Nick Butler at the FT points to this paper from the Grantham Institute and Carbon Tracker on the disruption cheap renewable power and electric vehicles are starting to have on global energy markets, a process which is going to continue to accelerate - Expect the Unexpected: The Disruptive Power of Low-carbon Technology (pdf).

Butler notes of the report:

* Solar will take 23 per cent of the power generation market by 2040 and 29 per cent by 2050.
* Wind power could constitute another 12 per cent of the power market by 2050.
* Electric vehicles will account for around 35 per cent of the road transport market by 2035.
* Hydrocarbons will peak and the authors are bold enough to foresee peak oil and coal demand in 2020

If you've got some free time I'd recommend these 2 articles:

The destruction of job security and financial prospects in the western world for workers without in-demand skills had created a generation of recluses living on the internet - Trump is their revenge on reality. "Trump’s younger supporters know he’s an incompetent joke; in fact, that’s why they support him." - 4chan: The Skeleton Key to the Rise of Trump.

Jeremy Grantham has a different look at the same problem in his latest newsletter: "The question now is: what for will the struggle take ?" - Grantham: ‘Twas capitalism that killed capitalism.

The data on rising inequality also led me to check what others had thought and written on this issue and made me realize that a self-destructive streak in capitalism had been well-noted in the past. A particular surprise to me was Schumpeter – he of “creative destruction fame” – who believed capitalism in its current form would eventually fail through overreaching, using its increasing power to dispense with regulations designed to protect the public good (that has a painful echo today doesn’t it?) until pushback FDR style (or Teddy Roosevelt style) results in a more controlled mix, which Schumpeter called socialism. There was also a suggestion in his work and that of Keynes that excessive corporate power would weaken the demand from ordinary workers and hence weaken the economy. This last point is also emphasized more recently by Mancur Olson, who argued that “Parochial cartels and lobbies tend to accumulate over time until they begin to sap a country’s vitality. A war or some other catastrophe sweeps away the choking undergrowth of pressure groups,” as The Economist rather eloquently summarized his thinking in his obituary of March 1998.

To promote a pushback against excessive corporatism (and elements of oligarchy) one needs first of all to recognize the problem. Given the rather apathetic response from what used to be called “the workers” to the last 30 years of relative slide, there appears to have been no such recognition. But then on the eve of the election I realized that the point had finally been made. For an astonishing 75% of those first 9,000 polled agreed that, yes, we did indeed need to be saved from the rich and powerful. From now on, in my opinion, we live in a different world from the one we grew up in. A world in which a degree of economic struggle between the financial elite, perhaps 10% but more likely 1%, and all the rest is finally recognized. The wimpy phase is probably over. The question now is which path will this struggle take? Will it be a broad societal effort through established political means to move things back to the 1950s to 1960s when a CEO’s pay was 40x his average employee’s pay and not today’s over 300x; when corporations never dreamt of leaving the US merely to save money; when investment banks set the standard (and a very high one) of ethical behavior? Or do we try to do it through the other historically well-used method, and a much more dangerous one – that of resorting to a “strong leader?” Strong leaders work out just fine if we end up with a Marcus Aurelius, the mostly benevolent and wisest of Roman Emperors. But when things go wrong, as they often do, we could more easily end up with Caligula. ...

I felt the pain from the “strong leader” bit because, like almost all in my age cohort, I am fanatically well-disposed to democracy. We were born, after all, at a time that overlapped the trio of nightmarish, strong leaders of the 1930s and 1940s, Hitler, Mussolini, and Stalin. But I believe this fanaticism has weakened in other age cohorts born less close to these three as they have receded steadily into history. A recent report5 captured this decline: Of those born, as I was, in the 1930s, fully 75% gave a 10 out of 10 for extreme support for democracy. But each younger cohort felt less enthusiastic: 62%, 57%, 50%, and 43% for each younger cohort by decade until by the time we get to those born in the 1970s, the 40-year-olds, extreme support is down to 32%! And this is not the worst of it. The same report listed those who were actually against democracy as a “bad” or “very bad” way to “run this country.” Shockingly, in the period from 1995 to 2011, the percent of each age group agreeing to that proposition doubled. From 5.5% to 12% for those over 65 rising to a frightening 24%, up from 12.5% for the 16- to 24-year-olds. ...

The real challenge in promoting less inequality is to increase the share of GDP going to labor. Almost certainly, for any given increase in their share of GDP there must be a decline in the share going to corporate profits. How does the program of the new strong leader stack up on this one? He is surrounded by capitalists and billionaires who, to further advantage corporations and the super rich, are apparently prepared to wage war on the already sadly diminished regulations that defend ordinary people (and, yes, with no regulations corporations would make more money). The war would also include direct tax cuts for the rich and corporations, which would further increase the share of the pie going to corporations. This is a strategy that if successful in the long-run – despite its current market appeal – could not possibly be worse for the workers if he tried. Perhaps they, the workers, will feel betrayed as their share drops in order to further fatten corporations. Perhaps they will be bamboozled enough not to notice the betrayal. For bamboozlement of the working poor has become an art form in the last 30 years, with bamboozlement defined as an ability to persuade people to vote against their own economic interest for one reason or another. For example, 62% of voters do not like the sound of “death tax,” which in the form of estate tax is paid by only 1-2% of American families. An astonishing 35% of those earning less than $10,000 a year do not approve of increasing taxes on the rich. Does it get any richer than that? It has been called the Homer Simpson effect,6 whereby the poor voter reacts negatively to the idea of tax, which like death has little appeal, but does not get the point that a tax decrease for the rich has unpleasant implications for them. But, the gods willing, you probably can’t bamboozle enough of the people enough of the time. And the Reuters/Ipsos poll clearly shows that the worms have turned. The lack of class war or economic war in the US has always been a fiction, but it has been mostly hidden, and deliberately so, by the side so completely winning the undeclared war. Perhaps the 74% vote was indeed a public declaration that the war is now official.

RNE has an article on Jeremy Grantham's latest pronouncements on our energy future - Grantham: Wind, solar to replace fossil fuels within decades.

Legendary hedge fund investor Jeremy Grantham says there is no doubt that solar and wind energy will “completely replace” coal and gas across the globe, it is just a matter of when.

The founder of $100 billion funds manager GMO Capital is known as a contrarian. But he suggests that the pace of change in the fuel supply will surprise everyone, and have huge implications for fossil fuel investments.

“I have become increasingly impressed with the potential for a revolution in energy, which will make it extremely unlikely that a lack of energy will be the issue that brings us to our knees,” Grantham writes in his latest quarterly newsletter.

“Even in the expected event that there are no important breakthroughs in the cost of nuclear power, the potential for alternative energy sources, mainly solar and wind power, to completely replace coal and gas for utility generation globally is, I think, certain.

“The question is only whether it takes 30 years or 70 years. That we will replace oil for land transportation with electricity or fuel cells derived indirectly from electricity is also certain, and there, perhaps, the timing question is whether this will take 20 or 40 years.”

Grantham’s predictions go against the conventional wisdowm of the fossil fuel industry, but they the thoughts of many people, including Stanford researcher Tony Seba, who said last year this could occur within a few decades.

And Grantham says it could happen quicker than even he believes, and will have major implications for new investments in the fossil fuel industry – a topic very much in mind for project developers and bankers in Australia.

“I have felt for some time that new investments today in coal and tar sands are highly likely to become stranded assets, and everything I have seen, in the last year particularly, increases my confidence,” Grantham writes.

Renew Economy has an article on Jeremy Grantham's latest musing on resource constraints - Welcome to Dystopia: the dangerous food and energy crises.

Jeremy Grantham, the former chairman and chief investment strategist for the $100 billion funds manager GMO Capital is known as a contrarian. But his quarterly investment newsletters are eagerly awaited, because they usually give some fascinating insight into some of the big themes that affect investments.

His latest, distributed to his investors in July but only recently publicly released, is worth a read in full. It focuses on the impending food crisis, and also how the climate issues and the energy issues are interlinked.

It’s a long document, so here we are just going to excerpt some of the key points he makes about energy. Remember, Grantham has no particular interest in one energy source of another, nor does he belong to any think tank that has a particular ideological bent. He is just responsible for $100 billion of someone else’s money and wants to know the best place to put it. (The answer appears to be farming stocks and other resources, if only for the anticipated price spikes).

One of his key themes is that the shale gas boom may buy some time, mainly for the US, but “seems more likely to create complacency” and continued dependence on hydrocarbons. He says this will have a slip-back effect in the longer term, because it will lead to yet higher prices and shortages that will impact global growth and even the viability of modern, rather fragile, economies.

“On paper… the energy problem can be relatively easily addressed through very large investments in renewables and smart grids,” he writes. “Those countries that do this will, in several decades, eventually emerge with large advantages in lower marginal costs and in energy security. Most countries including the US will not muster the political will to overcome inertia, wishful thinking, and the enormous political power of the energy interests to embark on these expensive programs. They risk being left behind in competitiveness.”

That seems a pretty clear message, and maybe one that Australia’s politicians should absorb. But while the energy problem make seem simple to solve on paper, in reality it is a different prospect.

“All it takes is real leadership from our leaders; common sense from the general public; a willingness of hydrocarbon interests to back off from politics and propaganda and a herd of flying pigs! We need to build a very large, very smart grid, covering the whole of the US and one day perhaps including Canada. Among many tricks, it needs to be able to reach into smart homes and turn off the refrigerators and so on for a few minutes when needed.

“It is, in fact, all state-of-the-art already and in the 10 or 20 years it would take to build, the technology and engineering would no doubt greatly improve, given the great scale, helping to drive down the cost. Behind the grid we would need a truly massive investment in storage technologies and all renewables, especially solar and wind power. Solar costs have unexpectedly crashed in the last three years, down by over two-thirds, and finally today, in ideal conditions (even without coal carrying its full environmental costs), solar is competitive.’

Grantham says that, in a happy variant of Moore’s Law, this fall in solar costs will continue. So will the fall in wind power costs. But the costs of hydrocarbon energy of all kinds will rise. The cost of a new grid would be cheaper as a percentage of GDP than the Manhattan project, and even if it took 20-30 years to build, the marginal costs of operating and maintaining such a system would cross the rising costs of the current grid long before then.

“By 2050,” he says, “cheap hydrocarbon sources will be a distant memory. Electric grids based solely on hydrocarbons would by then, after desperate struggles and brownouts, likely have turned totally black and economies based on such grids would be under very severe stress. If I’m wrong in this assertion for some countries, simply add 10 or 20 years onto the timeframe.”

The danger of complacency driven by the new reserves of natural gas and extra oil from new drilling technology could allow Germany and others, possibly including China, to forge ahead with renewables until they dominate these new, relatively job-intensive industries and eventually end up with much lower marginal costs. “The major disadvantage of all of these extra (oil and gas) reserves, though, is that they will give us more rope with which to hang ourselves by frying the planet.”

He notes recent estimates by Cornell University, which he hopes are preliminary and mis-measured, of almost 8 per cent of fracking gas leaks from drill to stove burner. Anything more than 4 per cent (and it may be as little as 3 per cent) makes natural gas even more dangerous to a warming planet than coal. “Unlike other environmentalists, I worry less about other of the several negative effects of fracking: boiling the planet makes other negatives seem to me relatively inconsequential.”

He says China has been in a “class of its own” in taking seriously this topic of future availability of resources. “It has a long Confucian tradition of thinking very long term and its politicians do not have to worry about being re-elected or about voters and funders as much as ours do. My colleagues worry that the Chinese save and invest too much, approximately half of all their income, a level never before reached in history.

“But for undertaking a completely renewable energy system, what a set-up! If the Chinese feel they must maintain a 50 per cent capital spending ratio (or at least come down gracefully to avoid an outright depression), there are few projects big enough to both absorb the giant quantities of money available and have a good return on investment at the societal level in the long term. Building a renewable energy system achieves both aims.

“As a first mover they would quickly be able to build fewer coal utilities and, eventually, none. In 30 or 40 years they could phase out the last of them and stop slowly poisoning their urban residents while at the same time helping to stop slowly cooking the Earth.

The Chinese are already becoming leaders in wind and solar power construction and research. At much higher scale, their cost advantages would be hard to match, and if a renewable energy system were to be completed, their biggest long-term worry of all – energy security – would be gone. ...

The NYT has a look at the big picture view of fund manager Jeremy Grantham - Can Jeremy Grantham Profit From Ecological Mayhem?.

Sitting in a Panera in Boston’s financial district in early July with Jeremy Grantham, I suddenly found myself considering how I might safeguard my children’s and notional grandchildren’s future by somehow engineering the U.S. annexation of Morocco. Grantham, the founder and chief strategist of the asset-management firm GMO, was reading aloud from a rough draft of his next quarterly letter to investors, in which he ranks some long-term crises of resource limitation along a scale from “merely serious” to “dangerous.”

Energy “will give us serious and sustained problems” over the next 50 years as we make the transition from hydrocarbons — oil, coal, gas — to solar, wind, nuclear and other sources, but we’ll muddle through to a solution to Peak Oil and related challenges. Peak Everything Else will prove more intractable for humanity. Metals, for instance, “are entropy at work . . . from wonderful metal ores to scattered waste,” and scarcity and higher prices “will slowly increase forever,” but if we scrimp and recycle, we can make do for another century before tight constraint kicks in.

Agriculture is more worrisome. Local water shortages will cause “persistent irritation” — wars, famines. Of the three essential macro nutrient fertilizers, nitrogen is relatively plentiful and recoverable, but we’re running out of potassium and phosphorus, finite mined resources that are “necessary for all life.” Canada has large reserves of potash (the source of potassium), which is good news for Americans, but 50 to 75 percent of the known reserves of phosphate (the source of phosphorus) are located in Morocco and the western Sahara. Assuming a 2 percent annual increase in phosphorus consumption, Grantham believes the rest of the world’s reserves won’t last more than 50 years, so he expects “gamesmanship” from the phosphate-rich.

And he rates soil erosion as the biggest threat of all. The world’s population could reach 10 billion within half a century — perhaps twice as many human beings as the planet’s overtaxed resources can sustainably support, perhaps six times too many.

Grantham, who is 72 and has what’s left of a British accent after living in Boston for more than four decades, outlined this wildly distressing assessment against a bland backdrop of chain décor and piped-in smooth jazz. He marked up his draft with a pen as he went along, departing from the text at times to emphasize a point. “Phosphorus makes up 1 percent of your body weight,” he said, looking up from the page to catch my eye. “It’s a basic element, the residue of exploded stars. You can’t just make more.” He also pointed out that most economists see global trade as a win-win proposition, but resource limitation turns it into a win-lose, zero-sum contest. “The faster China grows, the higher grain prices go, the more people in China or India who upgrade to meat, the higher the tendency for Africa to starve,” he said.

Grantham argues that the late-18th-century doomsayer Thomas Malthus pretty much got it right but just had the bad timing to make his predictions about unsustainable population growth on the eve of the hydrocarbon-fueled Industrial Revolution, which “partially removed the barriers to rapid population growth, wealth and scientific progress.” That put off the inevitable for a couple of centuries, but now, ready or not, the age of cheap hydrocarbons is ending. Grantham’s July letter concludes: “We humans have the brains and the means to reach real planetary sustainability. The problem is with us and our focus on short-term growth and profits, which is likely to cause suffering on a vast scale. With foresight and thoughtful planning, this suffering is completely avoidable.”