Insanity reins supreme
Like COVID policies, the "energy pandemic" response is equally poorly thought through
Over the last few weeks, I, like many of you, have begun to see the winds of change blowing in. Thankfully, these winds are not powering windmills or the hopes and dreams of energy policies not grounded in physics, economics or reality. These winds are instead asking questions that reflect on the past 20 years of the narrative of “The energy transition won’t cost you anything” and “Let’s make those big bad fossil fuel guys pay for it!!”. The answers aren’t pretty. To recap where Europe is at based on these policies:
Power prices in most countries are 10x what they were last year. If your business spent 4% of their revenue on electricity it’s now 40% and you can say goodbye to profits and keeping the doors open.
The UK is implementing price caps on residents which will cost $170 billion, minimum and not address demand at all. It amounts to a naked short on natural gas and it could be financially devastating.
Switzerland is considering jailing anyone who keeps their house warmer than 67 F this winter for 3 years.
The EU is considering a mandatory energy reduction of 15% complete with redistributing “war time profits” of energy companies benefitting from high prices.
And most bizarrely of all, western governments seem to believe that a “price cap on Russian oil” has a chance of working.
To these things I’d like to point out these same people are the ones that thought dumping $6.5 trillion into the US economy and untold trillions into Europe wouldn’t lead to inflation….
Let’s translate these into metrics that everyone can understand. The reality is that the “energy transition to net zero” WILL cost each and every American $11,300 per year, every year, for 28 years to get to “net zero.”
IRENA, a renewable energy think tank agrees and mentions it prominently in their call to action study yet never mentions who will pay for it. And what does the average family of 4 that spends $1.2 mm of after tax income get for it? They aren’t spending on college, or retirement or starting a business. They are spending it on rebuilding the grid and infrastructure that we already have, to do exactly the same things, only better.
“The plan” comes at a time when China has 260 coal plants in process or construction with 290 GW of power, and is expanding their coal production by 600 mm tons per year. For reference, burning one ton of coal creates 3 tons of CO2 and China is already the world’s leading emitter. No matter what we do in the west… China is the only one that matters. They too have a “net zero policy” and it’s that they give “net zero F’s about CO2.” Just watch them.
“We the People” are waking up to these inconvenient truths. Average citizens on social media are actively talking about increased prices AND their actual causes. Journalists are finally asking hard questions instead of being propaganda puppets for government narrative. And, the economic data from inflation to housing are showing up in the stock market. It couldn’t happen soon enough.
To quote my friend Tom Loughrey who we recently had on the podcast, his math shows that if Europe doesn’t reduce gas consumption by 20%… they will quite simply not have enough. He calculated that in “heating degrees” and calculated that everyone in Europe would need to reduce their home temperature by 17 F. That is, keep their house at 53 F all winter. Are consumers ready for that? How long until consumers say “but hold on…. what happened to global warming???! I’m absolutely freezing!”
70% of the fertilizer plants in Europe are off because natural gas prices are too high and natural gas is a primary feedstock. And it’s hitting industry too. This from Bloomberg.
Soaring gas prices are hitting other energy-intensive industries, with paper makers Norske Skog ASA and Pro-Gest SpA halting mills in Austria and Italy this week. Pro-Gest said that the selling price of a ton of paper was lower than the cost of the energy required to make it.
Steelmakers including Acerinox SA suspended operations at several facilities across Spain after energy prices more than doubled in the past two weeks. Despite benchmark construction steel prices surging to record levels in Europe this week, many mills using electric-arc furnaces are still likely unprofitable.
By the way, you know how they make solar panels? That’s right! Electric arc furnaces.
The results are predictable. In a short 3 weeks following decades of anti nuclear fear mongering from activists and western governments, nuclear has gone from the worst thing ever to “we may extend those plants because… physics” in California and Germany.
As you know, I have always been an “all energy is good energy” guy and if you believe that carbon is the biggest threat to humanity, nuclear is the best possible way forward. Don’t believe me?
The optimist in me (which has almost died on the table a thousand times in the last 2.5 years) believes we may be at a point when we can start having honest conversations about energy policy and the trade offs required to live the quality of life that we do.
The pessimist in me is reminded that 14 years ago when we began to embark on this “climate change is the biggest threat to mankind (subtitled “the best opportunity for bankers to make money”) we launched a plane to “net zero” without landing gear. Battery technology didn’t and doesn’t exist in the quantity needed. Minerals and mining are in their infancy. And rebuilding a grid that works pretty well and replacing it with expensive and intermittent power sources is foolhardy to say the least. It reminded me of an ad from the early 2000s and it doesn’t take much imagination to know it’s a horrible idea to build a plane while you are flying. That’s exactly what Western Governments, the IEA, the WEF and bankers around the world want you to do.
The escalation in energy poverty will continue until we reframe the problem.
1) No reliable and valid model exists that confirms with a high degree of certainty that increase in CO2 will result in massive disruption to the earth, or that natural disasters from climate change are increasing. None. The actual research, that Koonin breaks down in his book, Unsettled, confirms this. Anyone claiming otherwise, including the IPCC , media, and climate celebrities, are inaccurate. At best, these individuals and entities are simply ignorant, and at worst, they are fraudulent.
2) Since the advent of fossil fuels, deaths and destruction from natural disasters have DECREASED due to a fossil-fueled world that provides energy, mobility, engineering, building materials, communication and innovation.
3) Access to energy correlates to GDP. GDP drives the ability to improve quality of life, safety, security, health, education and income.
4) Cutting off a reliable source of energy and replacing it with a less reliable source reduces GDP, health, safety, security, education access and income. Watching this unfold is like a massive car crash in slow motion - the end result will only be dire.
I hear people say that "zero carbon" is about protecting their children, who have become victims to the disinformation campaign from elementary school to university curriculums. The path we are on is perhaps the greatest danger that humanity has ever faced.
David's mic drop moment....
"China is the only one that matters. They too have a “net zero policy” and it’s that they give “net zero F’s about CO2.”"
We have to follow suit. Chinese government has reduced funding in advanced military weaponry over the past decade because they realized that all they needed was to keep up with us. The bigger power play is controlling world energy resources. Once they control the energy, our advanced weaponry will be too expensive to operate routinely.