In today’s Money Morning…at the time, there wasn’t much interest in cars…in the end, we know Winton was proven right…COP26 — the UN climate talks — have kicked off this week…and more…
‘Winton, I am disappointed in you.’
Winton was Alexander Winton, a successful bicycle maker who had become obsessed with the idea of a self-propelled vehicle, one that a rider didn’t need ‘to push and keep pushing’.
The one disappointed was his banker.
‘What’s the matter with you?’ Winton asked.
‘There’s nothing the matter with me. It’s you! You’re crazy if you think this fool contraption you’ve been wasting your time on will ever displace the horse.’
This was the early 1890s and the ‘contraception’ was an automobile Winton had been building in his cellar.
At the time, there wasn’t much interest in cars. People thought having a vehicle without a horse pulling it was a crazy idea.
Horses were the superior ‘machine’. They moved people and goods around, they pulled carriages, street trams, omnibuses, and ploughed fields. In short, they were everywhere. Just to give you an idea, in 1890, the average New Yorker took 297 horsecar rides a year, triple the 100 cabs they hailed on average before COVID hit.
Horses were the more efficient choice too.
People weren’t convinced, though…
As Winton wrote in an article some decades later, in that time ‘to advocate replacing the horse, which had served man through centuries, marked one as an imbecile.’
So when his banker confronted him, Winton asked him to read a newspaper interview with inventor Thomas Edison. Here is an extract (emphasis added):
‘It is only a question of a short time when the carriages and trucks of every large city will be run by motors. The expense of keeping and feeding horses in a great city like New York is very heavy, and all this will be done away with. You must remember that every invention of this kind which is made adds to the general wealth by introducing a new system of greater economy of force.’
But the banker dismissed it saying, ‘Another inventor talking.’
In the end, we know Winton was proven right.
While it wasn’t cheap to feed and keep large amounts of horses in big cities like New York, what really put the nail in the coffin for horsecars was pollution.
It was a serious problem.
According to an estimate, in 1908 New York, its 120,000 horse population dumped 2.5 million pounds of manure and 60,000 gallons of wee every day on its streets. It attracted flies and vermin along with diseases.
People were really concerned about the health effects, and what the future would look like if things kept going the way they had.
One writer from The Times in London even predicted that all things equal, in 50 years every street in London would be covered under nine feet of manure.
Of course, while we humans tend to think of the future as linear, it rarely turns out that way.
Technology advancements and the assembly line made the automobile accessible, which ended up replacing horsecars, even though we were trading one form of pollution for a less visible one.
They say that history doesn’t repeat itself, but it often rhymes.
There’s certainly concern over pollution today too.
And in Glasgow, COP26 — the UN climate talks — have kicked off this week.
COP26, which was scheduled to happen last year until COVID derailed that plan, is all about putting into action the 2015 Paris Agreement.
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Countries have been racing to net zero and raising pledges in the lead up to it, and this includes Australia, who recently made the commitment to reach net zero by 2050. But COP26 is also looking for strong commitments by 2030.
While the world is concerned about climate and pollution, we also have a solution. One that has public acceptance and is cheaper than our current one.
Solar and wind are now cheaper than gas or coal in many parts of the world according to Bloomberg NEF. Costs really have come down. In fact, the International Energy Agency recently crowned solar as the cheapest electricity in history.
Renewables are a disruptive technology that make economic sense — they’re clean, abundant, and cheap, and can also be rolled out anywhere.
This all translates into more pressure for Australia and its exports.
Australia is the world’s largest exporter of coal and gas, making it one of the biggest contributors to climate change through exported emissions, according to Bloomberg NEF. Coal and gas make up 25% of Australia’s export income at $120 billion a year.
Markets for these exports will be shrinking, with our trading partners committing to net zero by either 2050 or 2060.
But Australia also has quite a chance to become a leader in renewables.
Australia is rich in sun, land, and critical materials needed for the energy transition like lithium and cobalt.
Rooftop solar has been quite the success story here. In 2020, even through the pandemic, Australia hit another record in rooftop installations of 3GW, growing its solar capacity by 28%.
And then, of course, there’s hydrogen.
Goldman Sachs forecasts that by 2050 green hydrogen could develop into a US$10 trillion market and supply up to a quarter of the world’s energy needs.
Hydrogen is one of the main technologies Australia is focusing on to reduce emissions. And the investment isn’t coming just from the government sector but also the private sector. Companies like Fortescue have been very vocal about green hydrogen, for example.
As renewables receive more investment, these should become even more attractive to market forces.
While we are still very early in the game, the clean energy transition is a long-term megatrend. Are you going to miss it?
For Money Morning
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