Eclectic ruminations on forecasts, dead horses, and climate change  

Aweh dearly beloved fellow ruminants & groupies

Dearly beloved readers, as you may have inferred from my previous blog posts, I’m deeply passionate about the issues surrounding forecasts and ambitious target-setting. To say I have a bee in my bonnet about it is an understatement—I have a whole hive buzzing with thoughts on this topic.

Let’s begin with the extreme example of doomsday cults, which unfortunately are depressingly common. Perhaps the most notorious doomsday cult in history was led by Jim Jones, known as the “mad messiah.” In 1965, Jones predicted that the world would be consumed by nuclear war on July 15th, 1967. When, inevitably, this prediction failed to materialize, he remained undeterred and established a commune in Jonestown, Guyana. Tragically, he managed to convince over 900 people to commit mass suicide by drinking Kool-Aid laced with cyanide as a form of protest against capitalism.

From this horrific event emerged the phrase “drinking the Kool-Aid,” which is used to describe blind obedience or unwavering loyalty to a cause. Some find this term offensive and disrespectful to the victims of the Jonestown tragedy. Nonetheless, the phrase has become ingrained in the language, unless, of course, it falls victim to the shifting norms of political correctness and is added to the woodpile of unacceptable phrases.

The term “groupthink” aptly characterizes the dynamics at play in Jonestown. Groupthink refers to a psychological phenomenon wherein individuals within a group prioritize consensus over independent thought. Often, individuals either suppress their own beliefs or conform to the prevailing group opinion. It’s important to recognise that groupthink is a natural feature of human behaviour, and not a bug.

So, how does any of this relate to climate change? Let’s revisit another concern that I’m passionate about: carbon capture and storage or CCS. This concept involves capturing carbon dioxide emissions from point sources and storing them underground. Over the past few decades, numerous predictions have touted the rise of carbon capture technology, particularly in the context of coal-fired electricity generation, suggesting it was on the verge of widespread adoption.

In 2006, the highly regarded International Energy Agency (IEA) predicted that by 2020, 4.9 gigatons per annum (gtpa) of carbon dioxide would be captured and stored underground. However, the reality fell far short, with only 0.04 gtpa achieved. Clearly, this forecast missed the mark by a wide margin. CCS projects have faced setbacks for three main reasons: exorbitant capital costs, inadequate technological readiness, and uncertain project revenues.

Despite these challenges, proponents of CCS remain undeterred. Mckinsey, for instance, is forecasting a more modest capture rate of 0.5 gtpa by 2034.

Is CCS perhaps a marvellous technological fix to allow us to continue burning fossil fuels or is it perhaps a dead horse? We are not yet ready to declare this horse dead and we are busy with some or all of the following:

• We declare that no horse can be so dead that we cannot make it run again.
• We change the criteria for the identification of dead horses.
• We change the criteria for determining the fact of the death of the horse.
• We change the jockey. They are usually the ones to blame when the dead horse is not galloping.
• We optimise all processes, especially for riding the dead horse.
• We organise an event to revive dead horses.
• We visit other places to see how others ride dead horses.
• We invite experts who have experience riding dead horses.
• We compare different dead horses on the market, compare them with ours, and conclude that our horse is not quite dead.
• We market the idea that dead horses have always been more economical, stable, and in many aspects better than living ones.
• We build a team for the resurrection of the dead horse.
• We sit near the horse and persuade it not to be dead.
• We persuade ourselves that there is still hope.

Can I conclude with certainty that the CCS horse is dead? No, I cannot but I will say that the horse is very unwell, and the prognosis is not good.

Yesterday I was invited into the inner sanctum of green hydrogen for the release of a new report on green hydrogen by the GIZ. I have not yet read the report yet, so I won’t comment on that other than to say the GIZ generally does very thorough and comprehensive research.

 What I was struck by was the euphoria of the delegates around the coming green hydrogen economy. The European Union has set a target to produce 10 million tons per annum (mtpa) of green hydrogen by 2030 and import 10 mtpa by 2030. This then creates an enormous opportunity for South Africa to export green hydrogen to the EU. Japan also has big plans to import green hydrogen.

There is a whole chapter on green hydrogen in the South African Just Energy Transition Implementation Plan (JET-IP) which forecasts more than 1 mtpa production in South Africa by 2030. This will require capital investments of more than $10 billion. This sounds like a fantastic opportunity. But is it?

There are very credible sceptics and critics of the hydrogen economy euphoria. Michael Liebreich, the founder of Bloomberg New Energy Finance is possibly the most prominent and has said the hydrogen cult will only be deprogrammed by 2030. When I asked a question to the panel regarding Liebreichs well-publicised perspectives on green hydrogen they were not aware of him.

It is beyond the scope of today’s blog to delve deeply into the topic of green hydrogen but what was telling for me were the one-on-one conversations I had with some of the experts after the panel discussions over a glass of wine. When I questioned them about the bold forecasts, they immediately indicated they were not realistic at all but none of this was articulated in public. I urge you to revisit the definition of groupthink. How healthy is the green hydrogen horse?

Some argue that the debate over various energy strategies is moot because we should be pursuing all options simultaneously, leaving the market to determine the victor—a sort of “spray and pray” approach. However, it’s crucial to recognise that this isn’t a purely free-market scenario. Generous government subsidies for renewable energy development, coupled with initiatives like the American Inflation Reduction Act (IRA), which allocates over  $500 billion in subsidies, paint a different picture. The EU is also following suit with similar measures. Essentially, this represents a massive punch bowl, funding a grand celebration. This leads us to question: Are governments truly the wisest allocators of capital?

Could it be that political lobbying and using a business model termed subsidy harvesting which has been coined by the energy analyst Michael Barnard is becoming prevalent? Doing research and performing studies based on subsidies is a business model on its own.

I would tentatively suggest the hypothesis that the spray and pray strategy funded by government subsidies is going to slow down progress on dealing with climate change not accelerate it. We are going to waste our resources flogging dead horses. Dearly beloved readers what do you think? Am I wrong?

 I want to express my gratitude for all the ideas and comments received. I genuinely appreciate them, and please continue to share your thoughts.

Regards

Bruce