In 2021, sales of electric vehicles, including plug-in hybrids, doubled compared to 2020 to 6.6 million units. Note that more than 50% of the cars sold were in China. Strong sales growth since 2012 confirmed. Between 2012 and 2021, the number of electric vehicles sold increased by 54 times, and between 2017 and 2021 by more than 5 times, which is an exponential trend with an average annual growth of almost 50% per year. Impressive development. However, in 2021, electric vehicles make up only about 10% of the 66 million new vehicles sold worldwide. And compared to the total number of cars in the world (1.4 billion in 2020), electric vehicles currently make up only 1% of the total. Thus, there is still a long way to go, given that road transport accounts for 12% of global greenhouse gas emissions.
Exponential growth but very slow deployment
We are talking about exponential growth, where the growth rate (as a percentage) is constant and value added in absolute terms increases every year. For example, for a starting value of 100, an annual growth rate of 10% means an increase of 10 in the first year, 11 in the second, 21 in the tenth, 55 in the twentieth, and so on. This corresponds to a doubling every 7 years. This is the type of growth we’ve been hearing a lot about during the Covid crisis, especially with regards to the increase in cases. The deployment of technologies as soon as they hit the market is also growing exponentially. In 2000, there were 730 million mobile phones in the world. 16 years later, there were 7.4 billion, the same number as people on the planet. For a very long period of time, this type of growth makes you dizzy. Moore’s Law, formulated from the empirical observations of an Intel co-founder in 1965 and then revised in 1975, postulates a doubling of the number of transistors on a printed circuit board every 2 years – an annual increase of 41%. Growth continued for almost 50 years, leading to a multiplication of 25 million!
This is precisely the paradox of the energy transition, which combines the exponential growth of technology and very large time scales. To stay below 2 degrees of global warming, we need to divide our greenhouse gas emissions by at least 4 by 2050, which is less than 30 years. At the rapid deployment stage, nuclear or even wind and solar power is showing an increase in installed capacity of about 25-30% per year globally. This exponential growth of nuclear power came to an abrupt halt in the late 1980s, accounting for just 4% of global energy in 2019.
Solar and wind energy still make up less than 5% of the world’s primary energy. Around 240 gigawatts (GW) of renewable generation capacity was installed worldwide in 2020, up 50% from 2019. Extrapolating from the current trend, it can be assumed that solar energy could account for 50% of global energy consumption in 20 years. Similarly, at current rates, electric vehicles will account for nearly 60% of vehicles sold in 2030. And this is the point of tension between the two views of the transition: those who favor a rapid transition because it is exponential, and those who are based on the past. the data considers the transition as necessarily a very slow affair.
Jump = replace
What is often forgotten in these discussions is that the energy transition requires not only the deployment of low-carbon technologies, but also the shutdown and replacement of existing technologies: replacements, not additions. As long as the new technology being introduced represents only a few percent of the demand, its development cannot compete with the existing means of production. After a certain stage, it is necessary to close the existing power plants, which may not yet be depreciated, which leads to large financial losses. A coal-fired power plant costs up to several billion euros and is expected to operate for decades. An early close represents a missed opportunity for investors and constitutes a failed asset.
Recall that in 2021, about 2,000 GW of coal-fired power plants (8,500 power plants) are installed, and that almost 20% of CO2 emissions come from coal-fired electricity generation. Many countries have announced that they will no longer finance the construction of new coal-fired plants abroad, and the number of plants planned or under construction has dropped significantly in recent years. About 500 GW are still planned for early 2021. Many power plants are newly built or under construction, and the question arises as to the cost of closing them early. Meeting climate commitments will require a total of $1.4 trillion in abandoned assets — almost half in China and a quarter in India. Closing existing power plants or reconverting the auto industry also has employment implications that need to be managed wisely.
While it is important to support the exponential growth of technologies needed to decarbonize our economy, it is equally important to manage the replacement of existing technologies.
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