what you’re saying, Peter, about affordability and other issues, the wars, but they’re trying to bring back the focus to the concerns around the decisions we’re making today and how that affects the climate longer term.
Peter Tertzakian:
Well, I think they’re going to have a lot of difficulty bringing the focus back, because every year it gets more dramatic in the language, yet 10 years on, the global emissions continue to go up. Very few countries can claim to be on track even for, say, the 2030 goals. Recognize, I actually went back and looked at some of the numbers, that there was a sense that we, we as in the collective world, would have reduced our emissions by somewhere between 20 and 30% by now, 10 years on. Well, there’s only half a dozen countries or so, most of them in Europe, that have come even close to doing that or are above 20% reduction relative to their baseline.
Most countries are nowhere close. Canada isn’t close. And so 10 years on with the policies that have been put into place and the incentives and the hundreds of billions, well actually it’s now, if you totaled it up over 10 years, I think it’s four or $5 trillion. I’m not sure what the exact number is depending upon how you count it. The reality is that fossil fuel demand continues to go up and emissions continue to go up. And although we have exponential increase in things like renewables, it’s more of a diversification of our energy systems rather than a substitution.
Jackie Forrest:
And we’ll get into those different future scenarios because the IEA thinks we are hitting a tipping point where a lot of the new growth from energy demand is going to be met by clean energy and fossil fuels will start to diminish. But let’s come to that later. The other thing I’m interested in is this carbon markets Article 6 topic. The goal is still to create a functioning global market for trading carbon offsets in the voluntary market or even bilaterally between countries that wouldn’t be voluntary. It would be more under their compliance markets. Now, there was last year, it was unfinished business. Couldn’t get agreement. The United States has taken some leadership in the last year, they’ve issued principles for responsible participation in the voluntary carbon markets in May, and it talked about things like having legit and high quality credits and making sure there was more of a global standard for that.
And actually the UN did publish a standard as well. Now there’s a whole bunch of other standards that have been worked on over the last couple of years, trying to address this issue of quality of these credits. So anyway, I’m doubtful, especially if the Americans aren’t quite as there because of a change in the political landscape. I’m doubtful this will happen, but why I’m interested in it is I think this is one of the things that could really unlock a lot of investment in clean energy. We could get away from the fact that political change in any one country means your project isn’t viable if we had a global market. And so I think this is one to watch and one I hope we get progress on because it really could result in clean energy growing faster.
Peter Tertzakian:
Yeah, I agree. It’s one to watch, the construction of a singular worldwide carbon market. But I really have to say, I think, as a scenario prediction on my part, I think it’s highly, highly unlikely. We can’t even get harmonization and consistency on a national carbon market here in this country. How many carbon markets do we have, 11? It depends how you count, I guess.
Jackie Forrest:
We have too many. We need a national one first, for sure.
Peter Tertzakian:
We can’t even settle on unifying our carbon markets in this country, let alone the world. But actually the Canadian situation of lack of harmony in carbon markets is really a microcosm of the broader problem of territorialism, of protecting trade and all sorts of other things that are going to preclude agreement on any such type legislation to harmonize markets.
Jackie Forrest:
That’s a good point. We’re putting up tariffs and things like that to stop global trade of products and it’s hard to see that carbon wouldn’t [inaudible 00:09:45].
Peter Tertzakian:
We’re going the other way in terms of agreement on trading things, whether it’s carbon or whether it’s cars or what have you. It is just going the other way. So I’m not one ever to stop people from trying to make these agreements, but the extreme low probability of it actually happening would lead me to suggest that maybe we ought to try something different. Maybe the whole construct of trying to get individual countries from the bottom up to achieve their emission targets is flawed. Because of the territorialism and the increased isolationism that we’re seeing in the world, maybe we have to try something different.
Jackie Forrest:
Well, I hope you’re wrong on that one, but I think there’s a good chance you’re right. Of course, we’re going to hear more discussion on this term “phasing out fossil fuels”. So last year the tech said transitioning away from fossil fuels in energy systems. And of course there’s been a lot of complaining that in a year we haven’t achieved anything. Oil demand and natural gas demand and even coal is still very robust. And I’m hoping there may be some more focus on demand side actions as opposed to the supply side. We haven’t seen that yet, but I think that will be a discussion obviously at the meeting.
Peter Tertzakian:
Well, I think the wording needs to change as well. It’s phasing out fossil fuels. It’s phasing out the combustion of fossil fuels because it’s actually people that make the decision to combust the fossil fuels. Fossil fuels by themselves don’t emit anything, as we’ve said many times on this program. And in fact, phasing out oil and gas means phasing out all sorts of other uses of these commodities, including petrochemicals that make everything from the soles of our shoes to tires to lubricants, to pretty much everything that we consume in society that has some material associated with it, including our clothes.
Jackie Forrest:
I like that, phasing out the combustion, because that gets to the end use, too, if we were to start to think of it that way.
Peter Tertzakian:
Yeah, because there seems to be this zealousness about phasing out oil and gas, whereas actually what is the actual combustion, for example, of crude oil products in light duty vehicles? It’s only about how much of a barrel? 30%, something like that?
Jackie Forrest:
Yeah, 30%.
Peter Tertzakian:
So without getting into the minutia, what are your expectations for this COP coming up?
Jackie Forrest:
I’m interested in it being a business-focused conference, as a lot of people said Dubai was. So I’ll be looking forward to seeing if there’s announcements around more funding as we saw last year from the private sector. I did want to note that CRIN, the Canadian Resource Innovation Network, has a pavilion again this year. So I’ll be looking to my LinkedIn for all the updates from that group as they did last year.
But what I’m really going to be watching for is what is the Canadian government going to be doing at this COP meeting, and what are the announcements that they’re going to make that could affect our energy sector, both positively or negatively? And so I do wonder if we’re going to have our new 2035 target come out, because the Canadian government legislated in the Net Zeros Emissions Accountability Act that on December 1st of 2024, we have to come out with our 2035 reduction target, and it needs to be more aggressive than our 2030 target. And for a reminder, Canada’s goal is a 40 to 45% reduction by 2030. We’re nowhere close to that. I think we’re down about seven–
Peter Tertzakian:
We’re five years away.
Jackie Forrest:
And we’re down about 7% versus our 2005 baseline. So I just wonder what the government’s going to do there. They probably are going to make an announcement, in my view, of what the 2035 target is, but I just wonder with the current domestic politics and how that’s going to resonate with Canadians.
Peter Tertzakian:
Well, think of it this way: 10 years on from the original Paris Agreement and the net-zero commitments etc, that were down 7%. And when it comes to carbon abatement, the first tons of carbon are much cheaper and easier to abate than the later ones. So how is it that we’re going to get, in five short years, down to those levels? Some people would say, “Oh, well you have to be ambitious to get to your targets,” but if you’re over ambitious, then people just tune out.
Jackie Forrest:
And then to come out December 1st saying, “That’s not even good enough. By 2035, we have to be at this level.” With the current politics, I’m interested to see if that is an announcement just at COP, and then they try to make it more quiet here domestically or how that’s going to play out.
Peter Tertzakian:
My prediction for the COP is that actually we’re not going to hear very much about it. I think that the fallout from the US election, whatever happens, is just going to overwhelm the news cycle, and that we’re not going to hear very much about COP at all. And also it is on the other side of the planet, and Azerbaijan, I think the attendance numbers that they’re forecasting are about a third of what they were from last year’s. I don’t think we’re going to hear very much this time. And I think that the 10-year anniversary next year is the one where we’re probably going to hear a lot more.
Jackie Forrest:
What about new regulations coming out from the Canadian government? That has happened in the past where they like to have announcements here, like clean electricity regulation or the methane rules come out as final gazette, too. Do you think that’s possible?
Peter Tertzakian:
Yeah, I think all that’s possible, if not highly likely, but that’s our issue. I don’t think on the international stage anybody’s listening.
Jackie Forrest:
We’ll wait and see. We’re going to revisit this after November 22nd. But I agree with you. There’s a lot of news going on in the world, whether it be these wars that are happening in the Middle East. There’s elections all around the world right now, and here, obviously domestically as well. I think it’s going to be hard to grab the attention. Let’s switch topics then to this IEA World Energy Outlook. We will put a link to it. It actually is public. The last couple of years, it’s a public document. It wasn’t before. You had to subscribe to it and it wasn’t that cheap to get. So I think it’s great that it’s public now, so we’ll put a link to it.
After reading it, and I do read the most years, I think that maybe the IEA heard some of the complaints that they were becoming a climate advocacy group, because I did feel like it was more balanced then, especially last year’s. And there was much more reference to their more conservative scenario called Steps, which is this current policy. Current policies exist today, and what would the world look like? That scenario. So I felt that was an improvement. Well, here’s some things that caught my attention and I thought we could debate them. There’s four areas that I wanted to highlight. One of the conclusions was that there’s the potential for ample energy supply in the latter half of the 2020s. And this helps ease concerns around energy affordability and security. And this is because they’re assuming a real slowdown in the growth of the use of hydrocarbons.
And at the same time, we still have a lot of investment on the supply side. So they’re assuming that there’s going to be an oversupply in hydrocarbons. So they talk about things like EVs rising, which reduces the growth of oil demand. There is an increase of LNG demand, but actually the supply is coming on faster, so we’re going to have an oversupply of LNG. Clean energy; we built out a lot of capacity, especially for batteries and solar PV modules, and that’s going to take a while to burn off. And so we’re going to have cheap batteries and cheap solar PV, which is another part of this narrative around cheap energy in the second half of the year. So this is all predicated on this peaking of oil and natural gas demand in the 2030 timeframe, and a real slowdown between now and then. So that’s the part that I think not everyone agrees with, but of course in their scenario, if that happens, then there would be some extra capacity in terms of the hydrocarbon supply.
Peter Tertzakian:
Well, I think there’s some inconsistencies in all this that should be pointed out. I certainly would buy into the view that we could have an oversupply of oil and natural gas because the ability and the technologies to liberate more and more of it out of the ground at cheaper inch cheaper costs is improving all the time. So I could buy into that, and I can buy into the fact that there’s going to be more renewable installations around the world.
But the inconsistency on the electrical power side and things that generate electrical power is that on the demand side, we’ve talked ad nauseum over the last several podcasts about AI-induced electrical power consumption growth. Now you’re talking about 50% adoption of electric vehicles per year. That’ll add to the electrical power demand load. So it’s not clear to me that electrical power, which ultimately is what we consume in our homes and in our factories, is going to actually decline in price. I can buy into the fact that our gasoline prices are going to potentially decline. So just because you have cheaper oil and gas prices doesn’t mean that you don’t have structural problems on the consumption end of the energy systems.
Jackie Forrest:
And that was another big news announcement as they released this report. IEA Fatih Birol said, we’ve witnessed the age of coal and the age of oil. We’re now moving at speed into the age of electricity. So this view that electricity demand is really going to go up, and as you say, Peter, that could result in much higher prices for that type of energy. I did want to just remind people of some facts here: the electricity use today is about 20% of primary energy demand, and under the IEA Step scenario, it becomes 26% in 2035.
So we’re not necessarily getting away from the fact that 80% of our primary energy is from fossil fuels in the next little while. So we’re entering the age… Well, we’re a long way from being in the age of electricity because there’s a lot of growth and a lot of money that needs to be spent for us to build out that infrastructure. Now the other interesting thing the IEA talked about is that they’re actually quite moderate on their views around AI. They think it’s probably not going to be as big of a deal as some people are saying in terms of the demands it puts on electricity.
Peter Tertzakian:
I tend to agree with that. You and I talked about that a couple of podcasts ago, is that something’s got to change, and probably AI data centers are going to become more streamlined and efficient and all that, but still the numbers are very big. And if there’s more of a pull on electricity than there, say, is on liquid and gaseous fuels upstream on oil and gas, then I fail to see the impetus to switch. It’s basic economic theory that if one commodity goes down in price, then the demand’s going to go up. And if the price of a commodity like electricity goes up, then there’s going to be resistance to adopt more of it. Here’s this quote that was in one of the publications, news publications from Fatih Birol, “Surplus fossil fuel supplies would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an age of electricity.”
That’s effectively what you just said, Jackie. But I don’t see it. It somewhat goes against economic theory. Surplus commodity of anything leads to lower prices. Lower prices then lead to more demand and certainly does not encourage switching to a new paradigm, especially when that new paradigm is likely to be more expensive because of the pull. And then, of course, there’s the interconnectivity of the systems, like natural gas is one of the now dominant incremental growth supplies of electricity in tandem with wind and solar. There’s a lot of inconsistencies in this report and in this thinking, and if we’re going to enter into an age of surplus, that just tells me that less is likely to change than more.
Jackie Forrest:
Right. Yeah, no, it’s true. Economics 101: if things are cheap, it’s harder to compete with them for the clean energy. I want to come back to that idea that fossil fuels are going to peak by 2030 because that is really the important assumption here in terms of getting this surplus of hydrocarbons that they talk about. Just to remind you, and this is for that Steps current policy scenario, oil demand will go from over a hundred million barrels a day to something like… I think we’re at 103 million barrels a day right now to about a hundred by 2030, and then 93 by 2050. So it’s a very gradual decline. Natural gas will be flat after 2030.
First of all, that is very different than a forecasts out there, especially for natural gas. No one’s really forecasting natural gas to be flat, and that’s part of why they see LNG being oversupplied because there isn’t such growth in natural gas. But one of the important assumptions in this Step scenario I wanted to point out is that they think there’s a real change in the growth of primary energy demand. So over the course of the past decade, global energy demand has increased annually at about one point a half percent, and they think that it slows to a half a percent.
And this is because things become more efficient, we move to more services instead of making steel and things like that, and more electricity, which is more efficient. I think this is a real flawed assumption. I don’t see primary energy demand slowing down. And efficiency, well our whole installed infrastructure of stuff isn’t going away tomorrow. It’s still as inefficient as it was in 2022. So I think if you assume more of a one and a half percent growth in energy use, it’ll be very difficult to see fossil fuels plateauing the way they’re predicting.
Peter Tertzakian:
Well, I would say that the only way that fossil fuels would plateau rapidly, especially oil, is if the Chinese economy really falls out of bed, if it really starts to slow down even more than it has already, and that there is real economic problems in China, because China has been such a contributor to the growth of oil over the course of the last 20 years. If it slows down, I can see it’s a peak. But that type of leveling out, plateauing of oil consumption as a consequence of slowdown in economy, should not be confused with success in substitution, especially if the commodity is cheap. Because if it’s cheaper, people are less inclined to switch.
Jackie Forrest:
And their assumptions weren’t about a slowdown in economic growth, they were about moving to electricity. Slightly slower population growth, but it wasn’t to do with slowdown of the economy. Hey, I wanted to come back to this, why AI electricity demand may be more modest because I think there were some interesting facts they had. They talked about supply chain bottlenecks limiting the amount of the chips that would be available for these servers, that Taiwan Semiconductor, which holds more than a 90% share of the market for these AI-related chips, has announced that they’re going to build a new plant. But their new factory wouldn’t even open until 2026, and it’s currently limited to its existing infrastructure, and it takes about three to five years to build these new chip plants. So I thought that was an interesting fact. They also talked about efficiency gains, that the new Blackwell Perform, that’s the NVIDIA new chip, it’s 75% more efficient than the previous generation. And so they think that that’s going to also result in energy demand growing slower for these new data centers.
Peter Tertzakian:
Well, we know what happens. It’s the Jevons Principle, that when things become more efficient, we just consume more to offset that efficiency gain. You can see it with the efficiency gains in LED lights. LED lights are something like six times more efficient than traditional incandescent filament-based light bulbs. But we’re now putting up six times as many lights, whether it’s Christmas lights or all sorts of feature lights and accent lights underneath our kitchen counters and all over the place, up and down our stairs.
Jackie Forrest:
Hey, how about Halloween lights? People now all have like, you know how you used to do Christmas lights? Now that’s like Halloween lights. So we got all those on every house, too.
Peter Tertzakian:
We cut our lighting consumption to one sixth of what we’re used to, but we string up six to seven times more lights.
Jackie Forrest:
But it looks great.
Peter Tertzakian:
I would argue that’s what’s going to happen with AI. We make chips, say, 50% more efficient, but then we consume twice as many AI chips. So this is a repetitive pattern in history of efficiency.
Jackie Forrest:
Well, I hope that the IEA is right in that we don’t have such demand pull from these data centers because it’s definitely going to make it harder to have cheap, affordable electricity that is necessary for energy transition.
Peter Tertzakian:
I think what’s going to happen, you and I talked about it, is that people are going to have to pay for the different tiers of AI processing. If you want to make, as I said, your own AI videos, it’s going to cost you a lot more than a simple query. Right now it’s all priced the same.
Jackie Forrest:
Well, let’s talk about the last topic, which I thought was interesting. They’re still bullish on EVs. In fact, their most conservative scenario is that 50% of new cars are EV by 2035.
Peter Tertzakian:
What are they saying is an EV? Is it a plug-in hybrid as well?
Jackie Forrest:
This is the interesting thing. I thought you’d find this interesting. There’s a whole bunch of new acronyms here for us to learn in the forecast. So they are saying that the plug-in hybrids are part of that as well, and they do acknowledge that they’re starting to grow. But now they’ve introduced a term called REEV, which is these range extended electric vehicles. So these are ones that can go 130 kilometers on pure electric before the combustion engine kicks in. And there’s another term here. I just thought this was interesting. It’s called EREV. So this is ones where they’re electric vehicles, but they have these generators on board. So instead of having a combustion engine, they have a little generator that fills the battery with electrons as it moves along. Do you remember the Chevy Volt? That’s what the Chevy Volt was.
Peter Tertzakian:
Yeah.
Jackie Forrest:
That was produced between 2011 and 2019. I actually just saw one in a parking lot the other day. I actually thought when they came out, that was a brilliant technology. So it was electric with this on-board generator. Maybe it was ahead of its time, because now we’ve got a number of automakers announcing that they’re going to put these, I’ll call them EREVs. So Stellantis plans to roll out the RAM Charger 1500 truck. It’s going to have that electric with the on-board generator, and then Scout Motors, which is Volkswagen’s new electric off-road vehicle, is going to have the same thing. So more varieties of electric cars coming all the time.
Peter Tertzakian:
But really, this whole EREV thing, where you have a little generator charging the battery, is absurd. Unless you can plug in to the wall and do it routinely to make it a true plug-in hybrid, it doesn’t make any sense to have a gasoline engine charging a battery, then pulling the energy out the battery and spinning an electric motor. You have more conversions along the way and even more energy losses. And also the engine is a lot smaller, so it’s probably less efficient. Just the whole thing seems absurd to me.
Jackie Forrest:
Yeah, for the electrons that you are getting off this generator, they’re not low carbon because gasoline small generator is not the most efficient way to generate electricity. However, what I would say though is most drivers, less than 20% of the time are they doing long trips. So if you’re always on the electric mode and then this is only used 10 or 15% of the time, I think they’re still a better environmental solution. And the combustion engine hybrid, like the plug-in hybrid, you have, what is it, 400 parts in your car? And all those have to be made also only to be used 10 or 15% of the time. So I think it’s more efficient in that there’s just one powertrain that is manufactured. And yeah, the odd time when you don’t have enough electric, you have this as an option.
Peter Tertzakian:
So I think it’s going to be a combination of all of the above, and I think we will see more vehicles that are more efficient and will take the edge off oil demand growth over the future. But will it result in us achieving some of those net-zero projections by 2050, in 25 short years? I don’t think so. We’ve got 1.3 billion vehicles to replace, so let’s just take a billion divided by 20. That’s 40 million vehicles a year, which is not being taken off the road. I don’t see that happening right now.
Jackie Forrest:
Especially if there’s all these mandates that mean that you can’t maybe get the car you want. If you look at some of the western countries, they have pretty strong mandates to move towards electric, and it may slow down people scrapping older vehicles. Interesting factoid in there, though. They said that in China right now, these plug-in hybrids accounted for over 35% of the total EV sales in the first half of 2024. So even in China this is picking up.
Now, the advantage of these is that you don’t need all that infrastructure because they don’t necessarily need to charge, but 80 or 90% of the miles that people put on their cars are short distance. And so they still do really affect the… For those ones, Peter, that do get into the fleet, I think they have just as much influence as electric vehicles because for 90% of the miles they’re not going to be using gasoline. But they definitely make that time where we don’t have the infrastructure, which is going to be the next decade or longer, there a car that can really reduce emissions and still give people the range that they need.
Peter Tertzakian:
Well Jackie, it’s always a fascinating discussion, and predicting the future is always difficult. We have COP that is going on on the other side of the world in a week. But based on our discussions, I think that what is far more consequential is the outcome of these elections, even if the incumbent wins, say whether it’s Kamala Harris or another in elections, the same stripe of government gets in, they’re still going to have to rethink what their carbon policies, their energy policies at large are. The emissions reductions that we’ve realized over the course of the last 10 years really have not met up to expectations, which to me says there’s a flaw in the way that we’re approaching the problem. And so stay tuned. It’s going to be fodder for many more conversations, whether it’s discussing the nuances of an IEA report, the outcome of a COP communique, or the outcome of an election, it’s all going to be consequential.
Jackie Forrest:
Yeah, and setting us up for this next year COP meeting. Interesting fact: countries representing half of global energy demand are holding elections in 2024. So definitely a pivotal year in terms of how energy policy will look going forward. So with that, we thank our listeners for joining the podcast. If you like this podcast, please rate us on the app that you listen to and tell someone else about us.
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