Fossil fuels lined up to play it again
Irwin Stelzer
January 22 2023, 12.01am GMT
They might not admit it, but they know their beloved Paris is no more. Kerry knows most corporations have no idea how to fulfil the pledges made by some 200 nations in the city’s 2015 agreement on climate change, and Gore believes we are creating emissions equivalent to 600,000 Hiroshima atom bombs every day. If so, that makes the Paris temperature target further limiting global warming to 1.5C unattainable.
America and other nations’ finances are being painted too red to leave much room for green. Covid relief, the needs of Ukraine, and the unrelenting demands of the left for more social spending are consuming realistically available resources.
No policy could survive all this, and climate policy surely has not. With national budgets under strain, income transfers from richer to poorer countries to reduce global emissions get harder to justify. The billions promised by rich nations to developing ones have not materialised, and funds that have become available have passed through so many sticky fingers that little ends up in the hands of the intended recipients.
Perhaps an even more important reason not to cling to Paris-vintage policy is the realisation that climate change is only one of many costs to be considered when making policy — that reducing the total impact on what is being called “nature” should be the main focus. Electric vehicles (EVs) might avoid the cost imposed by CO2 emissions from petrol-burning vehicles, but create even greater environmental damage by requiring the mining and processing of materials such as lithium and graphite for batteries. Filling a petrol tank just might be less harmful than charging a battery containing “dirty” ingredients and powered by generators increasingly reliant on fossil fuels.
In short, the issues that dominated Paris are now merely a sub-set of a larger, more significant problem. America’s chief executives know the difference between the world of 2015 and today. Pinched by rising interest rates, they are now focused on profit margins, and face increasing pressure to keep their noses to the grindstone rather than insert them in policy areas best left to, heaven help us, politicians.
Those elected officials know two things that, although true, were not quite so obvious only eight years ago.
The first is that there must be economic growth to generate tax receipts to pay for costly programmes, especially with a national debt already at $31.5 trillion (£25.4 trillion) and rising, and the debt ceiling a red-hot political issue. The second is that there can be no economic growth without reliance on fossil fuels for decades to come.
Doubt that? Then consider this. Sponsors here in America are experiencing considerable difficulty in getting green projects started, but little difficulty in increasing the flow of fossil fuels, despite Biden administration promises to put the oil industry out of business. Supply-chain snags, unclear tax regulations and long waits to connect to the grid (3.7 years for 8,600 projects delivered between 2011 and 2021, against 2.1 years for 5,600 projects completed a decade ago) have caused a 77.5 per cent drop in new wind installations in the third quarter of 2022 compared with a year earlier. The good news is that there are investors eager to dip into the new $369 billion honeypot of tax credits; the bad news is that their projects are stalled. Besides, those projects threaten the stability of the electric grid.
Meanwhile, US natural gas production is at a record high, crude oil production at its highest level with the exception of 2019, and 90 per cent of the 600 massive offshore drilling rigs available worldwide last year were working or under contract, compared with 63 per cent five years earlier. Germany is turning to the dirtiest variety of coal, India has announced it will continue to build coal- fired generating plants rather than sacrifice growth, and China has 95 such plants under construction. Britain has reactivated its natural gas storage facility.
None of this is reason for despair. Adaptation proceeds apace. Meanwhile, investment in low-carbon energy technology rose to $1.1 trillion in 2022 — on a par with investment in fossil fuel supply. Growth, if not stifled by misbegotten fiscal and monetary policies, will provide innovators with cash and opportunities, and it takes only one to make a difference — think Elon Musk.
[email protected]
Irwin Stelzer is a business adviser
Irwin Stelzer
January 22 2023, 12.01am GMT
They might not admit it, but they know their beloved Paris is no more. Kerry knows most corporations have no idea how to fulfil the pledges made by some 200 nations in the city’s 2015 agreement on climate change, and Gore believes we are creating emissions equivalent to 600,000 Hiroshima atom bombs every day. If so, that makes the Paris temperature target further limiting global warming to 1.5C unattainable.
America and other nations’ finances are being painted too red to leave much room for green. Covid relief, the needs of Ukraine, and the unrelenting demands of the left for more social spending are consuming realistically available resources.
No policy could survive all this, and climate policy surely has not. With national budgets under strain, income transfers from richer to poorer countries to reduce global emissions get harder to justify. The billions promised by rich nations to developing ones have not materialised, and funds that have become available have passed through so many sticky fingers that little ends up in the hands of the intended recipients.
Perhaps an even more important reason not to cling to Paris-vintage policy is the realisation that climate change is only one of many costs to be considered when making policy — that reducing the total impact on what is being called “nature” should be the main focus. Electric vehicles (EVs) might avoid the cost imposed by CO2 emissions from petrol-burning vehicles, but create even greater environmental damage by requiring the mining and processing of materials such as lithium and graphite for batteries. Filling a petrol tank just might be less harmful than charging a battery containing “dirty” ingredients and powered by generators increasingly reliant on fossil fuels.
In short, the issues that dominated Paris are now merely a sub-set of a larger, more significant problem. America’s chief executives know the difference between the world of 2015 and today. Pinched by rising interest rates, they are now focused on profit margins, and face increasing pressure to keep their noses to the grindstone rather than insert them in policy areas best left to, heaven help us, politicians.
Those elected officials know two things that, although true, were not quite so obvious only eight years ago.
The first is that there must be economic growth to generate tax receipts to pay for costly programmes, especially with a national debt already at $31.5 trillion (£25.4 trillion) and rising, and the debt ceiling a red-hot political issue. The second is that there can be no economic growth without reliance on fossil fuels for decades to come.
Doubt that? Then consider this. Sponsors here in America are experiencing considerable difficulty in getting green projects started, but little difficulty in increasing the flow of fossil fuels, despite Biden administration promises to put the oil industry out of business. Supply-chain snags, unclear tax regulations and long waits to connect to the grid (3.7 years for 8,600 projects delivered between 2011 and 2021, against 2.1 years for 5,600 projects completed a decade ago) have caused a 77.5 per cent drop in new wind installations in the third quarter of 2022 compared with a year earlier. The good news is that there are investors eager to dip into the new $369 billion honeypot of tax credits; the bad news is that their projects are stalled. Besides, those projects threaten the stability of the electric grid.
Meanwhile, US natural gas production is at a record high, crude oil production at its highest level with the exception of 2019, and 90 per cent of the 600 massive offshore drilling rigs available worldwide last year were working or under contract, compared with 63 per cent five years earlier. Germany is turning to the dirtiest variety of coal, India has announced it will continue to build coal- fired generating plants rather than sacrifice growth, and China has 95 such plants under construction. Britain has reactivated its natural gas storage facility.
None of this is reason for despair. Adaptation proceeds apace. Meanwhile, investment in low-carbon energy technology rose to $1.1 trillion in 2022 — on a par with investment in fossil fuel supply. Growth, if not stifled by misbegotten fiscal and monetary policies, will provide innovators with cash and opportunities, and it takes only one to make a difference — think Elon Musk.
[email protected]
Irwin Stelzer is a business adviser
