Originally posted on Luckybeanz.
By Mark Harpur
Imagine a world where transport is free, air is clean, and streets are quiet. Imagine a world where education is attainable, power available, and healthcare accessible to all. Imagine a world where the cost of living goes down instead of up. Now stop imagining and watch this talk by Tony Seba:
At the end of 2019 I was feeling rather somber about the state of the world. The year seemed to have been dominated by talks of climate catastrophe, grossly increasing global inequality, and governments failing a growing number of people. Then in early 2020 I came across the talk above. It excited me and I was buoyed with hope for the future. The reason being is that this talk was given in 2018. You see, while most people reading this blog [Luckybeanz] probably think that I have just been a travelling surf bum for the last few years, the truth is that I have spent an increasing amount of time following the rEVolution. What is that, you ask? Well, it is the shift from fossil fuels to clean energy and the electrification/automation of many day-to-day tasks, especially transport. At some point I became invested in this concept, which is why I have spent so much time following and studying it. Listening to the talk with the knowledge I have gained as a reference, I realized that the reason 2019 seemed so tough was that we were pushing through a barrier and the result was crossing a tipping point. A tipping point for those who don’t know is the point at which a change or an effect cannot be stopped. For those wanting to understand more about tipping points, I highly recommend Malcolm Gladwell’s book on the topic.
So, what has caused this tipping point? Technology. To be exact, renewable energy. In particular, solar and lithium battery technology have passed key thresholds where they are now more economically viable than the comparable fossil fuel technologies. And here is the punch — it has happened sooner than anyone expected! What this means is that regardless of the attempts of the fossil fuel industry to delay the transition, regardless of the indifference of governments, the shift towards renewable energy is happening and will now accelerate even faster than anticipated. Let’s dive into these points.
At 28 minutes into the video, there is a graph showing the projected cost per kilowatt-hour of batteries. It is widely accepted that once batteries reach $100/kWh, electric vehicles (EVs) will be price comparable with internal combustion engine vehicles (ICEV). In the graph, this was projected to happen in 2023. In Tesla’s 2018 shareholder meeting, it was stated that the company should reach $100/kWh by the end of the year. In 2019 VW claimed that it was buying batteries at under $100/kWh. I’ve also been researching batteries for an electric boat conversion and have been able to find them available for $100/kWh. This is 4 to 3 years ahead of the projections in the video, which as Tony pointed out were seen as aggressive by many.
Keeping with batteries at the 30 minute mark, he talks about the massive battery that was installed in South Australia, pointing out that with only 2% of the capacity of the plants it is competing with, it managed to wipe out 90% of the revenues of the system. The takeaway from this is that disruptive technology only needs a small percent of the existing market to bankrupt the incumbents in the industry. So, let’s take that idea and use the 2% figure from the battery example and look at the electric vehicle market in 2019.
Depending on whose numbers you use, in many markets EVs have already passed 2% market share. In Norway they are upwards of 50%. With each EV sale, more people will realise that EVs are the future and buying an ICEV is just a waste of money. It stands to reason that many people who would have bought an ICEV in the next few years may now delay the purchase to wait for the appropriate EV. Considering EVs are becoming cheaper and ICEV sales are decreasing, we can expect the market share of EVs to increase significantly over the next couple of years. The question is at what percentage do they cause ICE company bankruptcy?
What also needs to be taken into account is that with each EV sale, there is a reduced need for the ancillary products around ICE vehicles such as lubrication oils, transmission fluids, etc. I believe that 2019 was the year that that bankruptcy happened. Though you don’t have to listen to my analysis, below is a video Tony put out while I was compiling this post. While much of the content is the same as the previous video, this one has two additional years of data to talk to… Oh, and another piece of information that surfaced whilst composting this was Tesla’s Q4 earnings call.
If we consider all the above information, it is quite easy to get excited about the future, one in which we are no longer killing ourselves and our planet with noxious gases. Though, this disruption, the one which Tesla has become the poster child for, spans far wider than just energy and transportation.
As Tony points out in his presentation, one has to look at all the industries that are underpinned by energy and transport, which is just about every industry, to fully grasp the implications of this. And this is one of those things that seems to fly over many a bright individual’s head. Once renewables have been installed, the cost of that instillation keeps going down until it reaches zero. There are very little additional inputs and maintenance costs. This is in contrast to our current system, which relies on the continual use and mining of resources. Fuel (energy) is needed to power the machines that mine the fuel, fuel is needed to power the refineries so the new fuel is useful, fuel is needed to power the vehicles that transport the fuel to the places it is needed, and all of this is done using inefficient technology which looses much of the potential energy of the fuel to heat. Put another way, the fossil fuel economy requires energy (whether it be coal, oil, or gas) to be continually pumped into it for it to continue functioning, and to obtain those energy sources, we need to use more energy. While, with renewables, once the energy is put into the mining and production, there is no more or very little [stored] energy needed to maintain the system, it can be produced where it is needed and occurs no or very little transport costs. Thus, it is foreseeable that we reach a stage where we have met all of our energy needs and no longer need to input energy to make energy. If you think this is unlikely, then consider these two points:
1) In 2015 we used 17.2 terawatts of power globally. If we cover an area of the Earth 335 kilometers by 335 kilometers with solar panels, even with moderate efficiencies achievable easily today, it will provide more than 17.4 terawatts of power. Now, consider the number of rooftops and glass buildings we have available to us, or just watch this video on solar technology, to realise that we already have the space without using up any additional land:
2) Electric motors are upwards of 90% efficient in their energy use, the best ICE is somewhere around 40% in ideal conditions and more like the low 30s in day-to-day use. This is to say that, as we electrify our transport and industrial systems, we will use less and less power due to the gain in efficiency.
This brings us to the realization that energy becomes free or nearly free, and so does transport. Once we reduce two of the most significant costs in almost all industries to nearly zero, what will the effect be? The cost of living goes down! I don’t know about you, but I can’t think of another time in history when the cost of living has actually gone down.
This isn’t the future — it is possible today. In 2017 I wrote a post about VanLife Tesla style, in which I put forth the idea of a van powered entirely by solar. Today there is a van driving from Alaska to Argentina powered only by the sun!
This disruption is so much bigger than most realize. It doesn’t stick to an industry. It spans cultures and is truly global. It is inadvertently changing industries by its sheer nature. Just look at the financial industry(ies) from stock trading to financing to insurance. These industries have traditionally been run by a handful of families/companies who hoard most all the wealth they produce. The same can be said for the fossil fuel economy. I believe that what we will see as the disruption takes place is possibly the greatest shift in wealth that we have ever seen.
For instance, in the stock market Tesla has become such a hot topic that there is endless news about it and countless analysts commenting on it. Though, what has become evident is that the traditional analysts and financial institutions do not have a clue when it comes to understanding this disruption, while many retail investors — i.e., you and me — who are sharing their thoughts and ideas on the internet do, and stand to shift a large proportion of wealth from these institutions to individuals, essentially decentralizing the financial markets. Nowhere is this more evident than on the Tesla earnings calls in which they invite questions from retail investors. On the latest call, it was even suggested that they no longer entertain questions from institutions.
While investors move their capital into renewable energy, they are moving it out of fossil fuels, which means that as they become less cost effective, they are also starved of capital, adding to the acceleration away from them and the collapse of the industry around them. Though, don’t take my word for it. Again, while I was writing this post, this idea became part of mainstream media.
Though, this shift in wealth may have us questioning exactly what wealth is. After all, the world’s reserve currency, the US dollar, is underpinned by oil and propped up my a military complex with more bases around the world than there are countries.
To understand this, one needs to dig a bit deeper into the history of the dollar. I cover both of these topics in, “What is really going on?”
Knowing this, one has to question, what happens when the very resource most of the wars in the world today are being fought over loses most of its value? Where will these war machines turn their attention to? What of all those whose job it is to work in the military? What of all the workers in the fossil fuel industry, what will they do? Will things not only get worse as these people lose their reasons for being?
I don’t think so. In the next installment, I’ll lay down my thoughts on why the end of the war on drugs, the psychedelic revolution, and sustainable agriculture give people hope and meaning in a post-fossil, and dare I say, post-capital world!
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