Friday, April 22, 2022

Net Zero Watch: Southeast Europe turns to coal as energy crisis trumps climate commitments


In this newsletter:

1) Southeast Europe turns to coal as energy crisis trumps climate commitments
Reuters, 19 April 2022
2) China doubles down on coal
The New York Times, 19 April 2022

3) Welcome to Net Zero: 40% of Britons could go into fuel poverty, CEOs warn
Bloomberg, 19 April 2022

4) One in four Britons have gone without heating all day due to skyrocketing energy bills
Daily Express, 18 April 2022
5) Net Zero will be new Brexit for Tories, says Richard Tice
The Daily Telegraph, 18 April 2022
6) UK braced for prolonged period of stagflation
Financial Times, 18 April 2022
7) Andrew Orlowski: The great hydrogen swindle – ‘green’ gas is not what it seems
The Daily Telegraph, 16 April 2022
8) Brian Gitt: Energy myths are triggering a new Dark Age in Europe
Real Clear Energy, 18 April 2022
9) Mark P Mills: The Coming Green-Energy Inflation
10) Rupert Darwall: Woke investors threaten the West’s security
Real Clear Energy, 18 April 2022
11) Walter Russell Mead: The end of Russia’s Empire?
The Wall Street Journal, 19 April 2022

Full details:

1) Southeast Europe turns to coal as energy crisis trumps climate commitments
Reuters, 19 April 2022

OSLOMEJ, North Macedonia (Reuters) – Balkan nations in southeast Europe are turning to coal as they try to tackle a global surge in energy prices, raising fears among environmentalists that countries are rowing back on commitments to phase out the most polluting fossil fuel.


North Macedonia, once a frontrunner in attracting renewable energy investors, said earlier this month it planned to open two new coal mines to supply power stations.

The energy ministry also said it wants to buy 3 million tonnes of coal from neighbouring Kosovo, though no deal has been signed.

“With the start of the energy crisis, not just us but all nations in Europe have immediately increased the production of electricity from coal because it is the cheapest and most secure (source),” said Vasko Kovacevski, CEO of state-owned power utility Elektrani na Severna Makedonija (ESM).

Surging wholesale prices, low inventories and Russia’s invasion of Ukraine have sent energy prices soaring and prompted many countries to scramble to secure supplies.
But environmentalists say turning to coal is not the answer.

“Decarbonisation is one of the pillars of the green agenda and we submit a plan for a coal mine? This is unacceptable,” said Nevena Smilevska of environmental group Eko-svest in Skopje.

The new coal mines are Zivojno, close to the Bitola power plant in the south of the country, and Gushterica, near the Oslomej plant in the west. Neither the government nor ESM have said when they will open or how much they will produce.

Skopje originally planned to phase out coal by 2027, but in January pushed this back to 2030.

Kosovo, meanwhile, said foreign companies – including from Germany – had also enquired about buying coal. Kosovo has world’s fifth largest deposits of lignite, a soft coal whose relatively low energy content translates to especially toxic pollution when burnt.

Serbia has said it is increasing coal production due to insufficient rain for hydro-electric plants, and that it will import 500 tonnes of coal per day from Montenegro.

Bosnia, the only Balkan country that exports electricity, says it will delay plans to shut down coal-fired power plants due to high energy prices and the impact of war in Ukraine.
Full story
2) China doubles down on coal
The New York Times, 19 April 2022
China’s chosen economic path is hugely energy-intensive. It requires vast amounts of electricity, and, to produce that electricity, China is betting on coal.


What happens in China doesn’t stay in China. Certainly not when it comes to global warming.

China produces the largest share of greenhouse gases warming the planet right now, and in the coming decades, it could catch up to the United States’ unenviable record as the largest emitter in history. So China’s economic choices, and the fuels it chooses to power its growth, have profound implications for the climate crisis.

Here’s what you need to know about what’s happening with the Chinese economy and how it impacts our collective ability to rein in global temperature rise.

1. China is in the throes of a building boom to jump start its economy.

Start by reading my colleague Keith Bradsher’s story from Beijing. As he wrote last week, the government of President Xi Jinping has “scrambled in recent months to try to reverse a slowdown” in economic growth caused by many things, including rising oil and gas prices brought on by the Russian invasion of Ukraine.

Lots of construction is underway, Keith told me, including infrastructure projects like high-speed rail lines. That has already affected global emissions: According to the International Energy Agency, China accounted for the largest share of the surge in carbon dioxide emissions in 2021. And that surge exceeded the decline in emissions in 2020, during the first wave of the coronavirus pandemic.

2. So China is in the throes of a coal boom, too.

China’s chosen economic path is hugely energy-intensive. It requires vast amounts of electricity, and, to produce that electricity, China is betting on coal.

First, it is importing more coal, including about 15 percent more from Russia in the first two months of 2022, compared with the same period last year. The really big push, however, is to build new mines and expand existing mines, at a truly mind-melting scale.

China’s coal mining capacity grew more in the final three months of 2021 than all the coal produced in Western Europe. Moreover, its latest Five Year Plan for the energy sector, made public in late March, makes it clear that coal will be a mainstay of the country’s electricity mix for a while. Government agencies were instructed to “enhance” coal’s role in “ensuring the basic needs” of energy security, Carbon Brief wrote in an analysis of the document.

Pandemic-related lockdowns in more than 60 cities across China this spring are causing an economic slowdown, including at many energy-guzzling factories. But work is likely to resume at an even faster pace as soon as lockdowns are lifted, as the government tries to get economic growth back on track.

Most worrisome: The energy strategy for the next five years does not spell out when coal use will peak. Yan Qin, a China analyst at Refinitiv, a global economic analysis company, said she expected China’s coal fleet to increase by 150 gigawatts in the next five years. Many plants are already in the pipeline, she said, “due to provinces complaining about tight power supply.”

3. No one likes power cuts, least of all authoritarian governments.

Many Chinese provinces ran critically short of electricity last fall. Factories suddenly went silent. High-rise office buildings had to be evacuated before their elevators stopped. Chemical factories lost power and, with it, their ability to control the heat and pressure in potentially hazardous operations.

In March, President Xi Jinping underlined that he would not let his country turn away from coal without making sure that reliable replacements were in place. “You can’t throw away the eating utensils in your hands before you have new eating utensils in your hands. That’s not OK,” he said at a meeting of China’s national legislature, which is controlled by the Communist Party. Energy security became a top imperative.

4. China’s emissions will grow, but also its renewable energy sources.

We have long expected China’s emissions to grow. The real question is by how much and for how much longer.

Xi has said that carbon dioxide emissions would peak before 2030. The country is on track to meet that target, even with the current coal boom, because China is also planning to add more wind and solar power capacity this year than the rest of the world did last year, according to an analysis by Bloomberg.

That isn’t enough to unseat fossil fuels, though. In 2021, wind, solar, hydropower and nuclear energy sources accounted for a little more than a third of China’s electricity mix. (By comparison, the United States draws around 40 percent of its electricity from sources other than fossil fuels.)

5. Beijing is pulling back from financing coal abroad.

China has said it will stop funding coal plants overseas. That’s important because China is by far the largest financier of coal projects globally, especially in Asia and Europe. Several overseas coal-burning projects have been canceled in recent years, in part because of popular opposition in those countries and in part because they don’t make as much financial sense as they did before, because the price of renewables has dropped sharply.

6. What’s next?

In theory, with new renewable energy installations coming online in the years ahead, China could dial down coal use. But that will be hard, Qin says, considering how many new plants are being built now in the name of energy security.

“The current tone of ‘ensure energy security’ may also imply that China’s leadership is less willing to ramp up its Paris pledge or commit to a peak emission year,” Qin said, referring to the pledges that China made under a global agreement to slow down global warming, known as the Paris accord. China’s long-term climate goals might not get more ambitious, she said, and may even get temporarily weakened.

China is not alone in that respect. In the United States, the Biden administration has also approved more oil and gas production, despite the president’s promises to move the American economy away from fossil fuels.
3) Welcome to Net Zero: 40% of Britons could go into fuel poverty, CEOs warn
Bloomberg, 19 April 2022

Britain’s biggest energy suppliers are warning of a huge increase in the number of customers falling behind on paying their bills as households struggle with soaring costs for gas and electricity.

The amount of money owed by customers is expected to be 50% higher by year’s end, Michael Lewis, chief executive officer of the U.K. arm of E.ON SE, told lawmakers Tuesday. The U.K.’s cap on energy prices surged to a record on April 1 for 22 million people, and it’s predicted to increase again later this year. That could put 40% of the population in fuel poverty, Lewis said.

“Come October, that’s going to get horrific, truly horrific,” Keith Anderson, CEO of Scottish Power Ltd., told the parliamentary panel. “The size and scale of this is beyond what I can deal with, beyond what I think the industry can deal with. It needs a massive shift, significant shift in the government’s approach to this.”

The wholesale price of U.K. gas has more than tripled in the past year, adding to mounting consumer costs. Regulator Ofgem’s price cap puts a limit on how much bills can rise, but it also contributed to the demise of 26 household suppliers that struggled to pass on costs. The cap could lift another 39% to 2,738 pounds ($3,563.40) in October, according to Investec Plc.
Full story
 see also GWPF paper by Patricia Adams: China's energy dream (pdf)
4) One in four Britons have gone without heating all day due to skyrocketing energy bills
Daily Express, 18 April 2022


Millions of households are feeling the pinch of the cost-of-living crisis, with higher taxes, soaring energy bills and the rising cost of food and petrol dealing a blow to the nation’s finances.
Energy bills surged to £2000 in April in a 50 percent increase after industry regulator Ofgem announced the price cap (maximum tariff) rise, which could even soar to £3000 in October.
Now, a UK poll has revealed that one in four (26 percent) of respondents have had to go without heating all day instead of forking out the extra funds to heat their homes.
And a staggering seventy percent have made day-to-day changes to their lives because of the cost-of-living crisis.

The poll by The Mail on Sunday also revealed that almost half of participants in the survey have cut back on electricity use.

And nearly a thrid have been buying less food as the nation grapples with tighter budgets.

While the Government has come up with a strategy that it claims can help to curb the rising bills, it appears it has a mountain to climb in convincing the public.

Up to 59 percent of people say its response to the crisis has made them feel “less favourable” towards Prime Minister Boris Johnson’s Government.

Full story
5) Net Zero will be new Brexit for Tories, says Richard Tice
The Daily Telegraph, 18 April 2022


Reform UK leader says Conservatives face ‘seismic crisis’ because of soaring bills and plans to exploit divisions at local elections

Net zero will be the new Brexit for the Conservatives, the leader of Reform UK said as he vowed to exploit Tory divisions at May's local elections.

The majority of Tory MPs were "out of touch" with their voters over climate policy, said Richard Tice.

Mr Tice's party will stand around 120 candidates in the local elections as well as a candidate in the Wakefield by-election. All will campaign on the benefits of fracking and restarting exploration in the North Sea.

He predicted that divisions within the Tories over net zero "will become as big as Brexit or bigger" in the coming months.

"It will be a seismic crisis for them because of what will happen to people's bills," he told The Telegraph. "Some Tories in the shires get bamboozled by the green lobby.

But most of the members are completely in our camp – cut taxes, go for growth, become self-reliant and use our own shale gas."

Earlier this year, The Telegraph reported that senior Cabinet ministers believe the Government should rethink its net zero plans as the country faces its biggest cost-of-living crisis in a generation.

The campaign group Vote Power Not Poverty, which Mr Tice co-founded, will publish a report accusing the Government of being "asleep at the wheel" by allowing energy production to fall to its lowest level in half a century.

Mr Tice, who said he hoped his candidates would take votes away from the Tories, added: "The Government will have to do something very significant, otherwise you are going to see millions of people not able to pay their bills.

"We are going to be focusing very hard over the next few years in the 'Red Wall' areas – we are polling well in those parts of the country. Our plan involves making things better for people, cutting taxes, cutting bills, and more growth."

The businessman and former MEP replaced Nigel Farage as leader of Reform UK in March last year. Before joining the Brexit Party, Reform UK's predecessor, he was a Conservative Party donor.

Reform UK will this week announce a candidate for the Wakefield by-election, triggered by the resignation of Imran Ahmad Khan, who was found guilty of child sex offences earlier this month.

"We will be the only candidate there campaigning on a manifesto of cutting taxes hard now, for shale gas, and the best way to level up is to use your own energy," Mr Tice said. "In a sense this is the first Red Wall seat that has come up – we will be going for it very hard."
6) UK braced for prolonged period of stagflation
Financial Times, 18 April 2022

The risk of a prolonged period of stagflation in the UK has increased after consumer prices surged more than expected while economic growth slowed to a crawl.

Recent official and informal economic data have fallen short of analysts’ expectations, prompting many to warn about stagflation and even an economic contraction in the second quarter of this year.

It comes as some experts say the government has not done enough to help households with the cost-of-living crisis resulting from soaring consumer price inflation. Opposition parties in parliament have also accused chancellor Rishi Sunak of providing inadequate support to Britons grappling with rising energy and food bills.

Stagflation, which refers to slow growth in gross domestic product coupled to high inflation, is a relatively rare economic situation that puts great strain on consumers and businesses.

Last week, official data showed that consumer prices increased at an annual rate of 7 per cent in March, the fastest pace since 1992. By contrast, growth in gross domestic product slowed to just 0.1 per cent in February, and real wages, adjusted for inflation, contracted by 1 per cent.

The figures “highlight the risk of a stagflation-like episode for the UK economy”, said Paul Hollingsworth, economist at the consultancy BNP Paribas Markets 360.

Ed Monk, associate director at the investment management company Fidelity International, said: “The spectre of stagflation stalks the UK economy.”

Last month the Office for Budget Responsibility, the UK fiscal watchdog, predicted this year would mark the biggest squeeze on household real incomes since records began in the 1950s.

Full story
7) Andrew Orlowski: The great hydrogen swindle – ‘green’ gas is not what it seems
The Daily Telegraph, 16 April 2022


Special interest groups however have discovered that the magic words “net zero” have the same incantatory power as “Open Sesame!”
Engineers will rarely tell you something is impossible, even when your proposal is a very bad idea. Computer scientists at Stanford and MIT in the 1970s came up with a wonderful expression for this, an assignment that was technically feasible, but highly undesirable. They called it “kicking a dead whale down a beach”. The folklore compendium The Hacker’s Dictionary defines this as a “slow, difficult, and disgusting process”. Yes, you can do it like that. But you really don’t want to.
In its efforts to show the world how keenly it is embracing CO2 emission targets, our Government has left a lot of dead whales on the beach for us, and as consumers, we’ll be the ones doing the kicking.
For example, it’s not impossible to heat a home with a heat pump, but it is a very noisy, ineffective and expensive way of doing it. An electric car might be fun to drive, but it is also expensive, and because of the inferior energy density of batteries, a petrol equivalent will always be lighter and go further. Nor at the end of the day will an EV be able to boast any CO2 emissions savings, we now know, thanks to Volvo. But perhaps the greatest whale to land on our beach is hydrogen.
Every day, manufacturers announce that they’re working on some kind of hydrogen initiative.

These include our best and brightest companies, such as Rolls-Royce and JCB. The Government has a Hydrogen Strategy. The Climate Change Committee thinks hydrogen is wonderful. You may think these are all signs that it’s a good idea. But things are not what they seem.
Hydrogen has two big problems which turn any project into a dead whale exercise.
The first is that pure hydrogen doesn’t exist – it’s both everywhere and nowhere. We must generate all the hydrogen we can then use, and this requires a lot of energy. This is fine when the output of the process is something very valuable to us, such as fertiliser. But less so when the output of the process must compete with much cheaper commodities, as it must in an energy market.
Secondly, hydrogen’s intrinsic physical properties create a whole range of unique problems. It’s a tiny atom that easily escapes confinement. Keeping it captive for storage is expensive, and moving it around safely even more so, because in liquid form it must be very cold. 
Hydrogen advocates tend to shrug off these issues – solving them will be someone else’s problem, they reckon. Individually, none of these factors make hydrogen as an energy carrier or storer impossible, but the whale-like properties are becoming harder to ignore.

To replace gas boilers with hydrogen boilers requires thousands of miles of new, much thicker, high-pressure pipes. Last year, Lord Martin Callanan, the energy minister, candidly described the plans to replace our gas boilers with hydrogen boilers “as pretty much impossible”. 
Wrong, m’Lud. It’s not impossible – it’s just a supremely bad idea. And when hydrogen explodes, it is quite spectacular. Right on cue, Australia’s first hydrogen carrying ship set sail for Japan this year, and burst into flames on its maiden voyage.
Again, hydrogen powered transport is not impossible, it’s just hampered by reality. Liquified hydrogen may be as light as petrol or kerosene, but keeping it at -257C requires much heavier apparatus. Converting a two engine turboprop from kerosene to hydrogen, I noted here recently, increases the weight of the engine from two tonnes to 13 tonnes.
As for storage, the story is little better. Wind often generates electricity when it is not needed (and doesn’t generate it when it is needed). So when the wind is blowing, the hydrogen lobby argues, we can create “green hydrogen” using electrolysis. These electrolysers are expensive, and sensitive, and switching them on intermittently to produce the mythical green hydrogen isn’t economic.
So green hydrogen is really not one, but two dead whales, engaged in a gruesome act of congress.
In his devastating assessment of the Government’s energy paper, Prof Dieter Helm calls it a “lobbyist’s utopia”. Prof Helm, an energy expert, describes how rent-seekers “[react] to each problem… by inventing another intervention. Each has unintended consequences, and these unintended consequences need more ‘fixes’”.
That’s green hydrogen in a nutshell.
Green hydrogen may be generated reliably and cheaply using high-temperature gas-cooled nuclear reactors (HTGRs), a technology the Japanese have been refining for two decades. Japan’s first HTGR opened in 1997, but incredibly, was out of commission for a decade. 

The history of nuclear energy is full of such stories, of untapped potential, and of avenues not explored. Our own Government tepidly hopes for a “HTGR demonstration by the early 2030s at the latest.” But even with a fleet of HTGRs generating hydrogen, the nasty stuff still needs to be stored and moved, and those costs haven’t gone away. Using hydrogen remains the worst way of doing almost anything.
Special interest groups however have discovered that the magic words “net zero” have the same incantatory power as “Open Sesame!”. In Arabian Nights, the phrase opened up a cave full of treasure. Here, they open up an unlimited trove of research grants and subsidies, and tap into abundant buckets of ill-directed “green” capital. The dead whale is never removed from the beach – and perhaps that’s the point.
8) Brian Gitt: Energy myths are triggering a new Dark Age in Europe
Real Clear Energy, 18 April 2022


Europe shows what happens when you adopt policies based on false ideas—myths about energy that all but guarantee high prices, power blackouts, and a crashing economy. 
Europe has an energy crisis. Factories are halting operations in the face of soaring energy prices; families are paying 50% more for heating (or opting to freeze in their homes), and  Europe as a whole continues to destabilize its political position by making itself dependent on Russia for natural gas.
Europe shows what happens when you adopt policies based on false ideas—myths about energy that all but guarantee high prices, power blackouts, and a crashing economy. Here are 6 of them: 

MYTH 1: The world is transitioning to solar, wind, and batteries.
Fact: Solar and wind power are unreliable, raise electricity rates, and over-consume minerals and land. Even after investing $2.7 trillion in them over the last decade, solar and wind still produce 3% of global energy.
MYTH 2: Solar and wind power are the best ways to lower greenhouse gas emissions. 

Fact: The biggest emissions reductions over the last 15 years have been due to shifts from coal to natural gas. Natural gas produces only 10% of the air pollutants and 50% of the CO2 that coal does. 
Proponents of solar and wind power can talk about the potential of these technologies as much as they want, but the reality is—per Myth 1—the world is far, far away from being able to manufacture, deploy, and maintain this tech efficiently.

MYTH 3: Solar farms reduce household utility bills.
Fact: Households pay more for electricity where governments mandate solar power: households in the United States (US) pay 11% more in the 29 states with solar mandates; households in California pay 80% more than the US avg; and households in Germany are paying double for their electric bills because Germany spent hundreds of billions of euros on building massive wind and solar farms.

MYTH 4: Nuclear power is dangerous.
Fact: Nuclear is the safest, most powerful and reliable way to generate low-emission electricity. Only about 200 people have died as a result of radiation from nuclear accidents in over 60 years. This number includes the accidents at Chernobyl, Three Mile Island, and Fukushima.
Even if you count the cancer diagnoses among people exposed to radiation, the harm from nuclear plant accidents remains minuscule in contrast with the millions who die every year from the effects of coal pollution.

MYTH 5: Nuclear waste is a big problem.
Fact: Nuclear is the only energy source that prevents waste from going into the environment. All the nuclear fuel ever generated in the US is safely contained and can fit on a single football field stacked less than 10 yards high. 

In fact, used nuclear fuel is not strictly waste because some advanced reactor designs in development could run on used nuclear fuel in the future. More than 90% of its potential energy still remains in the fuel, even after five years of operating in a reactor.

MYTH 6: Electric vehicles (EV) reduce CO2 emissions.
Fact: EVs don’t eliminate emissions; they just shift emissions from the tailpipe to the power plant. If the power source is dirty, so is the EV. More than 50% of new EV sales are expected in China where most power plants are fueled by coal, the dirtiest power source.
Energy Myths Are a Global Threat
Myths like these continue driving bad investments and bad policies. They hurt the poorest among us by weaponizing good intentions. 
We all want to feel like we’re making the world a better place. But feeling like we’re doing the right thing doesn’t mean we are. I championed energy efficiency, solar, and wind power for over two decades—first as executive director of a green building non-profit, then as CEO of a consulting firm specializing in clean energy, and more recently as founder of a cleantech startup.
All of this made me feel like I was fighting the good fight to promote people’s wellbeing and protect the environment. But I was wrong. My agenda was harming both. I just couldn’t admit it. My sense of identity was tied to false beliefs about energy, and my ignorance and ideology blinded me to what actually does help the planet. 
I see other people making the same mistakes today.
Europe isn’t the only place basing policies on these energy myths. California, New York, and New England are doing it too. If the US wants to avoid what’s happening in Europe, we need to see Europe’s example for what it is: a canary in a coal mine. We need to break free of the pernicious influence of these myths. We need to stop taxing the poor with the high cost of false moral comfort, and build an energy system that maximizes human flourishing and minimizes environmental harm.

Here’s how to start:

* End subsidies and incentives for solar and wind.

* Retire the dirtiest coal power plants.

* Build new efficient natural gas power plants (and hydro and geothermal where possible).

* Reform regulations and build nuclear power plants.

* Invest in energy research and development.
If Europe takes these steps, it may avoid a new dark age.
9) Mark P Mills: The Coming Green-Energy Inflation
The Wall Street Journal, 17 April 2022

Policy makers do have a tool they’re familiar with to conquer more minerals inflation: Use President Obama’s famous “I have a pen and a phone” logic to repeal green mandates that inflate demand.

If you think inflation is bad, wait until the rest of the commodity markets really heat up. Although prices for basic materials like copper, aluminum, nickel and steel—used to build everything—have already inflated, they haven’t yet escalated as much as fuels and energy-driven commodities like food. But they will if European and U.S. policy makers have their way. Buckle up.

On both sides of the Atlantic, leaders promise that more green energy—solar, wind and electric vehicles—will cure Western overreliance on volatile oil and natural gas and further isolate Russia. But that cure would be far worse than the disease because green energy’s staggering use of basic minerals will fuel inflation.

Just as inflated prices for oil and natural gas rip through the economy, so do the costs of basic minerals, which are needed to build every class of product from appliances and houses to computers and cars. And while materials have for most of recent history constituted a minor share of the final cost of products, that share becomes major if mineral prices balloon.

Producing energy from wind and solar machines, and especially from batteries, requires an enormous increase in supplies of copper, nickel, aluminum, graphite, lithium and other minerals. Each electric vehicle contains about 400 pounds more aluminum and about 150 pounds more copper than a conventional car. That’s really going to add up at the proposed levels of production. The same goes for the suite of minerals necessary to build the tens of thousands of wind turbines and millions of solar modules needed for green plans. Unfortunately, as the International Energy Agency and others have pointed out, supply of critical minerals isn’t expanding apace. Not even close. That’s an incendiary formula for inflation.

To wit: In Paris on March 24, the IEA convened a summit of member nations to strategize on replacing Russian oil and gas supplies while also reaffirming “decarbonization” goals. Attendees issued a declaration to “accelerate” as a “top priority” the green-energy transition to replace hydrocarbons. President Biden and the president of the European Union both reinforced the theme of a green-energy “double down.”

On the face of it, that seems logical. Huge increases in the use of solar and wind power, and electric vehicles, could displace enough fossil-fuel use to bring down prices of natural gas and oil. Or it could insulate markets from inflation triggered by the loss of, or sanctions against, of Russian supplies. Energy Secretary Jennifer Granholm said as much when opening that Paris summit.

Whether realistic or not, the mere pursuit of such a strategy is inflationary. And it would last longer than food or fuel inflation. International Monetary Fund economists last year looked at mineral commodity data going back to 1879. They calculated the inflationary impact from trying to meet mineral demands to build enough machinery for a green double-down. Metal prices would reach historical peaks, they wrote, “for an unprecedented, sustained period of roughly a decade.” The IMF also pointed out that the “integrated assessment models” for the energy transition “do not include the . . . potential rise in costs.”

Epic escalation in the costs of minerals would create powerful headwinds for the Federal Reserve’s efforts to tame inflation. Evidence supporting the IMF’s warning is already at hand.

Lithium—now well-known because of car and grid batteries—has seen prices soar nearly 1,000% in the past two years. Prices of copper and nickel, more widely used, are up 200% and 300% respectively over the same period. Aluminum, the second-most-used metal on earth after iron ore, is up 200% and trading at a 30-year high.

While metals historically have constituted a minor share of the fabrication cost of most products, the picture changes with stratospheric input prices. A doubling of aluminum prices would add input costs that wipe out nearly the entire profit margin for U.S. manufacturers of heavy vehicles, according to a 2020 United States Geological Survey paper. Higher prices for cars and trucks are inevitable.

Commodity materials inflation has already ended the long-run decrease in battery, solar-module and wind-turbine costs. That’s because minerals alone constitute over half the cost of fabricating batteries and solar modules, and about 20% for wind turbines. Well before the latest mineral escalations, forecasters saw cost rises in 2022 of 5% for batteries, 10% for wind machines and 25% for solar modules. The biggest Chinese and U.S. electric-vehicle makers, BYD and Tesla, recently announced price increases.

The potential for greater inflationary pressure should be obvious. Despite fast growth, the world still gets only 3% of its energy from wind and solar. Less than 1% of all cars on global roads are battery-electric. ING determined in late 2021 that a double-down on electric-vehicle goals would alone soak up about half of all current aluminum and copper production and about 80% of global nickel output.

Polls show that consumers believe increasing oil and natural-gas production reduces inflation. We’ve seen genuflections to that reality on both sides of the Atlantic: Europeans petitioning for more fuel from Algeria and Qatar, and the Biden administration releasing oil from the Strategic Petroleum Reserve. But no one in Europe or the U.S. is talking about a surge in mining capacity, nor is a Strategic Energy Minerals Reserve even possible.

Mining is like anything else. Eventually high prices stimulate more production. But the slow real-world expansion capabilities of mining explains the IMF’s forecast that mineral inflation would last “roughly a decade” until supply catches up.

Most analysts focus on where the gigatons of new minerals will come from, and the derivative geopolitical impacts of the new supply chains. It would shift Europe’s dominant dependency from Russia to China; for America, from domestic industries to China. But policy makers are going to be hit first by the fast and furious inflationary effects of chasing minerals.

Policy makers do have a tool they’re familiar with to conquer more minerals inflation: Use President Obama’s famous “I have a pen and a phone” logic to repeal green mandates that inflate demand. As Ms. Granholm told the IEA summit, the “decisions we make today . . . will shape the energy landscape of tomorrow.”

Mr. Mills is a senior fellow at the Manhattan Institute, a partner in Montrose Lane, an energy-tech venture fund, and author of “The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and a Roaring 2020s.”
10) Rupert Darwall: Woke investors threaten the West’s security
Real Clear Energy, 18 April 2022
In an era of rising geopolitical tensions, it is folly to let Wall Street determine the nation’s energy policy.

Since Russia attacked Ukraine two months ago, Western governments have been learning the hard way about the critical importance of energy to their national security. Germany’s 20-year, trillion-dollar “Energiewende” (Energy Transformation) has made its economy totally dependent on supplies of Russian natural gas and paralyzed its response to Russian aggression. French president Emmanuel Macron faces a tougher re-election fight this month thanks to soaring energy prices and failure to replace the nation’s aging fleet of nuclear power stations. The Biden administration is tapping America’s Strategic Petroleum Reserve in an effort to tamp down energy costs as inflation heads toward double digits. 

As the West grapples with the energy implications of a hostile Sino-Russian alliance, the steering group of the Net-Zero Asset Owner Alliance, whose members manage over $10.4 trillion of assets, issued a statement urging Western governments not to sacrifice climate goals for energy security. “The world is still heading for an excess of fossil fuel-based energy use that will vastly exceed the carbon budget needed to meet the 1.5° Celsius Paris agreement goal. This trend must be halted,” the United Nations-backed alliance said in its April 8 statement, arguing that “the national security argument for accelerating the net-zero transition has strengthened considerably.”  

What, one might ask, is the standing of asset managers to opine on national security matters? They have no expertise in this domain. It turns out that their understanding of the economics of energy policy is defective, too.   
The Net-Zero Asset Owner Alliance claims that development of new oil and gas reserves will lock in fossil fuel subsidies, exacerbating market distortions. In fact, the International Energy Agency (IEA) in its 2021 net-zero report states that under its net-zero pathway, tax revenues from oil and gas retail sales fall by about 40% over the next twenty years. “Managing this decline will require long-term fiscal planning and budget reforms,” the IEA warns. Similarly, Britain’s Office of Budget Responsibility estimates that net zero policies will result in the loss of tax receipts representing 1.6% of GDP. So much for the fossil fuel subsidy myth. If fossil fuels were heavily subsidized, eliminating them would mean fossil fuel subsidies disappear. Instead, it’s tax revenues that would melt away to zero. 
The net-zero investors cite figures for the decline in solar and wind energy costs. These numbers are based on so-called levelized cost of energy (LCOE), a metric that aims to measure a plant’s lifetime costs. Wind and solar power are intermittent, but LCOE metrics exclude the costs of intermittency, which increase the more wind and solar are put on the grid. Because wind and solar output responds to weather and not to demand, the value of this output declines the more installed wind and solar capacity is available. It was for these reasons that MIT professor of economics Paul Joskow concluded in a foundational 2011 paper that using LCOE metrics to compare intermittent and dispatchable generating technologies, such as coal and natural gas, is a “meaningless exercise.” 
Wind and solar investors don’t need to understand the economics of the grid to make money – they are shielded from the intermittency costs their investments inflict on the rest of the grid, which is one reason why their views on energy policy can be taken with a pinch of salt. Their economic illiteracy does, however, make it easy for them to subscribe to the green fairy tale of 100% renewables. They’re not responsible for keeping the lights on – that depends on traditional power plants staying fueled up and ready to spin, which is what Germany can’t do without Russian gas. Adopt the net-zero alliance’s call for no new fossil-fuel investment, and the cost of energy is bound to spiral. And if the lights go out, politicians – not woke investors – get the blame.  

Investors’ opinions on energy and national security would matter less if they didn’t have political power. Bloomberg opinion writer Matt Levine argues that asset managers of giant funds form a parallel system of government that exercises overlapping legislative powers with those of governments. These government-by-asset-managers, as Levine calls them, tell companies to do things they think are good for society as a whole, “making big collective decisions about how society should be run, not just business decisions but also decisions about the environment and workers’ rights and racial inequality and other controversial political topics.” 
Foremost among these areas is climate policy. Although the Biden administration has set a net-zero goal, Congress has not legislated it, and it lacks the force of law. The absence of legislation passed by democratically accountable legislators, however, presents no barrier to government-by-asset-managers legislating climate policy for the companies in which they invest. “Investors are making net zero commitments for themselves and demanding that companies issue greenhouse gas reduction targets and transition plans for meeting those targets,” says the Reverend Kirsten Snow Spalding of the not-for-profit Ceres Investor Network on Climate Risk and Sustainability.  
Neither Spalding nor the Net-Zero Asset Owner Alliance make a case that forcing net-zero targets on companies will boost investor returns, demonstrating that this is not about investors’ traditional concerns – making money – but about pursuing politics by other means. In this, the Securities and Exchange Commission (SEC) is working hand in glove with woke climate investors. Commenting on the SEC’s newly proposed rule on climate-risk disclosure, Spalding says that for investors who have committed zero emissions by 2050, “this draft rule is absolutely critical.”  
It’s no coincidence that SEC chair Gary Gensler chose Ceres to make his first appearance to talk about the SEC’s proposed rule. Of course, Gensler didn’t justify it in the same terms as Spalding. To have done so would have heightened the risk of the courts striking down the rule in subsequent litigation. Instead, Gensler attempted to justify the rule as bringing “some standardization to the conversation” and putting material climate information – the SEC issued guidance in 2010 on how companies should disclose such risks – in one place, saving investors the bother of piecing together the information from different sources. Gensler’s explanation, to put it politely, is an implausible one for imposing on corporate America what amounts to a parallel climate-reporting regime to the established framework of financial reporting. Whatever Gensler might say in public, the effect of the SEC rule – if implemented – would be to empower investors to impose net-zero targets on companies, to monitor progress in meeting them, and to hold company boards to account for them.  
Unlike elected politicians, woke climate investors are not accountable for the effects of their climate policies: They exercise power without responsibility. This arrangement weakens America’s ability to respond to the geopolitical challenges of a revanchist Russia and an expansionist China. “We are on a war footing – an emergency,” Energy Secretary Jennifer Granholm declared at the CERA energy conference in Houston last month. “We have to responsibly increase short-term supply where we can right now to stabilize the market and to minimize harm to American families.” Addressing oil executives in the audience, Granholm told them: “I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply . . .  right now, we need oil and gas production to rise to meet current demand.” 
As Granholm suggested, woke investors have been trying to do the opposite. Despite the war in Ukraine, there has been no let-up in investor pressure on oil and gas companies to scale down their operations. Whatever criticisms might be made of the Biden administration’s handling of the war in Ukraine, it is responsible for taking the awesome decisions that war involves. Investors, by contrast, have no responsibility for the nation’s security and America’s ability to lead the West. By helping investors impose their desired energy policies on American oil and gas companies, the SEC is undermining the national security prerogatives of the Biden administration and eroding America’s ability to meet the challenges of a dangerous world. The SEC is playing in a domain that it has no business being in. 
Rupert Darwall is author of “Climate-Risk Disclosure: A Flimsy Pretext for a Green Power Grab.” 
11) Walter Russell Mead: The end of Russia’s Empire?
The Wall Street Journal, 19 April 2022

As Russia and Ukraine prepare for what could be the biggest tank battle in Europe since World War II, the future of Vladimir Putin’s war remains impossible to predict.



Large-scale tank and artillery engagements in the flat open terrain of eastern Ukraine may favor Moscow, and the sheer weight of Russia’s military machine could force territorial gains, but other outcomes are possible. Ukrainian courage, tactical brilliance and access to Western arms and equipment could produce another string of humiliating setbacks for Russia.

The worst-case scenario for Mr. Putin would be for Russia’s war in Ukraine to end in a comprehensive military defeat, with the collapse of pro-Russian enclaves in the Donbas and Moldova and Ukraine’s integration into the West. Such a defeat would be more than a personal humiliation; it could be a career-ending setback for him. It would also deliver a psychological and strategic shock to Russia’s standing and self-image. The course of Russian history would change.

Russia would not be the first former empire to face a moment of historical reckoning. Spain’s 1898 defeat at the hands of the upstart Americans was a watershed moment in Spanish history. The global empire that had defined Spain since the voyages of Columbus had suddenly disappeared, and Spaniards began to question everything from the monarchy to the role of the church.

For Britain and France, their ignominious failure in the 1956 Suez campaign forced both countries to realize that they were no longer independent global powers. The glories of empire were over, and the two former superpowers began, painfully and reluctantly, to adjust to their new circumstances.

A decisive Russian failure in Ukraine could be Moscow’s Suez moment. If Russia fails to conquer the heart of Ukraine (western Ukraine is less of a concern in Russian historical mythology), Russians will be unable to avoid the conclusion that the empire of the czars, painfully assembled over many centuries and restored by Lenin and Stalin after the disasters of World War I, has irrevocably fallen. This will force the kind of deep introspection in Russia that other former empires have had to face. The consequences will be far-reaching.

Under the Romanovs, the communists and Mr. Putin, Russian political thought has been shaped by three beliefs: that Russia is different, that the difference is transcendentally important, and that it gives Russia a unique role in world history. Defeat in Ukraine would radically undermine confidence in these ideas, plunging Russia into an identity crisis with unpredictable political consequences.

The czars, commissars and Putinists all saw Russia as both unique and committed to a struggle against the West. For the czars, Moscow was the “third Rome” that would carry the torch of Christianity and civilization after the first Rome fell to barbarian invaders and the second Rome (Constantinople) fell to the Turks. For the communists, Moscow was the citadel of the global proletarian revolution, fated to annihilate the decadent bourgeois culture of the West. Mr. Putin and his acolytes see the world in similar terms, with Russia committed to a war of survival against Western decadence, soullessness and unbridled greed.

To hold its own in the unequal competition with the more developed West and to provide governance suited to its unique psyche, Russia, its rulers argued, needed to concentrate power at the top. Only someone as strong as Catherine the Great, Stalin or, his admirers maintain, Mr. Putin can enable Russia to prevail in its confrontation with the West.

Ukraine is the heart of the matter. With Ukraine under its thumb, Moscow sees itself as the greatest power in Europe. Without Ukraine, the dream that Russia can recapture the Soviet Union’s status as a superpower will die a bitter death.

Worse, perhaps, from the viewpoint of the “Eurasian” theorists and radical Russian nationalists who provide a veneer of legitimacy for Mr. Putin’s regime, a victory for Orthodox, Slavic and democratic Ukraine over despotic Russia wouldn’t only challenge the personal legitimacy of Mr. Putin. It would challenge the idea of Russian exceptionalism and fatally undermine the view that despotism is the form of governance best suited to the Russian soul.

As the war exposes the darkness inherent in Mr. Putin’s regime, and as atrocities abroad and repression at home impress the mark of Cain ever more deeply on its brow, it is impossible not to hope for a Russian defeat.
Nevertheless, caution is in order. Mr. Putin and those around him know that in Ukraine they aren’t fighting only for an adjustment of frontiers. They are fighting for their world, and it may be psychologically impossible for them to accept defeat until every measure, however ruthless, and every weapon, however heinous, has been brought into play.

For Vladimir Putin and the people around him, the stakes in Ukraine are almost infinitely great.

The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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