As ever it’s possible that Ambrose Evans Pritchard has got a little more enthusiastic than technological changes entirely and wholly imply and yet imagine if this is true:
Saudi Arabia and the Gulf states are also reinventing themselves, aiming to become mass global exporters of zero-carbon fuels for ships, aircraft, or Asian power plants. Abu Dhabi is already developing desert solar power for $1.35 per kWh, tantamount to free energy. This will be converted into hydrogen by Siemens through electrolysis to make clean synthetic jet fuel. Carbon-free air travel is in sight.
The point here is something that all too many don’t realise. Especially those shouting that something must be done about climate change.
We have two different sets of costs here, Opex and Capex – Operating costs and capital costs. The correct solution is the one, or ones, that optimises the overall sum of them.
So, OK, take cars, just as an example. We can go out and rebuild the entire global car industry and dump a century’s worth of work on the internal combustion engine by replacing all with batteries. This gives us low carbon emissions costs as long as we gain green electricity to fill them up with. It will be a long time, even with that, before they are economic. For that to be true they have to be cheaper than petrol untaxed which is something that will indeed take a long time.
But, OK, that’s a high Capex and low Opex method. The Capex is that we’ve got to entirely turnover the whole global industry in order to get there.
It’s also possible to, in theory at least, imagine high Opex and low Capex methods. Perhaps we might use that green electricity to make green hydrogen which then makes green petrol?
As is obvious the chemistry can definitely be done. Further, the cheaper your hydrogen the lower the cost of building the complex hydrocarbons. Finally, at some level of hydrogen cost it is, overall, cheaper to make the petrol than it is to switch to batteries.
OK, maybe that never does work for cars. But it might for lorries. Or ships. Or the first stage that it’s likely to work for is airplanes. Jets that run on anything other than hydrocarbons are going to be difficult to produce.
That is, make hydrogen cheap enough and we green the global economy by going and making petrol, not by making everything run on not-petrol. Which is interesting and fascinating and the more we get told about how cheap green hydrogen is going to be the more true it becomes.
The only problem will be that it will piss off every Green. For of course the motivation is to abolish the ability of the proles to travel and restrict that to the responsible workers allowed into the Zil lanes. But, you know, amazing what markets and capitalism can innovate around, isn’t it?