Where And When Does The Rubber Hit The Road?

Determining the ingredients of  a system that produces the lowest per unit cost of energy including externalities is worthwhile.

All energy systems incorporate production, generation, transmission and consumption. For example hydro power employs flowing water as the energy source, generators to convert that energy into electricity, wire configurations and storage for transmission systems and consumption for to a variety of end users. The units of cost include capital recovery, a return on investment and operating costs.

The energy journey is now travelling in territories requiring significant research, development, applications and methods for delivery. The least complicated method is solar power. Solar panels matured early, transmission to storage is conventional, batteries convert the electrical energy to mechanical energy and the EV is mobile.   An appreciation of the barriers to realizing the lowest cost per unit of energy from here on are more significant.

The demand for natural gas, both in gaseous and liquid forms, has an expanding profile. Natural gas producers are universally enthusiastic as electrification and data center demand indicate a bullish future. Timing is currently an issue.

Coal producers say that two factors are in play. Coal consumption will continue to increase in some lesser developed economies because of increasing demand for electricity now while renewables are in a very aggressive growth stage. China is a good example. As renewable sources increase they will be the main source to replace coal. Metallurgical demand will grow well into the future as demand for steel shows no sign of lessening.

Technologies to replace metallurgical coal for the production of steel and cement are underway.

What is clear, the long term demand for thermal coal will decline as economies become more robust.

On June 5^th, 2025 The International Energy Institute forecast that that global energy investment is set to increase to U.S. 3.3 trillion dollars this year with clean technologies attracting twice as much capital as fossil fuels.

The family of renewables includes hydropower, solar, wind, biomass, geophysical, hydrogen, fission and fusion. Each has credentials that place them in a place that already competes as an energy source or shows promise to do so.

Hydropower and fission (nuclear) are well positioned now, solar has earned a significant place, wind is moving along the journey mostly with acclaim, hydrogen represents a significant source, a revised nuclear source is being captured by the small modular reactor and a colossal global effort is represented by employing fission (best described as an artificial sun). Biomass and geothermal have proven applications but do not represent the needed global impact.

Distinct from the multiple of energy generating systems are the issues of promotion, politics, financing, science, public policy, environmental, economics and the cartel.

At recent oil and gas conference, Haith A Ghais, the Secretary General of OPEC there “There is no peak in oil demand on the horizon and global demand could surpass 120 barrels by 2050 per day. He said global demand for energy will increase by 24 percent. A move to the lowest cost per unit of energy is a long way off.

Political forces influence supply and remand. The current conflict between Russia and the Ukraine has disrupted the supply of natural gas from Russia to several European countries. The implementation of boycotts are frequently implemented to punish supplying countries who are acting in harsh manners globally. Examples include Iran, Venezuela and Russia. OPEC has the collective power to control oil world oil supply.

On a less impactful basis one region of a country will develop policies to reduce fossil fuel production and therefore lower carbon dioxide emissions. A separate region will encounter reduced economies as the fossil fuel producer.

Who can forget the conspiracy fashioned by Russia and Saudi Arabia to lower oil prices that rendered oil from the United States uneconomic?

Another significant political factor is when governments change and policies changes as well. Obvious to all are the avalanches in the United States as the environmental world is again being rewritten.

THE LESSON….GLOBAL SUPPLY OF ENERGY IS ANYTHING BUT A FREE MARKET

Financing is a major part of renewable energy projects. Quoting Bloomberg NEF Investment decisions are driven primarily by the need to meet rising energy demand not by climate concerns. We explore how far and how fast the low carbon transition can proceed based purely on competitive economics and existing short-term policy settings. Financiers will place a positive spin on their offerings.

THE LESSON……UNDER WRITERS ARE COMPELLED TO IGNORE GLOBAL WARMING AS A CONSEQUENCE OF THE METHOD OF GENERATION

Lingering in the shadows are the issues of transmission. Current delivery systems span the world. Ships, trains, trucks, pipelines, lines of wire all touch the delivery processes

THE LESSON…..DELIVERY IS COMPLICATED, AND VERY EXPENSIVE

Science presents a quandary. One major caveat….the sciences of global warming, and ocean acidification are both works in progress.  This is the very essence of all sciences. One discovery always leads to another and is seldom linear as the of knowledge accumulation increases. Because global warming remains somewhat controversial, the science will sometimes be directed towards proving an outcome that the investigators have already decided. Worthy of attention is the reference to climate policy as an ideology. If it is only an ideology then it is a belief and lacking any substance and certainly not based on science.

THE STAKES ARE VERY HIGH….EXCELLENCE IN SCIENCE IS VERY IMPORTANT

Public Policy organizations are dedicated to providing information about issues that are important to the public at large. Their mandates are to function independently, particularly with regard to finance and to embrace research that is reliable and sustained by third parties.

THE LESSON….ASERTAIN THE NATURE OF THE POLICY MAKER FOR QUALITY AND REPUTATION.

The costs of supplying energy are distorted by subsidies. Clearly energy demand has matured to a level that it is now a necessity. Under certain conditions support must come from governments by way of direct funding, by way of favorable taxation regulations and by way of policies that can enhance all aspects of the industry.

A tax on carbon is the exact opposite and is detrimental to the necessity of growing the oil and gas industries

THE LESSON….FINANCIAL AND POLICY SUPPORTS ARE UBIQUITOUS AND ARE FASHIONED IN DIFFERING WAYS BY DIFFERENT JURISDICTIONS.

Carbon dioxide in excess that is retained in oceans and the atmosphere is the significant contributor to global warming and ocean acidification. A fringe of dissenters continues to disagree.

Carbon capture and sequestering is an expanding initiative which will remove the carbon from the production and consumption processes. Acknowledgment that these are underway validates that carbon emissions are the cause of global warming.

THE LESSONS….IT WILL TAKE A VERY CONCENTRATED GLOBAL COMMITMENT TO ELIMINATE CARBON DIOXIDE FROM ENTERING THE ATMOSPHERE. UNDERSTANDING THE EXTERNAL FUNDING OF ENERGY FROM END TO END WILL AID IN ORGANIZING THE BEST JOURNEY.

For the first time there are multiple sources of energy beyond going up the ladders of fossil fuels, hydro power and nuclear. Solving the technical and political issues present barriers all of which are under intense research.

The industry is now entering a renascence of major proportions including the ability to produce and deliver energy in all forms and not limited by geography. Hydrogen is everywhere and available for energy production.  One example is the west coast of Chile where wind and water can combine to produce hydrogen. Of course wind and solar are good examples of geographic independence as well

Noteworthy is the extent to which Saud Arabia is implementing plans to remain a global supplier of energy. The country has the financial, technical and physical resources to sustain a dominant energy supplier.

THE LESSON….Satchell Paige said “Don’t look back someone may be catching up to you”.