Yves here. This post on the likely viability of net-zero goals adds to the accumulating evidence that mere subsidies and other incentives are not sufficient in our market-based system to make the so-called energy transition happen quickly enough to prevent seriously bad climate change outcomes. But note that the threat of more dirigiste measures has resulted in enough resistance by key groups as to block their implementation too:
🔊 … sound on
BREAKING: The EU have surrendered to the farmers
1. Dropping its 30% reduction target on emissions from farming
2. Reversing unrealistic pesticide quotas
3. Allowing more land for agricultural use
4. Agreeing to stop telling EU citizens to eat less meat… pic.twitter.com/nDWU3ES52l
— Wall Street Silver (@WallStreetSilv) February 7, 2024
We had a recent, albeit less dramatic, instance of failure of official will in the US. Recall the rash of stories some months ago about the health dangers of gas stoves, with some US jurisdictions requiring their phaseout? This came up with such suddenness and force as to seem not at all organic. Detailed Federal regs were in the works. There were secondary efforts to depict a gas stove phase-out as a climate change plus, but that case was weak.
Did you notice that that campaign died? It seems likely that the reason was that no one bothered to consider the impact on restaurants, where there is also way more exposure than in a home setting. There are many dishes that can’t be prepared quickly or well on other than gas heat. Going off gas would decimate the restaurant biz. And so the campaign has been largely cashiered.
This reinforces the point we made in a post yesterday: that Green New Deal and other advocates of saving the planet have not given sufficient thought to how people get by now. Many of these changes threaten livelihoods. Handwaves about coming new green energy jobs doesn’t cut it when you have bills to pay. These activists have not been honest with themselves, let alone affected groups, about the magnitude of changes needed. If they were, they would conclude that radical conservation may be less disruptive than their planned teardown and rebuild to preserve most of our current lifestyles.
However, Satyajit Das in his Energy Destinies series pointed out that (ex severe economic contractions) modern economies keep consuming more and more power, as the post below confirms. So how ex rationing via very high prices or even power interruptions do we get there?
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
- Already in 2021, the assumptions in the IEA’s net-zero 2050 report were looking unrealistic to many.
- Factors such as inflation and borrowing costs, as well as technological challenges and competition, asserted themselves as valid for even the wind and solar industries.
- The IEA also projected in its latest report that demand for oil and gas will peak before 2030—when demand has been breaking record after record.
Back in 2021, the International Energy Agency published what it called a landmark report titled “Net Zero by 2050: A Roadmap for the Global Energy Sector”. The report made quite a splash, not least because of the assumptions it involved about oil, gas, and coal use.
Many companies, however, especially in the financial services world, took the report at face value and made it a basis, or at least a reference point, for their net-zero plans. Now, they have to revise these. Because it turned out the IEA’s assumptions were quite far-fetched. And they weren’t the only ones.
Bloomberg reported this week that banks are among those busy adjusting their net-zero plans, which were based on assumption-rich forecasts such as the IEA’s original net-zero roadmap. And with good reason. That roadmap included statements such as an end to “investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.”
Several months after the publication of the roadmap, the IEA was calling on the oil and gas industry to invest more in oil supply because a shortage was looming. And that was before the war in Ukraine even started, offering transition advocates a much-needed reality check and reasserting the primary importance of energy security.
“We can’t stay in the 2021 view of the world,” Celine Herweijer, HSBC chief sustainability officer, told Bloomberg. “We can’t choose a pathway that is several years out of date and just stick to it. We will need to keep looking at how the net zero-aligned scenarios are evolving.”
Indeed, HSBC’s chief sustainability officer is right. Just last year, the IEA was forced by energy realities to publish an update of its net-zero roadmap where coal and oil demand were revised significantly—upwards.
Even so, the IEA also projected in its latest report that demand for oil and gas will peak before 2030—when demand has been breaking record after record, contrary to the IEA’s and others’ regular forecasts of demand and supply trends. It’s not only oil demand, either. Coal demand is rising, driven by China and India. The latter recently said it would slash transition funding for state oil firms and double down on coal generation capacity.
Oddly enough, Germany is building new gas-power plants. The poster child of the transition, the country with some of the highest capacity of both wind and solar power that has recently boasted about breaking records in output, is building gas power plants. The motivation for that is to “guarantee electricity supply security as the share of intermittent renewable energy increases and coal is phased out,” per Clean Energy Wire.
Yet coal was phased in last year, rather than out after the ruling coalition in Germany closed the country’s last three remaining nuclear power plants—despite half of Germans being against it. Neither the IEA nor anyone else could have predicted that, perhaps. Yet it happened, along with other seemingly unpredictable things, such as the slowdown in EV demand in key markets. It happened right when sales were starting to take off, too.
Meanwhile, despite massive government support for wind and solar, both sectors are struggling in both Europe and North America. This was not supposed to happen, according to those upbeat transition scenarios that the IEA and other advocates fed the investor world. Indeed, wind and solar capacity were supposed to grow without restraint. Yet it has emerged recently that government support is not enough to ensure this unrestrained growth on its own.
Factors such as inflation and borrowing costs, as well as technological challenges and competition, asserted themselves as valid for even the wind and solar industries—as they are for all other industries. The upbeat forecasts and roadmaps ran headlong into reality. Now it’s time to rush to adjust those net-zero targets that so many companies based on those forecasts.