Reforestation in Estonia: six months in?

Reforestation in Estonia

This short note is a progress update, including videos and drone footage, on our aspirations to undertake a series of reforestation projects in Estonia. It covers considerations for selecting land; and our first small investment, which has been to clear out the dense thickets from a 5-acre parcel, to plant some spruce in 2022 and improve the carbon density.


Those who follow Thunder Said Energy research will know that nature-based carbon removals play a large role in our roadmap to net zero (below, around 20GTpa, or one-quarter of all global decarbonization). This is so important that I am trying to learn and stress-test the thesis. Including by undertaking my own reforestation projects in Estonia.

In the research note below from July, the strategy was laid out, to ‘crawl, walk, then run’. The ‘crawl’ phase mainly involves learning, and reducing my family’s net, lifetime CO2 emissions. The ‘walk’ phase involves undertaking what I would consider to be a proper reforestation project, that is undeniably incremental, measurable, trustable, long-lasting and bio-diverse (again, mainly for learning, and to offset my family’s entire lifetime CO2 emissions, multiple times over). The ‘run’; phase might involve replicating this at larger scale, and possibly even commercializing the CO2 removal ‘credits’.

Hence 2H21 has been constellated with trips to learn about Northern European forestry. This is not challenging in Estonia. Forests are part of the culture. In Western Europe, the forest is a dark place where bad things happen (think ‘Red Riding Hood’). In Estonia, the forest is where you go to hide from bad things happening. There are sacred forests, where you are forbidden from swearing or using a mobile phone (photo below). And there is even a national pastime here, picking mushrooms in the autumn. Many Estonians can somehow tell the difference between two near-identical fungi — one translating as “delicious wood champignon” and the other translating, more ominously, as “the angel of death”.

The purpose of this short note is a progress-update on our Estonian forestry ambitions. Acquiring thousands of dollars-worth of land, for a 40-year project, is not something you want to rush. My land acquisition spreadsheet is trying to optimize for about a dozen different variables. But I am pleased to be starting a first project in 2022, and have at least made some inroads towards buying a reforestation plot (video below).

To be clear, it is not a good goal to turn all of the land in the world into forests. Estonia is already about c50% forested, which is one of the highest shares in Europe (our land screen across 170 different countries is linked below). Again, selectivity is important.

Moreover, there are amazing bogs around the country, also known as “Raba”, accumulating peat in their anoxic waters, at around 1mm per annum for the past 10,000 years. So these mossy accumulations actually seem to bulge upwards and rise above the surrounding forests (video below). Step off the boardwalk, and you literally sink into the bog (you are discouraged from stepping off of the boardwalk).

These bogs are categorized alongside other blue carbon eco-systems in our data-file below. But at 1,500 tons of CO2 storage per acre, they will likely contain about 5x more CO2 than boreal forests. If you re-forest them, you actually lower carbon storage and increase the risk of forest fires (especially in South-Western Canada, although this is generally not a huge concern up here on the outskirts of Europe’s Arctic circle).

Nevertheless, Estonia’s somewhat dark history means there is also a relatively large number of abandoned properties. The video example below is on a public footpath, whereas some of the former Soviet structures we have visited or inquired on are still technically in private hands (and thus not appropriate to post on our website). Abandoned farms are the prime target for reforestation. Out of 2.5 bn hectares of degraded land globally, about 400-500M hectares is farmland that has simply been abandoned (note here). This is what I am most set on buying in the ‘walk’ phase of my reforestation ambition.

Just lower down the merit order are marginal grazing lands, which make up 70% of our recent case studies into UK reforestation projects (data below). Some of these have also been interesting to explore in our own land search.

What has seriously helped the process of appraising land for reforestation in Estonia is an amazing government data-portal. This is not a huge surprise in the world-leading country for digitization of government services. You can look up every single plot of land across the entire country, in the digitized map function here. Including their size, basic eco-system type, tax status, history and current owner details. In addition, there are the usual commercial portals online for buying and selling properties.

Thus has started the process of finding potentially appropriate tracts and visiting them. The example below scored well on natural reforestation potential, and is clearly not ‘in use’ as arable land. It is a 30-minute drive away. It is covered in grasses, which preclude trees from establishing. But we also discovered that it lacked road access, had been clear-felled in 2012 (which under Estonian law means it should technically have been re-planted already) and the asking price was excessively high in our view.

Meanwhile the example below was interesting, because it could join up two adjacent patches of forests on the outskirts of a Raba. But upon visiting, those forests were mainly Juniper and low-lying pine varieties, i.e., very slow-growing species, not the mixtures of Pinus sylvestris, spruce, et al that are most appropriate for carbon storage in this climate. And, unfortunately, after discussions with the owner, they were not willing to sell.

We also looked at existing forests and bio-diversity, which was not without its perils…

For the ‘crawl’ phase of exploring reforestation, however, we have already acquired 5-acres of land in Suurupi, on which we will primarily be building a house to live in. This is another reason that some TSE research has recently made forays into carbon negative construction materials, insulation, small-scale wind turbines or who makes the best heat pumps. Surrounding us is a protected forest, with 35m tall pine and spruce (video below).

However we believe that our own plot was cleared and grazed during the time of the first Estonian Republic, then abandoned during Soviet times. This is why it is constellated with a few scattered birch (a pioneer species), and otherwise human-height bushes, in a landscape that is known in Estonian as ‘vรตsa‘. This is dense thicket, that precludes the establishment of larger trees. The video below is taken in winter. Because at any other time of year, you cannot see anything at all. Only leaves and thorns. Indeed, in the spring, you feel the mosquitoes bite a piece out of you, and then you hear them sitting in the vรตsa and gnawing away. This is a land type that can be substantially improved. Both aesthetically, and in terms of carbon storage. Ultimately it can look like the carbon dense pine-spruce forest shown above, although ideally with more bio-diversity.

Hence we have cleared the vรตsa this winter, which will be mulched and returned to supplement the soil. The video below is taken just over the ‘border’, in the plot next door (yes, Estonia is cold in the winter).

The aerial photo below shows what was cut, and what remains, including one giant spruce, estimated to be 100+ years old and dating back to the original forest here. The idea is to plant more spruce in the spring (inter alia), which can grow well in the dappled light beneath the relatively open birch canopy. But then spruce has a tendency to shoot up in the gaps, once the birch trees reach end-of-life.

Reforestation in Estonia

There are also clearings on the land, with only minimal vรตsa, where we have other options, and the chance to bring more biodiversity into the mix.

To document the process, and help appraise further prospective land parcels in 2022, we also invested in a drone. I have not yet learned to fly it convincingly.

Reforestation in Estonia

For more light-hearted content on six-months’ perspectives, living in Estonia, please see the short video below. Genuinely, please visit, if you would like a tour of some amazing Estonian forests, and our future reforestation projects.

Sustainable forestry: a new listed entity?

Public company forest carbon

For the first time, in November-2021, a moderate-sized company has gone public with a mandate to generate CPI + 5% returns, by investing in forestry and nature-based afforestation projects. This short article summarizes the key points from the 216-page prospectus. We remain excited by the theme. The fine-details are informative.


Foresight Sustainable Forestry Company PLC (FSFC) went public in November-2021, listing in London and raising ยฃ130M in its IPO. This makes FSFC the second listed afforestation company in our screen that will be commercializing CO2 removals, and the only one of moderate size (below). The notes below are our highlights from the prospectus.

The Ambition of the group is to generate a total return of CPI + 5% by creating a balanced portfolio of sustainable timber and afforestation assets, while protecting nature and enhancing biodiversity.

Revenues. โ€œThe groupโ€™s revenues will primarily be generated by the sale of harvested timber and, in due course, the sale of Carbon Creditsโ€. But harvested timber is โ€œthe primary revenue streamโ€.

Why forestry? Forestry investment returns are quoted at 12-16% pa over the past decade.

Timber. Global demand for timber is predicted to rise 4x from 2012 to 2050, by which year the market is seen being 4.5bn m3 pa under-supplied, increasing timber prices. UK timber prices have risen at 2% pa in the last 30-years and 5.6% pa in the last 20-years.

Future timber upside is seen from new wood products, with excellent carbon credentials, including mass timber, packaging and biochar. We would agree here, notes below. In the UK, upside is seen from the governmentโ€™s plan to construct 300,000 new homes, increasingly sustainably, as well as practically and cost-effectively.

The harvest paradox. The prospectus addresses the paradox that timber harvesting might be seen to worsen natural carbon stocks. Academic research is cited showing that planting (or re-planting) conifers can mitigate 3x more emissions than conserving pre-existing broadleaf forest. Again we would agree (notes below) 65% of harvested tonnage is seen being used as sawlog, for lumber, with structural use and a long life. 25% will be small roundwood (particle board, fiber board, packaging, paper) and 10% is wood fuel.

Sustainable Timber standards. All projects will meet or exceed UKFS standards. The company notes it must obtain certifications from the FSC or PEFC, in order to sell its forest products.

Afforestation. โ€œThe Company will seek to make a direct contribution in the fight against climate change through forestry and Afforestation carbon sequestration initiatives.โ€ Afforestation assets may comprise up to 50% of gross asset value. This matters in the UK, where forest cover is cited at 13%, one-third the level of other European countries.

Policy support is cited. In March-2020, the UK committed to reforest 30,000 hectares per year. In May-2021, plans were laid out to treble tree-planting rates in England, with grants from the ยฃ500M Nature for Climate fund. Scotland aims to plant 10-15k hectares per year and has a grant scheme, which tends to average ยฃ4k per hectare. Most recently, COP26 has explicitly encouraged the protection and restoration of forests.

Carbon Credit standards. The company plans to meet the criteria for creating carbon credits under the UKโ€™s Woodland Carbon Code. This is encouraging, as we have generally found prior projects in the WCC to be high-quality (data below).

Carbon removals from the IPO are ascribed potential to enable 4MT of additional CO2 removals.

CO2 attribution. The company states โ€œregardless of who ultimately acquires and/or retires the CO2 Credits, investors in the Initial Issue will always reserve the right to the claim they provided the original enabling capital to get the additional Afforestation and natural capital projects into actionโ€.

Ancillary Revenues. Where appropriate, additional revenues may be generated by leasing the land for sporting, eco-tourism, renewable energy, telecommunications towers. Wind farms are noted in particular, as newer, taller turbines can now be โ€˜key-holedโ€™ into forestry areas without impacting wind resources. This looks interesting to us.

Biodiversity. โ€œThe Company will seek to preserve and proactively enhance natural capital and biodiversityโ€. In addition, biodiversity credits will be commercialized โ€œif a future market developsโ€. Some reports suggest legislation is progressing that will market worth hundreds of millions pa. Biodiversity can also be its own benefit (see below).

https://thundersaidenergy.com/downloads/forest-carbon-biodiversity-impacts-productivity/

Other co-benefits cited are stabilizing soils from erosion, preventing flooding and landslides, supporting rural jobs, active engagement, education and health benefits for local communities.

Land ownership could be either on a freehold or leasehold basis.

Diversification. The company is using a portfolio approach, across a mixture of assets, asset types, geographies (although at least 90% will be in the UK), age classes, harvesting profiles and off-takers. No single asset is to represent more than 15% of the firmโ€™s gross asset value.

Control. Assets will typically be owned 100%.

Gearing may be used to enhance returns but will not exceed 30% of gross asset value. One reason noted is that forestry assets are inherently illiquid.

Distribution yield. The company states that it will not retain more than 15% of its income. Distributions will be in the form of dividend (or โ€œinterest distributionsโ€ for UK tax purposes).

Operating history. Foresight Sustainable Forestry Company PLC is a new entity with โ€œno operating historyโ€.

Capital Raise. The companyโ€™s ambition was to raise ยฃ200M, of which ยฃ4M would comprise initial expenses for setting up and listing. (The IPO amount of ยฃ130M seems to be at the lower end).

Speed of capital deployment is cited as a key challenge for meeting earnings and returns targets. We have found this to be a challenge in our own reforestation efforts (see below).

Hence an initial acquisition has been scoped out at the time of the IPO, with a related party, Blackmead Infrastructure Limited. FSFC has the option to acquire 11,000 hectares of standing forests and afforestation assets from Blackmead, based on a third-party valuation, conducted by Savills (at ยฃ138M). In return, Blackmead will invest for 30% of the initial IPO.

The Target Asset comprises 34 discrete areas. 85% is in Scotland, 10% in Wales, 5% in England. 59% is mature, 38% are afforestation assets and 3% are mixed. Average age is 19-years. 10 species are used across these sites.

Further land acquisition is cited as another potential risk area. FSFL’s main targets are pasture land and semi-natural grasslands, which comprise 22% and 17% of UK land, respectively. 47,000 hectares of farmland was openly marketed in 2019, a new record low. cยฃ325M of forestable or farm land transacts each year in the UK. Brexit is said to have reduced farmland values by 2% since the Brexit referendum in 2016 and the scale-back of EU subsidies may bring more land to the market. Our own land data are below, comparing the UK to other geographies.

โ€œConverting largely sub-economic grazing land into a commercial forest can increase the value of the asset by 2-3x over an 8-10 year time horizonโ€ (chart below). The rationale also fits within changes in the food system (note below).

Pipeline. The company has identified 324,00 hectares in Scotland, 166,000 hectares in Wales and 68,000 hectares in Northern England that could be suitable for afforestation. The total pipeline is seen to be in excess of ยฃ300M per annum.

Due diligence will include legal, financial and other advisory expenses. These expenses may be incurred without necessarily resulting in a successful acquisition.

Land quality matters for carbon credentials. Forests with the best wind-firm soil can achieve up to 80% sawlog, while poorer ground may only achieve c50%.

Rising future competition is also cited as a possible risk. Today โ€œthere are a limited number of investment managersโ€ฆ in the UK forestry sector for institutional clientsโ€.

Physical risks are also noted, including possible fires (see below), pest damage, disease, extreme weather. These may lower the value, or delay the timing of harvests.

Environmental laws are noted. For example, the Group could be held liable for historical contamination on land that it acquires, and forced to pay for remediation measures. Other sites in the UK are designated as โ€œSites of Special Scientific Interestโ€ or โ€œSpecial Areas of Conservationโ€. The group would be liable for fines in the event that it damaged or disturbed such designated sites.

Species selection. Conifer species such as Sitka spruce are highlighted for their yield advantages. Such softwoods (pine, fir, spruce, larch) can be harvested after 40-years, whereas broadleaved hardwoods (oak, ash, beech) will take up to 150-years before they reach maturity. Our own data are below.

Modern forestry techniques are โ€œgenerating accelerated rates of tree growth and higher overall forest timber productivityโ€. They include decisions into thinning, understory management, species selection, soil management. For our own views on improving forestry techniques, please see the research note linked below.

Relatively early harvesting may be favored. โ€œOnce commercial conifers reach maturity they become much more susceptible to damageโ€ from wind, fire or beetle attacks. Again this matches with our data.

Carbon inventories will be run following guidelines from the UK Woodland Carbon Code, using third-party service providers. For our views on measuring forest carbon, please see the research note below.

Overall we like the space of afforestation, as more and more companies seek to compensate for unavoidable and residual CO2 emissions, and truly get to net zero (note below). Please contact us for a more specific discussion on FSFC.

Neodymium market: our top ten facts?

neodymium market

Neodymium is a crucial Rare Earth metal, used in permanent magnets for the ramp-up of wind turbines and electric vehicles. The market is small, growing rapidly. This could create opportunities, as bottlenecks and cost-inflation need to be kept in check. Hence this short note outlines our ‘top ten facts’ on the neodymium market.


(1) What is neodymium? Neodymium is the 60th element in the Periodic table, a rare-earth element, in the Lanthanide series. The most important use of Neodymium is in alloys with iron and boron, creating tetragonal crystals of Nd2Fe14B, which are some of the strongest permanent magnets known to mankind, capable of lifting over 1,000x their own weight. The alloy was discovered independently, by GM and Sumitomo, in the early 1980s.

(2) How are neodymium magnets used? These magnets are used in electric motors, generators (especially wind turbines) and other electronics (especially computer hard drives, audio equipment, and the accelerometers in cell phones). For example, each Toyota Prius might contain 1kg of neodymium (some vehicles use as much as 2.5kg), and a wind turbine might contain 125kg per MW of capacity (some direct-drive generator designs use 600kg/MW). These have been crucial themes in our recent research, as cost-inflation and bottlenecks need to be avoided (see below).

(3) Physics: How are magnets measured? The strength of a magnet is measures in Teslas. Specifically, a magnetic field with 1 Teslaโ€™s strength will exert 1 Newton of force on a particle with 1 coulomb of charge that is moving perpendicular to the magnet at 1 meter per second. This is due to fundamental electro-magnetic laws of the Universe, such as the Lorentz Force Law. Ferrite magnets’ magnetic fields typically peak out at 0.5-1.0 Teslas, and this is for very large and heavy magnets. Nd2Fe14B magnets can have magnetic fields of 1.0-1.4 Teslas. They can also have very dense magnetic fields, of 200-440kJ/m3, making them compact. Finally, they are relatively “permanent” magnets, resisting demagnetization up to 750-2,000kA/m competing magnetic fields and temperatures up to 310-400ยบC.

(4) The neodymium market? There are seventeen rare earth elements. Data here are opaque. Hence what follows is some simple ballparking, triangulating between online sources and technical papers. The global market for rare earth oxides is about 160-240kTpa in 2020, worth around $4bn per annum. Of the metals in these ores, c20% comprises the Neodymium market. Around 50kTpa of the Rare Earth ores are likely to be used to make 140kTpa of permanent magnets (the other components are not Rare Earths), worth as much as $14bn per year. The largest Rare Earth component in permanent magnets is Neodymium, comprising 27% by mass of Nd2Fe14B magnetic material. Overall, our best guess for neodymium market demand in 2021 is around 20-30kTpa. Total demand for Rare Earth Oxides is seen growing at 4% per annum by CRU. Nd-Pr is seen growing at 7% per annum. Roskill sees demand for permanent magnets in EV power-trains increasing at 17.5% per annum from 2021 to 2030. Total demand for these materials could thus rise 3-10x by 2050, among the fastest growth rates of any commodities in the energy transition research (chart below).

(5) Global reserves of Rare Earth metals have been estimated at 120MT by the USGS, equivalent to a 600-year reserve life. In turn, this might imply as much as 24MT of neodymium reserves, if neodymium comprises 20% of all Rare Earths. However, reserves of neodymium, specifically, have been more conservatively estimated at 8MT in other sources. Nevertheless, this still implies a c300-year reserve life at todayโ€™s current rate of production. The materialโ€™s total abundance in the Earthโ€™s crust is 38mg/kg (38ppm). And this is actually “high” (chart below). For contrast, copper is 66pm, cobalt is 25ppm, lithium is 20ppm, uranium is 2pm, platinum is 0.004ppm and gold is 0.003ppm. This all suggests that there is no shortage of Neodymium in the Earthโ€™s crust, only a possible shortage of projects to extract and upgrade it economically from high-grade ores.

neodymium market

(6) How is it produced? The two main ores for Neodymium are monazite and bastnasite. Neodymium comprises 10-18% of these minerals by mass. The ore is mined, crushed, screened, leached, precipitated, calcined, and then chemically separated and precipitated (e.g., using nitric acid) in order to produce Neodymium oxides with 99% purity. This is not dissimilar to other materials value chains that have crossed our screen, such as lithium, uranium or copper, and similar models could be translated across.

(7) Where is it produced? Output from Rare Earth mines runs at around 160-240kTpa, of which c20% is neodymium. c60% of global output is from China, primarily six state owned enterprises. Other large producers include Australia and Myanmar. Non-Chinese mine output has been increasing since 2015. But the mined materials are still largely refined in China, which supplies c85% of total refined rare earth production. As usual, this creates the Catch 22 of whether China’s decarbonization needs to go hand-in-hand with the West’s, or whether this is even possible without accelerating inflation even more so (note below).

(8) What does it cost? Neodymium prices have run around $60-70/kg in 2017-20. Prices have risen sharply in 2021 to around $160kg. Again, our nemesis of inflation is rearing its ugly head…

(9) What is the CO2 intensity? Carbon-accounting for rare earth materials is complex, because many materials are co-produced. Hence it is debatable how to allocate CO2 emissions across these different materials. One study estimated 12kg of CO2 emitted per kg of neodymium oxide (here), while another found 66kg of CO2 per kg of neodymium oxide (here). You can compare and contrast these CO2 intensities with other materials in our granular data-file of global CO2 emissions below.

(10) Which companies? China is the worldโ€™s largest producer of rare Earth materials, mining over 100kTpa, and refining c80% of global supply. Companies are also ramping up outside of China. One of the largest producers is MP Materials (NYSE-listed), which operates the Mountain Pass mine on the Nevada-California border, supplying and processing 15% of the worldโ€™s Rare Earths in 2020 (of which 11.5% is neodymium). Lynas Rare Earths (listed in Australia and the US) recently agreed to construct a 5kTpa rare earths separation plant in Texas, which will yield 1.25kTpa of neodymium-praseodymium, sourced from ores in Western Australia. Rare Element Resources is developing the Bear Lodge project, which comprises 18% neodymium by weight. Texas Minerals is progressing the Round Top Rare Earths project, of which 7% is neodymium. Finally, many of the uranium companies that have crossed our recent screens also co-produce Rare Earths, while we like this theme as we also see nuclear projects re-accelerating (uranium screen and uranium note).

Further research. We hope you have enjoyed this short note on the neodymium market. To receive our research as we send it out, then you are very welcome on our distribution list.

Power functions: how would gas shortages change the cost curve?

how would gas shortages change the cost curve

This note evaluates how sustained gas shortages could re-shape power markets (chart above). Nuclear is the greatest beneficiary, as its cost premium narrows. The balance also includes more renewables, batteries and power-electronics; and less gas, until gas prices normalized. Self-defeatingly, we would also expect less short-term decarbonization via coal-to-gas switching.


Across our research we have modelled over 150 different technologies which can help the world on its pathway towards net zero. Naturally this includes power generation sources such as wind, solar, gas turbines, CHPs, coal, hydro, nuclear and hydrogen fuel cells.

The lowest-cost ‘net zero power grids‘, we argue, most likely comprise a mixture of 25-50% renewables, backstopped with the most efficient and low-carbon natural gas power. There will inevitably some CO2 emissions associated with the gas production, but we think this can be entirely offset with nature-based CO2 removals, for a cost below $50/ton. The model is explored in the note below.

The reason for this balance is that renewables start out as the lowest cost power source. Until they hit 25-50% of the total grid. This is because wind and solar generation auto-correlates over very wide areas (charts below). Hence at a certain point, any incremental renewables that you build will be trying to feed into the grid at a point when the grid is already saturated with renewables, and these incremental renewables will be curtailed.

You could build more renewables into these grids, but the costs would escalate rapidly, because of curtailment, because of the costs of batteries, and because of the complicated power-electronics that must be installed downstream to compensate for renewables’ inherent lack of inertia, reactive power and fault current (notes below).

A final issue with wind and solar is that they may see some inflation in their future costs. Although they are very low carbon, their costs are partly determined by the cost of input materials, many of which are energy intensive and themselves need to be decarbonized. For example, PV silicon, carbon fiber, other metals (see below). This is why higher gas/energy prices or higher CO2 prices mechanically translate into mild re-inflation for wind and solar in our analysis.

However, what has prompted the analysis in this short note is that we are confronting the possibility of materially higher gas prices in the next 2-5 years, due to sustained gas shortages. If fears over the energy transition have elevated capital costs in the gas industry to 15-20%, then we think international gas prices may need to run at $12-16/mcf, in order to attract sufficient investment to re-balance future gas markets (note below).

Higher gas prices clearly are going to translate into higher prices for gas-fired power. As a rule of thumb, each mcf of gas contains 304kWh of chemical energy. When combusted in an efficiency power generator, around 175kWh of electricity will be generated. Thus each $1/mcf increase in the gas price increases the marginal cost of gas-power by 0.6c/kWh.

In our chart below, we are also assuming that coal prices off of gas (i.e., the coal industry charges whatever it needs to charge, in order to incentivize the marginal consumer not to switch off its coal plant and switch to burning gas instead). So the levellized cost of coal power is also going to rise with gas prices. Finally, to be clear, we are assuming a $50/ton CO2 price, apples to apples, across the board in the analysis below.

So what changes if we were to have several years of gas prices in the range of $12-16/mcf, rather than $6-8/mcf as we have previously hoped for?

The first re-alignment is the relative balance between renewables and gas, in an optimized mix. Clearly if the baseline price gap between gas and renewables widens from 2c/kWh previously to 6c/kWh, then more renewables can be built before the cumulative costs of curtailments, backups and power-electronics upgrades sway the calculus. This might be good news for manufacturers of renewable assets, their underlying components, and power-electronics companies (some examples are profiled below). However, it is not necessarily great news for consumers, fore-suffering higher energy prices.

The other clear shift in the cost curve of power options would be bringing nuclear firmly into the money. In the past, our constructive outlook on the nuclear industry has hinged almost entirely on China (note below), where new nuclear facilities are constructed for c$3,000/kW. In the West (and in our model above), capex costs have been closer to $6,500/kW. And we have actually been assuming that Europe would phase back 15% of its nuclear capacity by 2025.

No longer. The easiest and most politically palatable way to address 2-4 years of gas shortages would be to cancel the nuclear phase backs. But moreover, at $14/mcf gas and $50/ton CO2 prices, there is effectively no economic difference between building new gas generators and new $6,500/kW nuclear plants. You probably want a mixture of both for diversification. And all the better if you can build the nuclear plants for less, for example, using some of the interesting next-generation nuclear concepts and SMRs under development.

Overall, our conclusion is that a period of sustainedly high gas prices would be most constructive for incumbent gas producers, who effectively print money until the world can be incentivized to quench painfully under-supplied gas markets. But longer term, upside is created for the nuclear, renewables and power-electronics industries. The data behind our analysis are tabulated below, with underlying details drawn from our other models.

Energy transition: old Soviet jokes?

old soviet jokes

After six months living in Tallinn, Estonia, the history of the Baltic States has been swirling around in my mind. Especially a list of old jokes, told during Soviet times, about persistent industrial shortages, propaganda, the suppression of dissent and the ridiculousness of planned economies. This video aims to share some observations, and explore whether there is any overlap with energy transition policies.

Switching gears: the most potent GHG in the world?

SF6 switchgear replacement costs

SF6 is an unparalleled dielectric gas, used to quench electric arcs in medium- and high-voltage switchgear. There is only one problem. It is the most potent GHG in the world. Therefore, it may be helpful to find replacements for SF6 switchgear, amidst the ascent of renewables and electrification. This note discusses resultant opportunities in capital goods, plus some minor cost inflation consequences.


Electrical Arcs and Amazing Switchgear?

Our recent research is taking us down the rabbit hole of power-electronics, looking for capital goods opportunities associated with increasingly renewables-heavy grids. For example, wind and solar are more volatile than conventional generation. They do not inherently provide any inertia or reactive power. For an explanation of these effects, and an example of a possible solution, please see below.

Another crucial theme is switchgear, which you can think of as the industrial-scale equivalent of the circuit-breakers and light switches in your house. At the 120-240V voltages in a typical home, flipping these switches ‘off’ is fairly trivial.

But once voltages surpass about 10kV, and especially above 150kV, we are starting to deal with serious amounts of energy. The potential difference on either side of these electrical contacts can be large enough to literally rip the electrons off of air molecules, and form an ‘electric arc’, which is like an electrical lightning bolt, whose core can reach 20,000โ—ฆC. For some slightly mesmerizing videos of electric arcs in primary power distribution, see below.

Further downstream, you obviously do not want uncontrolled electrical lightning storms raging through the sensitive and expensive electronic equipment in an industrial facility, every time you turn it on/off, or every time there is a fault on increasingly volatile power grids. Especially if people are in the vicinity. High potential differences will chemically degrade most substances. High enough temperatures will also melt practically anything.

Enter gas-insulated switchgear (GIS). In 1957, Westinghouse began commercializing switchgear containing a compound called SF6, which rapidly gained popularity in the 1970s. At comparable pressures, this gas has 2.5x higher dielectric strength than air (and more at even higher pressures, see below), which means it takes 2.5x more voltage to rip the electrons away and permit current to flow. Moreover, SF6 is ‘self healing’: in a few micro-seconds, any dissociated SF6 molecules will re-combine, so the SF6 can quench multiple electric arcs in quick succession. It has 3.7x higher specific heat than air, absorbing excess heat without transmitting it onwards. It is non-toxic. It is non-flammable. Hence it has become a dominant solution to ‘fill’ the cavities of switchgear and quench electric arcs. There is no other substance known to man with such an incredible array of properties.

Climate Impacts of SF6?

There is only one problem with SF6. It is the most potent greenhouse gas in the world, with around 23,900x higher warming potential than CO2 (chart below). Because of its exceptional stability, it also has an atmospheric lifetime of about 3,200 years, which effectively means that any SF6 released into the atmosphere stays there ‘forever’.

It is important not to sensationalize the climate impacts of SF6. The world consumes around 8kTpa of SF6, of which 80% is used in electrical switchgear, as described above. Especially in Europe, there are stringent regulations to ensure checks and prevent leaks of SF6.

But even if 8kTpa of SF6 were released to the atmosphere — e.g., at end-of-life, when switchgear is retired — then this would be equivalent to about 200MTpa of CO2, or around 0.4% of today’s global emissions. A study in the 1990s concluded that SF6 emissions had so far contributed <0.1% of all historical manmade warming. On the other hand, the $120bn pa market for switchgear will likely grow rapidly from here, with the themes of renewables, EVs and the policy-objective to ‘electrify everything’ (below).

A read-across for gas? There are people out there who look at natural gas’s global warming potential — 80-100x CO2 on an instantaneous basis, 21-25x CO2 over 80-100 years — and argue natural gas should therefore be ‘banned’. This is not our view. We simply think gas users and consumers must mitigate methane emissions (note below). But you cannot help wonder what these ‘abolitionists’ would say about SF6. Should it not be banned as well by the same logic?

Reading through documents from the European Commission, one gets the sense that there is a desire to tighten regulations and lower SF6 usage in the electrical industry. (It has already been banned in other non-essential contexts, such as in double-glazing).

The challenge is that alternative solutions are not practical. One EU document from 2020 notes โ€œit is a challenge to find cost effective, reliable, and safe SF6-free replacements for load break switchesโ€ฆ because, compared to vacuum circuit breakers, load break switches are normally simpler, cheaper and maintenance freeโ€. However, the document goes on to argue that โ€œWhere the SF6-free alternatives are more costly than switchgear containing SF6, policy intervention is likely to be needed to trigger a transition. As part of the European Green Deal, the Commission has recently launched a review of the EU rules on fluorinated gasesโ€.

Replacements for SF6 — Capital Goods Opportunity?

What are the challenges? Larger footprints are needed for SF6-free switchgear. In other media, it simply takes more space to safely quench an electrical arc. This makes it difficult to replace switchgear at industrial sites with space constraints.

Larger switchgears also tend to use more materials, and require larger manufacturing efforts, which in turn makes their costs 20-30% higher than SF6-using switchgears (and 2x more expensive in some cases).

Finally, SF6 is so chemically inert that it does not react with metallic components or contacts, degrading switchgear over time, whereas other gases will likely require more maintenance over their operating lives.

Nevertheless, there are alternatives, using air insulation, mineral oils, fluoroketones, CO2, epoxy coverings and vacuum-mechanisms to quench electrical arcs. To re-iterate, they are simply more expensive and usually less practical than SF6.

There is a large prize for the capital goods industry, therefore, developing SF6-free alternatives. And we will note some examples below.

  • Eaton was the first manufacturer of SF-6 free switchgear, and has shipped 350,000 SF6-free switchgears by 2019, and 15M vacuum-interrupters, under its Xiria product range.
  • AirPlus is a mixture of Novec 5110 (C5-PFK) and dry air, commercialized by ABB and 3M. These have been field-tested since November-2015 and have largely behaved as expected. The product range includes a medium-voltage gas-insulated indoor RMU which can operate at 24kV and with a 630A rating.
  • g3 is a blend of Novec 471010 (a C4 PFN) and nitrogen, developed by GE and 3M and has been fully type-tested. It has similar performance to SF6 and has been proved up to 420kV. It is being tested at insulated substations by TSOs, including National Grid, with a single substation in SW Scotland saving 1.7 tons of SF6.
  • Nuventura has a product using โ€˜synthetic airโ€™ as an insulator. The product is claimed to match the footprint of comparable SF6 solutions, while having 7-10% lower capex and opex. The product is currently rated up to 1,250A and 12-36kV. We currently see three patents for Nuventura in the EPO database. The company is privately owned, based in Germany and was founded in 2017.
  • Other manufacturers of SF6-free switchgear include Meiden, Hitachi, Schneider, Toshiba, Lucy et al. Screening different companies may form the basis of a future TSE research note. Please contact us if this would be interesting or helpful.

What impacts on renewables and electrification costs?

The best way to evaluate the future costs of a technology are to build up a detailed line-by-line cost model, then interrogate each line. Our main conclusion from this exercise, across 500 data-files so far, is that we many cost lines in the build out of renewables and electrification may actually re-inflate in the future. Especially where costs are linked to underlying materials.

Electrical balance of plant usually comprises $100-300/kW of the costs in our wind and solar models, out of $1,000-3,000/kW total costs (breakdowns below). A single circuit breaker might cost $5/kW (maximum capacity basis). A single transformer might cost $12/kW (note below). Generally, one might expect c10-30% reinflation in the cost of switchgear as SF6 is de-prioritized for new equipment in the future. Although we think this is unlikely to add more than 1-2% to the cost of an overall renewables project.

Examples of our research into future renewables costs are linked below. Again, we do not want to sensationalize the issue of SF6. But broadly, we think it may be dangerously incorrect to assume ‘perennial deflation’ for many renewables technologies, as there are many line items re-inflating in our models. We will continue to look for opportunities in power-electronics and materials.

Grid volatility: are batteries finally in the money?

UK power price volatility

UK power price volatility exploded in 2021. The average daily range has risen 4x from 2019-20, to 35c/kWh in 3Q21. At this level, grid-scale batteries are strongly โ€˜in the moneyโ€™. So will the high volatility persist? This is the question in today’s 6-page note. We attribute two-thirds of the volatility gains to gas shortages and high absolute power prices. However, wind generation is at three-year lows.

Energy transition: distorted by politics?

is energy transition distorted by politics?

Political divisions may explain some recent mysteries around the energy transition, and be larger than we had previously imagined. This note explores lobbying data and concludes there is more need for objective and apolitical analysis.


To an apolitical researcher, focused mostly on data, numbers and objective analysis, there are some strange goings-on in the energy transition. Our review of the ‘top ten controversies’ is linked below. But let us zoom in on a few examples…

(1) A Republican President recently stated that climate change was a ‘hoax’ and could effectively be ignored. This is despite not having any clear expertise in Earth Science or climatology himself. Conversely, our own climate models and conclusions are below.

(2) A Democrat President recently has been seen to discourage US oil and gas production in the name of averting climate change, but then later called on OPEC to raise output. This is despite many OPEC countries – Iraq, Nigeria, Venezuela – having much higher levels of flaring, methane leaks and CO2 emissions than US producers (data below).

(3) Another of the leading US Academic institutions recently announced it would divest its endowment from oil and gas. This is despite suggestions that divestment might, again, hand market share to higher CO2 producers, while also depriving China of new LNG supplies, thereby perpetuating its reliance on 2-3x more CO2 intensive coal.

(4) 100% renewable electricity is often promoted by policymakers and even claimed by some tech companies (note here). This is despite nobody having a practical or economical solution to satisfy demand in the 30-70% of the times when wind and solar hardly generate any electricity at all, or other complications with the power grid (below).

(5) Restoring degraded natural ecosystems can absorb around 200-400 tons of incremental CO2 per acre at costs of around $15-50/ton. This should be an enormous win for the environmental movement, especially with more experience (notes below). Yet many policymakers have so far disavowed nature-based solutions in favor of other CO2 abatement options costing $300-1,000/ton and that do not restore nature.

The mysteries above are unsettling to me as a researcher. I have spent an inordinate amount of time wondering ‘what am I missing?’ and poring back over my numbers.

But these apparent paradoxes may also be explained by political divisions. Our chart below aggregates data from opensecrets.org, showing several billions of dollars spent on lobbying by fifteen major industries in the past 20-years. Conspiracy theories are not usually helpful. But there are clear conflicts of interests in these numbers.

Political polarization? Some members of the oil and gas industry appear to be consistently among the largest contributors to Republican candidates and causes, followed by some members of other energy-intensive industries. Conversely, some members of the education, entertainment and tech industries are consistently the largest contributors to Democrat candidates and causes. And to state the obvious, Democrats tend to be pro-Democrat causes and anti-Republican causes; and vice versa.

Everyone is entitled to a political opinion. However, is there not the smallest temptation for those with strong political leanings to promote the interests of others with similar political learnings; and equally, to weaken the interests of those with opposite political leanings? How do we know that politics are not ‘distorting’ energy transition policies? Five conclusions follow below…

(1) Some statements are merely political posturing? If you cannot find a good facts-based, numbers-based justification for strange goings-on in the energy transition, it is possible that they could be politically driven. In some cases, you may simply translate “I support this technology” or “I strongly object to this technology” as “I am hereby expressing my political position”. That is fine. People are entitled to political positions. But it may be helpful for decision-makers to differentiate between objective facts and political opinions. We think transparent data and numbers are the best way to do this.

(2) Politicizing the energy transition may make it harder to achieve important environmental goals. By definition, the solution space that satisfies a complex array of lobbying interests is going to be smaller than the overall solution space. It may involve selecting non-optimal solutions. There is also a risk of yo-yo policies, as each fresh administration reverses course from the last. Therefore an important goal for decision-makers, is to identify opportunities that will ‘stick’, regardless of the political climate, and differentiate them from temporary fads that are politically motivated. Our work aims to do this.

(3) If you want to make a difference, driving the energy transition, the best solution may be to steer clear of politics, and simply get on with ‘doing’ something constructive. You are not going to change other peoples’ political views. Get on with your life. As a personal example, I am currently speccing out my own reforestation project, which should offset my family’s entire lifetime CO2 emissions (note below). Per our research, there are some amazing companies ‘doing’ amazing things across the energy transition, and some amazing opportunities as a consequence…

(4) Is all research objective? What is most surprising about our lobbying chart above is the very large political skew of US Academia, especially in the last electoral cycle. How does an institution that gives $2.5 – 25M to a particular political party (data here) ensure that it is conducting apolitical research, balanced peer-reviews and considering all angles? Everyone is entitled to political opinions. But we aspire that science should be apolitical and objective. Moreover, some of the output from widely-reputed, inter-governmental organizations has also recently contained some surprising conclusions, which smell of the political cart leading the numerical horse.

(5) The best antidote, we believe, is objective, numbers-based analysis. Which is the goal in TSE’s research. It is independent and apolitical. The sole focus is to find practical and economic opportunities for decision-makers, which can help the world decarbonize. To keep a balance, each of our 170 clients pays the same subscription fee to access our research. Our conflicts of interests policy is linked here. And most importantly, all of our data and models are published transparently on our website. If you ever disagree with the number in a particular cell in a particular spreadsheet, then please write in, and we should debate it.

Diet and climate: should energy transition include agriculture?

diet changes could cut total CO2 footprint

Feeding the world explains 20% of global CO2e, across 12bn acres of land, whose reforestation could theoretically decarbonize the entire planet. Kilo for kilo, many meat products have 1-10x more embedded CO2 emissions than fossil fuels. Thus with dietary changes a typical developed world inhabitant could cut their total CO2 footprint by 50-70%. The purpose of this short article is to present our top ten facts and observations.


(1) Food is a form of energy. The average person needs to ingest around 2,000 calories (kcal) per day to maintain their weight. The energy content of 2,000 calories is equivalent to 2.3 kWh. In power terms, this is c100W, or a similar electrical draw as a desktop computer. Hence nourishing 8bn people globally is equivalent to supplying 7,000 TWH per annum of energy, or c10% of all global energy. For comparison, the useful energy harnessed from 40Mbpd of oil by the worldโ€™s fleet of 1.7bn passenger vehicles is around 5,000 TWH per annum. Energy demand per capita and across different household appliance are captured in our data-files below, to enable further comparisons. But how efficiently do we supply this food energy onto our plates?

(2) Crop yields can be very high per acre. The average yield for an acre of corn in the US is 175 bushels (explored in detail in our biofuels research below). 1 bushel of corn contains 88k kcal of food energy. Hence 1 acre of corn yields 15M calories per year of energy and could theoretically nourish 20 people (although they would get very sick of eating corn). Numbers can be similar for potatoes. Calorific yields fall to c11-13M calories/acre for rice, 4-6M for wheat, 2-6M for soybeans.

(3) Animal agriculture has >85% lower yields per overall acre. Producing 1 calorie of eggs or dairy products requires feeding 6 calories to chickens and cows. While producing 1 calorie of poultry, pork or beef, respectively, requires feeding 9, 12 or 37 calories to chickens, pigs or cows. Even further land is needed to rear these animals too.

(4) Macro land use. Animal agriculture therefore takes up c80% of all agricultural land to produce c20% of the calories. Specifically, the Earth contains 37bn acres of land. Of this 37bn acres, 12bn acres are barren (deserts and Antarctic wilderness) and 25bn acres can support life. Of this 25bn acres, 10bn acres remain as forests. 8bn acres are used to graze animals, and 4bn acres are used to raise crops. Of these crops, c55% are fed to humans, c35% are fed to animals and c10% are used for biofuels. These data are drawn from our research below.

(5) Micro land use. It takes 2.5 acres of land to support the average UK personโ€™s diet, consuming 75g per day of protein, which is 50% above the recommended daily intake, and c40% derived from meat and meat products. The US average land requirement has been estimated between 2.6 โ€“ 3.3 acres, as the average American eats 200lbs of meat per annum, 3x the global average. By contrast, the average Chinese and Indian diets currently require 1.7 acres and 0.8 acres of land. Finally, to re-iterate, the minimum possible land footprint to sustain a human being today is around 0.05 acres.

(6) Agricultural land has a climate cost. 5bn acres have been deforested by mankind, releasing one-third of all anthropogenic CO2-equivalents. Forest cover in different countries with Western diets is as low as c10%, across the UK, Netherlands, Ireland, Denmark; and generally around c30% in countries such as the US, Germany, France, Italy and Central Europe more broadly. We have cleared 50-70% of our forests in these European countries, over the past several centuries. The world is still shedding 25M acres per year of forest land globally, of which 75% is driven by animal agriculture, and half may be for rearing beef. Thus deforestation remains the largest source of anthropogenic CO2 emissions on the planet (chart below).

(7) Agricultural land also has an opportunity cost. Reforesting 1 acre of land would be likely to absorb around 5 tons of CO2 per acre per year (below). This is equivalent to 25-35% of the average CO2-equivalent emissions of the average Western citizen. A purely vegetarian diet that requires <0.5 acres of land per year may free up an area large enough to absorb 10 tons of CO2 per year, around 50-70% of the average Western CO2 footprint. To be clear, our existing thesis – on the amazing climate potential of large-scale reforestation – does not require vast numbers of people to give up eating meat. But it would help.

(8) Direct emissions add on top. Methane is responsible for another 25-30% of all anthropogenic warming that is currently occurring on the planet. c40% of mankindโ€™s methane emissions have come from the fossil fuel industry, where vast efforts are needed and underway to reduce leaks (note here). But a similar, c40% of anthropogenic methane has come from agriculture, mainly from methanogenic bacteria, which digest coarse plant material in the fore-stomachs of ruminant animals. 1kg of beef releases 15-50kg of CO2-equivalent methane emissions, as the average cow burps up c100kg of methane per year. Kilo for kilo, this means that 1kg of hamburger is one of the most CO2 intensive materials on the planet, an order of magnitude more than steel or cement (1-2 kg of CO2 per kg of material, chart below). Even further, on top of this, producing different crops will typically require 0.4-2 kg/kg of CO2 emissions, in fertilizers and running agricultural equipment; and 6-40 kg of crop feed is needed to produce 1 kg of meat. Thus ‘what you choose to eat’ has vast CO2 consequences, and certainly much more than ‘where it comes from’ or ‘what form of packaging’ it is sold in (charts below).

(9) Weird subsidies abound. One of the strangest site visits I ever did in my time as an analyst took me to a 4MTpa frac sand mine in Texas. There were a couple of cows standing around on the property. And the manager explained that these cows enabled the facility to claim a legitimate tax exemption available to cattle ranches. In Florida, a similar tax loophole allegedly induces Disneyland to keep cows. Some studies have estimated that the US spends a total of $38bn per annum subsidizing the meat and dairy industries (direct and indirect costs). Meanwhile, the EU has been said to pay โ‚ฌ2bn per annum to support livestock farming (direct costs only), providing half of all โ€˜value addโ€™ in the livestock industry. It makes you wonder whether current climate policies have anything to do with climate at all. For the future, it will be interesting and controversial to see whether emissions taxes will cover agricultural products. If the IEAโ€™s proposal for a $250/ton CO2 tax by 2050 was adopted in the developed world, this would logically be expected to add around $1.65 to the cost of the c$1 quarter-pounder in a typical c$3 fast food hamburger.

(10) An environmentally friendly diet has recently been called the single biggest opportunity for any individual to reduce their CO2-equivalent impact on the planet by a research team at the University of Oxford. Direct CO2 intensities are lowest for root vegetables, nuts, and fruits and vegetables more broadly, which should all have CO2e emissions below 0.5 kg/kg. In addition, this type of annoyingly virtuous vegetarian lifestyle may free up enough land that, if reforested, could realistically offset c50-70% of the CO2 emissions of a typical Western lifestyle. A further practical step would be to minimize food waste, which claims one-third of all food produced globally. Energy efficiency of different cooking techniques is discussed here. Finally, we have recently profiled vertical indoor greenhouses, which may make sense in grids with overbuilt renewables, and certainly a lot more sense than hydrogen (note below).

After-word. The data used in the header image of this report are from an excellent and free resource provided by Our World in Data (Source: Hannah Ritchie and Max Roser (2020) – “Environmental impacts of food production”. Published online at OurWorldInData.org. Retrieved from: ‘https://ourworldindata.org/environmental-impacts-of-food’). Some of these numbers are possibly on the high side, relative to our own numbers. But if they are correct, they imply that consuming 1kg of meat products emits 1 – 10x more CO2 than 1 kg of fossil fuels such as gasoline or natural gas.

Phasing out gas: five hidden consequences?

consequences of phasing out gas

Phasing out gas is likely to be a policy choice made by some cities or States, as part of the energy transition. The purpose of this note is simply to examine possible consequences. Which could be stark. Somewhere after c75% of customers have been shed, costs balloon by 70-170% for remaining customers, methane leaks worsen, local gas distributors suddenly go bankrupt, and governments must step in to ensure safe decommissioning and reliable backups. Taxpayers foot the bill.

A baseline: how do gas utilities work?

As a starting point, the typical, small municipal gas network might serve a few thousand to a few tens of thousands of customers, charging around $700 per household per year (60mcf pa at $12/mcf) (note below), and more for larger consumers, such as industrial/commercial consumers (data also below).

Network effects mean that costs are a function of the customer count. Furthermore, costs will rise if the number of customers falls. For example, a recent technical paper has evaluated 250 shrinking utilities in the United States, over several years, concluding that customer losses tend to yield 0.5-to-one revenue declines (Davis, L, & Hausman, C. (2021). Who Will Pay for Legacy Utility Costs? Energy Institute WP 317).

In other words, $1 of lost revenue typically results in $0.5 of additional revenue being raised from remaining customers. The idealized maths of this process are captured belowโ€ฆ


Specifically, we estimate that if a gas network falls to c20% of its original size, the remaining customers would be likely to pay 70% more (rising from $700 pa to $1,200 pa) while the gas utility’s ability to earn a profit has effectively been wiped out. The balance could be different in practice. But let us explore the consequences of this scenario…

Five hidden consequences of phasing out gas

(1) Tipping points? The more customers leave a gas network, the faster costs start rising for remaining customers. In turn, this might accelerate the rate at which new customers leave the network. So the shift away from incumbent gas networks could start slowly, then accelerate, then happen particularly quickly. This suggests governments wishing to phase out gas may need a good plan up-front, before this sudden acceleration sets in.

(2) Huge costs for those who cannot switch? If the ultimate size of a gas network falls by 80%, the cost per customer rises 70%. If the size falls 90% then costs per customer rise 170%. If there were some customers who could not switch away from gas (e.g., insufficient capital/credit to make the upgrade), then they would be saddled with very high energy costs. Those most impacted are likely to be those with the least financial resilience. Again, this means governments may need to step in and come to the rescue in some way.

(3) Maintenance costs of the gas networks hardly decrease just because customers are moving away. The pipes are still in the ground. But fewer customers dents the profitability of gas distributors. Hence there may be a temptation to cut back on maintenance spending, or some other financial difficulty for maintaining existing as networks properly. In turn, this could have negative environmental consequences, worsening methane leaks, which already tend to be higher at smaller and more cash-strapped gas utilities (note and data-file below).

(4) Bankrupted distributors? Once c75% of the customers have left a gas network, it will become very difficult for these gas distributors to remain profitable at all, according to our analysis. Thus they may shut down entirely, yielding ‘stranded assets’ and the bankruptcy of thousands of small firms (charted in the data-file above). Critics of the fossil fuel industry often jeer at stranded assets, as though it is some kind of milestone of progress to be celebrated. The reality is that governments would need to step in, take over control of these gas networks, and then pay to have them safely decommissioned. Using taxpayer money.

(5) What alternatives? The old adage for a century has been that a mixture of gas and electricity offers a helpful lifeline in the depths of winter. Gas pipelines tend to be trenched underground. Hence if a vicious winter snowstorm comes through and knocks out the overhead power lines, Mrs Miggins is going to have some kind of alternative heating source and is not going to freeze to death in her home. Again, one of our main question marks over renewable-heavy power grids is whether they will have sufficient resiliency in extreme conditions (note below, looking at hot conditions, but a similar logic applies in the cold).

Conclusions: are there better options?

Our own personal view is that some governments may not be prepared to shoulder the consequences noted above. Nor do they need to. Well functioning gas heating can be perfectly compatible with decarbonization goals in the energy transition, if the gas is used efficiently, without methane leaks, and the residual CO2 is offset or decarbonized at source. This may be superior to ‘phasing out gas’ and dealing with the issues noted above.

Our research below explores a selection of these different themes…

Copyright: Thunder Said Energy, 2019-2024.