The Motley Fool

Why Big Oil Can’t Make the Renewable Energy Transition

Today’s fossil fuel giants can see that wind and solar power will be eating their lunch tomorrow, but knowing the disruption is coming doesn’t mean they can pivot to meet it.

Travis Hoium       July 23, 2017 

Big oil companies are starting to consider what the world will look like after the reign of petroleum is over. For example, Royal Dutch Shell recently announced it will invest $1 billion per year in clean energy — a large number, but still a relatively small investment compared to its $25 billion in annual capital spending. Nonetheless, it was a public admission that clean energy is the future, not oil. Rival Total has, arguably, made the biggest investments in renewable energy, buying two-thirds of solar solutions leader SunPower, battery company Saft, and stakes in a number of solar power plant projects.

Chevron and BP have also been in and out of the renewable energy business over the past decade, though both have taken  steps back recently. ExxonMobil is really the only holdout among the hydrocarbon majors, continuing to focus solely on fossil fuels. What the rest of them are trying to do is create a path to a world beyond oil. But these old-school energy industry giants have a long road ahead to reach powerhouse status in renewable energy.

Image source: Getty Images.

Disruption you can see a mile away

Everyone sees the renewable energy revolution coming. Solar and wind are getting cheap — I mean, really cheap — and systems for storing energy with batteries, compressed air, or hydrogen are getting more affordable by the day. Shell, ExxonMobil, Chevron, and Total can see the threat coming a mile away. The question is what they can do about it.

Disrupting your own business is hard. When a company is running at full steam and generating cash, and has decades of profitable history to look back on, it’s nearly impossible to admit that disruption is coming, even if it’s staring you in the face. Microsoft could have produced a viable device to compete with the iPhone, but it was making so much money from Windows and Office that it didn’t want to reinvent its business, so it missed out on the smartphone revolution. Sears, JC Penney, Walmart, and nearly every other major retailer are losing sales to Amazon.com, despite the fact that even a decade ago, it was easy to forecast that e-commerce was going to skyrocket. One could tell story after story about steady, profitable, incumbents that were unwilling or unable to make strategic shifts to new business models, despite the fact that they were able to see the changes coming to their industries years in advance.

Oil and renewables don’t mix

The idea of a company making a firm transition from oil to wind or solar energy seems simple enough. Fellow Fool investor Jason Hall recently asked me if I thought Total would buy out the rest of SunPower soon, as part of its path to the energy business of the future. That decision would seem to make sense for Total, on the surface, but I still view it as unlikely, for now.

It’s difficult to make a wholesale shift to a new business model, and Total is a perfect example of that. Sources have told me that when it bought its majority stake in SunPower, it asked the company for a 10-year plan — something that’s standard in the fossil fuel industry, where businesses chart their investments many years in advance. But SunPower had never crafted such a plan, because if they did, it would be obsolete in a matter of months. The solar industry changes so quickly that companies must constantly adjust on the fly. According to GTM Research, in 2007, the solar industry installed 2.5 GW of generating capacity worldwide. In 2017, China alone installs about that much every two weeks! No one could have predicted that a decade ago, let alone devised a plan then that still made sense in the current environment.

It would be almost impossible for SunPower to be as nimble as it needs to be now under Total’s corporate umbrella. The better strategy for Total would be to keep its major stake, support the company financially if that’s needed, and maybe swoop in to buy the company outright in five or 10 years when the solar industry is mature and the oil business is dying.

Why big renewable buyouts aren’t on the horizon… yet

Just because oil companies don’t have the corporate structure, dexterity, or know-how to run renewable energy companies today doesn’t mean they’ll all go down in flames with the decline of oil. Once the world definitively moves past peak oil consumption and energy companies see darker days ahead, they’ll feel compelled to adjust their strategies. That’s when their acquisitions of solar manufacturers and developers will likely begin in earnest. But buying into the still-evolving industry that renewable energy is today is too risky, even for big oil’s balance sheets.

There’s a reason incumbent industries in general have a hard time adapting to upstarts that disrupt their businesses, even if they see the disruption coming. It’s hard to turn away from a profitable model and leap to a new growth opportunity, even if it’s one with a bright future like solar or energy storage. So, while it seems like the big oil companies are starting to take renewable energy seriously, a decade from now, they probably won’t be the big energy players they are today. They’re just not built to thrive in the fast-moving renewable energy industry.

Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. Travis Hoium owns shares of Royal Dutch Shell (A Shares), SunPower, and Total and a family member works for Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool owns shares of ExxonMobil. The Motley Fool recommends Chevron and Total.

EcoWatch

Bad News for Big Oil: Electric Vehicle Sales to Surpass Gas Guzzlers by 2038

Lorraine Chow    July 14, 2017

Despite the Koch brothers’ best efforts, it looks like gas guzzlers are on the way out. Sales of electric vehicles will surpass those using internal combustion engines by 2038, a new analysis has found.

Bloomberg New Energy Finance (BNEF) projects that “electric cars will outsell fossil-fuel powered vehicles within two decades as battery prices plunge, turning the global auto industry upside down and signaling economic turmoil for oil-exporting countries … [displacing] about 8 million barrels a day of oil production—more than the 7 million barrels Saudi Arabia exports today.”

“This is economics, pure and simple economics,” BNEF’s lead advanced-transportation analyst Colin McKerracher said. “Lithium-ion battery prices are going to come down sooner and faster than most other people expect.”

The report’s bold forecast was also bolstered by surging investment in lithium-ion batteries, higher manufacturing capacity at companies like Tesla Inc. and Nissan Motor Co., as well as rising demand for EVs in China and Europe.

BNEF admitted that its report is the “most bullish to date and is more aggressive than projections made by the International Energy Agency.”

Here are other notable projections for the booming category, according to BNEF:

• In just eight years, electric cars will be as cheap as gasoline vehicles, pushing the global fleet to 530 million vehicles by 2040
• Electricity consumption from EVs will grow to 1,800 terawatt-hours in 2040, or 5 percent of global power demand, from 6 terawatt-hours in 2016
• There’s around 90 gigawatt hours of EV lithium-ion battery manufacturing capacity online now, and this is set to rise to 270 gigawatt hours by 2021.
• Charging infrastructure will continue to be an issue with bottlenecks capping growth in key Chinese, U.S. and European markets emerging in the mid-2030s

The report is another sign of the shifting energy landscape. Just this month, France joined Norway, Germany and Kenya’s efforts to ban gasoline- and diesel-powered cars. Also, Volvo became the first major carmaker to phase out vehicles powered by fossil fuels. Finally, Tesla CEO Elon Musk announced that his company is building the world’s largest lithium ion battery to solve in South Australia’s energy woes.

Meanwhile, DeSmog reported that conservative oil billionaires Charles and David Koch are funding a campaign called Fueling U.S. Forward to squash the rise of electric vehicles. The group released a video called the Dirty Secrets of Electric Cars., featuring “blatant factual errors, misleading statements, and glaring omissions,” DeSmog writes.

Interestingly, the BNEF points out that the world’s “Electric Car Revolution” could be well underway except for one major factor: Donald Trump.

According to the report:

“In Europe, almost 67 percent of new cars sold will be electrified in 2040, and 58 percent of sales in the U.S. and 51 percent in China, BNEF said. Though there’s uncertainty in the U.S., where President Donald Trump could dramatically disrupt electric vehicle growth by withdrawing support for the technology in the world’s second biggest car market.”

Lorraine Chow    July 14, 2017

Despite the Koch brothers’ best efforts, it looks like gas guzzlers are on the way out. Sales of electric vehicles will surpass those using internal combustion engines by 2038, a new analysis has found.

Bloomberg New Energy Finance (BNEF) projects that “electric cars will outsell fossil-fuel powered vehicles within two decades as battery prices plunge, turning the global auto industry upside down and signaling economic turmoil for oil-exporting countries … [displacing] about 8 million barrels a day of oil production—more than the 7 million barrels Saudi Arabia exports today.”

“This is economics, pure and simple economics,” BNEF’s lead advanced-transportation analyst Colin McKerracher said. “Lithium-ion battery prices are going to come down sooner and faster than most other people expect.”

The report’s bold forecast was also bolstered by surging investment in lithium-ion batteries, higher manufacturing capacity at companies like Tesla Inc. and Nissan Motor Co., as well as rising demand for EVs in China and Europe.

BNEF admitted that its report is the “most bullish to date and is more aggressive than projections made by the International Energy Agency.”

Here are other notable projections for the booming category, according to BNEF:

• In just eight years, electric cars will be as cheap as gasoline vehicles, pushing the global fleet to 530 million vehicles by 2040
• Electricity consumption from EVs will grow to 1,800 terawatt-hours in 2040, or 5 percent of global power demand, from 6 terawatt-hours in 2016
• There’s around 90 gigawatt hours of EV lithium-ion battery manufacturing capacity online now, and this is set to rise to 270 gigawatt hours by 2021.
• Charging infrastructure will continue to be an issue with bottlenecks capping growth in key Chinese, U.S. and European markets emerging in the mid-2030s

The report is another sign of the shifting energy landscape. Just this month, France joined Norway, Germany and Kenya’s efforts to ban gasoline- and diesel-powered cars. Also, Volvo became the first major carmaker to phase out vehicles powered by fossil fuels. Finally, Tesla CEO Elon Musk announced that his company is building the world’s largest lithium ion battery to solve in South Australia’s energy woes.

Meanwhile, DeSmog reported that conservative oil billionaires Charles and David Koch are funding a campaign called Fueling U.S. Forward to squash the rise of electric vehicles. The group released a video called the Dirty Secrets of Electric Cars., featuring “blatant factual errors, misleading statements, and glaring omissions,” DeSmog writes.

Interestingly, the BNEF points out that the world’s “Electric Car Revolution” could be well underway except for one major factor: Donald Trump.

According to the report:

“In Europe, almost 67 percent of new cars sold will be electrified in 2040, and 58 percent of sales in the U.S. and 51 percent in China, BNEF said. Though there’s uncertainty in the U.S., where President Donald Trump could dramatically disrupt electric vehicle growth by withdrawing support for the technology in the world’s second biggest car market.”

China may be the planet’s biggest polluter but it’s also powering ahead of other countries on renewable energy.

As the Trump administration yanks the U.S. out of the Paris climate change agreement, claiming it will hurt the American economy, Beijing is investing hundreds of billions of dollars and creating millions of jobs in clean power.

China has built vast solar and wind farms, helping fuel the growth of major industries that sell their products around the world.

“Even in China where coal is — or was — king, the government still recognizes that the economic opportunities of the future are going to be in clean energy,” said Alvin Lin, Beijing-based climate and energy policy director with the Natural Resources Defense Council.

More than 2.5 million people work in the solar power sector alone in China, compared with 260,000 people in the U.S., according to the most recent annual report from the International Renewable Energy Agency.

While President Trump promises to put American coal miners back to work, China is moving in the opposite direction.

Coal still makes up the largest part of China’s energy consumption, but Beijing has been shutting coal mines and set out plans last year to cut roughly 1.3 million jobs in the industry. The Chinese government has also moved to restrict the construction of new coal power plants.

For the first time ever, China’s National Energy Administration in January established a mandatory target to reduce coal energy consumption. It also set a goal for clean energy to meet 20% of China’s energy needs by 2030.

Analysts expect China to easily meet that target. Greenpeace noted in a report earlier this year that the country’s clean energy consumption rose to 12% at the end of 2015. Renewable energy sources account for about 10% of total U.S. energy consumption, according to official statistics.

To help reach the 2030 goal, China is betting big on renewable energy. It pledged in January to invest 2.5 trillion yuan ($367 billion) in renewable power generation — solar, wind, hydro and nuclear — by 2020.

The investment will create about 10 million jobs in the sector, the National Energy Administration projects. China currently boasts 3.5 million jobs in clean energy, by far the most in the world, according to the International Renewable Energy Agency.

The country has already become a major manufacturer and exporter of renewable energy technology, supplying some two-thirds of the world’s solar panels.

China also has a strong grip on wind power. It produces nearly half of the world’s wind turbines — at a rate of about two every hour.

Inside the U.S. solar jobs boom

China’s hottest new project is a giant floating solar energy farm located in the eastern province of Anhui.

Covering about 100 square miles, it is the largest floating panel facility in the world. It has the capacity to produce enough energy to power 15,000 homes, according to Sungrow Power Supply, the company behind the farm.

Fittingly, the solar farm floats atop a flooded area once home to a coal mining factory.

The idea to float solar panels is fast catching on in an industry that faces one persistent problem — space.

“The government won’t allow us to just install panels wherever we want,” says Yao Shaohua, the deputy director of the project. “This lake wouldn’t be used otherwise, so it makes sense.”

Initially it is more expensive to build solar farms on water than on the land. But experts say floating solar panels can run more efficiently in the long run, because they are cooled by the water underneath.

“The whole world, including China, is recognizing that we need to fight climate change,” said Yao. “I’m pretty sure this is going to be a trend.”

China’s growing dominance in the sector has had a huge effect on the global market.

Manufacturers dramatically ramped up production of solar panels, driven by an estimated $42 billion in government subsidized loans between 2010 and 2012, according to the GW Solar Institute at George Washington University. The flood of Chinese panels was one of the main reasons why world prices crashed by 80% between 2008 and 2013.

The U.S. accused China of flooding the market and the Commerce Department started imposing steep tariffs on Chinese-made solar panels in 2012 in a bid to protect American producers.

Just last month, the U.S. informed the World Trade Organization that it may impose tariffs on imports of solar panels from other countries as well, alleging that Chinese companies have opened production facilities in third countries to get around import restrictions.

Reuters

Wind, solar do not harm power grid reliability-draft U.S. study

By Timothy Gardner, Reuters      July 19, 2017

(The July 17 story corrects paragraph 14 to show that ERCOT does not serve a small part of Nevada.)

WASHINGTON (Reuters) – The growth of renewable power, including wind and solar, has not harmed the reliability of the U.S. electricity grid, according to a draft U.S. Department of Energy study, echoing the findings of grid operators across the country.

The conclusion of the draft, dated July and viewed by Reuters, could ease fears in the renewable energy industry that the widely anticipated study would be used by President Donald Trump’s administration to form policies supporting coal plants at the expense of wind and solar.

“Numerous technical studies for most regions of the nation indicate that significantly higher levels of renewable energy can be integrated without any compromise of system reliability,” the draft says.

It added that growth of renewables could require the building of more transmission lines, advanced planning, and more flexibility to balance generation and meet demand. But it said that baseload power – coal and nuclear power – “is not as necessary as it used to be” given advances in grid technology.

Shaylyn Hynes, an Energy Department spokeswoman, said the draft was “outdated” and had not gone through “any adjudication” from career or political staff. The final report had been slated for release in early July, but is now expected within a couple of weeks, she said.

The draft can be seen at http://tmsnrt.rs/2v9PJ9l. Bloomberg first reported on it on Friday.

Energy Secretary Rick Perry had called in April for his department to examine whether regulations backing renewable energy use imposed by former president Barack Obama and other administrations “threaten to undercut the performance of the grid well into the future.”

Critics of wind and solar energy have argued that those technologies leave the U.S. power system vulnerable to shortages when the sun is blocked or the wind does not blow – meaning that coal, nuclear, and natural gas plants that do not depend on weather should remain the bulk producers.

Renewable energy is seen by many state and local government as a cost-effective way to reduce emissions linked to climate change. Nuclear energy is virtually emissions-free but poses potential safety risks and the thorny issue of disposing radioactive plant waste.

Renewables and natural gas have displaced a slew of coal and nuclear plants in recent years, due to lower prices, environmental regulations and government subsidies. The draft said this is “not yet a problem for grid reliability and resilience – but further study is needed,” to determine how much of this “baseload” power can be lost while still ensuring reliability.

GRID OPERATORS SEE NO THREAT

Officials at four grid operators, serving about 133 million customers, agreed renewables do not harm energy security or reliability.

“I don’t see them as threatening, no,” said Woody Rickerson, vice president of the Electric Reliability Council of Texas. “We can perform reliably with renewable generation; there are just things you have to do with renewables that you don’t have to do with (conventional) power generation.”

ERCOT said Texas got about 15 percent of its power from wind generation in 2016, and the region’s solar power will grow quickly.

Grid operators said that as renewables become more common they depend more on weather forecasting. Storm fronts and cloud covers sometimes require grid operators to ensure that conventional power is readily available as solar and wind power generation waxes and wanes.

Stu Bresler, senior vice president for operations at PJM Interconnection, which coordinates the movement of power in all or parts of 13 states from New Jersey to Tennessee, said renewables have not harmed reliability in his region.

Steven Greenlee, senior spokesman at the California Independent System Operator, said on one day in May wind and solar served 67 percent of CALISO’s demand.

“We don’t see the security at risk,” he said.

(Editing by Jonathan Oatis)

Mother Jones

California Just Did Something That Will Make the Rest of the Nation’s Liberals Green With Envy

Bipartisan agreement on climate change is possible.

Oliver Milman      July 18, 2017  

This story was originally published by The Guardian and appears here as part of the Climate Desk collaboration.

California legislators have voted to extend a centerpiece program to cut greenhouse gas emissions, burnishing the state’s reputation as a bulwark against Donald Trump’s demolition of climate change measures.

In a rare show of bipartisan agreement on climate change, eight Republicans joined with Democrats in California’s two legislative houses to extend the cap-and-trade emissions system a further 10 years until 2030.

The emissions-lowering scheme, the second-largest of its kind in the world, aims to help the state reach its target of cutting planet-warming gases 40% by 2030, compared to 1990 levels.

“Tonight, California stood tall and once again, boldly confronted the existential threat of our time,” said Jerry Brown, California’s governor. “Republicans and Democrats set aside their differences, came together and took courageous action. That’s what good government looks like.”

The cap-and-trade program, established in 2006 under then governor Arnold Schwarzenegger, sets a limit on emissions and requires polluters to either reduce their output or purchase permits from those who have. As the limit steadily becomes stricter, it nudges businesses to take the more financially attractive option of cutting their pollution.

California, the sixth-largest economy in the world, is in stark opposition to Trump’s administration. The president has said he will withdraw the US from the Paris climate agreement and has set about dismantling federal policies that lower emissions.

Brown has positioned himself as a countervailing force to Trump, visiting China to talk to its leaders about climate change and promising to build and launch weather-monitoring satellites should federal budget cuts endanger programs handled by Nasa and the National Oceanic and Atmospheric Administration (NOOA).

“A lot of you people are going to be alive, and you’re going to be alive in a horrible situation,” Brown told California lawmakers at a committee hearing shortly before the vote. “This isn’t for me, I’m going to be dead. This is for you, and it’s real.”

“A lot of you people are going to be alive, and you’re going to be alive in a horrible situation,” Brown told California lawmakers. “This isn’t for me, I’m going to be dead. This is for you, and it’s real.”

Many Californian Republicans remain opposed to the cap-and-trade system, warning it will pose a “crushing” blow to small businesses. But the bill ended up gaining an unusual level of Republican support, with the extension also supported by key conservative constituencies, including the California Chamber of Commerce and associations representing manufacturers and agriculture interests.

Concessions to get some Republican support, such as the limiting of separate regulations on refineries, risked alienating more liberal Democrats. Some environmental groups, including the Sierra Club, attacked the bill for allowing polluters to continue emitting greenhouse gases if they offset them with green projects, including those outside California.

But other climate activists declared themselves pleased with the outcome, pointing out that it showed that action to reduce emissions is bipartisan and popular.

“California is once again showing Washington DC and the rest of the world that fighting climate and air pollution is the right thing for our health, economy and future,” said Fred Krupp, president of the Environmental Defense Fund.

California’s pioneering attitude to climate change action was underlined by separate court action launched on Monday, aimed at holding fossil fuel companies accountable for global warming.

Marin and San Mateo counties, along with the City of Imperial Beach, filed a lawsuit in the California superior court to complain that 37 oil, gas and coal companies knew burning their products would increase carbon pollution and cause sea levels rise.

“Defendants have known for nearly 50 years that greenhouse gas pollution from their fossil fuel products has a significant impact on the Earth’s climate and sea levels,” the complaint states.

The municipalities are claiming damages from the fossil fuel firms, echoing a strategy used against the tobacco industry in the 1990s that resulted in multi-billion dollar payouts.

The companies targeted in the lawsuit include Shell, Exxon Mobile, Chevron and BP. According to the municipalities, these businesses have caused around 20% of all industrial carbon dioxide and methane pollution since the 1960s.

The Dallas Morning News

Dakota Access-style protests may happen often, panel tells pipeline companies

Written by Wire Services     July 19, 2017

BISMARCK, N.D. — Well-funded and organized protests like the one involving the disputed Dakota Access oil pipeline may become commonplace, officials said Wednesday as they urged the industry to prepare for such activity.

The struggle over the recently completed $3.8 billion pipeline was discussed at an annual oil industry conference in Bismarck, with a panel dissecting what the industry learned. Native Americans and other opponents worried about the pipeline’s effect on the environment established a massive encampment in North Dakota to protest it.

“The opponents will not rest,” said Craig Stevens, a spokesman for Grow America’s Infrastructure Now, a pro-pipeline coalition of businesses, trade associations and labor groups.

Stevens called such protests the “new normal” and the “new cost of doing business.” He said pipelines will be targeted by those wanting to stop the use of fossil fuels, by attempting to “kill the heart by cutting the veins.” Stevens said the oil industry must battle what he called misinformation about pipeline projects while touting benefits, such as jobs.

“It is important for us to engage the opposition … and provide context to the overall debate,” Stevens said.

The Dakota Access pipeline began moving North Dakota oil to Illinois on June 1. But a judge has ordered the Army Corps of Engineers to do more study on its impact on the Standing Rock Sioux tribe, which believes the pipeline threatens sacred sites and the Missouri River that provides drinking water for millions of people. Texas-based developer Energy Transfer Partners maintains it’s safe.

Troy Eid, a former U.S. attorney in Colorado who specializes in Native American law, said tribal consultation is key in building such projects and something the industry must take “much more seriously.”

Based on information supplied by ETP in court documents, delays have cost it more than a half-billion dollars.

Companies can save money in the long run by doing more work with tribes “on the front end,” he said.

One-fifth of all oil production comes from in and around American Indian reservations, Eid said.

“Tribes are going to be in this game,” he said.

By James MacPherson / Associated Press

The Nation

VIDEO: People in Denmark Are a Lot Happier Than People in the United States. Here’s Why.

When governments provide benefits and services that allow its citizens to thrive, everyone wins.

By The Nation Twitter    July 17, 2017

Text by Joshua Holland. Graphics and animation by Rob Pybus. This work was supported by the Economic Hardship Reporting Project and its Puffin Story Innovation Fund.

Last week, in Denmark, Malthe and Lærke Knudson had a baby girl they named Emma. That same day, the Robinsons—Dale and Beth—had a little baby in the United States. They called her Rachel.

Right now, they’re just two little babies keeping their parents awake at night. But Emma and Rachel were born in countries that have very different priorities, and that’s going to lead to pretty different futures.

It all boils down to this: Though Danes pay a lot more than Americans in taxes and government fees, they get a whole lot more back in social services.

As a result, Americans end up spending twice as much out-of-pocket for those social goods and services. Let’s see how that plays out over their two lives.

Early Childhood Education

In six months, Emma will probably enroll in preschool. By law, every 6-month-old Danish baby is guaranteed high-quality preschool, and parents can’t be charged more than a quarter of the cost of those services. Parents who can’t afford it? They don’t have to pay.

In the United States, kids from low-income families are often eligible for full-time Head Start programs. Even then, the program only has enough funding for a half-million slots nationwide. But the Robinsons make too much to qualify, so they’ll either have to park little Rachel with Dale’s mom, or one of them will have to get a second job to help cover the cost of daycare. That little luxury could set the Robinsons back as much as $22,000 a year.

Danes receive a child benefit which starts with $225 a month at birth, and goes to $140 a month from age 7 to 17. That’s not a benefit just for poor people, everyone gets it!

Child Benefit

It costs a lot to raise kids these days no matter where you live, but the Knudsons will enjoy a child benefit which starts at $225 a month. When Emma hits age seven, they’ll get $140 a month until she’s 17. That’s not a benefit just for poor people; everyone gets it!

Rachel, on the other hand, will have to start learning some cool tricks ASAP in order to get into a decent elementary school and prepare herself for a high school that will help her get into a good college.

Public Schools

Some American schools are world class, but others, often serving students from low-income families, can rank down there with those in developing countries.

That means the Robinsons may soon be shopping for a house in another school district—a notion that would never even occur to the Knudsons, because all of the public schools in Denmark are really good.

Free College

Emma and Rachel are both good students, and they’ll both go to college when they get older. In Denmark, almost every college student attends public colleges and universities, which don’t charge tuition.

Rachel will navigate a very different educational system. She’ll probably end up with a good deal of debt—in the US, 71 percent of the class of 2015 graduated with student-loan debt averaging around $35,000.

Many Danes get about seven weeks of paid vacation every year.

Vacation

Fresh out of school, the young women enter the workforce. And again, they’ll have very different experiences.

If Rachel is lucky, she’ll get two weeks a year of paid vacation, but maybe not—the US is the only industrialized nation that does not require any amount of paid vacation. Emma, like most full-time workers in Denmark, is guaranteed five weeks of paid vacation time a year.

That doesn’t include the nine public holidays, which most employees get. And many Danes enjoy a sixth week of paid vacation during the holidays. And that’s how you relax like a Viking!

Leisure Time

Danes and Americans have similar incomes, but Americans work a whopping 24 percent more hours per year. That means that Danes get to spend about an hour and a half more each day on leisure activities than Americans.

Unemployment Benefits

When Rachel loses her job she’ll qualify for unemployment benefits that cover about half of her income, usually up to half a year.

Emma will face a similar situation—hey, it happens to the best of us—but she’ll get up to 90 percent of what she was making, and she can collect that for up to two years and sometimes more!

Employment

Now, some people say those generous benefits create a culture of dependency and discourage people from looking for a job, but 73 percent of working-age Danes have a paid job, compared with 60 percent of Americans.

Health Care

And Emma will always have access to an excellent public health-care system. In Denmark, everyone’s covered. Americans, on the other hand, spend two and a half times as much per person on health care as the Danes, but around one in eight are still uninsured.

With our lack of paid parental leave, the US has a gender pay gap around three times as large as Denmark’s.

Parental Leave and Gender Pay Disparity

Some day, Emma and Rachel will meet the right partner and have babies themselves. Emma won’t pay anything for delivering her baby, but Rachel will pay around $5,000 out-of-pocket for a normal delivery.

Rachel also lives in the only advanced economy that doesn’t mandate paid family leave. She can take some unpaid time, but for most women, there’s no guarantee that her job will be waiting for her.

One in four American women quit or are laid off when they have a baby, so they lose seniority and end up with an uneven work history. According to one study, each child lowers an American woman’s earnings by 6-8 percent.

Emma and her partner, on the other hand, will be able to divide a full year of paid parental leave between them. Many Danes work under union contracts that give them up to 100 percent of their salaries during that time, but if they don’t, the government will give them $630 per week while they’re on leave.

This is one reason why the gender pay gap is around three times bigger in the United States than it is in Denmark.

Retirement

Emma and Rachel will watch their kids grow up, and then they’ll look to enjoy their golden years.

According to the World Happiness Report, Denmark is the 2nd happiest country in the world. The US is 15th.

As an average American, Rachel will work two years longer than Emma. Emma’s pension will cover two-thirds of her pre-retirement income, while Rachel’s Social Security benefits will cover less than half of what she had earned.

The Result?

Emma will have lived her life under the crushing burden of democratic socialism. That combination of state-funded education, health care, parental leave, and plenty of other benefits has made the citizens of Denmark the second happiest in the world. And Americans? Number 15.

Watch the full video here.