Energy Transition Advocates Get A Reality Check

Yves here. I’m preserving the original OilPrice headline since it invokes one of the themes of a new pro-fossil-fuels messaging campaign, that migrating to cleaner energy sources is contrary to energy security. It’s not hard to see that message hitting home with a lot of voters, particularly ones that live in suburbs or other area with poor public transportation, or in parts of the world where there’s not enough sun for rooftop solar to be anything more than a secondary power source.

One reason the oil, specifically Shell messaging will strike home at least in Europe is the respite from super high energy prices came largely from government subsidies. Those will be reduced or even gone next winter. Bearing the full higher energy cost will make many consumers want relief, climate change impact be damned. Of course, the obvious expedient of rolling back sanctions on Russia is off the table.

But another, more broadly applicable reason is the lack of adequate planning for changing the mix of energy sources. Too many things are done in an uncoordinated manner at a low level, too often the result of the lobbying of various green energy interest, as opposed to a look at the merits. In addition, any adequate program would have a point of view on what sort of living, schooling, and community arrangements we should be moving towards. But the US seems not to tolerate planning controls much more stringent than zoning. Too many Green New Deal types treat important issues like grid adequacy and meeting base load needs as problems that will solve themselves. The “too much vision, too little technical plans” orientation of a lot of energy transition advocates is enough to make ordinary citizens worry about where this is all going, which then enables Big Oil to play on security fears.

By Irina Slav, a writer for with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

  • The choice between energy security and decarbonization is not one that tends to attract a lot of attention.
  • Following the energy crisis in Europe last year, world leaders are more aware of energy security.
  • The UN Intergovernmental Panel on Climate Change is calling for an acceleration of the decarbonization push.

This week, the Intergovernmental Panel on Climate Change released a new report. Unsurprisingly alarming, the report aimed to turn up the heat on governments, the business world, and every one of us to do more about the energy transition. Decarbonization, the report said, had to move faster and more dramatically. Yet that wasn’t the only document that made the headlines this week. Shell also released a report in which it detailed two different scenarios for the future to 2050. In those scenarios, the supermajor’s analysts pitted energy security against the energy transition – something the IPCC reports have never done.

The choice between energy security and decarbonization is not one that tends to attract a lot of attention. It is a sensitive topic because it exposes the shortcomings of low-carbon energy. Yet, as Europe found out last year, it may be wise to discuss this topic before we splash $110 trillion on the energy transition.

In one of its scenarios, dubbed Archipelagos, Shell paints a familiar picture of the world of the future, at least politically. With a focus on energy security rather than decarbonization, the Archipelagos scenario describes a world similar to 19th-century Europe, where spheres of interest shift and nations ally with a view to energy security and resilience.

In that scenario, emission reductions and the Paris Agreement take a back seat, but work continues on deploying low-carbon energy technology. It simply progresses at a much slower pace.

The IPCC would probably be quick to point out that this scenario is effectively a doomsday scenario because nothing should take priority over emission reduction and the race to net zero. However, it is much easier to make computer models of future global temperatures and sound the alarm about them than find the money and the raw materials necessary to effect the transition at the pace that the IPCC wants it.

The raw materials problem of the transition has been garnering more and more attention from the media and, with it, from various stakeholders. The United States came up with the idea of friend-shoring to source these raw materials because it has no mine capacity to meet all of its projected demand from local supply. The EU plans to set up a Critical Raw Material Club, which effectively amounts to a buyers’ cartel, but this time for metals and minerals.

The chances of success of either of these approaches are yet to become clear, but in the meantime, another thing is becoming clear: the transition bill will be even bigger than previously expected.

The sum total of transition investments has always been in the trillion-dollar territory, but the latest estimate from a climate think tank pegs the annual spend necessary to hit net zero by 2050 at $3.5 trillion. That’s a more than threefold increase on last year’s record investment in wind, solar, and other decarbonization efforts, which for the first time topped $1 trillion. Unfortunately, that record investment—some of its actual spent, the rest in commitments—brought us nowhere near either net zero or energy security.

In Shell’s second scenario, however, these investments will work their miracle, with the indispensable help of everyone deciding to work for the common goal of cutting emissions and achieving what the company referred to long-term energy security.

In this scenario, governments, citizens, and businesses team up to bring those emissions down and deploy as much low-carbon energy capacity as possible, notably driven by energy security concerns. Energy security has indeed been one of the strongest arguments in favor of wind and solar—the energy produced locally is better than imported energy.

That leaves the reliability and affordability issue, which decision-makers appear determined to tackle with excess capacity—for reliability—and with massive investments and subsidies—to solve the affordability problem. Because much as climate think tanks and activists like to repeat that wind and solar are the cheapest form of energy available, the windand solar industries themselves appear to disagree.

“We are walking when we should be sprinting,” the chairman of the Intergovernmental Panel on Climate Change, Hoesung Lee, said at the release of the body’s latest report.

There are “no big fundamental barriers to the energy transition,” said the deputy director of that climate think tank that produced the report estimating the cost of said transition.

Based on these statements and the documents behind them, the transition seems like a no-brainer, however you look at it. Except if you look at it from an energy security perspective. Or a financial one. Because if there were no big fundamental barriers to decarbonization, such as reliability issues or affordability challenges, the transition would be happening everywhere, organically, without the need for such strong government support. This is what happens with successful, beneficial technology.

Which of the two scenarios that Shell has developed for the future remains to be seen. For now, the Archipelago scenario seems more realistic, not least because it does not rely on as many assumptions as the Sky 2050 scenario, such as a global ban on ICE cars by 2040.

So do all the scenarios of transition advocates. They are all based on a series of assumptions, some of them dangerously far-fetched, such as the assumption that there will be enough metals for EVs to take over roads. And assumptions are risky allies. Although sometimes grounded in reality, most of the transition assumptions appear to be grounded in wishes rather than facts. And wishes do not make reality or bring energy security into spontaneous existence.

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  1. cnchal

    Running on sunshine and wind, coming to a freeway near you is a near five ton 1000 HP electric Hummer. Right behind is a fleet of 600 HP tire shredding shitboxes.

    Happy motoring is here.

  2. Paris

    The green pie-in-the-sky dream was killed by their fellow neocons and their war against Russia. Nobody, and I repeat nobody, wants to pay that bill. In the end of the day people want cheap energy, a hot shower and warm food.

    1. NoFreeWill

      Capitalism doesn’t even provide all three of those things to many people… and it demands endless growth against a finite resource. As EROEI is dropping dramatically and even getting near the 7:1 ratio required to run a complex civilization level in some cases, oil will have to be replaced eventually anyways. The current system will dig it all up and doom us all.

  3. mrsyk

    Strategies to massively decrease the use of energy doesn’t seem to be on this bingo card. Instead, all the spaces are dedicated to waving the magic wand one way or another. I gave up believing in magic some time ago.

  4. Some Guy

    I guess two things can be true at the same time, 1) fossil fuel companies will throw whatever they can at the wall to slow down an energy transition and 2) it is likely not possible to make a transition away from fossil fuels happen without serious disruption to our lives and economy – including that in any war, the side using the most fossil fuels probably wins.

    What I find strange about discussion of our energy crisis is that people still seem to think of it as something that will affect us in the future. Meanwhile, we are struggling more and more with every passing year, and have been for decades, with the bind of being in a civilization whose complexity level exceeds the available energy to support that complexity.

    This manifests itself in any number of ways, most fundamentally in first flatlining and now falling life expectancy, in a collapse of people willing and/or able to support having children, in ‘deaths of despair’, in increasing homelessness, in secession movements, in political polarization, in ballooning costs for infrastructure projects, in an inability to build enough housing where the population is growing and so on.

    We point figures and say our ongoing decline happens in one country because they elected a right wing government, in another country because they elected a populist, in another country because they have a left wing government, in one country because they modified their trade arrangements, in another country because they didn’t let their banks fail, in one country because they aren’t building enough houses, and in another country because men and women aren’t getting along, in one country because all the money goes to wars and military contractors and in another country because the wealthy are hoarding all the money, and in another country because of drug cartels, and it goes on, but we don’t stop to wonder how the OECD countries are all facing some version of the same symptoms for supposedly so many different reasons.

    The big energy question is if renewable options can ever get to a point where they provide enough excess energy to at least sustain our current lifestyle – if we can stop the bleeding – as it were. They’ve made a lot of progress and are continuing to do so, but people in the pro-renewables camp do seem to underestimate the sheer magnitude of this challenge, at the same time that those in the opposite camp will exaggerate how impossible it is and downplay the need for the change.

    And both camps seem to miss how we need to simplify our societies in order to bridge this gap, but instead we keep trying to add more complexity to solve our problems. To take just one example, after the 2008 downturn, banks are spending billions on compliance with complex IFRS9 accounting changes designed on the insane premise that banks can rely on economists to see the next downturn coming and prepare their allowances for losses accordingly. Meanwhile those billions are not available to solve real problems like the need for spending on the energy transition.

    1. NoFreeWill

      Your point about energy exploiters advantage in war is unfortunately the truth, in nature those animals that successfully turn the most available energy into useful work win, based on the Maximum Power Principle (or Lotka’s principle, which isn’t quite confirmed to be a law). This principle ensures that organizations like the US military can hold the globe down for the fossil fuel companies, preventing a meaningful transition.

      “How much will climate change cost by 2050?

      Climate change could cost the global economy as much as $23 trillion by 2050. The U.S. federal government alone could spend between $25 billion and $128 billion each year in such areas as coastal disaster relief, flood insurance and crop insurance”

      All these points about cost and energy “security” ignore that the climate crisis is projected to cost hundreds of trillions (excluding the infinite value of human life) or more before 2100. What’s more expensive, fixing your leaky roof now or waiting for the rains to come?

      We could cut the US military budget in half (or since we spend as much as the next 9 countries combined, in 6) and spend it on the transition, with some left over for free healthcare university and more.

      Unfortunately an ecosocialist revolution with a healthy component of degrowth is required to accomplish any of the major changes required… but your degrowth military vs their capitalist military is a frightening option (given the US/UK/more all supported the Whites in the Russian Civil War and other examples)

      1. c_heale

        The cost is irrelevant. If global warming is anywhere near as bad as it’s predicted to be, we’re talking about our extinction.

    2. jams O'Donnell

      It will need quite a lot of simplification – see:

      “it would take four Earths – or to be precise, 3.9 Earths – to sustain a population of seven billion at American levels of consumption.
      However, the US does not consume the most on this measure. It is in fact ranked fifth among countries with a population of one million or more. Kuwait comes top with 8.9 global hectares (5.1 Earths), followed by Australia (4.8 Earths), the United Arab Emirates (4.7 Earths) and Qatar (4.0 Earths). The others in the top 10 are Canada, Sweden, Bahrain, Trinidad and Tobago, and Singapore. The UK is 32nd on the list (2.4 Earths).”

      If you add all the ‘excess Earth’s’ that are currently extant then reduce them enough to fit into one, along with all the other populations on the globe, then we are going to have to be very smart indeed not to end up back in the 14th century. But the alternative is to pass the baton on to the ants, or possibly crows.

    3. Odysseus

      The big energy question is if renewable options can ever get to a point where they provide enough excess energy to at least sustain our current lifestyle

      That answer is obviously yes, if overbuilding is allowed. But the Fossil Fools strongly oppose overbuilding, and mock it every chance they get.

  5. KD

    But the US seems not to tolerate planning controls much more stringent than zoning.

    Unclear what is meant by “planning controls”–as it stands zoning is local and the permitting process is largely driven by NIMBY, which means nothing is possible because any infrastructure by definition has to be in someone’s backyard (the pores tend to be in circles or cluster, so its hard to roll something out in a straight line without running into privilege). One of the problems is not “Planning Controls” but how you are going to get the necessary infrastructure built instead of spending 10-15 years in court over the adequacy of the environmental impact studies.

    1. KD

      Why renewables cannot save us:

      The problem with renewables is the political process and permitting process, leaving aside global lithium production, toxic waste from obsolescent solar panels and wind turbines, inefficient land utilization relative to power generation, intermittent production versus peak demand and lack of sufficient electrical infrastructure to carry increased loads. This political and permitting problem is true for nuclear as well, although projects can have smaller site impacts. Oil and gas already has infrastructure in place, so the NIMBYs lock us into fossil fuels.

  6. Kouros

    Beside the energy transition costs, the built environment has to be changed, to a more dense layout that allows easier commutes for work leisure and shopping, on public means, biking, and walking.

    I am also looking for the natural drop in population in the northern hemisphere due to low births. However, a lower population will not be happy of possible rises in sea levels, which can eat a lot of valuable productive and habitable land.

      1. Kouros

        Sorry mate, but the city I grew up in, a kind of Mitteleuropa architecture and what not, has been built around a fortress attested in 1200s.

        And for all intents and purposes, one can walk to anywhere needed. While public transportation and cheap taxis offer great service.

        Anglo-Saxon North America on the other hand…

    1. digi_owl

      Funny thing is that such an environment was the default until the intro of the automobile.

      1. Kouros

        Yes indeed. I am walking my dog in the my new neighborhood, which is a bit further away from the “City” than my previous home, and I see the sheer numbers of cars parked in front of all these single detached homes…

        And then is the heating and cooling of all these homes…

        1. Piotr Berman

          Walking a dog gives you credit. I spent a few days next to a place where people can let their dogs run and play, and at least half used SUVs or vans to come there. Most probably not from far away, but …

    2. Piotr Berman

      Somewhat flippantly, a reduced population could survive on reduced land. E.g. flooded city areas can be (a) replaced by rebuilding partially abandoned communities in Rust Belt etc. (b) in many places, sea walls may be practical, i.e. landfills in Boston area (Back Bay etc.) Agriculture in flooded area can be replaced elsewhere, e.g. gasohol production can be eliminated, surprisingly big percentage of land and fertilizer use in USA.

      However, some countries would be disproportionally affected, the Netherlands, perhaps Bangladesh, surely Maldives and many nations in Pacific.

      In general, drop in fertility rates affects more and more countries, which may be humanity survival mechanism, apparently such mechanism (density –> lower reproduction) exists in a number of mammalian species. Which rises interesting question:

      Industrialization and urbanization induce lower fertility rates (perhaps changed job market reduces the value of uneducated children? surely different mechanisms in Kenia and Sweden), but increase energy consumption per capita. So non-carbon electricity has to be part of the solution, while urbanization and urbanization is the only alternative to old fashioned Malthusian methods, war, hunger and disease (more often than not, combined).

  7. upstater

    >…if there were no big fundamental barriers to decarbonization, such as reliability issues or affordability challenges, the transition would be happening everywhere, organically, without the need for such strong government support. This is what happens with successful, beneficial technology.

    Doesn’t the author ignore the explicit or implicit subsides in place for fossil fuels? When we see these tens or hundreds of trillions investments required for net zero, it hand waves away the ginormous investments in fossil fuel infrastructure and government investments to make burning fossil fuels so attractive and feasible.

    There is the huge issue of stranded investments of fossil infrastructure and reserves. So in addition to investments in renewables, there is a concurrent write off of stranded investments. Who is gonna pay? What are the implications for finance capital? After all, we’re talking about property rights and perhaps mandatory abandonments amount to a taking?

    Everything energy needs to be a public utility, managed for the public benefit. But that’s socialism.

    1. bdy

      In agreement, piling on. The author’s assertion is false.

      What happens with successful beneficial technology is that existing market players rally against it, buy the patents up to suppress it, operate at reduced profits or even loss for extended periods to undersell it, and engage their own levers within government to regulate against its implementation.

      Successful beneficial technology, facing monopolies and cartels enabled by poorly regulated state capitalism, can only ever be brought to bear with strong government support.

  8. Alan F

    Without disputing the financial and political aspects of this sort of PR campaign, there are difficult underlying issues with a shift to “green” energy. Rather than attempting to summarize them, I am placing a link below to one recent article, among many, by a retired actuary and former regular of The Oil Drum (for those who remember it) discussing underlying issues from a calm, rational and deep point of view.

    I am not affiliated, but a regular reader. It is an apolitical blog and avoids most fearmongering.

  9. Smelly Unemployed Person

    One thing about decarbonisation that I do not hear discussed alot, is energy reduction. Increasing the energy efficiency of our homes is one thing I would dearly love, but I rent and cannot be bothered slaving away to buy an overpriced neccesity.

    One thing I never hear discussed is the absolutley absimal efficiency of our transportation methods. Around the small city/large town I live in, a good 60% and more of the traffic I see on the road, are cars with one person in them. It is taking at least 8 times or more energy to move the vehicle than the person. To me this is a criminal waste. I live happily without a car, for me the ROI in time money and stress is not worth it. Public transport, shanks pony and a bicycle work very well. On the very rare occassion I do need use of a car, a friend is more than willing to help.

    1. Tim

      A complaint of mine is inefficient traffic lights, that are not properly programmed to observe and minimize the loss of kinetic energy traveling through the intersection.

      How many sensor based lights will keep a car stopped at an otherwise empty intersection until it sees another car coming from the other direction and stop them to finally let the other car go? I also see lights that will stop a large group of cars arriving from an adjacent light at full speed to let a single car turn left, because it is “their turn”. The efficiency of a car driving a steady state at surface street speeds is probably twice the efficiency of a car that has to stop, wait and accelerate at a light every 1/4 mile.

      We hear about IBM and others working on a smart grid of traffic lights for patterns, but I’d settle for smart lights!.

  10. Adam1

    Sadly for those at the top the requires solution in variably means they have to give up lots (i.e private jets). Because they can’t, it means plan B is to just ride the wave over the cliff and make sure they are on top when we hit the edge! Which means from now until the cliff their priority is to stay on the top and screw everyone else!

  11. John

    Wind and solar alone cannot fulfill the perceived energy needs of present economies. Will the future demand less? I presume not. It has always seemed to me that if you wish to reduce or eliminate fossil fuels, that now and into the medium term future, that nuclear is the only way to fill the gap. The price is to exchange a degree of danger from a meltdown and waste disposal for the certainty of an ever increasing load of carbon in the atmosphere which will drive climate instability.

    I say medium term future in the assumption that a non-nuclear solution can be found.

    1. NoFreeWill

      This is somewhat correct, but that decision should have been made 20-30 years ago. Capitalism doesn’t like nuclear because it’s a massive upfront investment and no guarantee of good returns, but theres also a big carbon intensivity due to the complexity of construction and MASSIVE concrete related emissions. And also maintaining nuclear requires a level of complexity I’m not sure we can sustain when we run out of oil.

    2. Piotr Berman

      An important aspect of nuclear energy is that the time and cost of new capacity depends hugely on the vendor. RosAtom seems to offer half the cost and half the time (6 years instead of 12+ years) compared to Western vendors, and proceeds on time in Turkey, Bangladesh, Egypt and India, plus other projects. The West exercises huge pressure to keep RosAtom out of the picture.

      In the same time, China made longest strides on bringing down the cost solar energy, while USA (and the rest of the West?) tries to block Chinese products.

      More generally, no country has a grip on all technologies needed for cost effective transition toward non-carbon electricity, so Cold War will hugely contribute to Global Warming.

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