In it, BNP Paribas introduces the new concept of Energy Return on Capital Invested. Conclusion: “The economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.” This is a 4 minute slideshow summary for busy folk.

1. If you thought things were beginning
to look bad for the oil industry….
....today they just got a whole lot worse
Norway Is Walking Away From
Billions Of Barrels of Oil
Frackers Face Harsh Reality As
Wall Street Backs Away
‘Oil’ and “Gas Become Dirty
Words in FTSE Rebranding
A slideshow precis for busy people by Jeremy Leggett
8th April 2019
24th Feb 2019
3rd July 2019
e.g.

2. In a historic report, BNP Paribas introduces the new
concept of Energy Return on Capital Invested
7th Jan
2016
4th Aug
2019
“We think the economics of renewables
are impossible for oil to compete with
when looked at over the cycle. We
calculate that to get the same amount
of mobility from gasoline as from
new renewables in tandem with EVs
over the next 25 years would cost 6.2 to
7 times more.”
“The economics of oil for gasoline and
diesel vehicles versus wind- and solar-
powered EVs are now in relentless and
irreversible decline, with far-reaching
implications for both policymakers and
the oil majors.”

3. Delivered energy at the wheels of an ICE vehicle is a
tiny fraction of gross energy in crude oil purchased
7th Jan
2016
5th Aug
2019
So BNP Paribas Head of Sustainability Research Mark Lewis calculates,
using conservative assumptions for this & comparison with renewables.
TWh
Derivation of net EROCI for every $100 bn spent on gasoline at $60 barrel
(average oil price in 2018 was $68)
(1 mboe =
1.7 TWh)
20% average efficiency
assumed for an internal
combustion engine (ICE):
that is generous

4. Much less energy is lost across the cycle using
electricity from solar and wind, meaning that….
7th Jan
2016
….at $60 per barrel oil price, solar delivers 6.2 times more energy than
oil, wind 6.2-7 times. They deliver 3 to 4 times more energy than diesel.
Derivation of net EROCI for every $100 bn spent on new solar projects
This is without factoring in
the huge cost savings
inherent in the ecological,
social, and security benefits
of using renewables not oil

5. How cheap would oil have to be to achieve the
same energy return on capital as solar and wind?
7th Jan
2016
“The numbers are stark,” the report concludes. And the solar net EROCI
assumes a solar new-build cost of $65 MWh: beyond conservative.
Net EROCI from new renewables in tandem with EVs versus oil used for gasoline
in light delivery vehicles for a $100 bn outlay
…The answer is less
than $10 a barrel

6. At $10 a barrel, only a tiny fraction of targeted oil
industry drilling can break even (i.e. cover costs)
7th Jan
2016
The implication is seismic: “We think the oil majors should be accelerating the
deployment of capital into renewable-energy and energy-storage technologies and/or
reducing re-investment risk via higher dividend payouts to shareholders.”
Collective pre-Final Investment Decision capital expenditure (capex) break-evens
for seven oil majors, 2018-35

7. How much of the oil industry’s operations are at
risk of capital wastage / stranding of assets?
7th Jan
2016
The answer is fully 40% of all oil use, spanning most road transport
and oil use in power (the green sectors in the figure).
Breakdown of final oil demand by sector in 2018

8. Will it make a difference that the oil industry has a
century’s worth of delivery infrastructure in place?
7th Jan
2016
Oil supplied 33% of global energy in 2018 compared with only 3% from wind and solar
“Even if we add in the cost of building new network infrastructure to cope with
all the new wind and/or solar capacity implied by replacing gasoline with
renewables and EVs, the economics of renewables still crush those of oil.”
“Extrapolating total expenditure on gasoline in 2018 for the next 25 years would see
$25 trillion spent on mobility, whereas we estimate the cost of new renewables projects
complete with the enhanced network infrastructure required to match the 2018 level of
mobility provided by gasoline every year for the next 25 years at only $4.6-$5.2 trillion.”
HOWEVER

9. Bottom line: “Both the majors and the national oil
companies are effectively in a race against time”
7th Jan
2016
“The simple truth is that the oil
industry has never before faced
the kind of threat that renewable
electricity and EVs pose to its
business model. For the first time
there is a competing energy
source with a short-run marginal
cost of zero, that is much cleaner
environmentally and will be able
to replace up to 40 per cent of
global oil demand once it has the
necessary scale.”
Mark Lewis

10. A personal view from within the solar industry
“That our technologies provide such irresistible routes
to capital efficiency should now galvanize governments,
corporations, and investors to accelerate the solar
industry from today’s 100 GW a year to the terawatt a
year we will quickly need to get to if we are to play the
role required of us in civilisation’s fight for survival. We
know we can do this. Scale is not scary to us.”

11. www.jeremyleggett.net
Including links to this and other powerpoints for free use
Much more here
Thank you