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BP’s chief economist, Spencer Dale, is perhaps one of those for who the old EF Hutton ad applies: when Spencer Dale speaks, people should listen. Thoughtful, substantive, and often incisive about what has happened, is happening, and might/potentially could happen in the energy sector.

Dale’s presentations aren’t only substantive, but articulately engaging and done in a way that encourages others to engage and challenge him rather than simply sit back and nod their head yes.

Yesterday, BP released their 2018 statistical energy review with a Dale speech as the core portion of this event.  While there is much of interest in the document and in Dale’s discussion, this post primarily focuses on — challenges — one specific point emphasizing material from one specific slide.

Coal’s percentage of the electricity sector is at the same level as 1998: is this the item of greatest concern?

Dale emphasizes his concern:

Striking: because despite the extraordinary growth in renewables in recent years, and the huge policy efforts to encourage a shift away from coal into cleaner, lower carbon fuels, there has been almost no improvement in the power sector fuel mix over the past 20 years.

This statement suggests a stagnation, a treading water moving in place as if the energy (electricity) sector is not amid massive change.

With all due respect to Spencer Dale (and, the opening words to this post should make clear that he merits serious respect), that slide and his focus on it recalled to me what the climate-science community nicknames the escalator chart of climate-science denial.

The Science Denialist Escalator

When it comes to statistical and trend analysis, a simple reality: it often matters (tremendously) where one begins.  Yes, the global share of electricity provided by coal is roughly today where it was 20 years ago. And, yes, this is not a good thing as humanity should have been driving coal out of the energy sector a long time ago. However, focusing on that 20 year parallel masks a reality that Dale is quite aware of: that there has been major change within the electricity sector in the past decade that has been accelerating year-to-year. At the beginning of the 2010s, many forecasters saw a rosy future for coal which was being reflected in massive acquisition binges by firms like Peabody Energy. The years since have seen massive change to that unhealthy forecast, reflected in Peabody’s bankruptcy, with massive declines in wind and solar prices, massive increases in solar and wind penetration, natural gas displacing coal, energy efficiency entering the market, etc, etc, etc …

The major growth in ‘new’ renewables is masked in a graphic like Dale’s, as the non-fossil figure includes hydropower and nuclear power — both significant players in the global electricity market — and the ‘new renewables’ (essentially wind and solar) needed to grow to significant levels before they would notably shift the ‘non-fossil’ line in graphic like that.   Look closely at that graphic and  you will see a meaningful edging upward in that blue line toward the end of the period.

More directly, in the past few years, we are seeing

• Minimal new coal plants coming on line.
• Planned coal plants being delayed and canceled.
• Coal power plants being closed … often early.
• Significant shares of new power generation provided by wind and, increasingly, solar.
• Bidding for future power having renewable energy coming in at a price below — often half the price of — the cost of operating existing coal plants.
• Etc …
• Etc ..
• Etc …

As a small window on this, in the late 2000s, coal plants provided more than 50 percent of U.S. electricity. That share is barely above 30 percent today … and, despite the great efforts of the Trump administration, there is little prospect of going back up over the long time rather than continuing down (an accelerated) downward path.

A graphic with solely the past five years providing details down to wind and solar in the electricity market would have provided a vastly different window on coal’s prospects than a high-level, decades-long slide.  Using this, solely, might have been deceptive external to a longer-trend graphic but would have been useful to highlight that things can change (significantly) in the energy sector and, perhaps now, far more rapidly than some conceive.

Energy is a complex space with many dynamics. Dale had much ground to cover in his presentation. However, using that one slide and those words as the core discussion about coal in the power sector was deceptive and potentially harmful to effective decision-making..

Two charts from BP this week. First shows picture BP focused on, suggesting power sector has barely changed in the past 20 years.

Second shows the reality – gas & renewables have grown rapidly while oil, nuclear and hydro lost out https://t.co/7Xl4WEHUWF pic.twitter.com/5N0Jx9JoLc

— Adam Vaughan (@adamvaughan_uk) June 15, 2018

Underplaying efficiency?

As another point of contention, Dale made this comment:

It’s worth remembering that, when commentators proclaim that the world is electrifying, power demand in the developed world hasn’t grown for the past 10 years.

Yes, “power demand” has been flat in no small part because of massive ‘negawatts’ impacts of efficiency measures across the economy from LED lighting taking over to artificial intelligence tools enabling shockingly rapid advances in industrial process efficiencies.   Even with growing services powered by electricity, efficiency is enabling that growth to occur with flat demand. While, just as with retirement of coal is happening too slowly, economic electrification isn’t occurring at the pace necessary for a <1.5C future, the flat power demand curve in the developing world doesn’t prove a priori that electrification isn’t occurring.