published in 2022 RMI views (not necessarily EFOW point of view: check on facts, realities and views, and ways of going about change: urgencies (priorities), realities and our true opportunities!)

1. RMI – Energy. Transformed. 1
Kingsmill Bond, CFA
& Sam Butler-Sloss
September 2022
The Energy
Transition Narrative

2. RMI – Energy. Transformed. 2
• This presentation presents an insurgent view of
the energy transition.
• Rapid energy technology change is inevitable and
beneficial, not forced and costly.
• The speed of change is set by challengers, not
incumbents; by fossil fuel importers, not
exporters; and by markets more than
policymakers.
• Ever-falling costs open up new markets and
opportunities.
• Financial markets, policy, and social norms are
responsive, not static.
• This is a just transition, as we move from a
commodity that favors the few to technology for
the many.
• History shows that rapid technology shifts at the
margin are the norm, not the exception.
• Peaks come early, and with peaks comes
disruption.
• Change happens far faster than most incumbent
experts predict.
• This decade will see enormous opportunity for
those that embrace change, and catastrophic risk
for those that fail to see what is going on.
• The energy transition is not primarily a debate
about ideology or values. It is simply a technology
shift.
• Incumbents resist change. So we need to make it
happen. The renewable economy needs to be
built.
Introduction

3. RMI – Energy. Transformed. 3
The Energy System Needs to Change
Change Is Driven by the Growth of New Energy Technologies
This Growth of the New Means Decline of Fossil Fuel Demand
Financial Markets React at the Start of Transitions
Summary
01
02
03
04

4. RMI – Energy. Transformed. 4
The changing risk assessment of where key climate tipping points lie
Source: Lenton et al 2019
2001
Undetectable Low High Very High
2007
2013
2019
0 1 2 3 4 5 °C
Past Future
1.1°C
(2020)
IPCC
Assessment
Reports
and Special
Reports
In 2001, the IPCC thought that
climate risks would be "high" at
over 4°C of warming
Better modeling means that the
IPCC now believes that climate
risks are high at over 1.5°C
The latest paper in Science
suggests that we are already at
risk of crossing tipping points in
several areas including the
Greenland and West Antarctica
ice sheets and the Northern
permafrost
The Climate Necessity to Change Is Becoming More Urgent
The climate is changing faster than scientists anticipated

5. RMI – Energy. Transformed. 5
High prices of fossil fuels reduce fossil fuel demand
and massively increase the competitiveness of
renewable technologies.
Governments have an additional energy security and
economic incentive to deploy renewables and
increase efficiency. Witness the IRA in the United
States, REPowerEU in Europe, and the IEA
Sonderborg Action Plan on efficiency.
Renewable energy deployment continues to grow
exponentially. We expect solar growth in 2022 of
~30% and EV sales growth of ~60%.
The removal of 5% of global fossil fuel supply from
Russia inevitably means some new coal and LNG
supply. But net fossil fuel demand will still fall.
Marginal Costs of Fossil Fuels vs.
Total Cost of Renewables (Germany)
€/MWh
Source: McKinsey
Putin’s War Speeds Up Change
High fossil fuel prices and energy security bring
forward change

6. RMI – Energy. Transformed. 6
Renewable electricity is the
cheapest electricity source in
90% of the world
90% of people live in countries
with abundant renewable
energy
Renewables have an
ecological footprint c.100
times lower than fossil fuels
1
2
3
COST
SECURITY
ENVIRONMENT
…and Solves the Energy Trilemma
Cost, security, and climate: once at odds, now fully aligned

7. RMI – Energy. Transformed. 7
Source: IHME
The World Health
Organization estimates that
outdoor air pollution kills 4.2
m people every year
More detailed analysis by
Vohra suggests that 8.7 m
people die as the result of
burning fossil fuels
That makes fossil fuels the
third largest killer,
responsible for 20% of global
deaths
Death rates are especially
high in the Global South and
in poorer communities
Justice Demands a Change in the Energy System
Outdoor Pollution Death Rate, 2019
Fossil Fuel Air Pollution Kills the Poor
The number of deaths attributed to outdoor ozone and particulate matter pollution per 100,000

8. RMI – Energy. Transformed. 8
Source: IEA
A New Energy System Will Mean More Jobs
The impact of the energy transition on jobs
The IEA calculates that there are already
more jobs in clean energy than in fossil
fuels
And an energy transition would mean a
net gain of 22 million jobs.
The jobs of the future are in renewable
technologies
For fossil fuel importers, you exchange
rent paid to petrostates for jobs paying
local employees.
Employment Growth in Clean Energy and Related Areas to 2030

9. RMI – Energy. Transformed. 9
Source: Carbon Tracker
The impact of the technology shift on politics
Politics Follows the Technology Shift, Albeit Slowly
Until recently, the fossil fuel system
seemed to have all the advantages.
Thanks to technology solutions and
lower costs, the economic, security, and
technology advantage has passed to
renewables.
So the seesaw has moved over toward
change.
The fossil fuel system is now being
propped up by political support. But that
will inevitably change over time.
Petrostates will be the last to change.

10. RMI – Energy. Transformed. 10
Definitions: petrostate >10% GDP in fossil fuel exports, exporter 0%–10%, importer
0%–(-5%), dependent <-5%
0%
10%
20%
30%
40%
50%
Petrostates Fossil fuel
exporters
Fossil fuel
importers
Fossil fuel
dependent
Population split by % GDP spent on fossil fuel
imports/exports
Source: COMTRADE 2016, RMI assumptions
While the Drive to Change Is Greatest in Fossil Fuel Importers
80% of the world lives in fossil fuel importers
The balance of forces in favor of change is
especially strong in countries that import fossil
fuels.
80% of people live in fossil fuel importers. It is
importers, not exporters, who determine future
fossil fuel demand.
Only 10% of people live in petrostates.
Most of the sources of energy demand growth
are in fossil fuel importers, notably China and
India, both of which face rising dependency on
oil and gas imports under BAU.

11. RMI – Energy. Transformed. 11
0
10
20
30
40
50
2017
2015 2021
2016 2020
2018 2019
National Regional & municipal
0%
5%
10%
15%
20%
25%
2000 2005 2010 2015 2020
0%
20%
40%
60%
80%
-
10
20
30
40
50
2015 2017 2019 2021
Q1
Countries Share of emissions
Countries
with
pledges
Share
of
emissions
covered
Share
of
emissions
covered
Source: (from left to right): IEA, BNEF, World Bank
Net-Zero Targets # Combustion Car Bans Carbon Taxes
In 2022, over 90% of the world by GDP had set net-
zero targets, up from 6% in 2017.
Fifty countries and regions are planning to
ban ICE cars.
The share of emissions covered by tax has
increased fourfold in a decade to nearly a
quarter.
There Has Been a Dramatic Policy Shift in the Past Five Years
As one country sets a target, it’s easier for the next to follow …

12. RMI – Energy. Transformed. 12
Breakdown of US climate spending (>$500B) across S-curve phases
1) Research &
Development
2) Applied
Innovation
3) Early
Adopters
4) System
Integration
5) Market
Expansion
Source: RMI. The colors of the bars correspond to the colors of the program names
Now US Federal Action Creates a New Race to the Top
With passage of the IRA, the US triples federal spending on climate — getting in the game with China, the EU, and India
Three new bills that invest throughout the
technology adoption S-curve, encourage
innovation, back multiple technological
solutions, and embrace risk:
• The CHIPS and Science Act (2022)
focuses investment on the first two
phases of the S-curve, supporting
early/lab-stage innovations and
demonstrating commercialization.
• The Infrastructure Investment and
Jobs Act (2021) focuses mainly on the
commercialization of innovations, the
second phase of the S-curve.
• The Inflation Reduction Act (2022)
invests heavily in the third and fourth
phases, when innovations are taken to
market, accelerating uptake of
deployed technologies.

13. RMI – Energy. Transformed. 13
0
20
40
60
80
100
2015 2016 2017 2018 2019 2020 2021
Companies
Financial institutions
Countries
SHARE OF REVENUE OR GDP (%)
81 79
68
54
41
8 11
22
36
44
10 10 10 10
15
Airlines O&G
producers
Steel Vehicle
OEMs
Chemical
producers
No climate
commitments
Percentage of top 20 corporations, by sector
Share of net-zero pledges by key players, 2015–2021
Source: BlackRock (L), McKinsey (R)
Half the world’s leading institutions and 40% of companies
have made net-zero pledges.
Even in heavy fossil fuel usage sectors, companies are
pledging to get to net zero.
And the Private Sector Is Rapidly Joining In
Companies and countries alike are making significant net-zero pledges, including the largest players across key industries
Other climate
commitments
Net Zero or
climate neutral

14. RMI – Energy. Transformed. 14
The Growth of New
Energy Technologies
14
02

15. RMI – Energy. Transformed. 15
0
100
200
300
2011 2021 2011 2021
0
300
600
900
2011 2021
Fossil fuel range
pre-Putin’s War
Onshore Wind Offshore Wind Solar Batteries
$/MWh $/kWh
Source: BNEF; Note: * in sample time period; Definition: the learning rate is the observed cost reduction for each doubling of deployment
Fossil fuel
range in 2022
2011 2021
Learning
Rate* 37% 36% 19%
59% 89% 83%
61%
Cost decline Cost decline Cost decline Cost decline
We Are in the Middle of an Energy Technology Cost Revolution
The cost of new energy technologies has fallen by 60%–90% in 10 years

16. RMI – Energy. Transformed. 16
0
2
4
6
8
2010 2020
Annual
Sales
(million)
0
500
1,000
1,500
2,000
2000 2010 2020
Solar
Wind
TWh/yr
Annual solar & wind generation Annual EV sales Annual battery sales
Source: BNEF, BP; Note: CAGR is the compound annual growth rate over the sample time period
CAGR 39% 68%
21%
Exponential Energy Change Is All around Us
68%
0
50
100
150
200
250
300
350
400
2011 2021
GWh/yr

17. RMI – Energy. Transformed. 17
Brazil wind Vietnam solar India solar
Source: BNEF, BP
0
5
10
15
20
25
30
2010 2015 2020
0
10
20
30
40
50
60
70
80
2010 2015 2020
China offshore wind
0
10
20
30
40
50
60
70
80
2010 2015 2020
Generation
(TWh)
Generation
(TWh)
Generation
(TWh)
Annual capacity
additions (GW)
Change Is Happening across the World
Adoption of superior technology is not confined to the Global North
0
2
4
6
8
10
12
14
16
2014 2016 2018 2020

18. RMI – Energy. Transformed. 18
0
5
10
15
20
25
30
2000 2005 2010 2015
0
10
20
30
40
50
60
70
80
90
100
1965 1975 1985 1995 2005 2015
Useful energy by carrier, global Final energy by carrier in China's industrial sector
Source: Rystad (L); IEA (R)
Electricity just overtook oil as the world’s top energy
carrier of useful energy, and it is rising fast.
Electricity has been pushing coal out of the Chinese industrial
sector since 2013.
EJ EJ
Electricity Has Become the Largest Energy Carrier
Electrification is driven by China
Coal
Electricity
Natural
Gas
Oil
Electricity
Liquids
Methane
Coal

19. RMI – Energy. Transformed. 19
Source: RMI
Because Superior Technology Drives Change
Renewables have fundamentally different characteristics with far-reaching consequences
Commodity-based system
No learning curve (or decreasing returns)
Geographically concentrated
Finite
Continuous material flow required
EROI falling
Heavy
Fiery molecules
Low efficiency
Pervasive negative externalities
Trillions of dollars of rent for oligarchs
Concentrates power
Technology-based system
Learning curve (increasing returns)
Everywhere
Abundant
Zero marginal cost
EROI rising
Light
Obedient electrons
High efficiency
Much lower impact on nature
No superprofits
Distributes power
The Age of Carbon The Age of Renewables

20. RMI – Energy. Transformed. 20
Primary
Carrier
Fossil
fuels
Renewable Costs Will Continue Falling on Learning Curves
Decreasing costs of solar, wind, batteries,
and hydrogen — past and future
Source: INET Oxford
Key renewable energy technologies enjoy
learning curves. Fossil fuels do not.
So the bigger renewables grow, the cheaper
they get.
Learning curves are extremely persistent.
Learning curves have proven the most
accurate way to forecast future costs.
Mathematicians at Oxford University use this
framing to forecast future costs.
Their central scenario implies $10 per MWh
for solar LCOE by 2050.

21. RMI – Energy. Transformed. 21
Source: RMI; cost forecasts use Rystad’s growth rates and observed learning rates. Hydrogen is competitive locations
0
20
40
60
80
100
120
140
2021 2030 2050
0
10
20
30
40
50
2021 2030 2050 2021 2030 2050
0
1
2
3
4
2022 2030 2050
Fossil fuel lower bound
before Putin’s war
Fossil fuel range
before Putin’s war
Fossil fuel range
before Putin’s war
Solar Wind EV batteries Green hydrogen
$/MWh
$/kWh $/kg
If we continue on existing learning and growth rates, then by 2030 the world will enjoy $15 per
MWh solar, $25 per MWh wind, $50 per kWh Li-ion batteries, and $1/ kg green hydrogen.
And Cheap Renewables Create an Entirely New Paradigm
The faster change happens, the cheaper renewables become

22. RMI – Energy. Transformed. 22
Source: Carbon Tracker
Solar and wind energy potential as a multiple of energy demand
Renewables Are 100 Times Bigger Than Fossil Fuels
Humanity has unlocked a giant new energy source
Renewables are, obviously, available
everywhere.
Even if you massively constrain
deployment, the world has annual
renewable flows of over 100 times
fossil fuel supply.
Solar rooftops alone could supply us
with all our electricity needs.
The Global South is especially abundant
in renewable energy resources.
Only 10% of demand comes from
places like Germany or Japan that will
struggle to find enough space.

23. RMI – Energy. Transformed. 23
Primary
energy
Solar
Wind
Carriers
Electricity
Hydrogen
Applications
Electric
vehicles
Heat pumps
Other
non-fossil
machinery
Efficiency, electrification, & digitalization
Efficiency, electrification, & digitalization
Plus other
renewables
Plus via storage
Source: RMI
We Have All the Technologies We Need
A new cluster of technologies can
replace the entire fossil fuel system
Energy efficiency is improving all the
time thanks to better machines,
electrification and digitization
The two core primary renewable
energy sources are solar and wind
The key carriers are electricity,
batteries and hydrogen
The new prime movers include EV,
heat pumps, ammonia powered
ships and other non-fossil machinery

24. RMI – Energy. Transformed. 24
What we need to do Where we stand What we need to do Is this feasible? Grounds for hope
Increase efficiency
Efficiency gains of 1.8% p.a.
for the past decade
Increase efficiency to
2%–3% p.a.
Efficiency gains of 3%
p.a. follow inevitably from
the deployment of
renewable technologies
On track
Decarbonize
electricity
38% of electricity already from non-
fossil sources. Renewables are
cheaper than fossils in 90% of the
world and growing on S-curves
Increase renewables to 100%
of supply. Leaders first, then
laggards
We need to maintain solar
and wind growth up the
S-curve
On track
Electrify whatever
we can
Non-fossil energy is already the
energy source for two-thirds of
buildings and a third of
industry. EVs are comparable in
price with ICE vehicles
Electrify transport. Deploy
heat pumps at scale. Electrify
industry and buildings
The transport revolution
has started. Industry and
building electrification
needs to happen faster
China is doing this
Hydrogen, biomass,
or CCS for the rest
Massive ramp in green hydrogen
planned
Get green hydrogen costs
down to $1/kg, which is price
parity
The past 12 months have
seen a massive increase in
hydrogen plans
Hydrogen ramp
has started
Source: RMI
We Know Roughly What to Do

25. RMI – Energy. Transformed. 25
Electricity
Cars
Buildings
Trucking
Aviation
Shipping
Steel
Cement
Chemicals
1990 1995 2000 2005 2010 2015 2022 2025 2030 2035 2040 2045 2050
Concept Solution
development
Niche market Mass market Late market Market tipping point (cost &
critical mass tipping points)
Source: SYSTEMIQ
Each of the key sectors
will hit a price tipping
point this decade.
That moment has already
come for electricity, which
is 35% of fossil fuel
usage.
And for light vehicles.
These tipping points are
spreading to the rest of
the system.
Key Sectors Hit Their Tipping Point This Decade

26. RMI – Energy. Transformed. 26
Share of solar and wind in electricity generation
Source: BP
US, 11%
China, 9%
EU, 19%
India, 8%
UK, 28%
Spain, 29%
Australia, 17%
Denmark, 60%
Ireland, 36%
0%
10%
20%
30%
40%
50%
60%
70%
2000 2005 2010 2015 2020
There Are No Insoluble Barriers to Change
Skeptics have been hoping for years that
something would stop the deployment of
renewable electricity.
Grid codes, intermittency, lack of
minerals, and so on were meant to act as
a ceiling on growth.
But we have found solutions for all of
these.
The ceiling of the possible is
therefore constantly rising.
Meanwhile, most countries are far below
the ceiling of the possible.

27. RMI – Energy. Transformed. 27
Source: Rystad; light to dark: 1.5°C to 2.2°C; 1.6°C (Rystad’s central scenario) is based on technology change
0
5
10
15
20
25
30
35
2000 2010 2020 2030 2040 2050 2060 2070 2080
0
10
20
30
40
50
60
70
2000 2010 2020 2030 2040 2050 2060 2070 2080
PWh/yr
PWh/yr
2.2°C
1.5°C
2.2°C
1.5°C
Global electricity
demand 2019
Central technology
forecast
Central technology
forecast
Solar generation will increase from over 1 PWh today to around 40 PWh in
2050, a growth rate of around 14% a year versus 25% today.
Wind generation will increase from 2 PWh today to over 20 PWh in
2050, a growth rate of 7% versus 15% today.
Solar generation Wind generation
So Exponential Growth of Renewables Will Continue
Powered by and powering falling costs

28. RMI – Energy. Transformed. 28
Source: Comin & Hobijn via OWID (L); Grubler (R)
Infrastructure systems
Individual products
Rapid exponential growth along S-curves is a standard
characteristic of successful new technologies.
S-curve-type growth even applies to infrastructure.
Technological adoption by household in the United States
This Pattern of Growth Has Been Seen Many Times
Share of maximum size in the United States

29. RMI – Energy. Transformed. 29
Oil
Gas
Coal
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1870 1890 1910 1930 1950 1970 1990 2010
Primary energy consumption by fuel (global)
Mtoe
Oil and gas enjoyed spectacular S-curve growth in their era.
Electricity supply increased 2,000-fold in a century. Nobody sat
down in 1900 and worked out the detail
-
5,000
10,000
15,000
20,000
25,000
30,000
1900 1920 1940 1960 1980 2000 2020
TWh
Electricity generation (global)
Source: Smil, BP
Fossil Fuels and Electricity Once Grew on S-curves

30. RMI – Energy. Transformed. 30
Source: RMI, Foreign Affairs
In 1976 Amory Lovins argued
that efficiency gains would
reduce US primary energy
intensity by 2.5% a year.
Industry forecasts assumed no
efficiency gains.
Lovins’s predictions so far have
been remarkably close to reality.
Meanwhile, Efficiency Has Been Reducing Energy Demand Growth for Decades

31. RMI – Energy. Transformed. 31
Source: RMI
250%
300%
400%
Efficiency gain
Solar as a primary energy source is
A heat pump is
more efficient than coal
more efficient than a gas boiler
An electric vehicle is
more efficient than an ICE
Efficiency Is Moving from Incremental to Systemic
As new energy technology penetration increases, efficiency gains will rise

32. RMI – Energy. Transformed. 32
Source: Rystad central scenario (1.6°C) for energy data; IMF for GDP; RMI calculations
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1990 2000 2010 2020 2030 2040 2050
Efficiency
Renewables
(substitution)
Renewable
energy
Future
EJ/yr
Past
Renewables push out fossil
fuels from the energy system
Goodbye to the huge thermal
losses of fossil fuels
More efficient technologies
& systems
Global energy demand (EJ/year) since 1990 Description
Change Happens When You Combine Efficiency and Renewables
Efficiency slows growth; renewables push fossil fuels off the plateau

33. RMI – Energy. Transformed. 33
The Decline of
Fossil Fuels
03

34. RMI – Energy. Transformed. 34
0
50
100
150
200
250
300
2000 2010 2020 2030 2040 2050 2060
Past Future
Useful energy
EJ/yr
Solar & Wind
Fossil fuels
Source: Rystad Central Scenario (1.6 degrees)
The growth of renewables inevitably
means a decline in demand for fossil
fuels.
It is the new technology that sets the
speed of change, not the old.
The very size of the fossil fuel system
makes it extremely vulnerable to this
type of disruptive change.
There is no debate that we will still
need a lot of fossil fuels in 20 years’
time. But the point is we will need
much less than today.
The Rise of the New (Renewables) Pushes Out the Old (Fossil Fuels)
The new, not the old, sets the speed of change

35. RMI – Energy. Transformed. 35
Lighting: Gas to electricity
0.0
1.0
2.0
3.0
1885
1892
1899
1906
1913
1920
1927
1934
1941
1948
1955
Electricity Gas
Power: Steam to electricity Heat: Coal to gas
Cast iron to steel Transport: Sailing ships to steamships
0
5
10
15
20
25
1900 1910 1920 1930 1940 1950 1960
Steam Electricity
-
5
10
15
20
25
30
1946 1956 1966 1976 1986
Gas Coal
Source: Perez, Fouquet, Nakicenovic, Mitchell; Note: all UK charts except horses to cars (US)
10
100
1,000
10,000
100,000
1,000,000
1830 1880 1930 1980
Thousands
This X Pattern Is Common to Most Technology Shifts
As superior new technologies grow, demand for old technologies peaks early and falls fast
Transport: Horses to cars

36. RMI – Energy. Transformed. 36
New area Quote Source
Trains
Rail travel at high speed is not possible because the passengers,
unable to breathe, would die of asphyxia.
Lardner, professor of natural philosophy, UCL,
c. 1830
Telephones What use could this company make of an electrical toy?
Western Union to Bell when turning down his
patents, 1876
Electricity
Edison's ideas are unworthy of the attention of practical or
scientific men.
Committee of the British parliament on Edison's
work, 1878
Oil
Drill for oil? You mean drill into the ground and try to find
oil? You're crazy.
Prospective drillers to Drake, 1859
Cars
The horse is here to stay, but the automobile is
only a novelty — a fad.
Advice to Henry Ford's lawyer, c. 1910
Computing I think there is a market for about five computers. Watson, Chairman of IBM, 1943
Renewables The fundamentals of our (energy) lives will not change drastically
in the coming 20-30 years
Vaclav Smil, 2022
Source: Nairn, Engines that move markets, Recharge News
Incumbents Rarely Forecast Disruptive Change
We should not be surprised by the failure of incumbents to forecast a future without them

37. RMI – Energy. Transformed. 37
Time
Demand
Plateau
Peak Decline
Incumbent demand
(fossil fuels)
Challenger demand
(renewables)
Cliff
Source: RMI
The Future for Fossil Fuels Is One of Peak, Plateau, and Decline
Peak demand for incumbents is
reached relatively early in all
transitions.
Because of inertia and large amounts
of incumbent machinery, there is then a
plateau.
External shocks (like COVID or Putin’s
war) make that plateau bumpy.
But decline sets in after 5–10 years, as
new technologies move up the S-curve.
Investors should not mistake a bump
on the plateau for a new mountain.
The pattern of peak, plateau and decline (illustrative)

38. RMI – Energy. Transformed. 38
We Have Likely Reached Peak Fossil Fuel Demand
Global change in energy supply EJ
Source: BP Statistical Review
In 2019, fossil fuels were only 15% of the
increase in energy supply
In the crash and recovery of 2020-21, solar
and wind supply increased by 7 EJ, and other
renewables by 1 EJ. Fossil fuel supply fell by
0.4 EJ.
Solar and wind are now 5% of primary energy
supply and growing at around 20%.
Therefore, energy demand growth in
2022 would need to be more than 1% for
fossil fuel demand to exceed its 2019 levels.
Putin’s War brings forward the peak by
reducing growth and supercharging
renewables
(5)
-
5
10
15
20
25
Fossil fuels Hydro, nuclear, biomass Solar and wind

39. RMI – Energy. Transformed. 39
Source: IEA WEB
OECD United States UK
0
10
20
30
40
50
2000 2005 2010 2015 2020
EJ
0
5
10
15
20
25
2000 2005 2010 2015 2020
0
1
2
2000 2005 2010 2015 2020
-60%
-35% -87%
Coal is the Canary
The decline in coal demand across the OECD is the shape of things to come

40. RMI – Energy. Transformed. 40
ICE sales (m)
Source: BNEF, IEA WEI
-
10
20
30
40
50
60
70
80
90
100
2015 2016 2017 2018 2019 2020 2021
0
20
40
60
80
100
120
140
160
180
2015 2016 2017 2018 2019 2020 2021
Coal Oil and natural gas
Coal and gas power capex ($B)
0
100
200
300
400
500
600
700
2015 2016 2017 2018 2019 2020 2021
Oil and gas upstream capex ($B)
ICE sales are down by 20% since 2017.
Fossil fuel power station capex is down 26%
since 2015.
Oil and gas upstream capex is down 41%
since 2015.
Flows of Fossil Fuel – Consuming Equipment Have Peaked
And the change in flows leads to a change in stocks and a change in fossil fuel demand

41. RMI – Energy. Transformed. 41
0
10
20
30
40
50
60
2000 2005 2010 2015
50
55
60
65
70
75
80
85
90
2000 2005 2010 2015
0 40
45
50
55
60
65
70
75
2000 2005 2010 2015
0
Primary fossil fuel consumption, EU-27 Fossil fuel consumption in industry, world
Primary fossil fuel consumption, US
EJ
Source: IEA WEB
EJ
EJ
Down
20%
Down
3%
Down
10%
Fossil Fuel Demand Is Already Falling in Many Areas

42. RMI – Energy. Transformed. 42
Source: IEA WEB with RMI assumptions and calculations; Note: 60% percent of world measured by energy demand in 2019
Demand for fossil fuels in most
European countries peaked in
2000–2005.
In the United States and Australia, it
peaked in 2005–2010.
In much of Latin America, demand
for fossil fuels peaked in 2010–
2015.
And in many petrostates, it peaked
in 2015–2018.
60% of the world has already seen
peak demand for fossil fuels.
60% of the World Is Past Peak Fossil Fuels
Countries that have already seen a peak and decline in fossil fuel demand

43. RMI – Energy. Transformed. 43
Source: IEA WEB; RMI. For example, countries using 56% of primary energy have seen peak coal, and countries with 76% of buildings demand have seen peak
fossil fuels in buildings
35%
2000 2010
56%
0%
20%
40%
60%
80%
100%
2000 2010
64%
2000 2010
93%
0%
20%
40%
60%
80%
100%
2000 2010
76
%
2000 2010
63%
2000 2010
64%
2000 2010
Industry Buildings Electricity Transport
Coal Gas Oil
58%
2000 2010
Fossil fuels total
By
fuel
By
sector
Share of world measured by primary energy*
Share of world measured by sector demand*
Share of Demand Past the Fossil Fuel Peaks by Fuel Type & Sector
Peaking demand is happening in every sector and every fuel. This shows what share of the world is past the peak

44. RMI – Energy. Transformed. 44
Global demand and peaks
0%
10%
20%
30%
40%
50%
60%
70%
Peak passed total Peak looming: China Peak yet to come:
OECD Non-OECD
Source: IEA data, RMI (L); BP (R)
-
50
100
150
200
250
2000 2005 2010 2015 2020
OECD China RoW
EJ
Fossil fuel demand by region
China is a quarter of fossil fuel demand. China has been the key driver of fossil fuel demand growth.
China Is the Swing Factor for Fossil Fuel Demand
Once fossil fuel demand peaks in China, the global peak is indisputable. 80% of the world will then be in decline

45. RMI – Energy. Transformed. 45
EV sales share Solar and wind TWh Final energy in industry EJ
0%
5%
10%
15%
20%
25%
30%
-
100
200
300
400
500
600
700
2000 2005 2010 2015 2020
Solar Wind
A quarter of car sales are EVs.
Solar and wind have been growing at
38% and 22% a year since 2016.
China is leading in the electrification of
industry.
0
5
10
15
20
25
30
2000 2005 2010 2015
Electricity Coal
Oil Natural gas
Source: BNEF, BP, IEA WEB
China Is Racing Up the Renewables S-curve
The world’s largest market is setting the pace of change

46. RMI – Energy. Transformed. 46
China renewable target in 2030 (GW)
Source: Carbon Brief
-
200
400
600
800
1,000
1,200
1,400
2015 2021 2030 original 2025 new
So Chinese Fossil Fuel Demand Is Near the Peak
The Chinese government officially plans peak
fossil fuel demand by 2030.
China has a very strong track record of
outperforming its renewable targets.
Demand for fossil fuels in industry peaked in
2014 and in buildings in 2017.
The 2030 renewable target will now be hit by
2025, meaning that electricity demand would
have to rise by more than 6% for fossil fuel
demand to rise.
China is the global leader in the electrification of
transport.
So China’s peak fossil fuel demand is very close.

47. RMI – Energy. Transformed. 47
Source: RMI
Past peak
2020 2025
Geography
Sector
Fossil
fuel
Peaking Looming peak
Coal Total
Industry Buildings Electricity Harder-to-solve
Light
transport
Oil Gas
OECD S America Petrostates China SE Asia India Africa
60%
Share of total 25% 15%
We Can Set Out the Timing of Peaks in Fossil Fuel Demand by Area
We can identify fossil fuel
demand peaks by fossil fuel, sector,
and region.
The past: We have seen peak
demand for coal, for industry, for the
OECD — and for fossil fuels as a
whole.
The present: Demand is about to
peak for oil, for electricity, and for
China.
The future: Demand will peak by the
end of the decade for gas, for
India, and for harder-to-solve sectors.

48. RMI – Energy. Transformed. 48
1990 2010 2030 2050 2070
Forecast
0
50
100
150
200
250
1990 2010 2030 2050 2070
Forecast
1990 2010 2030 2050 2070
Forecast
Global coal demand Global gas demand
Global oil demand
EJ/yr
Source: Rystad; Note: Light to dark: 1.5°C to 2.2°C
2.2°C
1.5°C
2.2°C
1.5°C
2.2°C
1.5°C
Central technology
forecast
Central technology
forecast
Central technology
forecast
Coal demand is reaching the end of its
plateau and is about to decline steeply.
Oil demand reached its peak in 2019 and
is bouncing along the plateau.
Gas demand is still rising, but the
peak is near.
So Fossil Fuel Demand Will Shortly Collapse

49. RMI – Energy. Transformed. 49
Financial Markets
React Early
04

50. RMI – Energy. Transformed. 50
Source: Carbon Tracker
Challengers
Peak Demand
Incumbent Expectations
Stranded Assets
Incumbent Actual Sales
Time
Demand
2019
Peak Demand Means Stranded Assets
As soon as demand peaks, there are
significant consequences.
Incumbents build for growth, and
when there is no growth, they face
stranded assets.
The rest of the industry then faces
overcapacity and lower prices.
The supply shock of Putin’s war is
temporarily obscuring this dynamic.

51. RMI – Energy. Transformed. 51
Source: Rystad 1.6 degrees
0
5
10
15
20
25
30
35
1990 2000 2010 2020 2030 2040 2050 2060 2070
Renewables
Fossil
Energy fixed assets ($T)
Future
Past
Investors have
deployed most of their
capital in the fossil fuel
system
But fossil fuel capital is
at the very peak and
about to decline
Renewable capital is where
the growth is
Investors have most of their energy capital
tied up in fossil fuels.
But capital assets are about to fall.
And all the growth is in renewables.
Who wants to invest at the top of the market?
Investor Capital Is Currently Deployed in Fossil Fuels

52. RMI – Energy. Transformed. 52
Source: Carbon Tracker for 2020
Market capitalization of fossil fuel–linked sectors, global
0
1
2
3
4
5
6
7
8
Fossil Fuel Supply Electricity Transport Industry
$6.8
$2.9
$4.4
$3.6
Trillion US$
Because fossil fuel industries are highly
capital intensive, investors are deeply
exposed to the risk.
A quarter of the capitalization of global
equity markets is in fossil fuel extraction
and heavy usage sectors.
A Quarter of Equity Markets Are in Fossil Fuel Sectors

53. RMI – Energy. Transformed. 53
Source: Carbon Tracker 2020
Corporate bonds of the fossil fuel sectors, global
0
0.5
1
1.5
2
2.5
3
Fossil Fuel
Supply
Electricity Transport Industry
$2.6
$2.3
$2.1
$1.0
Trillion US$
Bond markets are even more
vulnerable.
Half of corporate bonds are in fossil
fuel extraction or heavy usage sectors.
Half of Corporate Bonds Are in Fossil Fuel Sectors

54. RMI – Energy. Transformed. 54
Source: Ceres 2020
Share of US syndicated loan portfolios
Banks are also deeply exposed to the fossil
fuel system.
Half of US syndicated loans are to fossil fuel
sectors.
Banks are in denial about disruption: They use
metrics built up over the past 40 years of rising
fossil fuel demand in order to assess risk.
Greenwashing and ESG won’t help with
technology disruption.
When banks realize the degree of risk they are
carrying, they will all try to sell at the same time
— a classic Minsky moment like 2008.
Banks Are Highly Exposed: Half of Syndicated Loans

55. RMI – Energy. Transformed. 55
Source: Goldman Sachs, Bloomberg
0
5
10
15
20
25
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cost of capital (%)
Offshore oil
LNG Solar
Onshore wind
The Threat of Peaks Drives a Higher Cost of Capital
Financial markets price the future, not the past.
Investors are well aware that peaks lead to
disruption and decline.
When they sniff out the risk of peaking demand,
they tend to increase the cost of capital.
This is what has been happening for the fossil fuel
sectors.
The cost of capital for oil and LNG has been
rising, as that of solar and wind has been falling.

56. RMI – Energy. Transformed. 56
Source: Carbon Tracker, based on Soros
Technology & reflexivity
Capital Flows Drive Change: Reflexivity
As capital is recycled out of declining industries
(fossil fuels) into growth industries (renewables),
it drives change.
Higher cost of capital stops fossil fuel
companies from expanding.
Lower cost of capital encourages money to flow
into new renewables projects.
This then drives change in a feedback loop.
The process, popularized by George Soros, is
known as reflexivity.

57. RMI – Energy. Transformed. 57
Source: Bloomberg
US coal EU fossil fuel electricity Oil services
0
100
200
300
400
500
600
700
800
900
1992 1996 2000 2004 2008 2012 2016 2020
Peak US coal
demand
0
200
400
600
800
1000
1200
1400
2011 2016 2021
Peak E&P capex
DOW JONES US COAL INDEX
0
20
40
60
80
100
120
140
160
180
200
220
2006 2007 2008 2009 2010 2011
Peak fossil fuel electricity
demand in EU
MSCI EU UTILITIES INDEX IN € VANECK OIL SERVICES ETF
US coal stocks peaked in 2008, just as US coal
demand was peaking.
EU electricity stocks peaked in 2007, just
before demand for fossil fuel electricity peaked.
The oil services index peaked in
2014, just as E&P capex peaked.
Investors Sell Shares in Incumbents at the Peak
Investors hunt out peaks and sell just before

58. RMI – Energy. Transformed. 58
Cheaper alternatives Gas in India
Rising taxation Europe
Declining prices After Putin’s war
Stranded assets European electricity
Litigation United States
Reputation Banks
Tipping points Coal in UK
Cost of capital Increased by 5% so far
Social pressure Shift to EV
Untaxed externalities Plastics, air travel
Area Example
Source: RMI
Investors in Fossil Fuel Assets Thus Face a Range of Risks

59. RMI – Energy. Transformed. 59
Source: Rystad 1.6°C, IEA, BNEF, RMI
Renewable capacity in 2021 and 2030
0
2
4
6
8
Solar Wind Batteries EVs Heat pumps Electrolyzers
TW TW TWh 100m 100m TW
26% 11% 31% 40% 13% >100%
100 GW
Meanwhile Renewables Have All the Growth
The exact level of renewable assets in
2030 is a matter of debate, but there is
no question that there will be spectacular
growth.
For example, the central scenario of
Rystad assumes that solar PV capacity
will increase eightfold from 0.8 TW today
to 6 TW in 2030.
BNEF argues that EVs can grow 20-fold
from 16M to 360M.
Forecasts of electrolyzer capacity are of
up to 100 GW, up from 0.3 GW today.
Unit
CAGR

60. RMI – Energy. Transformed. 60
Source: McKinsey
Market size of the energy transition opportunity in 2030, $B
0
500
1,000
1,500
2,000
2,500
3,000 Minimum Maximum
The New Energy Opportunity Is Huge
Meanwhile, all of the opportunity lies in
deploying capital to the winners of the
energy transition.
From transport to buildings, from hydrogen
to efficiency, there are multitrillion-dollar
markets to be built.
As with all technology revolutions, there will
be winners and losers. Nobody said
investing was easy.

61. RMI – Energy. Transformed. 61
Source: RMI using Gartner hype cycle
Time
Expectations
Electric trucks
Circular
economy
Efficiency
CCS
Green shipping
Innovation trigger
Peak of
inflated
expectations
Trough of
disillusionment
Slope of enlightenment
Plateau of
productivity
Solar PV
Wind
Plastic
alternatives
Green steel
Green
hydrogen
Electric
aviation
Electric cars
Decarbonized cement
Grid
integrations
Advanced
nuclear
Investors are very well
versed in investing at
times of rapid
technology shifts.
The Gartner hype
cycle captures the
dynamic.
Views will of course
differ about the placing
of each area, but that
is the market.
Investors Can Use the New Energy Technology Hype Cycle
The Gartner hype cycle applied to new energy technologies

62. RMI – Energy. Transformed. 62
The Debate Has Moved a Long Way. Don’t Be Behind the Curve
Who is where?
Time
Fossil fuel
demand
Fossil fuel sector forecasts in 2018
This is a
technology
revolution
framing
Yesterday’s debate
Today’s debate
Tomorrow’s
debate
Fossil fuel sector
forecasts in 2022
OPEC
EIA
Exxon
JP Morgan
McKinsey
Princeton Net Zero America
IEA
BNEF
Rystad
DNV
Oxford INET
RMI
RethinkX
Source: RMI
Fossil fuel
advocates
Slow to
change
Leaders
Pushing the
boundary
The debate on the
energy system is
changing fast.
Four years ago, thinking
was dominated by
fossil fuel incumbents.
Today the debate is
between those late to
the party (the IEA,
Princeton) and leaders
like Rystad.
As technology
improves, tomorrow’s
debate will be between
them and the
visionaries.
The group
2018 2050
Fossil fuel demand concept chart

63. RMI – Energy. Transformed. 63
1. The supply shock impact of Putin’s war will eventually
fade. When it does, the energy environment will be different.
2. Prepare for disruption and volatility.
3. Banks will face a climate Minsky moment when they all
realize at the same time that they have too much fossil
fuel exposure.
4. Reduce exposure to sectors at risk of disruption.
5. Invest in companies leading the change to a new energy
system.
6. Go short greenwashers. They are the ones swimming with
no trunks on as the tide goes out.
7. Lean on companies to change before it is too late.
8. Change is never easy, but good stock pickers will do well.
Implications for Financial Markets

64. RMI – Energy. Transformed. 64
Copyright
©
2018
by
The
Boston
Consulting
Group,
Inc.
All
rights
reserved.
Source: RMI analysis
• Govern with climate as a
top priority
• Create jobs of the future,
lead the economies of the
future, and
enjoy geopolitical
leadership
• Minimize the impacts of
climate risk in policy
• Fall behind in global
economy, lose geopolitical
stature
• Invest to decarbonize
business
• Gain market share, attract
talent, and increase
shareholder value
• Invest in fossil fuels and
infrastructure
• Lose market share, lose
talent, reduced free cash
flow, and get decapitalized
• Factor in climate risks in
investing decisions
• Decrease exposure to
stranded asset risk,
increase AUM
• Invest in fossil fuels and
infrastructure
• Increase exposure to
stranded asset risk, lose
AUM
Leaders
Laggards
Government Business Finance
Leaders in Climate Will Reap the Rewards,
While Laggards Are at Risk of Being Left Behind

65. RMI – Energy. Transformed. 65
LCOE
Levelized cost of electricity, a standard way to
compare the generation cost of electricity.
EJ
An exajoule is a standard measurement of
energy flows. For example, primary energy
consumption in Hungary is 1 EJ.
Primary energy
The energy input into a system. The flow of
coal, wind, or biomass. Global total in 2020: c.
600 EJ.
Final energy
The energy that reaches the machines, after
losses on conversion into electricity or
petrol. Global total in 2020: c. 420 EJ.
Useful energy
The energy that actually does useful work,
after losses by the machines. Global total in
2020: c. 280 EJ, although estimates vary.
Stock
The total number of units deployed. e.g., the
car fleet of 1,000 million vehicles.
Flow
Annual sales. e.g., car sales of 80 million p.a.
EROI
Energy return on energy invested — the
equation at the heart of the energy
transition. Renewables now beat fossils.
Energy intensity
The gap between GDP growth and primary
energy demand growth.
Units
Mega is 10^6; Giga is 10^9; Tera is 10^12;
Peta is 10^15; Exa is 10^18.
Joule
Roughly the amount of energy needed to lift
an apple to your mouth.
Energy carriers: The carrier of energy to the
final user (for example: electricity, coal, or
hydrogen).
Rents
Profits generated by selling fossil fuels at
more than the full cost of extraction. They are
$1 trillion to $2 trillion a year.
Learning rate
The percentage fall in the price of a
technology for each doubling in deployment
(around 25% for solar now).
Minsky moment
The moment when banks realize their fossil
fuel exposure is too high and all try to sell at
once.
Reflexivity
The process whereby financial markets
influence activity in the real world.
Positive feedback loop
The process where self-reinforcing change
happens. More begets more.
Glossary — In Simplified Terms and Tailored to the Energy Transition

66. RMI – Energy. Transformed. 66
Q&A
Ideas, comments, and critiques are much appreciated.