“There is no reason why institutions that have direct holdings in coal, oil and gas stocks could not divest immediately.”

Ian Simm (Chief executive of Impax Asset Management)

No reason except money, Ian, and as you probably know, there is no bigger reason than that anywhere on this or any other planet.

Apparently pension funds in the U.S. – and probably everywhere else – have ignored calls from mayors, city councils, break-dancers, moonwalkers, hustlers and pseudo-intellectuals to forget about the viability of their business models and ditch (i.e. divest) their fossil fuel shares/stocks. As a counterexample however, Stanford University – which has an endowment fund of almost 20 billion dollars – has reportedly started to unwind its position in all publicly listed companies that focus on producing coal for energy generation, Right on, I’m tempted to say, especially when I read that George Serafeim, associate professor of business administration at Harvard Business School, informed his friends and neighbors that “If major pension funds and endowments divest from fossil fuel companies, this will send a very strong signal to the boards and the executives of these companies. Some changes will happen.”

You got that right, George, although they may not be the changes discussed in the faculty club at your establishment, or similar facilities at Harvard and other Ivy League institutions, where tenured faculty members care even less than I do about signals sent to and received from fossil fuel companies, because I happen to know that the changes you are talking about will involve even a larger outpouring of lies and misunderstandings about the energy future – a future in which coal is likely to be a star performer unless (or until) nuclear moves to the head of the class.

“Germany is winning,” according to Simone Osborne – Co-Editor of the publication Energy Crunch –  noting that she is not talking about football. She then goes on to say that “Germany also succeeded in avoiding a yellow card from the EU over exemptions designed to protect energy intensive German industry from the cost of the energy transition.” She also informed us that renewable energy supplied a third of Germany’s electricity in the first half of 2014, and during one day in May renewable energy supplied a “a peak of 74%, without the grid or the economy being brought to its knees”.

Dr. Bruno Burger of the Fraunhofer Institute explained that the gains made by renewables thus far in 2014 can be attributed to the combination of good weather and growing production of clean energy. He adds that “in the first half year 2013 we had really bad weather and the solar and wind production was below the long term average”. To this he added that “In 2014 we started with more [sun] and wind and the production is higher than in average years.”

         Continuing with the good news, the Fraunhofer Institute’s analysis found that coal based generation is down for both hard and soft coals from the record levels of 2013, and in addition the decline in output for gas-based power plants was down 25% compared to the same period last year.

Even  better he says that “Despite the fact that we had high production of renewables, we did not reduce the conventional production. Therefore we achieved an export surplus of 18 Terawatt-hours. If this trend continues until the end of the year, Germany will achieve a third record in a row in electricity exports.”

That’s funny, but I thought that Germany was (or will be) breaking records for electricity imports, and in a talk at an energy conference in Stockholm last year, a  researcher from Belgium claimed that if Germany goes through with its unwise plan for abandoning nuclear, Belgium will have to ration electricity. Craig Morris at Renewables International sees a down side though in Germany’s happiness, arguing that it’s the high  electricity exports (from conventional producers) that keep coal production high in Germany. He sums this up by saying that “Renewable electricity has priority on the German grid, and therefore offsets conventional (fossil fuel) generation, meaning that much of conventional generation will go to neighboring countries as exports.” Logic comes into the picture when he notes that the effect of coal based exports from Germany to surrounding countries will prevent those lucky countries from also going over to renewables.

Well there it is folks. If the Dean of Engineering at Illinois Institute of Technology could have seen the Energy Economics 101 book that I am working on now (Energy Economics: A Modern First Course) he would have expelled me after the first semester instead of the first year. Because in this book I claim that around the beginning of this year, Germany was burning more coal than was burned when that country was divided, and East Germany binged on soft coal. Moreover, the word in Germany most often applied to the Energiewende (= Energy Transition) is verrückt (= crazy, mad), and one of the decision makers in that country said that Germans have financed about all of the Energywende “learning curve” that is possible at the present time.

Before proceeding to destroy the manuscript for my new book, let me add what the World Coal Association says about that resource:  Coal provides around 30 percent of global primary energy needs, generates 41 percent of the world’s electricity and is used in the production of 70 percent of the world’s steel. Coal and lignite reserves are sufficient for more than 100 years at the current rate of production, and the worldwide rate of growth of coal consumption is 3.6 percent. Moreover, for what it is worth, the International Energy Agency believes that coal may come close to surpassing oil as the world’s main energy sources by 2017.

I’m tempted to finish this note by saying that the bigger the lie, the harder people will try to believe it, but I won’t bother. The Energiewende will be exposed before the first quarter of this century is over, but as far as I am concerned, that is almost a decade too late. At the same time I want to refer to a working paper by Charles Frank, called ‘Wind and Solar are Worst (2014).’ Yes they are, but not always and everywhere’ and determining the exceptions and how to exploit them is where the high-level/real-deal logic comes in.

REFERENCES

Banks, Ferdinand E. (2014). Energy and Economic Theory. New York, London and

   Singapore: World Scientific.

Frank, Charles (2014). ‘Wind and Solar are Worst’. Brookings Institution. (June 19)

Rosenberg, Martin (2014). ‘Coal Generation Report Card’. Energy Central (July)