?? Can David slay Goliath?

In the latest edition of my weekly newsletter, I look at the challenges and opportunities in the global energy transition. Here's all you need to know.

?? Today’s edition is supported by OctoAI, the fastest generative AI inference API.

Vaclav Smil’s guest letter in Electravision, a J.P. Morgan report on electrification, paints a sobering picture of the global energy transition. Despite a quarter-century of counter-efforts, the world has increased its dependence on fossil fuels, with global emissions continuing to rise (shown in the attached chart). Smil highlights just how complex the energy transition is, requiring a systemic shift involving multiple interconnected components and several expensive-to-abate sectors. Global steel production, which chunters out 7% of global emissions, currently amounts to 1.9 billion tonnes. Of this, green steel represents less than 0.02%. Exponentialists will recognise it would take 12-13 years of doubling green steel production to replace traditional processes. At least we know how steep, and high, the climb is.?

However, we should not succumb to fatalism in the face of these challenges. The economics are rapidly shifting in favour of technology-driven approaches rather than brute-force, industrial-era ones — for example, solar panels (that generate electricity!) are now cheaper than plastic faux-wood fence panels. The learning rates of established technologies (like solar, batteries and wind) still have several years to run — and prices will continue to drop. Newer technologies, like electrolysers and clean industrial processes, have many more iterations of learning-based deflation ahead of them. And even in the bureaucratic West, we’ve successfully scaled hard technologies in less than a decade. Let’s look at the rampant expansion of horizontal wells in the US: in 1995, fewer than 6% of oil and gas drilling rigs in operation were horizontal. By 2014, this number jumped to 68% — and the total rig inventory doubled.

Of course, hope isn’t a great strategy. So, we must consider diverse approaches, including a better scientific understanding of higher-risk options like solar geoengineering. Now it’s more important than ever to engage?in transparent discussions about adaptation strategies.

See also: to get a grounding of where the oil industry is at, we recommend EV reader Vijay Vaitheeswaran’s special report in The Economist. Elsewhere, a summary of recent milestones in commercial nuclear fusion.

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