One of the greatest Christmas parties in literature is King Arthur’s fifteen-day feast at Camelot, in Sir Gawain and the Green Knight. Before the knights are allowed to eat, Arthur insists on being told a story, and in Simon Armitage’s terrific translation, he demands “the tallest of tales, yet one ringing with truth”. In the spirit of the season, here are five tall-ish energy stories from 2018 that are nevertheless entirely true.

Also, see these stories from the editors of Hart Energy:

1. U.S. oil production soared past expectations.

A year ago, the Energy Information Administration forecast that U.S. crude production would rise in 2018 by a little under 600,000 barrels a day (bbl/d), December to December. That turned out to be a colossal understatement: the actual increase was about 1.6 million barrels per day (MMbbl/d), with U.S. output estimated to be running at about 11.6 MMbbl/d as 2018 draws to a close. That is well above the previous peak, reached in 1970, and also a little ahead of Russia, the world’s second-largest producer, which reported its own record output of about 11.4 MMbbl/d for October.

As the U.S. shale oil and gas revolution strengthens, its global consequences are continuing to play out. The downward pressure it has exerted on oil prices has exacerbated the crisis in Venezuela, and sharpened the need for economic reform in other producing countries such as Saudi Arabia. It has also pushed Opec members into a closer alignment with Russia, despite their longstanding rivalry, in recognition of the common threat that they face. Most recently, the strength of US production has also been a contributing factor in the 40% slump in crude since October to 15-month lows.

International climate politics have also been profoundly influenced by the shale boom. At a briefing at the COP24 climate talks in Katowice, Poland, this month, Wells Griffith from the US administration hailed the “energy renaissance” that had made his country “the number one combined oil and gas producer in the world.” U.S. attitudes to energy policy would surely have been very different if the country were now a large and growing importer of oil and gas, as seemed likely in the mid-2000s.

2. Strains emerged in the U.S.-Saudi alliance.

The U.S. friendship with Saudi Arabia is its longest-standing alliance in the Middle East, and has survived many tests since it was forged in the 1940s. But the re-emergence of the U.S. as the world’s largest oil producer has changed the nature of the relationship, and there have been signs this year of new tensions emerging. President Donald Trump has made a point of defending the alliance: in the aftermath of the murder of Jamal Khashoggi in the Saudi consulate in Istanbul, the president repeatedly insisted on the importance of the kingdom’s oil production. The administration has seen Saudi support as critical for its strategy of reinstating sanctions on Iran. Not everyone in Washington has been so eager to remain in Saudi Arabia’s good graces, however. Senior Republican senators said there was “zero” doubt that Saudi Arabia’s crown prince, Mohammed bin Salman, was involved in the killing, and the Senate voted 56-41 in favour of withdrawing US military support from the Saudi-led coalition fighting in Yemen. The crisis sparked by Mr Khashoggi’s murder now threatens to undermine Crown Prince Mohammed’s bold plans to attract foreign investors to modernise the Saudi economy.

On the Saudi side, too, there has been a willingness to test the strength of the relationship. Despite the pleas and veiled threats from Mr Trump, intended to persuade OPEC to keep production high, Saudi Arabia played a central role in pushing for the cut agreed in Vienna earlier this month.

3. China’s coal country became a battleground for competing policy priorities.

China accounts for about half of the world’s coal consumption, so its decisions on fuel use are critically important for the global market, and for greenhouse gas emissions. Its coal demand peaked in 2013, and dropped about 4% between then and 2016, as the government pushed to cut local air pollution. That effort showed some success: the air in Beijing became the cleanest it had been in a decade. However, the downsides of restrictions on coal use have also become increasingly apparent. In the bitter cold of last winter, regulations on coal burning had to be eased, because gas supplies to northern regions proved inadequate to meet the demand for heating, and China's coal consumption rose in 2017 for the first time in four years. China is attempting to avoid a similar gas crisis this year, and it has been helped by milder weather. The position this winter has been described as “so far, so good.”

More fundamentally, it is becoming increasingly apparent that China’s ambition to improve air quality is difficult to reconcile with its need to sustain jobs and economic growth. In one of the most important pieces of the year, David Stanway and Joseph Campbell of Reuters wrote about the coal city of Jincheng, where the clean air drive had been “sending shockwaves through the local economy”. It is a political dynamic that is familiar in the U.S. and in Europe. As it plays out in China, the stakes are even higher.

Worries about the effects of cracking down too hard on coal and other heavy industries already seem to be having an effect on China’s environment policy. The latest three-year air pollution plan, published in July, looks less demanding than previous plans. It reiterates the existing targets set in 2016, which dozens of cities have already met. Air quality in the Beijing area, meanwhile, has shown signs of deteriorating again. Cities in northern China were covered by blankets of smog in November.

The problem could get worse. CoalSwarm, a non-profit that tracks investment in coal-fired power stations worldwide, has warned about the prospect of a “massive surge” of new plants in China, caused by a rush of permit awards by provincial authorities back in 2014-2016. The International Energy Agency, in its Coal 2018 report, published this week, said global coal use had grown again this year, as it did in 2017, driven by strong demand from power plants in China and India. For the future, the IEA said, “coal’s fate largely rests on the Chinese power sector”. There is a lot of talk in the US at the moment about ideas for a “Green New Deal.” It seems as though China could really do with one.

4. Emerging economies took the lead in renewable energy.

Most of the world’s investment in renewable energy since 2015 has been in emerging economies, with China in the lead. This year, as the data from 2017 was collected and analysed, it became clear just how far lower-income countries now dominate additions of renewable energy capacity worldwide. As Bloomberg NEF put it in its Climatescope report in November: “Less developed nations are now very much driving the energy transition.” In 2017, those countries added about 114 gigawatts of low-carbon electricity generation capacity, including nuclear and hydro power as well as wind and solar, almost twice the 63GW added in OECD members, according to BNEF.

It would be expected that generation capacity would rise more quickly in developing countries than in developed ones, because their economies are generally growing faster. What is particularly impressive is that emerging economies' investment in renewable generation capacity has now outstripped their investment in fossil fuel plants.

The crucial factor in this has been the plunging cost of renewable energy. The IEA’s Renewables 2018 report in October said bid prices for wind and solar power in competitive auctions worldwide were falling to $20-$50 per megawatt hour, which makes them competitive against investments in new gas or coal-fired plants in a growing number of countries.

Of course, the variability of wind and solar generation means that capacity factors can be expected to be lower than for fossil fuel plants, meaning that the smaller volume of coal and gas-fired capacity is still likely to produce more electricity than the new renewable energy facilities. Even so, as BNEF points out, the support for renewables in emerging economies “marks a remarkable turnabout from a decade ago when the world's wealthiest countries accounted for the bulk of renewable investment and deployment activity”.

5. Energy storage became the hottest new technology investment.

For many years Bill Gates has talked about his interest in the problem of energy storage. Electricity grids that are becoming increasingly reliant on variable wind and solar power need ways to manage those fluctuations, and energy storage through batteries or other technologies is expected to be increasingly important for maintaining reliable supplies. Breakthrough Energy Ventures, the $1 billion fund for new energy technologies that Gates launched in 2016, reflected his interest in the issue in June with its first two investments, which were both in energy storage companies. There was another storage company on the list of seven additional investments that Breakthrough announced in October, which also included a start-up developing nuclear fusion power and another working on “enhanced geothermal systems”.

Then in December, Breakthrough led a $26 million funding round for another company, Malta, which is developing an idea for storing energy using heat in high temperature molten salt and cold in a low temperature antifreeze liquid, to generate power using a heat engine. Bloomberg had a good explanation of the technology last year.

There are plenty of other ideas for innovative forms of storage out there, including a system that hauls concrete blocks up to the top of a tower when there is excess electricity available, and then uses their descent to generate power when it is needed. We are still waiting for one of these ideas to make the leap to commercial viability, but if it does not happen it will not be for the want of trying.

The costs of lithium ion batteries have been falling fast, and large-scale mass production, particularly in China, can be expected to deliver continued cost reductions through economies of scale and learning by doing. But even so, they seem likely to remain expensive solutions for stationary storage, for the next few years at least; cost-effective for some specific uses such as shaving demand peaks for businesses, but not as a large-scale answer to the problem of making sure power is available when it is needed. The need that Gates identified for superior storage technologies creates an enormous opportunity, and there is likely to be sustained interest in meeting that challenge.