By Irina Slav
The secretary-general of the United Nations, Antonio Guterres, said this week that investment in new oil, gas, and coal was “delusional”. The word flashed in headlines across the media board because it is an excellent clickbaity word. But that’s not all that Guterres said.
“The energy crisis exacerbated by the war in Ukraine has seen a perilous doubling down on fossil fuels by the major economies,” the UN’s top man also said and he might have done well to think about what he was saying, that is, ask himself why major economies would double down on fossil fuels instead of, you know, building more wind and solar.
The answer is pretty obvious to anyone willing to see it and it has been pointed out repeatedly by the more honest sort of researchers. This answer comes down to the following: despite trillions spent on the buildup of wind and solar generation capacity globally in the past years, human civilisation remains overwhelmingly dependent on fossil fuels for its energy and by overwhelmingly I mean more than 90%.
The undying 11-year-old in me itches to say “Who’s delusional now?” but the answer to this question is quite depressing because it is “Too many people for comfort.” And when a lot of people are acting under a delusion chaos is the most logical consequence.
Here’s the definition of delusion: “an idiosyncratic belief or impression maintained despite being contradicted by reality or rational argument, typically as a symptom of mental disorder.” I’m sure I don’t need to highlight the latter part of this sentence, especially since I don’t believe Guterres, Birol, von der Leyen, Granholm, etc. are, in fact, mentally disordered. They are not.
They are in a position where they must either admit the policies they have led and supported for years will lead to chaos and strife, or keep supporting them because they have a financial and a reputational interest in it.
Because of these interests, these people are all too ready to turn their back on facts in favour of fantasy. And even when facts bite them in the sensitive parts because facts can be mean, the transition army soldiers on despite the pain. Because a transition must be had no matter what.
In fact, a transition of the sort that is being pushed by the EU and the Biden administration will not be had no matter what but it will be a while until enough people wake up to this, sorry for repeating the world ad nauseam, fact. Alarms are already ringing.
Take this, for example, from Birol’s very own IEA. According to the IEA’s latest forecast, global oil supply will “struggle” to meet demand well into next year. That’s despite the first signs of demand erosion because of prices, the IEA noted.
Or take this, the issue of “charging deserts” that may make the rollout of enough EV charging stations across the United States a tad challenging and and interfere with the economic case for such stations.
Or there’s this piece of news from the UK this time, which will no longer subsidise the purchase of an EV and will instead subsidise the construction of charging stations. Bad news for Tesla lovers in the UK as the company just raised its prices substantially… because of “surging costs”.
This is just news from the last few days, and I’ve saved the best for last. Energy Price Surge Threatens U.N. Climate Pledge, the Wall Street Journal reported this week and the second paragraph of the report looked like this:
The surge in global energy prices and the war in Ukraine have prompted major economies to increase their investments in fossil fuels. China, the world’s biggest carbon-dioxide emitter, produced more coal than ever last year and approved plans this year to build at least five new coal-fired power plants. In the U.S., gridlock in Congress has stymied the Biden’s administration’s climate legislation.
One wonders why economies committed to an energy transition would spend money on more fossil fuels instead of using the money to build more wind and solar. The EU is certainly planning to build more wind and solar, it’s in its REPowerEU plan, the author of whose title should tear their diploma into pieces and eat it.
The EU is just not actually doing the buildup, it seems. This could be because solar and wind need raw materials and these, as just spelled out by Tesla’s Elon Musk, are, well, going up in price.
So, to recap, according to the UN’s secretary-general, some of the world’s largest economies are acting in a delusional way by investing in more oil and gas at a time when they should be committing to more renewable power instead. China, the world’s biggest wind and solar market, is mining more coal than ever. This should make people stop and think, shouldn’t it?
It actually shouldn’t, not necessarily, because delusions can become quite vivid, especially when supported by a constant stream of biased, cherry-picked information such as, just a random example, the bright prospects of green hydrogen: I’m sure that there are now reports saying that it has become commercially viable but failing to mention why it has become commercially viable — because gas prices are through the roof, that’s why.
The delusion is quite strong in the oil industry, too, by the way. Here’s a news report from this week again, according to which BP has bought a 40% stake in a — massive — green hydrogen project in Australia. It can afford all the transition stakes it wants right now, what with that windfall profit from the oil price rally.
Meanwhile, in the U.S., Continental’s Harold Hamm is using his windfall profits from the oil rally to take his company private. His family trust is already the biggest shareholder in Continental Resources anyway, so why not have it all and not have to deal with pesky bankers and activist investors that tend to wind board seats these days.
One of these companies is acting under a delusion. Which one it is remains to be seen. Maybe. Maybe it’s already clear but many don’t want to see it.