The Weekly Distillation No.53
Natural Gas; Alcohol Free Spirits; Carbon Capture Storage; Fit Drinking; Exponential Age; Holiday
Photo by KWON JUNHO on Unsplash
Welcome to The Weekly Distillation. This is a newsletter that seeks to distill the noise and help you be informed, provoked to think, and inspired to create as you lead in life and in your organisation. If you like it - sign up to receive it weekly and please share.
People once said……
“Vladimir Putin is leading a dying country. Vladimir Putin's regime exports three things: petroleum products - coal, natural gas, and hydrocarbon energy in the form of petroleum. Number two, it exports arms, and, number three, it exports people.” - Oliver North
“There is more refreshment and stimulation in a nap, even of the briefest, than in all the alcohol ever distilled.” - Ovid
“Hope is patience with the lamp lit.” - Tertullian
“Fragility is the quality of things that are vulnerable to volatility.” - Nassim Nicholas Taleb
“Today is reality. Yesterday is history.” - Prince Andrew
Skim it in a minute
Fitter people drink more alcohol. Even that statement sounds wrong. Apparently it’s true. This article gets into why and it’s worth a read before you go for a run and then feel you can drink a whole bottle of wine. Because you know that’s not a good idea, right? (As an aside, I listened to Pocket read this article whilst I was washing dishes, a simple hack to get through a high volume of articles that are not podcasts - it has a neat feature where it just rolls into the next article saved in Pocket).
Cop26 is approaching and I have to say I feel considerably underwhelmed. I can’t explain exactly why but I feel quite cycnical about 190+ countries coming together (or not, in the case of many lower income, Covid-infested or travel-challenged countries) with the aim of agreeing anything whatsoever. The maths say that there are only a few countries that really matter for carbon reductions - China, India, Russia, USA and Japan account for 49% of the world’s emissions. There is only 1 European country (ex Russia) in the top 15 and that is Germany at 2%. The UK is a meagre 1%. So it kind of doesn’t really matter what happens in the UK - the battle on emissions will be settled elsewhere. When you look at those 5, it’s hard to see too many of them (for political or economic reasons) volunteering to slash energy use and emissions to a level they’d need to. Instead, new technological solutions seem more likely in the long-run (and China is rolling out renewables on mass scale). The Carbon Capture technology that launched this year in Iceland is a good example of interesting technology that could make a massive difference if proven, cost-efficient and in place at scale.
I came across Feragaia this weekend at a farm shop and got talking to one of the co-founders. A Scottish alcohol-free distilled spirit, this is a 2 year-old business operating in a very high-growth category. You might say what’s the point of a non-alcoholic spirit and I’d say what’s the point of a hard seltzer (alcohol and fizzy water) or ready to drink cocktails (RTDs). The Millennial drinker seems to want a broader range, less sugar, organic, less calories, drink, but still to have the experience and narrative and provenance of some of the non-alcoholic spirits. The non-drinker’s premium experience basically. Looking forward to savouring this one.
The Exponential Age is a good read. We all came to terms with exponential curves over the last 2 years but the author of the article (which relates to a new book) argues that we are in an exponential rate of change and only organisations that get this will win. Largely about processing power, biology, AI and data, the life-span of projects and businesses is shortening and what works as a business model today is unlikely to work in the near future.
A deep dive into the energy crisis
There is an energy crisis in the UK. On one-hand it’s not surprising - with Covid lots of production facilities slowed or stopped producing, factories ran less shifts and transport demand was less. As economies re-open, factory demand has sky-rocketed and the production assets are struggling to catch up. Like all re-stocking crises, this one will also pass - it’s temporary. It is also slightly amazing that Government didn’t see this coming.
On the other hand, we’re an island we rely on imports. When an interconnector to France goes down, that accounts for 1GW of power, there is an issue that could not have been predicted. Russia is apparently not ramping up production assets and therefore supplies are tight all around Europe.
The media talk about how the lack of gas leads to fertiliser plants closing - which leads to less Co2, which leads to less supplies to stun animals before we kill them - which means less meat in your shops. Interconnector fire = less sausages. Who says the media dumbs things down?
But is there actually an energy crisis?
In 2017 there was 6.9 trillion cubic feet of known gas reserves in the world (equivalent to 1.1 billion barrels of oil). At that point the average person in the world was consuming 48 cubic feet of gas each day, or 132 million cubic feet of gas for the world each year. That gives us 52 years of gas supply - and if demand shrinks (likely) and we find more reserves (likely) then that length will increase. So there isn’t really a shortage of gas.
The issue is where it is. Of the 6.9 trillion cubic feet of gas, 24% is in Russia, 17% in Iran, 12% in Qatar, 4% in Saudi Arabia, 3% in Venezuela, 3% in Nigeria and 2% in China. That 65% of supplies doesn’t make a BFF list for the US or UK. And when Russia is the marginal supplier to Europe, you can see the problem - and the need for alternative pipelines. Russia already supplies 40% of Europe’s gas - and with Nord Stream 2, it seems this figure will likely increase.
This chart helps you see where the gas goes - but also how critical Norway is. As an aside, have a watch of Occupied on Netflix where Russia do a Crimea on Norway and invade it by the back door.
Experts think we are heading for a grim winter - with suggestions of gas bills spiking 20%. Perhaps the wind will pick up, we’ll find a way of storing gas that we haven’t yet thought of, the interconnector won’t take a month to repair and Putin will tell Gazprom to release cheap gas to Europe. Possible but pretty unlikely. Volatility and high prices are here to stay in the medium term. For anyone running a factory or a distillery, this is a nightmare scenario for planning.
In the long run, weaning ourselves off natural gas, developing appropriate storage systems including pumped storage hydro schemes, and expanding a renewables and nuclear power base is the way to go - but storage is key in all of that. Not a quick fix.
I went to the beach this weekend. There’s something about staying away, enjoying family time, breathing sea air and walking on sand that is restorative. I took a couple of books - “Home & Away”by Karl Ove Knausgaard and Fredrik Ekelund which is a series of letters between two writers about the 2014 World Cup in Brazil and “A House Somewhere” which is a series of short travel writing pieces. Three days of change that felt like a three week holiday.