Peak Oil is You

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Peak oil versus net zero

Public Policy

Fossil-fuel use could continue to rise despite efforts to achieve climate neutrality

Controversial question: is peak oil behind us or does it still lie ahead?

Those who claim that peak oil – the year when crude oil production reaches its peak – is in the past are forgetting that this is a market for non-reproducible goods. Unlike markets for reproducible good such as food or clothing, the production of finite goods remains rigid and is not particularly responsive to changes in prices (figure 1). As long as global climate policy remains unilateral and fossil-fuel producers are encouraged to increase rather than decrease production, global greenhouse gas emissions are more likely to rise than fall in the long term.

How can this be true?

The carbon leakage dilemma
Using a model based on an equilibrium price (p* in t=0), figure 2 shows why the price of fossil fuels could decline in the long run, contrary to the trend over recent months. If an alliance of ‘green’ countries pursues unilateral climate policy to reduce greenhouse gas emissions, such as by introducing CO₂ certificates or a CO₂ tax, then demand would decrease in these countries while the price would increase (to reach a temporary equilibrium at p*+x in t+1).

However, due to the nature of the market for finite goods paired with rigid supply, global aggregate demand would not decline to the same extent as demand among the group of green countries. The oil tankers of the exporting countries would simply deliver to other ports and sell the excess quantity at a lower price (p* – x). The produced quantity would thus be consumed despite restrictions in the green countries. This effect is known as the carbon-leakage dilemma.

Key points

  • Unilateral global climate policy will lead to more use of fossil fuels, not less
  • Economic incentives and carbon-trading schemes could be used to form a ‘climate club’
  • Stocks that have attractive sustainability aspects and dividends should be targeted in portfolios

The green paradox
Meanwhile, the producers of fossil fuels are not satisfied with lower revenues, particularly since their goods are not expected to be in high demand in the future. Furthermore, if fossil-fuel production is likely to be discontinued in the distant future, producers would have to cope with considerable write-offs. And we expect revenue from alternative sources would not fully compensate for carbon-related revenue shortfalls.

Therefore, the incentive for producers to further increase the supply of fossil fuels instead of reducing it is high. This leads to an even lower equilibrium price (p** in t+2). This supply-side phenomenon is known as the green paradox. In other words, unilateral climate policy subsidises and increases greenhouse gas emissions, for example in economies that are trying to evade their voluntary commitments under the Paris Agreement. In fact, outside the EU, only 32 of the 195 countries have presented quantifiable greenhouse gas reduction targets so far.

What economic incentives are needed?
According to Nobel Prize winner William Nordhaus, the solution to this could be that the demand side establishes an economic cartel that channels fossil-fuel deliveries. This should be combined with a global CO₂ certificate-trading scheme to overcome the carbon-leakage dilemma. To counteract the green paradox, a sufficient number of countries, ideally the G20 (responsible for 75% of global trading and 80% of world GDP), would come together to form a ‘climate club’.

In addition to working towards a climate-neutral footprint, they would ban third-party trading of goods. Only those committed to the club’s goals would be included in any trades. This could be supplemented by a withholding tax on fossil fuels to make the capital investment that comes from carbon-related revenues unattractive. In the absence of such an initiative, it must be assumed that fossil-fuel production will increase in the long term and prices will decline.

Number of oil barrels produced, price and market share

Escaping the climate trap
The challenge now is to respond to such long-term effects with tactical positioning. This is the only way to strengthen risk-return ratios throughout the economic cycle. One way to achieve this is with stock picking that takes the attractiveness of the dividend and sustainability aspects into account.

• Which stocks should be avoided?
Should fossil-fuel prices decline in the long term, this would primarily affect capital-intensive producers in the energy and basic materials sectors, as their sales are sensitive to fluctuating selling prices (figure 3). High asset write-downs would also hit companies from sectors that fail to adapt quickly. Likewise, it is doubtful that sufficient capital would be available to keep up dividend payments and satisfy income-focused investment funds. The assumption is that capital moves faster than companies are able to transition. Therefore, contrary to recent trends, we do not expect long-term recovery in these sectors.

Leverage capital intensity in the energy sector

Aside from CO₂-intense business models, banks would also be negatively affected. Not only would banks have to tediously realign their greenhouse gas-intensive investment portfolios and loan books, they would also bear the burden when their investors – especially institutional investors, sovereigns and central banks – start to avoid their securities more and more because they themselves have to position themselves as climate friendly.

This would make it more expensive for banks to obtain refinancing which, in turn, would have a negative impact on funding costs as well as on dividends. The aggregate global warming potential, which takes Scope 1-3 CO₂ equivalents into account, shows how acute this risk already is for bank stocks in the European equity universe.

Banks have the second-highest global warming potential (5.1°C), with the energy sector in first place (6.2°C), and the basic materials sector in third (4.9°C). This measure already takes the greenhouse gas emission reduction targets set by management into account. However, the targets set by the banks are not particularly ambitious and without taking them into account, the figure would be marginally higher at 5.2°C.

• Which stocks are worth investing in?
For some companies, declining energy prices can have a positive impact on sales. If household budgets are relieved by lower energy prices and savings rates remain stable, spending on consumption and investment increases. Companies can also benefit on the cost side if energy accounts for a significant share of total costs. Sectors with sales sensitive to fluctuating energy prices, where companies benefit in terms of either sales or costs and can outperform the market in terms of global warming potential, include real estate, insurance, and household goods.

Jan Rabe

Jan Rabe: “global greenhouse gas emissions could continue to rise instead of decline following the COVID-19 pandemic”

At the individual stock level, companies offering solutions in the areas of energy efficiency, renewable energies, electromobility, water and biofuels, building refurbishment, and carbon capture and storage (CCS) are of particular interest. Currently, the EU meets 75% of its power needs with fossil fuels and these are to be replaced with climate-friendly technologies. For example, industry experts estimate that the EU alone would need to invest about €1trn per year to be climate-neutral by 2050. This sum represents about a quarter of all EU investments. Of this, 80% would be diverted investments that would normally fund CO₂-intensive technologies. This could reduce primary energy demand for fossil fuels by 90% by 2050.

The gross excess return of a portfolio of 59 European stocks that all offer climate-friendly solutions and are therefore in high demand by investors is driven primarily by political events, such as the 2015 UN Climate Change Conference, the 2019 EU Green Deal, and the 2020 EU Recovery Plan (figure 4).

The bottom line: peak oil versus net zero
Price developments on the capital markets are still in line with the narrative of those who are convinced that climate neutrality can be achieved by implementing unilateral political measures. However, there is a growing risk that global greenhouse gas emissions could continue to rise instead of decline following the COVID-19 pandemic.

As long as climate policies are unilaterally tightened, this will not change. The peak-oil scenario is thus shifting further into the future. This makes it necessary to rethink the methods currently being used to pursue the goal of a climate-neutral economy.

Jan Rabe is head of the sustainable investment office at Metzler Asset Management


40 Comments on "Peak oil versus net zero"

  1. D T on Tue, 9th Nov 2021 8:29 pm 

    Funny this site is about peak oil and no one comments about peak oil with an article about peak oil.

  2. Cloggie on Wed, 10th Nov 2021 12:51 am 

    As far as we can tell, global oil production peaked in 2020, due to the pandemic:

    It remains to be seen if the world can top that again, after the pandemic is over, IF that is going to happen. Oil production will likely remain on a plateau for some time to come, until China (and in sync North-Korea) makes its inevitable move, and we all will be living in a different world from then on, with collapsing oil production world-wide, due to hostilities, world-wide (“WW3”), could take out much of the Middle East production, due to US blockades, to harm China.

  3. Cloggie on Wed, 10th Nov 2021 2:51 am 

    What really will initiate peak oil: not Covid-19, Paris Accords or depleting oil sources.

    No, it will be geopolitics and the coming conflict over Taiwan and US presence in East-Asia:

  4. GoingReallyWellSoFar on Fri, 12th Nov 2021 10:05 am 

    Fucking animal. Separating animals and humans is progressing very well. Jews are animals all of them. 2:58

  5. GoingReallyWellSoFar on Fri, 12th Nov 2021 10:19 am 

    Animal even among really young kids. Girl in the middle. Nobody will be spared not even the new born babies.

    A pale rider has been appointed by higher GOD’S to clean up earth.

  6. SomeOfMyMusing on Fri, 12th Nov 2021 2:38 pm 

    I just had sex with my spirit. She insisted we do something. Spirit sex is really a privilege reserved to King and GOD. Spirit sex is more sexual energy exchange instead of a physical act.

    She also insisted I take my prostate medicine, that we did after spirit sex. Prostate medicine is more a physical act with the body.

  7. SomeOfMyMusing on Fri, 12th Nov 2021 2:46 pm 

    Here are some of the stuff that appear on my youtube after the following comment:

  8. SomeOfMyMusing on Fri, 12th Nov 2021 2:59 pm 

    Prostate medicine is a simple masturbation with ejaculation.

    Spirit sex is a sex energy exchange without ejaculation, without erection or semi-erection. There is no ejaculation with spirit sex, never. I don’t need to think about a women body during spirit. It is pure form of sex.

  9. SomeOfMyMusing on Fri, 12th Nov 2021 3:06 pm 

    Apparently exterminating Jews and animals make us eligible for spirit sex

  10. SomeOfMyMusing on Fri, 12th Nov 2021 4:07 pm 

    If exterminating Jews and animals make me eligible for spirit sex. it obviously mean that higher GOD’s approve of my decisions and there are big chances it will happen. Time will tell.

  11. SomeOfMyMusing on Fri, 12th Nov 2021 5:42 pm 

    They have updated evenings news broadcast with animal. I knew, it was happening worldwide, but it is the first time I Watch the evening news. I approve. It is kind of weird watching the whole world remove the old reality and put a new one place.

  12. NobodyWillBeSpared on Fri, 12th Nov 2021 9:29 pm 

    No animals or Jews will be spared. This included all age groups including new born babies

    A pale rider has been appointed by higher GOD’s to clean this messy energy reality.

  13. NobodyWillBeSpared on Fri, 12th Nov 2021 9:33 pm 

    No Jews or animal will be spared. This included all age groups including new born babies

    A pale rider has been appointed by higher GOD’s to clean this messy energy reality.

  14. SkinCancerAsExcutionMethod on Fri, 12th Nov 2021 9:38 pm 

    Expect skin cancer to sky rock among the jews population.

    6:10 skin cancer.

    How Did 100 Israeli Tanks Beat The Entire Syrian Army?| Greatest Tank Battles | War Stories

  15. SkinCancerAsExcutionMethod on Fri, 12th Nov 2021 9:46 pm 

    Wow skin cancer everywhere, even amount new born babies. Israeli tanks video appear on my youtube just after I made this comment. This is sure confirmation in my book.

    I told you I own earth and its energetic reality

  16. IWillExplainToYouTheEarthPowerStructure on Fri, 12th Nov 2021 9:55 pm 

    Understand one thing, I can do all this because higher GOD’s authorized it and agree with me. I own a license to kill and enough energy to modify earth reality.

    I can do all this because higher GOD’s want me to do this. You get it.

  17. IWillExplainToYouTheEarthPowerStructure on Fri, 12th Nov 2021 10:16 pm 

    Do you want more animal babies. Jews and animal . no age group will be spared. Sign be me and higher GOD’s.

  18. YouGetWhoRunEarthNow on Fri, 12th Nov 2021 10:42 pm 

    Faster the animal and Jews get exterminated, faster we can build something new or all move into the energy field and leave this shit earth behind.

  19. UnderworldIsComingAlive on Fri, 12th Nov 2021 11:15 pm 

    I was waiting for something like this for so long. I was wondering who will be the first one to put a zombie/death cadaver face/underworld creature on screen. Here it is: 5:45

    Plus she has skin cancer. I was wondering who will dare to go there.

  20. ThisIsMyExterminationPlan on Sat, 13th Nov 2021 10:59 am 

    I just had a more detail idea how will exterminate the Jews and the Animal.

    So I guess if they can remove my liver spot, higher GOD’s can give skin cancer by modifying the DNA of some skin cell on their face. Once this is done the cancer will self replicate. Could take two to three month to do it for all of them.

    We slowly making their face red if they are Whites. If they are brown, we should have red patch on brown skin with small black Melanoma nodules. Then we start running on mainstream media an information campaign about skin cancer and how to detect. We do only the Jews and the animal we do not touch the humans in anyways, shape or form. We need the real human for the next creation. I am writing this to convert my thoughts into electromagnetic energy and make this event possible.

  21. JustMyEgo on Sat, 13th Nov 2021 12:55 pm 

    This is my ego talking. Here are the Armorial different nations some have a king crown of top of it most don’t.

    This is the one of Québec with a big king crown on top of the armorial. It was adopted in 1939.

  22. NotLaughingAnymore on Sat, 13th Nov 2021 1:53 pm 

    I am pretty sure, that the powerful Jews in Israel are not laughing anymore.

  23. YouControlOverEarthIsOver on Sat, 13th Nov 2021 1:55 pm 

    You control over earth is almost over Jews.

  24. SomeMoreDetailAboutTheXecutionList on Sat, 13th Nov 2021 4:08 pm 

    I will to turn Quebec into an example and add humain, mainly Quebec Inc, CAQ, Sirois Gang, Desmarais Mulroney and Peladeau and the following in the execution list of death by cancer.

    We will see if I am really the King of the earth

  25. SomeMoreDetailAboutTheXecutionList on Sat, 13th Nov 2021 4:17 pm 

    This kind of shit need to stop. If I have to kill 90% of earth population to make a point I will.

    C’est vraiment une grosse merde ! Qui a Montréal va payer 50$ (100 + 50$) de plus pour prendre le REM. C’est une obligation pour ceux de la Rive-Sud a partir du pont fragile (intérieur vide…) et trop mal conçu (Samuel de Champlain). Pourquoi n’ont-ils simplement pas fait une simple jonction avec le métro le plus près du pont a la place de se faire un Xieme ” réseau ” de transport ” privé “, le temps des plusieurs dizaines d’années a repayer, sans logique de désire au départ.., sauf pour ceux qui profitent $$. Tout les utilisateurs et ” surtout ” non utilisateurs vont remboursés environ 7 MILLIARDS (tel que dit la vidéo) d’intérêts personnel de consortium voleurs exagérés avec certainement une grande marge de ” profit ” pour des utilité ” dites ” publique, ou l’ont permet de s’enrichir au néo-communisme..$, allant en partie considérable vers l’étranger. Pourquoi n’ont-ils pas adapté un simple tram-bus sous-terrain de l’Univ. de Montréal vers le métro Mc-gill ou autre si c’était vraiment nécessaire (6-7 MILLIARDS de moins, de profits privés et promis…) ? Un réseau privé pour les promoteurs ” associés ” d’épouvantables immeubles électrique mal-conçu. Pour une immigration poussée en semi-esclavé vers l’UDM, Concordia, collège privé et autres, accumulant leurs 900 heures demandées pour immigrés..? Terrains agricoles de la rive-sud achetés et développés pour presque rien par une poignée de ” trop bien informés “, faisant pensée aux méthodes et terrains acheté avant l’expansion du métro de Laval ou encore de l’hôpital St-Luc et autres… Pourquoi faire ensuite des bretelles aussi coûteuse expendues jusqu’aux nord ? Qui est-ce qui va de la Rive-sud, vers Laval.., qui ne pourrait pas utiliser le métro présent..? Pourquoi aussi vers l’aéroport, Il y a déjà un simple autobus (pas plein) a partir de la gare de bus de Berry et pas plus de voyageur en transport en commun avec tout leurs bagages..? Apres ils tentent même de ” remplacer ” (pour rien de meilleur) le train de banlieue ” déjà électrique ” (très achalander) ” deux montagne ” (???), pour ensuite encore expendre jusqu’à Point aux tremble ou Montréal Nord (REM de l’Est)… Se cherche t’ils des clients pour se justifier aux actionnaires et autres en s’obligeant ainsi toujours au travers les réseaux existant et surtout, déjà payer !!? Il semble que si c’était nécessaire on expendrait le métro et autres avant et les fréquences de passages. Métro en passant qui lui n’aurait pas du être échanger a ce coûts payer (au mêmes performances avec moins de solidité…), sans adapter celui initial (entrant Alstom étranger dans nos réseaux)… En bref l’on voie un net intérêt de transaction (étrangère ?) sur nos transports publique.., montant avec l’intérêt cellulaire 2-3-4-5G de toujours plus suivre précisément les allez et venus en ajoutant aussi des wifi, suivi de passages (autobus…) entre autre dans le métro la ou avant l’ont pouvaient espérer un repos mental des technologies atmosphérique et médiatiques entre le travail, la maison et les visites d’amis… Consortium nouvLR (nouvel aire) vous dites ou ” new world order, wanna be controller “, SNC-Lavallin, Pomerleau + Aecon, Dragados, EBC inc, tous propriétaires.., encore dans leurs conquêtes de possession du Montréal métropole et autour de…

    Porte ouverte aux blanchiments $$, peut-être inspirer des mêmes sources que les grandes organisation criminelles…?

    Pensez-en ce que vous voulez, mais mieux que ce soit sans les seules présentations médiatiques vous forgeant d’avance les pensés et oublis, faisant de vous des non-concernés.., mais.., votre vie future et celle de vos aimables est en jeu… Enterrant les vrais intérêts ” grand publique ” qui doivent particulièrement et toujours être connus pour en venir a une conclusion de libre-arbitre.., sans traitement de l’antifa (anti-fact, ou anti faits-absolus). Quel meilleur exemple de manipulations que ce REM et autres actions semblables, allant avec le reste des destructions-constructions néo-criminelles des dernières 12 années, a Montréal et autres.

  26. ThereWillBeAlotOfCadaversToPickUp on Sat, 13th Nov 2021 6:49 pm 

    What is this skin cancer: 2:08

    Skin caner ? 18:14

  27. SomeOfMyMusing on Sat, 13th Nov 2021 9:00 pm 

    This is my ego talking. Here are the Armorial different nations some have a king crown of top of it most don’t. Most European nations have a King crown on top of their Armorial. You gather all the nations with a King crown on top of the Armorial and you basically almost reunite the White race together. Almost some White nations don’t have a King crown on top of their armorial.

    This is the one of Québec with a big king crown on top of the armorial. It was adopted in 1939.

  28. SomeOfMyMusing on Sat, 13th Nov 2021 9:11 pm 

    I guess that makes the White race the king of all races. See comments above.

  29. SomeOfMyMusing on Sat, 13th Nov 2021 9:29 pm 

    It always been a dream of mine to rebuild a united Whites tribe and transfer them into one nation or one land.

  30. SomeOfMyMusing on Sat, 13th Nov 2021 9:39 pm 

    The Jews are not going to like what I wrote above. The Jews, the ultimate parasite race will feel threaten if they have to survive without the help of White people. Can they make it alone with acting like a parasite. I doubt so.

  31. SomeOfMyMusing on Sat, 13th Nov 2021 10:18 pm 

    After all I was meant to be her from the beginning. Maybe this whole energy reality ownership has moved from the Jews to a White masculine man. Maybe it is time to appoint a new GOD for earth. One where is priority is the continuation and preservation of White race above everything else.

  32. SomeOfMyMusing on Sat, 13th Nov 2021 11:51 pm 

    We obviously continue the extermination process. Father and I will take of the Jews.
    We should not destroy any apartment building complex, house and throw away any furniture that is still in good shape. Eventually maybe new comers all of Whites origin might be happy to live in these units. Something to think ahead if the extermination process work well.

  33. SomeOfMyMusing on Sun, 14th Nov 2021 12:22 am 

    The time where the Whites race is the slave race for the brown shit diversity and Jews is also almost over.

  34. GodIsImprovingHimself on Sun, 14th Nov 2021 1:10 am 

    Love this. The consciousness of GOD is getting better and better at generating animals faces and videos.
    13:23 to 14:00

  35. IStandByYouFather on Sun, 14th Nov 2021 8:12 am 

    I will stand by you father. I will clean up this piece of shit earth. How is it going with give Jews and the animals skin cancer. Doing fine with DNA modification of their facial skin.

  36. SomeOfMyMusing on Sun, 14th Nov 2021 9:01 am 

    We another animal here. They are everywhere. I still believe if you turn their eyes total black, without any Whites, people will rationalize this as normal and animals will starting morphing into people with big black eyes.


  37. SomeOfMyMusing on Sun, 14th Nov 2021 11:30 am 

    Since the animals can only generate thoughts about themselves, it would be funny if they generate thought about themselves getting sick because everyone around them is sick. Maybe them having thoughts about getting sick will make them sick for real and they will die because of these sick thoughts.

  38. SomeOfMyMusing on Sun, 14th Nov 2021 1:57 pm 

    You see I was watching this here:

    4:00 the Bulgaria armorial caught my attention. So I noticed the king crown at the top of the armorial of Bulgaria. SO I decided to I will dig a little deeper into this.

    So this is Bulgaria armorial from 1927 to 1946. Notice de fleur de lys, same as Quebec armorial



    I guess we Whites people are one big familly speaking different language.

    The pieces of shit Jews race will get it good. Father and I working on this.

  39. FamousDrScanlon on Sun, 14th Nov 2021 2:43 pm 

    Stupid Obese White People Self Terminating

    Unvaccinated Texans make up vast majority of COVID-19 cases and deaths this year, new state data shows

    These are the same fat fucks who’ve been crying over their imaginary white genocide.

    Now, most of these stupid tubby white boys have dead sperm and/or are too fat to fuck, not to mention their bellies stick out so much their arms are not long enough to reach their cocks, so they can’t even jerk off in a jar for artificial insemination.

    And yet they still believe they are special, when in fact they are an embarrassment & a burden on society.

    I’m white & pro eugenics but the white trash needs to be taken to the dump or else trying to build a great society is a wasted effort.

  40. FamousDrScanlon on Sun, 14th Nov 2021 2:54 pm 

    ‘Don’t do this’: Anti-vaxxers who have to get COVID shots are taking baths in borax

    Don’t forget Trump’s Lysol cocktails. Guzzle a 6 pack right before your bath.

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