As Biden goes green, US reliance on Russian oil surges to record high
In this newsletter:
1) Biden rebuffed as Germany’s Armin Laschet warns against cold war with China
Financial Times, 21 June 2021
2) As Biden goes green, US reliance on Russian oil surges to record high
The Epoch Times, 17 June 2021
3) Net Zero agenda increases global inflation risk, economists warn
Financial Times, 21 June 2021
6) The dark side of solar power & the looming waste crisis
Harvard Business Review, 18 June 2021
Forbes, 18 June 2021
The Daily Telegraph, 21 June 2021
Financial Times, 21 June 2021
Armin Laschet, frontrunner to become Germany’s next chancellor, has warned of the dangers of a new cold war against China, agreeing with Angela Merkel that Beijing was as much a partner as a systemic rival.
Laschet was speaking to the Financial Times after US president Joe Biden’s first official trip to Europe, which was dominated by warnings about the challenge China poses for the west. Biden has made it clear he wants to work with allies to curb China’s ambitions.
In a wide-ranging interview Laschet, leader of Germany’s centre-right Christian Democratic Union, suggested many in Europe were sceptical of Biden’s hawkish attitude to China.
“The question is — if we’re talking about ‘restraining’ China, will that lead to a new conflict? Do we need a new adversary?” he said. “And there the European response was cautious, because, yes, China is a competitor and a systemic rival, it has a different model of society, but it’s also a partner, particularly in things like fighting climate change.”
Laschet also called for Russia to be brought out of the cold, saying the west must try to “establish a sensible relationship” with Moscow. “Ignoring Russia has served neither our nor the US’ interests,” he said, praising Biden’s decision to meet Russian president Vladimir Putin in Geneva last week.
With three months until an election that will see Merkel step down as chancellor, polls suggest that Laschet’s CDU is on course to win, though it faces a strong challenge from the opposition Greens. One possible outcome is a CDU-Green coalition, the first in Germany’s history, with Laschet as chancellor.
During the interview, Laschet was at pains to suggest continuity with Merkel’s policies. The two had very different personal biographies, but “on the fundamental issues we always agreed”.
One area of agreement appears to be China. Merkel has often been accused of tempering her criticism of Chinese human rights violations for fear of harming the interests of German companies active in China.
Laschet said Germany should never shy away from addressing “critical issues”. “But I’m not sure that always speaking out, loudly and aggressively, in public about a country’s human rights situation really leads to improvements on the ground,” he added.
“Often you can reach more in the area of human rights by addressing issues in private conversations with leaders of other countries than by talking about it in press conferences.”
This softly-softly approach could set up a potential clash with the Greens, who are much more eager to challenge China publicly over its human rights record, as well as tensions with the Biden administration.
Biden’s tough stance on China was in evidence during his European trip. The G7 summit communiqué criticised Beijing over human rights, trade and a lack of transparency regarding the origins of the coronavirus pandemic.
Asked if he thought Biden was trying to drag Europe into a new cold war, Laschet demurred, saying he was “right” to view China as “one of the biggest challenges for us, for instance on new technologies” and to want to “strengthen co-operation among democracies”.
But he also said the west should resist slipping into a cold war mentality when it came to its geopolitical contest with China. “The 21st century is very different and the prism of how the world looked before 1989 offers limited advice,” he said. “We have a multipolar world [now] with different actors.”
Laschet insisted, however, that he would not be a soft touch on China. “I would try to foster our partnership wherever possible, and, at the same time, make clear what we expect from China: that it accept reciprocity, embrace multilateralism and respect human rights.
Full story (£)
2) As Biden goes green, US reliance on Russian oil surges to record high
The Epoch Times, 17 June 2021
WASHINGTON—Russian oil imports have set a new record in the United States despite the strained relationship between Washington and Moscow. Industry experts believe the Biden administration’s climate policies will make the country more dependent on foreign oil producers.
The United States imported record levels of crude oil from Russia in March and is expected to continue importing at high levels in coming months, according to the Western Energy Alliance, a trade association that represents 200 independent natural gas and oil producers in the United States.
Imports of crude oil and petroleum products from Russia reached 22.9 million barrels in March, the highest level since August of 2010, according to International Energy Agency (IEA). Of the total amount, crude oil imports from Russia stood at 6.1 million barrels. Russia has become the third-largest oil exporter to the United States.
High levels of oil shipment from Russia have continued since March, according to ClipperData, a commodity intelligence company that monitors cargo shipments worldwide.
“Last month we saw a record 5.75 million barrels of Russian crude discharged in the US, and we’re projecting a further record this month of 7.5mn bbls,” ClipperData analysts wrote on Twitter on June 7.
Critics argue that Biden’s climate agenda is hard on the U.S. oil industry but soft on foreign producers.
“It’s disturbing to our industry that the Biden administration goes out of its way to disadvantage the American producer while buttressing the Iranian and Russian industries,” Kathleen Sgamma, president of the Western Energy Alliance, told The Epoch Times.
The recent spike in Russian oil imports has followed the “misguided climate policies” of the administration, including ending the Keystone XL pipeline and pausing new oil and natural gas permitting on public lands and waters, according to Sgamma.
President Joe Biden has “tipped us into oil dependence on Russia just a year after complete independence,” Sgamma said, calling it “a geopolitical gift” to the Kremlin.
U.S. West Texas Intermediate crude surpassed the $70 mark last week, reaching the highest level in over two years. Top commodity traders now believe oil prices could see $100 per barrel due to supply constraints. Oil hasn’t traded above $100 per barrel since 2014.
“There’s been kind of a dearth of investment in fossil fuels, which is going to leave us undersupplied as we go forward,” Phil Flynn, senior energy analyst at the Price Future Group, told The Epoch Times in a recent interview.
He noted that the Biden administration’s climate policies, which will reduce the supply of oil and gas, have been a major factor in driving the prices.
“U.S. oil production has fallen by 1.715 million barrels [per day] from a year ago, so a large part of that void is being filled by Russia,” Flynn wrote in a recent op-ed on Fox Business.
“During Trump’s term, America was competing with Russia and Saudi Arabia to be the world’s dominant oil and gas producer, yet under Biden, we are retreating from that race in the name of climate change,” he wrote.
BlackRock’s Fink and others see price risk in green revolution
The inflation scare that’s become a major theme in markets is getting fresh momentum from the climate-change battle and the huge economic transformation underway.
As governments recognize the importance of climate action and push every corner of the economy to decarbonize, industries from glass to steel to autos are being left with little choice but to change how they make products and ultimately what they sell. The technical hurdles and investment involved mean it’s going to cost much more. Just two examples: Making glass without poisoning the planet costs 20% more, cleaner steel is up to 30% more expensive.
The potential price hit from the green revolution is adding to the arguments about the inflation outlook that are already brewing as economies reopen from pandemic lockdowns and some commodity prices surge to record levels. BlackRock Inc., the world’s largest asset manager, and the Bank of England put the issue in the spotlight this month, while others have also cited environmental demands as one reason why the current inflation pickup won’t be transitory.
Hitting net-zero targets requires investment of $5 trillion a year in energy systems by the end of the decade, more than double the average in the past five years, according to the International Energy Agency.
And there's another piece to the puzzle. As green-minded investors tell oil companies to scale back drilling, the resulting supply squeeze is seen pushing up oil prices before economies are anywhere near phasing out fossil fuels.
“If I had to put my money on a single factor that was going to push up costs in the years to come, I would say it was the environmental emphasis and in particular the drive towards net zero,” said Roger Bootle, founder of Capital Economics Ltd. and author of the 1996 book `The Death of Inflation.’ “I think this is going to lead to a whole series of costs and price increases across the economy.”
Massive spending on new plants, technologies and processes could all feed through to prices. Manufacturing low carbon glass adds about 20% to the cost, according to Nippon Sheet Glass Co., which supplied the glazed exterior of The Shard, London’s tallest building. That’s a squeeze companies have to either swallow or pass on to customers.
Households are also going to have to spend. In the U.K., the government is drawing up plans to replace conventional gas boilers with more environmentally friendly — and more expensive — heating systems.
In addition to investment costs, the transition is fueling a huge demand for key raw materials. Copper for example, vital for power grids and wiring for wind turbines, is up more than 60% in price in the past year.
Steel is another case in point. The metal, used in everything from ball-bearings to bridges, is very carbon intensive to produce, normally relying on coal-fired blast furnaces. Greener production routes that use hydrogen or biomass exist, but are currently far more expensive.
That situation could worsen, with the IEA warning last month of a “looming mismatch” between “climate ambitions and the availability of critical minerals” such as copper, nickel, lithium and cobalt.
“If our solution is entirely just to get a green world, we’re going to have much higher inflation, because we do not have the technology to do all this, yet,” BlackRock Chief Executive Officer Larry Fink said this month. “That’s going to be a big policy issue going forward.”
The Irish Times, 16 June 2021
The Irish Republic will need to invest €20 billion annually for next 10 years in climate-related infrastructures and mitigation measures to achieve the emissions reduction targets laid down in the Government’s Climate Action Bill, the International Monetary Fund (IMF) has claimed.
In a report on climate change mitigation in Ireland, the IMF said the €20 billion figure was based on the State’s more ambitious emissions reduction target and “the projected sectoral investment needs”.
It estimated that about a third of the investment would need to be on climate-sensitive infrastructure relating to energy supply, transport, water and waste.
The Government’s landmark climate legislation commits the State to reducing emissions by at least 7 per cent per year – to enable a 51 per cent reduction by 2030 and climate neutrality by 2050.
A significant tranche of the investment earmarked for the €116 billion National Development Plan (NDP) will be used to fund the State’s climate transition.
However, it is nowhere near the €20 billion figure outlined by the IMF, which equates to 5 per cent of GDP (gross domestic product)....
The IMF noted that Ireland’s progress in climate change mitigation over the past two decades has been slow and uneven due to high economic and population growth and the sectoral specific emissions.
By Atalay Atasu, Serasu Duran, and Luk N. Van Wassenhove,
The solar industry’s current circular capacity is woefully unprepared for the deluge of waste that is likely to come. The economics of solar would darken quickly if the industry sinks under the weight of its own trash.
It’s sunny times for solar power. In the U.S., home installations of solar panels have fully rebounded from the Covid slump, with analysts predicting more than 19 gigawatts of total capacity installed, compared to 13 gigawatts at the close of 2019. Over the next 10 years, that number may quadruple, according to industry research data. And that’s not even taking into consideration the further impact of possible new regulations and incentives launched by the green-friendly Biden administration.
Solar’s pandemic-proof performance is due in large part to the Solar Investment Tax Credit, which defrays 26% of solar-related expenses for all residential and commercial customers (just down from 30% during 2006-2019). After 2023, the tax credit will step down to a permanent 10% for commercial installers and will disappear entirely for home buyers. Therefore, sales of solar will probably burn even hotter in the coming months, as buyers race to cash in while they still can.
Tax subsidies are not the only reason for the solar explosion. The conversion efficiency of panels has improved by as much as 0.5% each year for the last 10 years, even as production costs (and thus prices) have sharply declined, thanks to several waves of manufacturing innovation mostly driven by industry-dominant Chinese panel producers. For the end consumer, this amounts to far lower up-front costs per kilowatt of energy generated.
This is all great news, not just for the industry but also for anyone who acknowledges the need to transition from fossil fuels to renewable energy for the sake of our planet’s future. But there’s a massive caveat that very few are talking about. […]
The High Cost of Solar Trash
The industry’s current circular capacity is woefully unprepared for the deluge of waste that is likely to come. The financial incentive to invest in recycling has never been very strong in solar. While panels contain small amounts of valuable materials such as silver, they are mostly made of glass, an extremely low-value material. The long lifespan of solar panels also serves to disincentivize innovation in this area.
As a result, solar’s production boom has left its recycling infrastructure in the dust. To give you some indication, First Solar is the sole U.S. panel manufacturer we know of with an up-and-running recycling initiative, which only applies to the company’s own products at a global capacity of two million panels per year. With the current capacity, it costs an estimated $20-30 to recycle one panel. Sending that same panel to a landfill would cost a mere $1-2.
The direct cost of recycling is only part of the end-of-life burden, however. Panels are delicate, bulky pieces of equipment usually installed on rooftops in the residential context. Specialized labor is required to detach and remove them, lest they shatter to smithereens before they make it onto the truck. In addition, some governments may classify solar panels as hazardous waste, due to the small amounts of heavy metals (cadmium, lead, etc.) they contain. This classification carries with it a string of expensive restrictions — hazardous waste can only be transported at designated times and via select routes, etc.
The totality of these unforeseen costs could crush industry competitiveness. If we plot future installations according to a logistic growth curve capped at 700 GW by 2050 (NREL’s estimated ceiling for the U.S. residential market) alongside the early replacement curve, we see the volume of waste surpassing that of new installations by the year 2031. By 2035, discarded panels would outweigh new units sold by 2.56 times. In turn, this would catapult the LCOE (levelized cost of energy, a measure of the overall cost of an energy-producing asset over its lifetime) to four times the current projection. The economics of solar — so bright-seeming from the vantage point of 2021 — would darken quickly as the industry sinks under the weight of its own trash.
6) Solar power investors burnt by rise in raw materials costs
Financial Times, 21 June 2021
The rapid rise in prices for raw materials has reversed a decades-long decline in the cost of solar energy, denting investor interest in the sector following a record rally in 2020.
Shares in solar companies have fallen by 18 per cent this year, after more than tripling in 2020, according to the MAC Global Solar Energy Index, as companies face higher steel, polysilicon and freight costs.
The supply chain pressures are limiting the potential for further reductions in the costs of solar installations, just as governments pledge to focus on a “green recovery” from the pandemic.
The cost of solar energy fell by 80 per cent between 2010 and 2020, but those dramatic decreases have come to an end, according to S&P Platts.
“The narrative in the solar industry has shifted,” Bruno Brunetti, an analyst at S&P Platts, said. “We have seen steep declines in costs over the past decade, but we are seeing that stabilise now and even increase in some cases.”
The US price of hot-dipped galvanised steel coils, which are used in solar panel frames and structures, has more than doubled from early 2020 to record levels, according to S&P Platts. At the same time, prices for monocrystalline silicon cells, modules that allow for the conversion of light into power, have risen by a quarter from this time last year, BloombergNEF data show.
In addition, freight rates in China have also jumped by 41 per cent this year, according to the Shanghai Containerized Freight Index, which reflects rates for the export of containers from Shanghai.
John Martin, chief executive of the US Solar Fund, said higher raw material prices will probably increase the costs of installing new solar power by 20 per cent — putting solar costs back to the levels they were two years ago. “Decarbonisation costs will come down, but it’s not going to be free — capital will be required,” he said.
The US Solar Energy Industries Association said this week that “compounding cost increases across all materials are just beginning to affect installers”.
Full story (£)
7) Tilak Doshi: The IEA’s Net Zero report: Credible roadmap or unhinged advocacy?
Forbes, 18 June 2021
But in taking up the mantle of green advocacy on behalf of its paymasters, the IEA faces the prospect of losing all credibility as an objective advisor on energy security for its OECD members.
It is a month since the International Energy Agency – the rich world’s energy advisory body established in the wake of the oil price shock of 1973 — issued its astonishing report calling for the end to all new investments in oil and gas (let alone coal) from 2021. As expected, the IEA “road-map” elicited widespread media coverage and strong reactions, ranging from gushing support from those convinced of a “climate emergency” to outright dismissal, as in the case of the Saudi oil minister who called the report a sequel to “La La Land”.
Commentators on the IEA’s radical call against fossil fuel investments doubtlessly have their own share of biases and diverging interests. Yet the question remains as to just how credible is the IAE’s call for a complete transformation of the global energy system within two or three decades, a system which developed over two centuries and today relies on fossil fuels for 85% of its needs.
The IEA Roadmap
The IEA calls its report “the world’s first comprehensive study of how to transition to a net zero energy system by 2050 while ensuring stable and affordable energy supplies, providing universal energy access and enabling robust economic growth”. Its road-map, we are told, sets out “a cost effective and economically productive pathway” to a “resilient energy economy dominated by renewables like solar and wind instead of fossil fuels”. “Our roadmap”, the IEA states, “shows that the enormous challenge of transforming our energy systems is also a huge opportunity for our economies, with the potential to create millions of new jobs and boost economic growth.”
This best of all possible worlds promised by IEA will come about only if policy makers around the world do just what the roadmap requires. The 200+ page report can be summarized by three key milestones requisite to its ‘net zero by 2050’ vision: an immediate end to investments in all new oil and gas developments (coal, of course, is beyond the pale); a ban on all internal combustion engine vehicles by 2035; and a zero-emission power sector by 2040. These are “sensational” milestones, as one commentator put it somewhat mildly. For others, these recommended policy diktats are more in keeping with the agenda of the radical fringe of environmental activism.
Reactions to the IEA Report
The IEA’s report was met with some derision not only among policy makers in IEA member countries such as Japan and Australia but also by oil and gas industry executives and analysts. A day after the publication of the IEA Net Zero report, Reuters ran a widely-cited story headlined “Asia snubs IEA's call to stop new fossil fuel investments”. Akihisa Matsuda, deputy director of international affairs at Japan's Ministry of Economy, Trade and Industry (METI), said the government has no plans to immediately stop oil, gas and coal investments. In the Philippines, Energy Secretary Alfonso Cusi said the energy transition should be "fuel and technology-neutral", fully aware that coal will be the dominant power source in his country for decades even after a ban on new coal plant proposals.
Even before the IEA report was published, the “net zero (carbon emissions) by 2050” mantra pushed by the EU and the US under the Biden administration was cast as “pie in the sky” by Raj Kumar Singh, India’ s Minister of Power, New and Renewable Energy REGI -6.8%. Somewhat ironically, Mr. Singh’s views were expressed at a climate summit organized by the IEA.
If the Saudi oil minister was outspoken in calling the IEA report “La La Land” fiction, the Russian Deputy Prime Minister Alexander Novak was a little more restrained but no less incredulous. If the world were to follow the International Energy Agency’s controversial road map, he said that "the price for oil will go to, what, $200? Gas prices will skyrocket". Similarly, OPEC warned that the IEA’s net zero pathway would add to oil price volatility. The group remarked that “the claim that no new oil and gas investments are needed post-2021 stands in stark contrast with conclusions often expressed in other IEA reports”.
Real World Constraints and Credibility
Perhaps most damaging to the credibility of IEA’s net zero report is the logical question most objective analysts would pose: if indeed it is true that drastically cutting back on fossil fuels is consistent with higher economic growth and increased productive employment, why does the IEA require policy makers to force countries along the net-zero pathway? Surely, if replacing fossil fuels with wind and solar energy and electric vehicles promote growth and employment, then wouldn’t countries such as China and India naturally race towards this best of all possible worlds without expensive green subsidies and punitive anti-fossil fuel policies?
Equally questionable is the presumption that renewable energy is already cheaper than coal, oil and natural gas, and hence merely needs a level playing field in policy terms to compete. The fact remains that renewable energy businesses count on a significant part of their revenue streams from policy supports such as feed-in tariffs, production tax credits and mandatory renewable portfolio schemes. To date, renewable energy investments invariably depend on mandates, continued subsidies and other regulatory support, otherwise they fall.
If there is little in the IEA report that critically examines the real world constraints on replacing fossil fuels, equally concerning is the lack of any analysis on the impact of its draconian policy recommendations on the world’s poor who lack access to energy. The charge of climate imperialism on the part of the IEA is not lightly made. This was best put across by India’s Mr. Singh who commented “you have 800 million people who don't have access to electricity. You can't say that they have to go to net zero, they have the right to develop, they want to build skyscrapers and have a higher standard of living, you can't stop it".
All non-profit organizations reflect the needs of their funding members, and the IEA is no different. As the IEA’s growth in funding is primarily from the US and Europe, it is not surprising that it also reflects the “climate emergency” predilections of the Biden administration and Western European governments which see climate change as an existential threat and a national security priority. But in taking up the mantle of green advocacy on behalf of its paymasters, the IEA faces the prospect of losing all credibility as an objective advisor on energy security for its OECD members.
The world’s biggest economies won’t follow our ‘climate leadership’
Sir David Attenborough may be seen as an infallible ecological pope in this country; but elsewhere not so much. When the British government got him to lecture the G7 leaders assembled in Cornwall in moral support of the host’s proposal that they declare a fixed date by which they would have phased out all coal-fired energy, it did not have the desired effect. The Americans refused — backed by the Japanese.
President Biden has a little local difficulty with that one. His party’s wafer-thin majority in the legislature is dependent on the “conservative” Democrat Joe Manchin, from the coal-producing heartland of West Virginia, who happens to be chairman of the Senate energy committee. To make this clearer still, Manchin released the following statement after the G7 had rejected the UK’s suggested wording: “Fossil fuels, including coal, will be part of the global energy mix for decades to come.” He’s right, you know.
If the assembled leaders had needed any reminder of the risks of pushing their electorates too hard in the direction of “net zero”, it was provided, even as they were meeting in Carbis Bay, by a referendum in intensely democratic Switzerland on legislation to increase a surcharge on car fuel and impose a levy on air fares. The Swiss are regarded as among the world’s most “eco-friendly”: they are passionate recyclers and big on all forms of renewable energy, notably hydroelectric. Yet the people voted by 51 per cent to 49 per cent against a proposal to pay more taxes on activities tied to fossil fuels, even though the country’s environment minister said this was essential to Switzerland’s commitment to cut its contribution to greenhouse gases to half of 1990 levels by 2030, and every element in the political establishment — even the Swiss Automobile Association — campaigned for it.
The BBC’s Berne correspondent declared that this was “a huge shock ... voter rejection undermines Switzerland’s entire strategy to comply with the Paris agreement [on climate change]. Today’s results are a savage blow to environmentalists.”
A huge shock, really? Europe presents itself as the leader of climate change consciousness — the German chancellor, Angela Merkel, backed Boris Johnson’s proposals at the G7 meeting and tut-tutted afterwards that the failure to agree on them “was not our doing” — but whenever it’s time for consumers to pay the full price of their leaders’ rhetoric, the result is the same: rejection and revolt. Emmanuel Macron’s grandiloquent pronouncement, when he was trying to increase fuel taxes, that “we have no planet B” was ridiculed by the gilets jaunes: “The president talks about the end of the planet but we worry about getting to the end of the week.”
And for all the British government’s claims of “global leadership in the battle against climate change”, it is an embarrassing fact that ever since the fuel price demonstrations of 2000 — when lorry drivers and farmers blockaded oil refineries in protest against inexorable increases in petrol and diesel taxes — no administration has reimposed the “fuel price escalator”, a policy launched by the Conservatives in 1993 explicitly with a view to “saving the planet”. George Osborne and Philip Hammond were just two Conservative chancellors who humiliatingly abandoned proposed fuel tax rises in their budgets rather than face public wrath.
The latest Conservative chancellor, Rishi Sunak, has a bigger problem even than that. The government has committed itself to banning all new gas boilers for homes by 2025 and to having them ripped out of existing residences in due course. But the cost per household will be about £10,000 — and perhaps as much again for those without the wall insulation that the replacement electric heat pumps require, which will also be mandatory.
Sunak was asked about this repeatedly by Andrew Neil on Wednesday when he appeared on the presenter’s new channel, GB News.
“Who pays?” Neil kept pushing. It must have been a novel and even surprising experience for the interviewee. On the BBC, Sky or Channel 4, ministers are never asked about the price of meeting their climate change commitments, as it is simply assumed that no cost to the consumer is too high to “save the planet”.
The normally unflappable Sunak did look a touch discomfited, not least when he was asked if he agreed with the Treasury estimate under Hammond, that the cost of reaching net zero carbon emissions by 2050 would be at least £1 trillion. Hammond had leaked that in an effort to deter Theresa May, in her last weeks as PM and desperate for a “legacy”, from committing the UK to achieving net zero by 2050. He didn’t succeed. There was not even a parliamentary debate on the matter in either house, still less primary legislation: it was passed via a statutory instrument. This is the polar opposite of the democratic Swiss approach. All it does is defer the conflict between the government and the governed.
One of the arguments deployed by the winning side of that Swiss referendum was that their country was completely insignificant, globally, in terms of carbon emissions, so why should they face painful “voluntary” increases in costs to penalise drivers and flyers when, for example, China is augmenting its use of coal, the most heavily CO2-emitting fuel of all?
The figures are startling. China has not just been boosting its coal-fired energy production in recent years; it also has another 247 gigawatts of coal power in planning or development. That addition alone is larger than the entire US coal-fired energy capacity and six times that of Germany (Europe’s biggest coal producer). Beyond its own territory, Beijing is financing new coal-fired capacity across Asia as part of its Belt and Road initiative. The G7 did agree last week to cease financing any coal projects in the developing world. To which China says: thank you very much — we’ll pick up the slack.
Beijing, when taken to task over this, rightly points out that its CO2 emissions, per capita, are about half those of America. But China is already producing 27 per cent of the global total, a proportion that is only increasing.
Meanwhile, the UK is now responsible for just 1 per cent of emissions. Which means our commitment to rip out our gas boilers and also to move rapidly to all-electric locomotion, without even having worked out how we will renewably produce all that extra electricity for homes and cars, resembles a much-loved sketch from Beyond the Fringe. For younger readers, this is the one in which Peter Cook, playing a military officer, tells his hapless junior, played by Jonathan Miller, to make the ultimate sacrifice: “Perkins, we need a futile gesture at this stage. It will raise the whole tone of the war.”
Only I doubt British voters will be as gormlessly acquiescent as Perkins was, when called upon to make their sacrifice to impress the world with our moral leadership. Even if Sir David Attenborough tells us we should.
The Spectator, 20 June 2021
Boris Johnson’s plan to boost renewables around the world misses the fact that renewables are actually struggling to catch up with traditional energy sources.
At last week’s G7 summit, Boris Johnson pushed his fellow leaders to back his climate finance plan to support large-scale renewable energy projects across Africa and parts of Asia. The PM received a decidedly lukewarm response to his new Marshall plan, only netting pledges from Canada and Germany – and for good reason. As Rishi Sunak highlighted this week, when he declined to put a ‘specific figure’ on the cost of Net Zero in an interview on GB News, the cost of these climate plans are anything but clear.
Fundamentally, Boris’s plan to boost renewables around the world misses the fact that renewables are actually struggling to catch up with traditional energy sources. This isn’t likely to change any time soon: thanks to renewable energy’s reliability issues, the need for solid energy infrastructure in developing countries, and soaring demand for petrochemicals, the fundamentals of the fossil fuel industry remain strong.
It’s not surprising that most G7 states have shied away from making significant new pledges towards climate finance. Before the summit, the PM was already facing opposition within his own government, with the Treasury reluctant to free up new funds for the plan before the autumn spending review. Instead, the Treasury had only ‘reaffirmed’ an existing vague commitment to ‘increase and improve’ climate finance contributions.
During the pandemic, the UK managed to fund fossil fuel projects, as did other G7 governments. Over the past year, they channelled some £137 billion into oil, coal and gas, propping up their airline and car industries that were being hit by the pandemic.
Major energy powers have been betting even more extensively on traditional fuels. Norway recently released a white paper on its long-term energy strategy which made clear that the country intends to continue exploiting its substantial fossil fuel reserves in the decades to come. ‘We will supply energy to the world as long as the demand exists,’ Norwegian energy minister Tina Bru vowed, as the country opened new areas for oil exploration and state firm Equinor made a new offshore oil discovery.
Rosneft’s massive new £80 billion ‘Vostok Oil’ project, meanwhile, makes it clear that Russia also sees a promising future for the sector. The scale of the project is staggering. The construction of the enormous complex alone involves building three airfields, two sea terminals, a railway, 50 vessels and facilities to generate 3,600 megawatts of power. This will require hundreds of thousands of workers, and the project is expected to yield 100 million tons of oil a year by 2030.
According to the company’s CEO, one of the project’s major advantages is that oil from the Vostok fields has an unusually low sulfur content, meaning that the project’s carbon footprint could be as much as 75 per cent lower than other major oil projects. This is something that climate activists often overlook: technology is also making fossil fuels greener.
The prospect of what some have called ‘green barrels of oil’ may further delay the spread of renewable energy. Renewable energy has been plagued for years by reliability concerns: essentially, what happens if there's not enough (or too much) sun or wind. Hazardous materials are also required to make solar panels and wind turbines and dealing with the waste remains a substantial challenge. On top of that, there are geostrategic concerns, as many solar panels and windmills are produced in China.
Even in the EU, where green energy has been heavily promoted through regulation and subsidies, renewables still only account for about one fifth of the bloc’s energy consumption – much of which actually comes from biomass. In the United States, biomass even makes up 98 per cent of the renewable energy use in the industrial sector.
The fact that biomass is considered carbon neutral under EU law, despite the fact that scientists have warned EU policymakers that burning wood for electricity production can worsen climate change, only illustrates how desperate EU policymakers are to prop up the share of ‘renewable energy’.
Fossil fuels still dominate global electricity generation and are especially key in the developing world. As researcher Vijaya Ramachandran recently argued in Nature, ‘blanket bans on fossil-fuel funds will entrench poverty’ as ‘Africa needs reliable energy infrastructure, not rich-world hypocrisy.’ She adds that ‘much of development – roads, schools, housing, reliable power – cannot be realised quickly with green power alone… it would be the height of climate injustice to impose restrictions on the nations most in need of modern infrastructure and least responsible for the world’s climate challenges.’
As large rural populations in countries like China, India, Brazil, Nigeria and Indonesia move to cities where consumption habits are strongly linked to plastics, this uptick in petrochemical demand is likely to provide a further boost for fossil fuels. The International Energy Agency estimates that petrochemicals will account for 60 per cent of oil demand in the upcoming years, in particular due to increasing demand for plastic packaging. Oil prices are already near the highest levels since 2014, even if this is, of course, also a result of monetary expansion by central banks.
Before going on a global mission to phase out fossil fuels, perhaps Boris Johnson ought to take a closer look at the economic fundamentals – which show that fossil fuels should not be written off just yet.
The Daily Telegraph, 21 June 2021
Again and again, worst-case scenarios are presented with absurd precision, and the problem goes further than Britain's slow reopening
Britain leads the pack on vaccination, but lags far behind America, Germany and France on liberation. A big reason is that our Government remains in thrall to a profession that has performed uniquely badly during the pandemic: modellers. The Government’s reliance on Sage experts’ computer modelling to predict what would happen with or without various interventions has proved about as useful as the ancient Roman habit of consulting trained experts in “haruspicy” – interpreting the entrails of chickens.
[ ]( https://www.telegraph.co.uk/news/2021/06/16/latest-covid-modelling-pushed-back-june-21-based-out-of-date/ )
As Sarah Knapton has revealed in these pages, the brutal postponement of Freedom Day coincided with the release of a bunch of alarmist models predicting a huge new wave of deaths. The most pessimistic, inevitably from Imperial College, forecast 203,824 deaths over the next year. It did so by assuming just a 77-87 per cent reduction in hospitalisations following two vaccinations, despite the fact that real world data shows two vaccinations to be between 92 per cent (AstraZeneca) and 96 per cent (Pfizer) effective in preventing hospitalisation. That would cut the Imperial forecast of deaths by a gob-smacking 90 per cent to 26,854.
This keeps happening. In April the modellers assumed a 30 per cent effectiveness for the vaccine at preventing the spread of the virus. This was described as “a pessimistic view – but it is plausible, it’s not extreme”, by Professor Graham Medley, chairman of the SPI-M sub-group of Sage. It turns out it was far from plausible. At the end of March the BBC’s favourite modeller, Imperial College’s Neil Ferguson, was forecasting that by June 21, even with “optimistic” assumptions, less than half of Britain would be protected against severe disease by vaccination. The true figure is over 80 per cent.
This is the same Professor Ferguson who told us in the 1990s that millions might die of mad-cow disease. The correct number, as it turned out, was 178.
The experts would reply that ours is an uncertain world, but we knew that already. If you don’t know, say so. That new variants came along at the end of 2020 and ignited a terrible second wave may seem to have vindicated pessimists, but their models had no assumptions about variants in them. Being right for the wrong reasons was the excuse of haruspicy, too.
Again and again, worst-case scenarios are presented with absurd precision, sometimes deliberately to frighten us into compliance. The notorious press conference last October that told us 4,000 people a day might die was based on a model that was already well out of date.
Pessimism bias in modelling has two roots. The first is that worst-case scenarios are more likely to catch the attention of ministers and broadcasters: academics are as competitive as anybody in seeking such attention. The second is that modellers have little to lose by being pessimistic, but being too optimistic risks can ruin their reputations. Ask Michael Fish, the weather forecaster who in 1987 reassured viewers that hurricanes hardly ever happen.
As Steve Baker MP has been arguing for months, the modellers must face formal challenge. It is not just in the case of Covid that haruspicy is determining policy. There is a growing tendency to speak about the outcomes of models in language that implies they generate evidence, rather than forecasts. This is especially a problem in the field of climate science. As the novelist Michael Crichton put it in 2003: “No longer are models judged by how well they reproduce data from the real world: increasingly, models provide the data. As if they were themselves a reality.”
Examine the forecasts underpinning government agencies’ plans for climate change and you will find they often rely on a notorious model called RCP8.5, which was always intended as extreme and unrealistic. Among a stack of bonkers assumptions, it projects that the world will get half its energy from coal in 2100, burning 10 times as much as today, even using it to make fuel for aircraft and vehicles. In this and every other respect, RCP8.5 is already badly wrong, but it has infected policy-makers like a virus, a fact you generally have to dig out of the footnotes of government documents.
In 2020 even the BBC ran an article about how RCP8.5 had been misused. Yet a year later in March 2021, the Met Office published a study claiming that climate change would make dairy cattle and potatoes wilt in the heat in 30 years. Sure enough, it was based on RCP8.5, which the Met Office described as “credible” in its press release. They just cannot help themselves.
Nearly two decades ago, Professor Philip Thomas of Bristol University got the death toll from mad-cow disease right – “a few hundred”, he said – and was pilloried for his optimism.
He told an inquiry that “the Government’s continued inability to give proper consideration to the spectrum of scientific opinion… must be a cause for major concern. It is clear that those tasked with devising policy – ministers and civil servants – need to adopt a more critical attitude to the scientific advice they are offered, even when that advice comes from one of their advisory bodies.” That warning was ignored.