Located in Saudi Arabia’s Al Hasa province, Ghawar is the largest oilfield in the world.
The oilfield, owned by Saudi Aramco, covers about 2,000 square miles. To put that in perspective, that’s roughly the size of Perth.
But it’s also the world’s largest when it comes to both reserves and oil production.
Ghawar accounts for over 20% of Saudi Arabia’s remaining proven oil reserves. It pumps out close to four million barrels per day, about 6% of the world’s daily output.
A new report by Carbon Tracker Initiative, titled ‘The Sky’s the Limit’, argues that if you put solar panels in an area as large as Ghawar, you would be able to generate as much energy in terms of electricity as the oilfield.
Of course, there would be differences.
For one, as we extract oil reserves from Ghawar they deplete, they are gone. With solar, the energy would keep regenerating as more energy arrives from the sun onto our planet every day.
But here is why this is so significant. As the report explained:
‘Only Saudi Arabia has a Ghawar, but almost every country in the world has enough space to generate 1 PWh p.a. of renewable electricity.’
Hold onto that thought for a moment.
The energy transition is happening, despite the pandemic.
In fact, if anything the pandemic has accelerated that change. Oil prices and demand collapsed as soon as the pandemic hit, but it hasn’t stalled the advance of renewable energy. Don’t get me wrong, this is a long-term trend that will take decades to play out.
But, according to the International Renewable Energy Agency (IRENA), even with the pandemic the world added 260 GW of renewable energy capacity, beating the previous record by 50%.
And things are also accelerating in electric transport. While global car sales dropped by 14% in 2020, EVs had a great year with sales increasing 43% from the previous year.
Global leaders are starting to pay attention.
Last weekend Biden invited 40 global leaders to a virtual climate summit to urge countries to do more. The US committed to cutting emissions by 50–52% by 2030 from 2005 levels.
Ahead of the summit, the UK committed to cutting emissions by 78% by 2035 when compared to 1990 levels, and the EU agreed in principle to the European Climate Law, which looks at reducing emissions by at least 55% by 2030 when compared with 1990 levels, and net-zero emissions by 2050.
For now, those are just that, targets.
But, it’s economics that’s pushing the change.
The International Energy Agency recently said that:
‘For projects with low cost financing that tap high quality resources, solar PV is now the cheapest source of electricity in history.’
Battery prices are also falling…quick.
They’ve fallen 89% since 2010 from US$1,000 per kw hour to US$137/kWh in 2020. BloombergNEF expects prices will reach US$100/kWh as soon as 2023.
The technology is getting cheaper.
And a lot of money is flowing into the space along with investment, which is driving some technological change. The more we use these technologies the more it will drive prices down.
But, back to Ghawar…
Oil is an intrinsic part of our global economy. It powers our transport, our militaries, our economies…you name it. It’s an energy source that’s found only in a few areas of the world.
For over 100 years now oil has shaped our global geopolitics. It’s affected landmark events like the division of the Ottoman empire after the First World War, the Cold War, Middle East interventions…
But renewables are decentralising energy. Every country has some sort of access to renewables like wind, solar, hydro.
This is how pivotal the renewable energy transition is.
The effects of the energy transition in geopolitics will be huge. In a world where global relations have been defined by access and control of fossil fuels, renewable energy brings a paramount change. One with more energy independence and more players in the game. At the same time, it will reduce the geopolitical importance of those countries with fossil fuels.
Energy is changing…it’s decentralising. By the way, money is changing too. To find out more about this and the possibilities this new money system brings, click here.
Some of the winners in the energy transition will be those countries rich in solar and wind. As Carbon Tracker notes in the report:
‘Poor countries are the greatest beneficiaries. They have the largest ratio of solar and wind potential to energy demand, and stand to unlock huge domestic benefits. The continent of Africa for example is a renewables superpower, with 39% of global potential.’
Others that may benefit are countries with the resources needed for the clean energy transition.
And Australia is quite well placed here in both resources and access to renewable sources.
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