Host: James Lawler
Guest: Amory Lovins | Co-Founder | RMI
Category: ⚡ Renewable Energy | Russian Oil
Podcast’s Essential Bites:
[1:28] “From the mid 60s to 1973 world oil demand was on gradual exponential growth. But after the 73 and then the 79 oil shocks, which raised prices even more, that growth curve was just hammered flat. And what happened was really quite striking in historic retrospect. Demand for oil stagnated in the decade after 79 even though economies kept growing. European demand for oil never regained its 79 level. And when the oil crisis broke in 73, OPEC […] was supplying half the world's oil or a quarter of the total energy in the world.”
[2:30] “In the United States in just eight years, from 1977 to 85, US oil use fell 17% while the economy grew 27%. Oil imports fell 50%. Imports from the Persian Gulf fell 87%. So America proved able to save oil faster than OPEC could sell less oil. And the cartel’s sales dropped by nearly half, breaking its pricing power for a decade. Per dollar of GDP, US oil use fell 35%, that's 5.2% a year. And such a pace could eliminate Europe's fuel imports from Russia in four years, just to put that in perspective. […] But now the US and much of the world could rerun that play only more effectively. And not just for oil, but also for gas and coal, because we have now much more powerful ways to save our fossil fuels.”
[7:34] “The energy shock we're experiencing right now is very comparable in size to the oil shocks of the 1970s. But they differ in four main ways. Now we have much cheaper alternatives, particularly from solar, wind, green hydrogen, and batteries. All on steep learning curves of higher volume makes the cost lower, and then we buy more and then they get even cheaper. […] And then of course, there's a necessity that we now have this imperative to get to net zero and energy security, not just clean and healthy. So as we add energy security to the previous imperatives for climate protection, public health, and affordability, those four together I think will overcome incumbent resistance a lot better than we have seen in the past.”
[11:04] “India is buying a lot of Russian oil […] and they're getting a discount upwards of $30 a barrel for taking it off the Russians hands. That doesn't make the oil disappear. It means it frees up other oil India was importing from elsewhere. And that can now serve other countries, because the source is acceptable. So that sort of thing in India, and perhaps in China, could help reduce the price shock to the world. It isn't like in the Arab oil embargo, where the oil in a real sense did disappear from the market and you had a crunch between reduced supply and largely unchanged demand, the way they collided and the price went up.”
[12:04] “Of course, the price is up a lot, but a lot of that is driven by gas, because Russia reduced storage in Europe over the previous winter. It controlled a lot of that storage and got away with reducing storage, reducing flows to Europe to set the stage for its war. That raised energy prices a lot and really started making the whole energy system ring like a bell. And of course, now that we're seeing embargoes emerge on buying Russian fossil fuels, particularly in Europe, […] that is going to be quite disruptive, but not for long. Because we're already seeing dramatic policies emerge, led by the European Commission and by Germany. […] Most of it is a strong emphasis on efficiency and renewables, which are exactly the things to do if you want to get off Russian fossil fuels quickly and affordably.”
[16:09] “The way things are shaping up now, Europe is likely to buy two thirds less Russian gas by this fall or winter than it did previously. And by sometime around next summer probably no Russian gas. And the oil purchases will also phase out rather quickly, mostly over the next year or two, with some dribs and drabs tagging along over the next couple of years. So Russia is gonna lose its big market and its influence in Europe.”
[23:59] “In our recent paper we ran some deliberately simplified scenarios […]. And it's almost impossible not to get off Russian fossil fuel in the next five years or so, just with the kinds of achievements and further accelerations that we're seeing efficiency and renewables. And this will have a big demonstration effect. Even though Europe uses only 9% of the world's fossil fuel, and that demand is shrinking, it'll have a disproportionate effect, because it will set higher fossil fuel prices in places like Asia that can save fossil fuel just as well as Europe can.”
[26:15] “It breaks the narrative that energy transitions are way too slow. The notion that Europe could reduce Russian gas imports by two thirds this year, would have been laughed out of the room a few months ago. But now it's what's happening. And I think this breaks a lot of metal logjams and counters the narrative from the fossil fuel industries that transitions have to take half a century.”
[26:47] “The need to deploy renewables and the opportunity is even greater in the Global South, which already buys the majority of the world's renewables. And I think the these events in Europe are going to speed up an energy leapfrog in the Global South.”
Rating: ⚡⚡⚡⚡
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🕰️ 29 min | 🗓️ 05/09/2022
✅ Time saved: 27 min
Additional Links:
Article: “From Deep Crisis, Profound Change” (RMI, 2022)
