Global Investment In Clean Energy Fell 12 Percent In 2013; The Bakken Perspective -- July, 2014

Updates

Later, 2:20 p.m. PDT: it appears EU is getting prepared for Russia to turn off their natural gas in January (2015). The EU does not need to be concerned; they have plenty of wind/solar energy, and I assume France will go back into Libya. If one does a google search one will be reminded that back in March (2014) "everyone" was talking about how the Ukraine crisis would affect Russia's natural gas exports to Europe this summer and next winter. Yesterday, in the Budapest Times, it is clear that increased sanctions on Russia (following the Malaysia Airlines kill) could truly imperil some eastern European countries this winter. Regardless of where one stands on any of these issues, this is a very good article bringing the situation up to date (though not mentioning Malaysian Airlines, the article was probably written before the kill).

Later, 1:13 p.m. PDT: in the original post below I mentioned that Enbridge and Warren Buffett appear to know how to make money in renewable energy (wind/solar). I really don't follow wind/solar specifics all that closely, so it was kind of interesting to note that the ONLY Bakken "company" to hit a new high today was Enbridge (ENB). This week ENB dedicated a new wind farm. The press release:

EDF EN Canada Inc, a subsidiary of EDF Energies Nouvelles, and Enbridge Inc. dedicated the 300 megawatt (MW) Blackspring Ridge Wind Project today. Located in Vulcan County, Alberta, the project is the largest investment in wind energy in Western Canada.

I track Enbridge here.

Original Post

Exxon and BP had it right (as in "correct") from the beginning.

There are an incredible number of opportunities for investors to make money -- ah, to become wealthy -- investing in "green" energy. Enbridge and Warren Buffett have found ways to make money on wind/solar.

But "green" energy (wind, solar) will never come close to meeting global energy requirements. Ultimately it will be nuclear energy, but that may not be for a century or so.

Financial Times is reporting:

The so-called “green jobs” boom in renewable energy has not lived up to the hype. As government policy flip-flops in favour of one form of energy to another – one minute offshore wind, the next minute, fracking – investors are losing faith. 

In March, SSE, the big energy company, announced a freeze to its bills until 2016, at the expense of 500 jobs and its involvement with several offshore wind parks. In the past year too, the second phase of the world’s largest offshore wind farm, the London Array, was scrapped; energy group RWE ditched its Atlantic Array and Scottish Power Renewables dropped plans for an Argyll Array.

Global investment in clean energy fell 12 per cent in 2013 according to Bloomberg. [Comment: rule of thumb -- for every MW of "clean energy," the fossil fuel companies need to add one-half MW of fossil fuel energy to back up solar/wind; there is, as yet, no economic way to store electricity on a grand scale. For that reason, the fossil fuel companies are less concerned about renewable energy than they let on. The real concern: the grid. It ain't gonna hold. Germany is learning that lesson the hard way.]

So are we watching the nails go in the coffin of an unaffordable technology? And has the green jobs bubble burst along with it?

Before answering those questions:

The UK government’s Energy Act 2013 and Electricity Market Reform were intended to bring some calm. But the early response from the market has not been positive.

Dan Lewis, energy policy adviser to the Institute of Directors, says: “It’s quite hard to go to the market and say ‘I need to raise this much cash for these types of projects – oh and by the way, we’re seeing subsidies cut across Europe, so we don’t know what it is going to cost’.”

Back to the question: are we watching the nails go in the coffin of an unaffordable technology (wind and solar)? Probably not (hope springs eternal):

Even while investors come to terms with yet more policy change, it is not time for fossil fuels to dance on the grave of renewables just yet. [Comment: the operative phrase -- "not yet."]

Neil Robertson, chief executive of energy sector skills body, EU Skills, argues that renewable energy is just not “scaling up as fast” as once expected.

“When you look at it in the cold light of day, we’ve still got an ambitious agenda here.” 

The UK has a legal obligation to meet 15 per cent of its energy demand from renewable sources by 2020, up from only 4.1 per cent in 2012. [Comment: and if they get there, the UK will intentionally and severely cripple their economy.]

According to EU Skills, there are 34,500 people now working in wind, wave and tidal energy; by 2023 the group expects this to increase to 52,540, even accounting for the recent “marked scaling back of ambition.” Meanwhile, the UK solar sector is thought to employ a further 15,620 people.

I guess this was a press release from "EU Skills."

So, all of the EU and UK: 70,000 people working in renewable energy over 30 - 50 years of development with all kinds of tax credits and incentives for the industry.

The "male surge" in the Bakken in five years: up 50,000 in one small area in one small state in one country despite a war on fossil energy.

Comment: I found it interesting how the key takeaway in that article -- global investment in clean energy fell 12% in 2013 -- was glossed over. It was a throwaway line. A long, long article, and minimal discussion of what it really means when global investment in clean energy falls 12 percent. Considering all the ink spilled on clean energy, all the Algore PowerPoint presentations, all the hand-wringing over global warming, all the tax credits and incentives, and still: global investment fell 12 percent. Imagine if your net worth, or your salary, or your portfolio fell 12 percent in one year. It wouldn't be a pleasant sight.

**************************

Terrifying (Their Word, Not Mine)

Even as nations cut back on investments in green energy, the oil and gas industry is growing so fast that there is a dire need for skilled labor in that sector. The Financial Times is reporting that shortages of skilled labor are "terrifying" (their word, not mine):

But with seasoned oil workers so difficult to come by these days, her job is becoming harder. “People are inundated with offers,” she says.

The skills shortage in the oil patch is frequently cited as one of the biggest challenges facing the industry. In what has been called the “Great Crew Change”, the older generation of geoscientists and petroleum engineers who were hired before the sweeping lay-offs of the 1980s are now approaching retirement age and will soon leave the world of work. But it is still unclear who will replace them. The pool of potential talent is too small, and companies are scrambling to cope with the crunch.

A 2011 survey by Schlumberger Business Consulting (SBC) highlights the problem. It said more than 22,000 senior “petrotechnical professionals” would quit the industry by 2015 – equating to a net loss of more than 5,500 people. Recruitment of new graduates would offset this reduction in the total number of oil workers, but “will not fill the experience gap”, it noted. SBC’s 2012 survey delivers an even starker message: by 2016, it said, the shortage of experienced oil industry professionals will reach 20 per cent of the talent pool.