Sunday Thematic & Weekly Recap

Energy Transition – How Could Something So Promising Go So Wrong?
June 30, 2024
Commodities Mentioned:
Ethylene, Lithium, Plastics, Lithium, Hydrogen, CO2, Oxygen, Ammonia, Natural Gas, Asbestos, Ethane, Polyethylene
Companies Mentioned:
ExxonMobil, Air Liquide, GEVO, ADNOC, Covestro, Dow, Union Carbide, OQ Chemicals, SK, Albemarle, Utility Global, Nvidia, Apple

C-MACC Sunday Thematic and Weekly Recap

Energy Transition – How Could Something So Promising Go So Wrong?

  • One of the more compelling arguments for energy transition in its early days of initiatives was the economic boost from all the possible investments. Some countries badly need this in 2024/25, but it is falling very short.
  • While the rapid escalation of transition costs has been an impediment, global politics is now getting in the way as the fear of rule changes is rising. Separately, customer/consumer willingness to pay for transition is zero.  
  • Corporate strategy is adapting, but in the near term, that means putting many programs on pause, and the future for some entrepreneurs with interesting start-ups is looking quite bleak with little hope of reversal.
  • Populism does not lend itself to climate collaboration, and we suspect that a significant slowdown in investment may only be reversed by some shocking extreme weather events, which could cause policy to be chaotic.
  • Otherwise, we look at a constraint to European ethylene restructuring, disappointing US chemical demand growth, Trump and trade, lithium, chemical stock performance, and more on energy transition roadblocks.
  • Companies Mentioned: ExxonMobil, Air Liquide, GEVO, ADNOC, Covestro, Dow, Union Carbide, OQ Chemicals, SK, Albemarle, Utility Global, Nvidia, Apple
  • Products Mentioned: Ethylene, Lithium, Plastics, Lithium, Hydrogen, CO2, Oxygen, Ammonia, Natural Gas, Asbestos, Ethane, Polyethylene

Exhibit 1: Plastics are the capacity of majors versus their ambitions (some additional capacity under construction). Hydrogen high end is driven by blue, and SAF is a sleeve or renewable fuel, much of which is going to diesel today.

Source: Bloomberg, Other Sources, C-MACC Analysis, June 2024

See the PDF below for all charts, tables, and diagrams


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