Falling demand — not an oil shortage — will create the energy industry’s next revolution, a futurist tells Grant Bradley.

The $8 trillion energy industry is about to be turned on its head, says a futurist and tech pioneer.

Ramez Naam, who is heading to the SingularityU summit in Christchurch later this year, says that by 2030 the world's oil consumption will have peaked and time is running out for coal as a viable fuel.

While his predictions differ markedly from the views of organisations such as the International Energy Agency, he says solar, batteries and wind generation are getting cheaper every year and will come to supplant fossil fuels.

"The big message is that energy is an exponential technology. The price of that technology is plunging."


At the same time, political momentum is building around the world to tackle climate change and the businesses that adapt will thrive.

The head of the country's biggest fuel retailer, Z Energy's Mike Bennetts, expects big changes too, but says his company regards the move away from fossil fuels as an opportunity, not a threat.

Naam spent 13 years at Microsoft, where he led teams developing early versions of Microsoft Outlook, Internet Explorer and the Bing search engine. He holds 19 patents related to search engines, information retrieval, web browsing, artificial intelligence and machine learning.

He says around the world there is a willingness to make clean energy cheaper than dirty energy.

"Our only chance to beat climate change is through technological innovation. People will buy energy they find the cheapest and we're on a path to doing this."

He says the energy market will be upended and players in the industry will be "incredibly disrupted".

While the price of coal recovered slightly in the first part of this year, its value is down dramatically from its historic highs, mines and export terminals in Australia are economically "under water" and the largest coal companies in the US have lost most of their market value in the past few years.

Naam says most oil consumption will have peaked within 15 years because of the penetration of electric vehicles. They will get cheaper and be powered by longer lasting, more robust batteries.

Ramez Naam is a professional technologist and science fiction writer.
Ramez Naam is a professional technologist and science fiction writer.

It is peak demand - not peak oil - that will end the oil age, he says, referencing a famous quote from a former Saudi Oil Minister, Sheikh Zaki Yamani, in the 1970s: "The Stone Age did not end because of a lack of stones and the Oil Age will end long before the world runs out of oil."

While Naam acknowledges the number of electric vehicles (EVs) on the road now is minuscule - just over 1 million in a global vehicle fleet of more than 1 billion - the growth rate off this low base is about 60 per cent.

A decade from now about three to four per cent of cars will be electric, he forecasts. Light trucks will steadily be brought into EV fleets and then heavy trucks that could be charged up from wireless pads.

Naam lives in the US, where just 15 per cent of power is generated from renewable sources (in New Zealand it has been up to 90 per cent at times this year) but even there, he says EVs are still more environmentally friendly.

"Even if you fuelled up with coal generated electricity, it's still better than burning petrol. If you buy an electric car it gets cleaner as the grid gets cleaner."

If current trends hold, EVs will be the cheapest cars on the market.
Through a package of measures, the New Zealand Government wants to double the number of electric vehicles in this country each year, to reach 64,000 by 2021.

While Energy Minister Simon Bridges is enthusiastic about encouraging EV uptake, he also promotes this country as a good place for oil companies to explore and hopefully discover large fields, this week saying the transition to a low-carbon economy needs to happen in an "orderly" way and petrol will be needed for many years to come.

The big message is that energy is an exponential technology. The price of that technology is plunging.

He's said in the past that this country could be like Norway - an oil exporting giant but with 100 per cent renewable power and a high number of EVs. Bridges reckons New Zealand, too, "can chew gum and walk at the same time".

Naam says the transition to clean energy will be long and hard.

But coal workers can be retrained to work in the solar industry, and could earn more there.

During this transition fortunes will be made, and lost.

"Over the next 50 years US$200 trillion will be spent and the leaders in deploying these things - solar, wind, batteries and EVs - are going to be gigantic winners."

Z's Bennetts has spent more than three decades in the fossil fuels industry, once an oil trader for BP and for the past six years in his current role.

He's as prepared as he can be for what's around the corner.

Z Energy chief executive Mike Bennetts.
Z Energy chief executive Mike Bennetts.

"Whatever anyone says about the future, we're probably all individually likely to be wrong. We work more in the realm of scenarios."

Bennett's doesn't expect the service station industry to be disrupted overnight.

"We see ourselves as being able to take advantage of the opportunities, not the threat, of moving away from fossil fuels," he says.

Z is "agnostic" about what sort of energy is flowing in the forecourt. "We're in the energy business so we're somewhat agnostic about what we sell. We don't go around drilling for oil and gas so we have no upstream investment."

His company is about to start producing commercial scale biodiesel, has tendered for a jet biofuel project for Air New Zealand and dipped its toes in the EV charging market in a handful of sites.

However, Bennetts says he is not keen on launching a headlong push into charging stations.

"As much as we've invested in some EV charging stations, I'd be reluctant to put in 210 of them across our network."

It's not just a question of will my business be a winner or a loser, but how do we train people, how do we educate our kids.

He says it could be like investing in VHS video technology at the point MP3 technology arrived. The future of charging could be swap-out batteries or charging pads on the road.

Z is the summit's big backer. Bennetts says the decision to sponsor the conference was driven by the hope that small businesses will be able to share in some international thinking on exponential tech.

While he says the "big end of town" could get to technology hotspots like Silicon Valley, smaller firms couldn't afford it.

"New Zealand suffers from being at the bottom end of the world and that's why we're sponsoring the summit."

Bennetts says the gathering will also hear about the consequences of rapid technological change.

"Artificial intelligence is replacing professional jobs - it's not just robots replacing manufacturing jobs.

"There's a social perspective on this. It's not just a question of will my business be a winner or a loser, but how do we train people, how do we educate our kids."

Singularity summit

• SingularityU New Zealand Summit is a 3-day conference, hosted by Singularity University in tandem with NZ organisations and companies.

• The summit will be held in Christchurch on November 14 to 16.

• The goal is to uncover cutting edge, "exponential technologies" in New Zealand and how they can be used to create positive change and economic growth in the region.

• The conference will hear from experts in artificial intelligence, biotechnology, energy, self-driving cars, crime, technology and public policy, medicine, strategic relations, bioengineering and the future of work and education.

• It will look at how to create "exponential" organisations or adapt our existing corporations and organisations to work best in this new, evolving environment.

• Singularity University (SU) is a benefit corporation, headquartered in Silicon Valley, with alumni in more than 110 countries.

Online: www.singularityunz.com