What caught our eye - three key stories (week 11, 2024)
Sustainability. Strategy. Finance.

What caught our eye - three key stories (week 11, 2024)

Transition: it's not like-for-like; directors must consider nature related risks; EV charging on a neighbour's driveway?

Here are three stories that we found particularly interesting this week and why. We also give our lateral thought on each one.

Read in full by clicking on the link below.

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Thinking differently about energy: it's not like-for-like

Michael Liebreich published part 2 of his series of essays titled "Net Zero Will Be Harder Than You Think – And Easier!"

Last September we discussed part 1 in which Michael focused on the challenges in transitioning to net zero (the 'harder' bit) 👇🏾

The transitions will be harder and easier than we think.
There is a tendency to gloss over some of the challenges in delivering the sustainability transitions, to simplify what it is we need to do. And as a result our sustainability plans and proposals can jar with the people who actually have to deliver the change on the ground. This

The 'Five horsemen of the transition' as he called them are:

  • Poor economics of clean solutions beyond wind, solar and batteries
  • Inadequacy of our current electrical grid
  • Soaring demand for critical minerals
  • Political and social inertia; and
  • Regulatory capture and predatory delay.

"Five formidable challenges" as he put it, that are a reflection of the here and now.

Part 2 is the 'easier' bit where he discusses the 'Five superheroes of the transition' or powerful longer term trends that will help get the world to net zero:

  • Exponential growth: wind and solar together accounted for less than 1% of global power generation 20 years ago. 10 years ago it was 3% and as at the end of 2023 it was 15%. That trend is likely to continue for longer than people think, bringing costs down and bringing other efficiencies with it.
  • System solutions: there will be a need for a variety of technologies to come together including demand response, interconnections, long duration storage etc. Each of these has seen strong investment and growth.
  • Great power competition: supportive governments are driving competition which in turn is driving innovation and commercialisation. As Michael says "there are no longer any so-called hard-to-abate sectors. There are only some sectors in which clean solutions are not projected to undercut their fossil-based alternatives, perhaps ever." The 'no-longer-hard-to-abate sectors' will have self-fuelling momentum as a result.
  • Disappearing demand: two aspects here. Firstly a big chunk of demand for fossil fuels comes from the fossil fuel industry itself (to power extraction, refining, shipping etc). Secondly, the amount of critical minerals required for the transition to clean energy technology is consistently overestimated, just as the level of battery recycling, for example, is underestimated ;and
  • The primary energy fallacy: this lies in the confusion between energy in versus energy out. Primary energy demand describes how much energy stored in fossil fuels that is used to ultimately power the services we use (to heat, to transport, etc). It is about the input. However, that is a focus on input, rather than output.

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