Wednesday , May 22 2024
Home / Energy / Net zero is dead – so what now?

Net zero is dead – so what now?

There is a deep irony that Europe’s wind turbine factories were among the first to close in the face of our growing energy crisis.  Nevertheless, it goes a long way to demonstrating the fundamental flaw in the net zero project – while the harvested energy of the wind may be renewable, the technologies that do the harvesting are not.  Indeed, these supposedly “green” technologies depend upon complex global supply chains powered by fossil fuels at every stage of their manufacture, transportation, deployment, maintenance, and decommissioning.  But that inconvenient truth was never allowed to get in the way of the technocratic net zero fantasy – aka “the great reset,” “the green new deal,” or “the fourth industrial revolution.”

It wasn’t, you see, just us who were “energy blind.”  Indeed, those at the bottom of the income ladder tend to be more aware of the importance of energy – including having enough calories to ward off hunger – than the technocrats and elites at the top of the pyramid, who tend to believe that they are perched up in the clouds solely due to their own efforts, rather than to having burned their way through a mountain of coal and an ocean of oil to generate their theoretical wealth.  And so, they sold us this children’s story about how complexity and science don’t really matter, and that so long as we all wish hard enough, we could replace all of the coal, gas and oil with sunlight, wind and pixie dust.  And in doing so, nothing would really change, and we would all own nothing but still live happily ever after.

It didn’t take long for a host of shysters to climb on board the gravy train.  The bottom feeders were the people behind the raft of faux-green crowd funding scams like solar roadways and tree-shaped Savonius wind turbines which consume far more energy than they can ever produce.  At the top was the scrum of corporations and their “green” NGO enablers, fighting to get their snouts into the corporate welfare trough of government subsidies and kick-backs.  These are organisations which would have you believe that they are underdogs fighting an uphill battle against global vested interests solely to save future generations from catastrophe.  The reality is that in 2022, they are a global vested interest worth some $900bn today and expected to rise to $1.2tn by 2030.  And that’s just the direct energy.  Add in the full spectrum of Environment Social and Governance (ESG) investing, and we are looking at some $50tn today, rising to $160tn over the next decade.

The giveaway was the dissonance between their words and their deeds.  It was as if the rich folks who live in the swanky penthouse apartments had come running down to the lower floors screaming that the building was on fire and that everyone had to evacuate.  But then, when all of the ordinary folks were left outside in the cold rainy night, dressed only in their pyjamas, the rich folks went back up to their penthouses and carried on as if nothing had happened.  That was the so-called “climate emergency,” the claim that “we” – by which they meant only the little people – had to act now – which always seemed to amount to more corporate welfare for them and more eco-austerity for everyone else – to prevent disaster by reaching “net zero” by the end of the decade.  The trouble is that, like communism and pandemic lockdowns before it, net zero only works so long as nobody tries doing it for real.

The promise – which none of the activists, NGOs or Green Party politicians, who knew better, sought to correct – was that we could seamlessly replace our old fossil fuel (and in some versions nuclear) energy with non-renewable renewable energy-harvesting technologies (NRREHTs) without interrupting economic growth and rising living standards.  Anyone who raised awkward questions about the tiny energy return, the intermittency or non-renewability of what was being proposed could be dismissed as a “climate denier” – as if objecting to a flawed non-solution was the same as denying the problem.   So long as all that was asked of us was that we recycle our plastic and turn the thermostat down a couple of degrees, nobody was going to object.  Nor did it seem to matter much that the state was handing out huge subsidies to deploy NRREHTs and adding the costs onto our electricity bills back in the days when the annual bill was some £500 or so.

Not, of course, that we don’t already know what an economy which runs solely upon renewable energy looks like.  Indeed, there were two periods in the history of Europe when our ancestors came close to the very peak of what was technologically possible using renewable energy alone.  The first was the first century Roman Empire, which reached a level of technology which would not be seen again until the seventeenth century – the second renewable economy peak, based around the Atlantic slave and commodity-trading system.  And therein is an awkward similarity that the Romans had with their seventeenth century European counterparts – they depended upon a mass of slaves to keep the system running.  Less obviously though, life – even for those who were nominally free – tended to be short and brutal.  More importantly though, those renewable energy-based economies could only support a tiny fraction of the population which is currently alive as a consequence of fossil fuels.  At its height, the Roman empire reached around 70 million in an area encompassing Europe, North Africa and a large part of the Middle East.  In 1650, the global population was around 500 million.  Today it numbers eight billion!  Take away the oil and gas-based artificial fertilisers, pesticides and herbicides, along with the oil-powered ships, planes, trains and trucks which move the food from field to fork, and seven out of every eight of us will be dead within a year.

Even before we reach such extremes though, the decline in living standards for the so called “golden billion” – the people in the developed states of western Europe, Japan, Australasia and North America – is likely to cause economic, social and political upheaval on a scale that few proponents of net zero will survive.  Indeed, we are already witnessing the foreshocks of this as decades of wrong-headed energy and economic policy comes home to roost.

Economically, western governments are trapped between attempting to inflate the crisis away or opting to pull the rug out from beneath the economy by creating a debt default followed by a cascading depression greater than anything in living memory.  Business as usual – which essentially means borrowing more new currency into existence to repay current debt, even as an energy-constrained real economy can’t grow much further – is no longer possible because we have arrived at what we might call “peak debt.”  In short, debt creation is the point where the financial and real economies are joined.  To create the currency we need, governments, corporations and households must take out loans.  And because all currency is debt, and so there is never enough currency to repay the loan and the interest, we are on a treadmill which requires that we borrow more currency today than we did yesterday.  But nobody takes out a loan just so they can look at the additional numbers on their bank statement.  Loans are taken out to buy stuff or to invest in productive real economy activities.  And this system worked reasonably well so long as we had abundant surplus (minus the cost of production) energy and resources available to us.  Notice though, that the big economic crises – the 1930s, the 1970s, the years after 2005, and the current moment – were all triggered by energy shortages which, in turn, increased the cost of everything else in the economy.  In such circumstances, corporations, businesses and consumers switch from taking out loans to paying down debt – that is, we collectively switch from currency creation to currency destruction.  And because there is never enough currency to pay the debt with interest, we must either use inflation to devalue the outstanding debt or we must accept a depression that wipes out our collective nominal wealth… little wonder that Boris Johnson went on holiday rather than start trying to deal with it.

Net zero was supposed to provide the real economy with new productive activity that would get borrowing going again.  But this is where economic fantasy crashes headlong into the laws of thermodynamics.  To be productive, the net zero project would have to generate more surplus energy for the wider economy than is currently available from fossil fuels which have themselves been suffering declining surplus energy since the 1970s.  Indeed, in reality NRREHTs have more of a parasitic relationship to the productive economy, syphoning surplus energy away via subsidies while simultaneously undermining the wider energy system.  But again, so long as nobody was foolish enough to allow NRREHTs to grow to more than 15 percent of their energy mix, hard pressed Grid engineers could be counted on to find work-arounds to balance the intermittency and to prevent sudden drops in frequency from causing widespread power outages.  Unfortunately, governments in both Germany and the UK opted to close coal and nuclear long before anyone had invented a storage solution or a viable (so not hydrogen) alternative to gas to balance intermittency.  But since there is perhaps another 50 years of gas supply at current rates of consumption, provided our leaders didn’t do anything as foolish as locking down economies for two years or disconnecting us from Russian gas, then there might have been time to find storage solutions and workable new energy generating technologies.

Politicians and establishment journalists will no doubt try to blame our growing woes on “madman Putin,” but gas shortages and rising prices predate the invasion of Ukraine.  And the flaws in our energy system which are now coming back to haunt us, were baked-in when energy was privatised.  There is more to it though.  Because as part of the net zero project, we went out of our way to destroy investment in fossil fuels before anyone had figured out how to make NRREHTs work in practice… the economic equivalent of sawing through the branch you’re sitting on.  As Juliet Samuel at the Telegraph argues:

“The original error was not with the science of climate change. It was not with the notion that we should phase out coal. But sometime around 2014-16, regulators, lawyers and politicians began to run with the idea that the trashing of ‘big oil’ (and so on) led by students in feathered war bonnets was costless, popular and green.

“What followed was a co-ordinated effort to run down fossil fuel production, seemingly without a thought for the vastly different environmental impacts of gas versus coal or the need for Western economies and people to enjoy a reliable supply of energy. In 2015, the then Bank of England governor Mark Carney (yes, him again) gave a speech talking up the risk of climate ‘stranded assets’ – energy investments that would be rendered worthless by climate change legislation…

“Industry saw the writing on the wall. Utilities shut down their long-term gas contracting departments and began to buy gas at the going price on the day, fatally undermining security of supply and making new investment un-financeable. Fossil fuel producers began handing money back to investors. Even state-owned producers, like Qatar, cut investment on the basis that Europe (the UK included) had become an unreliable customer…

“And now? Well, now, as ‘big oil’ might say: ‘We just walked in to find you here with that sad look upon your face.’ Europe needs gas. It is pleading for gas. Instead of flying media to gas fields to court capital, the oil and gas men are being flown to the capitals of Europe and begged to invest. Despite the incredible prices, they hesitate.

“The meeting goes like this: ‘We need you!’ say the politicians. The producers scratch their heads as they mull $20 billion, 20-year investments, and wonder whether, when the war is over and the green bandwagon rolls back into town, the politicians will still sound so sweet on them. ‘Your green targets still say we need to shut down by 2030,’ they point out. To which Europe says: ‘Well, of course. Fossil fuels are evil!’”

This is where net zero gets real, because even if the politicians U-turn – and there will be increasing pressure for them to do so – there may not be that much cheap oil and gas left to be produced.  And even if we do find some which can be recovered at a price that we can afford, we are still looking at years of shortages before today’s investment turns into useable supply to the economy.  In the meantime, while eye-watering consumer prices are grabbing the media attention, it is the impact on business and industry which is the most troubling.  It turns out, for example, that German industry – the manufacturing powerhouse of the European Union – needs, but can no longer get its hands on, rather a lot of gas.  As Joe Miller and Guy Chazan Wrote in the Financial Times last month:

“No gas this winter would, according to analysts at Swiss bank UBS, trigger a ‘deep recession’ with almost 6 per cent wiped off GDP by the end of next year. The Bundesbank has warned that knock-on effects on global supply chains would ‘increase the original shock effect to two-and-a-half times the size’…

“It is not just a total shut-off that is worrying companies. European benchmark natural gas prices have soared eightfold over the past 18 months, rising from about €20 a megawatt hour to above €160 a megawatt hour. The price doubled in the past month alone, leading many companies to warn that they could not continue to operate at that rate.

“’We are financing the war,’ said Cingr, who added that his own costs were now more than 40 times as high.

“That price was already destroying demand for SKW’s fertiliser products by between 50 and 70 per cent, he added. Farmers were baulking at the increased costs, with some accessing illegal imports from Russian fertiliser producers smuggled into the EU via Serbia. The company would, he said, only be able to keep factories running for a few more weeks.”

In the UK, where a decent amount of gas still flows through the North Sea pipelines – including from Norwegian gas fields – the impact on business is, for the moment at least, financial.  Indeed, in recent weeks we have seen businesses being refused contracts entirely or being required to put down massive deposits because energy companies doubt the viability of their companies over the coming winter.  This though, is another facet of the unfolding crisis because in the first half of the year at least, consumer-facing businesses seemed to be working hard to avoid passing rising costs on in the form of increased prices.  That changed last month, even though consumer demand has plummeted, and with energy prices continuing to rise far beyond anything businesses can afford, it is only a matter of time before the wave of bankruptcies and redundancies arrive.  And when that happens, anyone earning the average weekly wage of £565 who thought that energy and food prices were getting out of hand, is going to be horrified when they are expected to make ends meet on £96 Universal Credit.

Incredibly, the green response to this – particularly from Germany’s two Green Party ministers – is to double down on net zero – to claim that we need more NRREHTs, even if it means we can no longer have warm houses and must forego washing in favour of a quick wipe with a soiled flannel.  The same people who a year ago were ordering everyone to stay at home and demanding vaccine passports to prevent the spread of covid are now advocating public warm spaces where we can gather to spread covid and a hundred other viruses to boot…  They might have had a better chance of winning the public over if they had told us from the beginning that this is what net zero was going to be like.  But they didn’t.  And Macron’s belated “end of abundance” speech is unlikely (not least because he spends most of his time in a gold-plated palace) to prevent a public swing away from the eco-austerity of net zero in favour of a return to the food and warmth provided by fossil fuels.

Certainly, there is a growing movement on the political right to put an end to net zero in pursuit of energy security.  Reform UK – the latest iteration of the old UKIP – is telling anyone who wants to listen that we should begin fracking the north of England immediately.  Closer to the centre right, supporters of Liz Truss are demanding an end to green subsidies and a return to fossil fuels.  Red Wall MP and former miner, Lee Anderson, for example, sets out a few home truths about our energy  situation:

“But let’s not blame Putin or anyone else for our own failed energy policy. Yes, Putin’s invasion of Ukraine has had a massive effect on gas prices, but no one has forced the UK to be dependent on foreign supplies of gas or forced us to have limited gas storage. We have made this choice ourselves over decades and we should hold our hands up and take the blame as successive Governments of all colours have been complicit. I would hope that this current crisis will finally wake Parliament up into working together to make sure we are totally self-sufficient for our energy needs…

“We have rushed to get rid of coal, closed all our pits and guess what? We are now burning foreign coal in our power stations again. Any energy policy should include a mix including fossil fuels, we have no one to blame but ourselves and in a few years’ time we should not get caught out again as a result to racing to Net Zero. We cannot afford it. Let’s live for today but plan for tomorrow. We can do both…

“I will continue to lobby for a much broader energy policy to make the UK self-sufficient.  Scrap the Green Levy.  Remove VAT.  Get Fracking.”

The problem with both sides of the growing political chasm around net zero is that they don’t understand energy.  The greens who advocate even more low energy density NRREHTs fail to understand that these cannot provide more than a small fraction of the surplus energy required to power a modern economy.  Thus, following that route leads us to a short-term cascading collapse which is guaranteed to wipe out a large part of the population.  The growing anti-net zero side, on the other hand, fails to understand that high energy cost fossil fuel extraction also deprives us of the surplus energy required to power a modern economy.  So, they too will end up destroying the economy and killing off a large part of the population along with it.

Perhaps we are fortunate insofar as a large part of the current crisis is artificial.  If cooler heads were to prevail, and given that one way or another, the invasion of Ukraine – which currently looks a lot like the attritional warfare of 1916 – has to end with some kind of negotiated settlement, we could probably still persuade Russia to turn the gas back on… although the more the rest of the world turns to the emerging BRICS system, the harder that is going to be for the western minority to obtain the energy and commodities we depend upon.  But even if we could restore the gas supply from Russia – which is surely preferable to reverting to coal or fracking large swathes of northern England – the underlying energy crisis resulting from depletion and declining surplus energy, together with the need to prevent too much more environmental damage requires that we find another way to end our addiction to fossil fuels.

In my last book, Why Don’t Lions Chase Mice? I made the case for what I call a “brown new deal.”  As I wrote two years ago:

“[My] answer is a kind of brown new deal based around a managed de-growth aimed at making the collapse of industrial civilisation as painless as possible.  Such an approach does not claim any one energy source as better or worse than another, but rather aims to utilise the energy we still have available to us to simplify, regionalise and localise our economies as best we can in the time available to us.  Nor does such an approach fit into traditional left v right political views which are all based upon the religion of progress and endless growth.  Rather, it views a combination of the raw power of the state and the innovativeness of private markets to work together to create as soft a landing as possible.

“The process begins by turning off the pacemaker – removing the central banking system and the creation of infinite volumes of debt-based currency – and allowing the cancerous financial sector of the economy to collapse back into line with a real economy which is already shrinking.  Ideally, we would peg the amount of currency in circulation to the amount of energy available to the economy, while returning financialised social services such as childcare and preparing food to communities and families.

“A proportion of the remaining fossil fuels (hence a ‘brown’ new deal) would be used to deploy alternative energy generation, including wind and solar; but not with a view to growing the economy.  Instead, the energy which remains to us would be redirected to maintaining pockets of complexity, such as some degree of socialised medicine or a functioning water treatment and sewage disposal system.  Meanwhile, a great deal of the (often debt-based) consumption which has grown the financialised economy in the last three decades will have to go away.  The word ‘enough’ and the old wartime plea to ‘make do and mend’ will have to feature large in the vocabulary of the future.  Most work will have to be refocused on genuinely essential activities such as growing food and transporting essential commodities.”

The problem is that the kind of Churchillian leadership that could honestly promise nothing but blood, tears, toil and sweat, no longer exists in crisis-torn Europe.  And in any case, the vast gulf in wealth and behaviour between the elites and the rest of us is far too great for anyone to buy the claim that we are all in it together.  Even Macron’s speech was met with the question, “quelle est cette abondance dont tu parles?”  Until and unless those elites up in the penthouse suites are prepared to act as if the building really is on fire, and join us out here in the cold and pouring rain, I fear the current crisis will only worsen both the energy and the environmental crisis, with a new dark age as our only possible future.

***

As you made it to the end…

you might consider supporting The Consciousness of Sheep.  There are five ways in which you could help me continue my work.  First – and easiest by far – please share and like this article on social media.  Second follow my page on Facebook.  Third, sign up for my monthly e-mail digest to ensure you do not miss my posts, and to stay up to date with news about Energy, Environment and Economy more broadly.  Fourth, if you enjoy reading my work and feel able, please leave a tip. Fifth, buy one or more of my publications

Check Also

Let’s join the dots for them

Let us not forget that beyond hard-pressed bill-payers are thousands more who can no longer afford electricity at all