The coal industry is dead, oil is hitting peak demand, and the future belongs to electric cars and renewable energy, the world’s largest investment house concludes in a recent interview with the Australian Financial Review.
“The thing that has changed fundamentally the whole picture is that renewables have gotten so cheap,” said Jim Barry, global head of the infrastructure investment group at BlackRock, a firm with US$5 trillion under management.
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“No, the world’s coal plants are not going to all down shut tomorrow,” writes Climate Progress Founding Editor Joe Romm, citing the Barry interview. But “the economic reality is that cheap fracked gas and plummeting prices for clean energy have squeezed both coal production and coal consumption to levels not seen for decades,” with the U.S. shuttering 40 gigawatts of coal capacity since 2000 and countries like India and China on parallel paths.
Those U.S. coal plants “will not reopen, whatever President Trump does,” Bloomberg New Energy Finance (BNEF) recently concluded, “nor do we see much appetite among investors for ploughing money into U.S. coal extraction .” Ultimately, “stranded asset risk will trump rhetoric.”
Moreover, Barry’s high hopes for EVs make him “bearish” about the future of oil demand. “There was always this historic view on oil about peak supply, but it’s about peak demand being an equal dynamic,” he told AFR.
Last February, BNEF projected 2022 as the most likely year for the cost of owning and operating an electric car to fall below the equivalent cost for internal combustion. “The plummeting cost of batteries is key in leading to the tipping point, which would kickstart a mass market for electric vehicles,” The Guardian explained at the time, adding that the sudden market shift would be enough to trigger the next oil price crash.
Less than 18 months later, that future appears closer than BNEF thought. In the last two or three weeks, Swiss investment bank UBS predicted the crossover point will hit next year, while BNEF now says EVs will be cheaper to buy by 2025.