We find a lot of familiar rhetorical turns of phrase in that speech, not least the urgent need for a putative “energy transition” as being “the greatest challenge that our country will face during our lifetime,” and the need to “act quickly” in order to “have a decent world for our children and our grandchildren.” Back then, the urgency was motivated by the belief that the world was running out of oil and natural gas.
Of course, in our time, the “energy transition” rhetoric is directed at replacing a now over-abundant supply of those hydrocarbons, specifically in service of reducing carbon dioxide emissions. The latter is the latest “greatest challenge” facing humanity. Meanwhile, after nearly a half-century of transition policies and massive government spending since the MEOW speech, the reality today is that oil, gas, and coal supply 82 percent of global energy.
To put that reality into a more recent context, since Y2K, we’ve seen more than $5 trillion of global spending on wind and solar and similar efforts to avoid hydrocarbons. That did reduce hydrocarbons’ share of world energy but by just 2 percentage points. And the quantity, not share, of hydrocarbons consumed globally has increased by an amount equal, in energy-equivalent terms, to adding six Saudi Arabia’s worth of oil output. Those two decades of spending have led to solar and wind combined supplying just under 4 percent of world energy. For context: burning wood still supplies 10 percent.
But energy transitionists now claim that this time is different. There are differences. The global population is far bigger wherein billions more people now aspire to the lifestyles of even the least fortunate in the wealthy West. Fortunately, because the costs of wind, solar, and battery technologies are far lower than two decades back, those sources can now more significantly complement hydrocarbons. However, a pivotal reality is found in the nature and location of critical upstream industries that make the complementary energy sources possible.
Because of unavoidable, underlying physics, fabricating wind, solar, and battery hardware entails a radical increase in the use of a range of minerals from copper and nickel to aluminum and graphite, and rare earths such as neodymium. The increases range from 700 percent to 4,000 percent more minerals per unit of energy production. While this reality still surprises many, for the cognoscenti, it’s no longer news that the spending and mandates directed at wind, solar, and electric vehicles will require an astonishing, unprecedented increase in output from the old-school industries of mining and mineral refining.
However, that reality is also greeted by hollow rhetoric. Transitionists claim that subsidies and mandates will stimulate the market to meet the unprecedented volume and velocity of those demand increases. As the International Energy Agency has pointed out, the transition will require hundreds of billions of dollars invested in hundreds of massive new mines, somewhere.
Yet, every sober analysis of mining realities points to two facts. First, both existing and planned world mining capacity won’t come close, by factors of 2- to 10-fold, to meeting the scale of minerals demands that will arise if the “transition” is in fact pursued. Second, in the meantime, China is the world’s biggest producer of most of the relevant energy minerals and has a global market share of at least triple the U.S. share of hydrocarbons. (The United States is the world’s biggest hydrocarbon producer.)
China produces or refines more than 60 percent of the world’s aluminum, more than half of the world’s copper (the keystone metal of electrification), 90 percent of rare earths, 60 percent of lithium, 80 percent of graphite (used in all lithium batteries), 50 percent to 90 percent of the specialty chemicals and polymer parts used to build lithium batteries, and more than 80 percent of silicon solar modules. That dominance will not be easily or quickly altered.
There’s one more reality in service of X-raying the rhetoric. All of the transition efforts are, again, directed at cutting CO2 global emissions. Since minerals industries are energy intensive (global mining accounts for about 40 percent of all industrial energy use), China has a profound advantage in producing them because of its low-cost electric grid. That advantage comes from burning cheap coal that fuels two-thirds of power production there. It’s an advantage that won’t erode any time soon: China is building far more coal plants yet, at the rate of roughly one a week, and will for close to a decade.
And, while energy transitionists vilify natural gas and vigorously oppose the expansion of U.S. exports of liquified natural gas (LNG), the United States already saw a 1-gigaton-per-year reduction in emissions over the past decade, without massive subsidies or imports. That happened because of the domestic shale revolution that collapsed the cost of natural gas making it cheaper than coal.
If policymakers are determined to further reduce U.S. carbon dioxide emissions, there are some more sensible options than a rhetorical genuflection to an energy transition.
Rather than subsidize the U.S. assembly of batteries using imported materials, instead, encourage—subsidize if political compromise demands as much—domestic production of pipelines and ports to export more LNG. That would yield far greater emissions reductions per dollar spent since it would facilitate other nations now planning to burn more coal to instead import LNG. It would also benefit domestic industries, and the balance of trade, as well as yield non-trivial geopolitical benefits.
There are other options that would be more consonant with reality rather than rhetoric, and that would be far more cost-effective than those driven by IRA subsidies. These would include a more sensible and expansive posture toward nuclear energy, the pursuit of improved combustion efficiency in all uses of hydrocarbons, and engaging serious efforts to resolve the barriers to expanding domestic mining and refining.
Thus far, however, rhetoric is still trumping reality.
