While petrostates try to fight off “oil fail,” Indian and Indonesian companies are fast-tracking electrification and e-transport innovation.
Since I wrote last month, another war driven by fossil fuels has broken out with all of its gory details on the front pages and none of the glory Putin expected … only loss. That is the reality of war and petrostates. That’s what this war is –– the last gasp of an oil-garchy attempting to assert relevance and control as the world changes dramatically. If you aren’t seeing what journalist Gregor Macdonald calls “oil fall” coming –– the deceleration in global oil demand growth impacting oil suppliers and price –– you aren’t paying attention.
Just last week the IEA revised its projections for oil demand down by 1m barrels a day for 2022. We’re never going to go back to the peak of 100m barrels a day in 2019 and that is bad news for Putin, the Kochs, the Saud family et al. but great news for the global climate.
We’ll get back to the oil barons, Ukraine and what to do about it, but let’s start in India where I heard this week that Indian early-stage climate tech venture deals in January took off.
Who would have thunk that climate tech would be the hot space in India!? OK, then smarty, what does India do really well in climate tech these days? Electric mobility! Think e-rickshaws. And electric scooters. And hot-swappable battery packs. And electric ferries … and the myriad ways in which electric motors bundled with the light lithium-ion battery of the 21st century are disrupting the infernal combustion engine.
Oil is what fuels despots and deranged dictators
The deal flow in India is awesome. Two from last week that I saw include Lithium Urban Tech, the largest operator of passenger EVs in India, selling a majority stake to Eversource Capital (that’s Eversouce of the $750m green infra fund recently announced). Ola Electric, a manufacturer of EVs in India, invested in an Israeli company to bring “extreme fast charging” batteries to South Asia. In India, innovators and investors are leaping into the energy transition.
And why wouldn’t they when you can switch out the nasty, gas-guzzling engine from your ferry, your scooter, your car, bus or rickshaw when your price exposure would simply be better? Not just cheaper, but much more certain (oh, and cheaper) as beautifully displayed in the graph below.
This graph shows retail prices in America. You can imagine what a graph like this would show for India where oil prices for end-users are even more volatile for a country at the bottom of the oil supply chain as a buyer. And that’s why oil is over.
Aside from the fact oil is what fuels despots and deranged dictators … It will take some time to push past inertia and turn over the system while vested interests demand we ignore these truths and drill baby drill. But they can’t stand in the way of this logic long-term. The big question remaining is how quickly do we kick the habit?
Startup of the month:
This brings me to my favorite deal for March, which, in full disclosure, is another investment choice of my organization New Energy Nexus. It’s for SWAP, the partner company to SMOOT, a first mover, e-mobility business in Indonesia bringing electric scooters to the country’s 275 million people. As scooters are how many Indonesians get around, the company’s potential could be huge. SWAP’s hot-swappable battery service to allow scooters to keep going is, I believe, going to be huge too. And very impactful.
So, shine on SWAP, which is accelerating the zippy little scooter conversion all over Java and Bali! But how does this take us back to the war in eastern Europe you ask?
Electrification is the answer. Not to everything. But electrifying as much as possible is what we need to beat climate change and Putin. Some say it’s possible that installing 75 million heat pumps would get Russian gas completely out of European buildings. Doing that, rather than choosing to fuel existing gas heaters with U.S. LNG or restarting Dutch gas fields closed because of the earthquakes they cause, is a no-brainer.
Getting off gas altogether and saving money while at it makes sense because electric heating, cooking and industrial processes are much cheaper and more efficient. Better still, when powered by local clean energy –– didn’t we go over this above? –– heat pumps equal energy security. The more we install heat pumps everywhere, the cheaper and easier it will be. Economies of scale kick in.
Heat pumps for peace I say. Electrify now and shine on!