In the spirit of a bit of fun, and also to force us to take our 2016 expectations seriously, we review what we got right and wrong through 2015.


1. The direction of global oil prices

In May, we said that “the new norm for oil is $60″. At that time, oil had rallied from a precipitous decline in the second half of 2014, and was trading at just over $60. There were near-record long positions, as investors took a bullish outlook, expecting further rises. We were more cautious, taking into account rising production, economic headwinds and demand destruction. As it turns out, we were also too bullish, with oil prices now below $40.

2. The risks facing U.S. shale gas exploration and production (E&P) companies

Also in May, we examined the exposure of five U.S. pure-play shale E&P companies to lower oil and gas prices. This research was undertaken with the Carbon Tracker Initiative. At sustained oil prices below $50, we showed how Whiting Petroleum and Chesapeake were closer to breaching debt convenants, as agreed with creditors, compared with Continental, Concho Resources and Energen Corp. Share prices are only one measure of company health, but Whiting Petroleum and Chesapeake have indeed under-peformed, down 75% and 69% since then, compared with 23-54% falls for Continental, Concho and Energen.

3. 2015 would be a record year for renewable installations

At the start of the year, we predicted a global market for new installed solar power of 50 gigawatts, compared with 42 GW in 2014. We also predicted wind installations would reach 55 GW in 2015, up from 51 GW the previous year. Although official numbers are not yet out, it seems we were right there would be new records, but still way too conservative with solar, where the number could be as high as 57 GW. Wind is indeed coming in at around 55 GW.

4. The Paris climate change conference

At the beginning of November, we forecast that the Paris climate conference from Nov. 30-Dec 11 would be a success. We noted that finally the stars were aligned, after past flops. Promising for success were cooperation between the world’s two biggest emitters, the United States and China; achievable goals for a Paris Agreement; tail winds favouring low-carbon energy over fossil fuels; and hardening evidence of climate risks. As it turns out, the Paris Agreement achieved the maximum that could be expected, including an ambitious long-term goal to cut greenhouse gas emissions, and a legally binding process to get there.

5. El Nino

In April, we posed the question whether an El Nino was brewing which would make 2015 a record hot year, as indeed turned out. A strong El Nino developed shortly after. Since then, in October we suggested that 2016 would surpass this year as another record hot year, as the UK’s MetOffice also subsequently predicted. We have a while to wait to confirm that one.


1. British nuclear power

We did not see the British government proceeding with a new nuclear power plant. Britain recently signed a deal with the Chinese government which secured £18bn financing to build the Hinkley Point C nuclear power plant, which is due to be completed in 2025. That financing represents a capital cost of £5.6bn per MW, or about five times a similarly sized, gas-powered station.

2. YieldCo performance

We have been positive about YieldCos and their ability to lower the cost of renewables. But if you look at the poor share price performance of the major US YieldCos such as AbengoaYield and NRG Yield you would believe we were wrong. But we still believe that we are seeing the growing pains of a growing and innovative new asset class

3. The outlook for carbon capture and storage (CCS)

We had speculated – perhaps too optimistically – that the ailing coal industry and other fossil fuel firms might invest in CCS, to demonstrate their commitment to climate action, and distance themselves from the biggest polluters . However, in 2015 there was only bad news. The United States cancelled its FutureGen project, for the second time, and Britain cancelled its support for two planned, commercial-scale CCS projects, also for the second time.

4. Biomass

We have long expected that biomass will eventually suffer reputational harm, as unclear social benefits contrast with a high level of European environmental policy support. In particular, burning wood contributes both to local air pollution and carbon emissions. In 2015, regulatory support largely continued as before, however, even as wind and solar were widely cut. In particular, a European court case recently ruled in favour of a long-term power price premium for an RWE biomass power plant, which sent stock prices higher at Drax, one of the world’s biggest biomas burners.    Send article as PDF   
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