Global solar: absorption spectrum?

Historic and future solar capacity growth as percentage of total electricity demand growth for different regions

How much new solar can the world absorb in a given year? And are core markets such as the US now maturing? This 15-page note refines our forecasts for global solar additions using a new methodology. Annual solar adds will likely plateau at 50-100% of total electricity demand growth in most regions. What implications and adaptation strategies?

Solar is the new energy source that excites us most, with potential to abate 11 GTpa of CO2 emissions by 2050 in our roadmap to net zero, ramping 18x from 2022, to supply 25,000 TWH of useful energy in 2050, or 20% of total global useful energy. But how much can solar grow?

The answer hinges on relative costs. When global electricity demand is growing, then as a general rule, new sources of electricity generation will be constructed in order to meet this increasing demand. The relevant comparison is the LCOE of constructing new solar versus the LCOE of constructing new windhydronucleargascoalbiomassdiesel gensets and geothermal (as discussed on page 3).

However, when solar growth starts exceeding total electricity demand growth, then new solar is no longer competing with new coal, gas, etc. It is competing with the cost of simply fuelling pre-existing power plants. These economics are much more demanding (pages 4-5).

Hence global solar additions will likely face new challenges when solar growth exceeds total electricity demand growth. We discuss this issue, country by country, across China, India, the broader emerging world, the US, Europe, Japan, Canada and Australia. The most interesting market is US solar, because it is now maturing? (pages 6-7).

What implications and adaptation strategies? We can see three pragmatic options for the solar industry, as 40% of the global solar market is now concentrated in more mature markets. Implications and recommendations are on pages 8-10.

Electrification initiatives and power grid expansions would seem to be the most important bottlenecks for global solar additions to continue accelerating from here. This is because we are increasingly tempted to model solar additions by country by multiplying total electricity demand growth x share of demand growth met by solar (pages 11-12).

A new methodology for modeling global solar additions by country and by region is captured in our wind and solar capacity additions model. Key outputs from the model, including our solar forecasts for 2024, 2025, 2026 and beyond, are described on pages 13-15.

Ten Themes for Energy in the 2020s

We presented our ‘Top Ten Themes for Energy in the 2020s’ to an audience at Yale SOM, in February-2020. The audio recording is available below. The slides are available to TSE clients, in order to follow along with the presentation.

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Lost in the Forest?

co2 sequestered by forests

In 2019, Shell pledged $300M of new investment into forestry. TOTAL, BP and Eni are also pursuing similar schemes. But can they move the needle for CO2? In order to answer this question, we have tabulated our ‘top five’ facts about forestry. We think Oil Majors may drive the energy transition most effectively via developing better energy technologies in their portfolios.


(1). Forests should sequester 5T of CO2 per acre per annum, which is the average figure in half-a-dozen technical papers that we reviewed. However, the rates in these studies vary from 1-25 Tons per acre per annum, depending upon the species, the latitude and the rate of harvesting. Forests grow fastest in their early stages, and so paradoxically, to maximise CO2 sequestration, it may be necessary to cut them down periodically (and then re-plant).

(2). The world emits 1T of CO2 per acre per annum, which means that for forestry to absorb all of the world’s CO2 emissions, an incremental 20% of the world’s land mass must be given over to planting new forests. An extremely high number. Global carbon emissions run at 34bn tons per annum, while the world’s total land area is 37bn acres (c150M sq km).

(3). It matters where you plant. The chart above also shows a problematic skew in the world’s carbon emissions. If developed Asian countries (Japan, Korea, Singapore) wanted to offset all of their emissions by planing forests, they would need to access land areas that are c3.5x larger than their entire territories. Likewise, India and China would need to access areas equivalent to 60-80% of their own borders. To move the needle, large new forests would need to be planted in the countries on the right hand side of the chart. For the full data series, please download our data-file.

There are select opportunities in the mix, which Oil Majors can pursue. Perhaps the largest come from irrigating and afforesting desert areas. Not only are these areas large, but forests in hot areas have a tendency to grow more quickly and release more moisture, which in turn seeds clouds, which in turn reflects more sunlight and cools the planet.

(4). Environmental question marks? Forests clearly sequester CO2, but the precise climate science is surprisingly complex. Leaves absorb more sunlight than other types of land cover, increasing albedo, and warming the planet mildly. Trees can also release compounds called isoprenes, which reacts with nitrogen oxides in the air to form ozone (a greenhouse gas), while lengthening the lifespan of atmospheric methane (another greenhouse gas). Similarly, trees in tropical forests can seem to act as a conduit for soil to convey methane into the atmosphere. This deepens the need for “the right kind” of forestry investment, based on science.

(5). Capital may be better spent elsewhere? Most of the estimates we have encountered point to $20-100/ton of costs for sequestering CO2 using forests. This is competitive with other current forms of CCS (chart below, data here). However, we are also researching next-generation carbon capture technologies, which are much more competitive, below $20/ton.

To illustrate the same point another way, photosynthesis’s energy efficiency is around 0.5-1%, compared to today’s solar cells at c17% and next-generation perovskites reaching c35% (chart below). So ramping up next-genration solar could yield greater decarbonisation per unit of land area.

While we think Majors have a deep role to play in driving the energy transition, it will most likely be though game-changing technologies, which also unlock multi-billion dollar economic opportunities, per our recent note here.


Caldecott, B., Lomax, B. & Workman, M., (2015). Stranded Carbon Assets and Negative Emissions Technologies Working Paper. Stranded Assets Programme.

Gorte, R. (2009). U.S. Tree Planting for Carbon Sequestration. Congressional Research Service

Lenton, T.M., 2010. The potential for land-based biological CO2 removal to lower future atmospheric CO2 concentration. Carbon Management 1(1), 145–160.

Lewandrowski, J., Peters, M. & Jones, C. (2004). Economics of Sequestering Carbon in the U.S. Agricultural Sector, USDA Economic Research Service, Technical Bulletin TB-1909

Popkin, G., (2019). How much can forests fight climate change? Nature 565, 280-282

U.S. Environmental Protection Agency (2005). Greenhouse Gas Mitigation Potential in U.S. forestry and Agriculture, EPA 430-R-05-006, Washington, DC.

BP (2019). BP Statistical Review of World Energy


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Our Top Technologies for IMO 2020

Top technologies for IMO 2020

So far we have reviewed 400 patents in the downstream oil and gas industry (ex-chemicals). A rare few prompted an excited thought — “that could be really useful when IMO 2020 comes around”.

Specifically, from January 2020, marine fuel standards will tighten, cutting the maximum sulphur content from 3.5% to 0.5%. It will reduce the value of high-sulphur fuel oil, and increase the value of low-sulphur diesel.

This note summarises the top dozen proprietary technologies we have seen to capitalise on the shift, summarised by company (chart below).


(1) Eni Slurry Technology (EST). Advertised as “the best worldwide technological solution for operators who wish to completely convert the bottom of the barrel”, EST converts >97% of heavy inputs into more valuable fractions. It is a hydroconversion process, which upgrades fuel oil or other heavy crudes, using a slurried, nano-dispersed zeolite, impregnated with Molbdenum/Nickel sulphide salt catalyst, run at 380-440C. $4.5/bbl uplifts to refining margins are cited by the company. It has been licensed by two Chinese refiners (Sinopec, Zhejian), for their own upgrading processes. We estimate EST will yield 10-20% returns, at $20-40/bbl upgrading spreads (chart below, model here).

(2) – (7). ExxonMobil refining technology. So far, ExxonMobil has the most advanced refining technology, out of the patents we have reviewed across the industry (chart below). For IMO 2020, this includes:

(2) Exxon. Hydrocracking. In its public disclosures, Exxon has alluded to using a proprietary catalyst in the $1bn hydrocracker at its 190kbpd Rotterdam refinery expansion, upgrading lower-value vacuum gasoil into Group II base stocks (see below) and ultra-low sulfur diesel.

(3) Exxon. Hydroprocessing. 5 patents were filed in 2018, for hydroprocessing and purifying heavy oil, coker oil or deasphalted slurry oil, to remove sulphur and nitrogen impurities, using a proprietary catalyst prepared from Group VI and Group VIII metals.

(4) Exxon. Lubricants from Fuel Oil. Exxon has filed patents to create Group I-III base oils for its lubricants business using FCC slurry, thermally cracked resids or other “disadvantaged feeds”. Requires high-pressure hydrofinishing to reduce aromatic saturation.

(5) Exxon. Dewaxing Catalysts. In 2018, Exxon patented a new de-waxing process that was achieving “unexpectedly high hydrogenation of feedstocks” without unwanted cracking. The proprietary catalyst combines noble metals and base metals on a zeolite framework. It can be used to improve heavier fuels, such as fuel oil.

(6) Exxon. Reduced Severity FCC. In 2018, Exxon patented a new combination of desaphalting and hydroprocessing. These steps are performed prior to fluid catalytic cracking (FCC). This allows the FCC to be run at less severe conditions. In turn, this reduces the production of light paraffins. It is seen to increase gasoline/diesel yields and lower fuel oil yields.

(7) Exxon. Diesel Range Fuel Blends. Some elastomers in vehicle fuel systems are known to swell when exposed to highly aromatic fuels and to shrink when exposed to renewable diesel components. The elastomers can fail when renewable components surpass 10%, limiting use of renewable diesel. Hence Exxon has tested and patented diesel blends (typically with 20+ components) that can tolerate >20% renewable inputs without shrinking fuel-systems’ elastomers.

(8) Shell. Ebullated Bed Processes. Shell has filed three patents to overcome the problem of sediment-fouling when upgrading heavy, asphaltene-rich hydrocarbons in an ebullated bed reactor. Shell’s solution is a reactor design with an ‘upper section’ and a ‘lower section’, each with its own catalyst composition.

(9) Shell. Hydrodesulfurisation Catalysts. Uses molybdenum-disulfide nano-particles supported on a titanium framework.

(10) Shell. Fuel Oil Composition. Shell has patented its own blend of fuel oil with 0.100% sulphur concentration, suggesting it is gearing up to compete within the fuel oil segment.

(11) Chevron. Improved hydro-conversion catalysts. Chevron filed c35 distinct patents for zeolite catalyst systems in 2018, largely aimed at hydrocracking, and improving energy efficiency. One formulation achieves 37% middle distillate yields from heavy oil, at 193C. Another can yield up to 83% middle distillates, when running C5s at 140-370C. Yields on average heavy inputs are c50%.

(12). Aramco. Advanced Hydrocracking Catalyst. Aramco has patented a system that is achieving higher yields of middle distillate, by avoiding “over-cracking” kerosene and gasoil. It works via a zirconium-hafnium zeolite, which encourages heavier oil into the zeolite mesopores. Do not be surprised to find Aramco in this list: it is a clear technology leader across the 1,440 patents we have reviewed so far.

If you have any questions about this list, or think we’ve missed anything that should be on here, then please let us know:


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