CommentsENERGY WATCH - Roughly a half century ago, rising energy prices devastated Western economies, helping make the autocrats of the Middle East insanely rich while propping up the slowly disintegrating Soviet empire.
Today the world is again reeling from soaring energy prices; but this time the wound is self-inflicted — a product of misguided policies meant to accelerate the transition to green energy.
For the political and academic clerisy, the energy “reset” is like manna from heaven. It gives them a licence to impose the kind of “technocratic social engineering” that makes poor people poorer while stripping away working-class aspirations, as we already see in places like California and Germany. In Spain, 10% of all households cannot adequately heat their homes during the winter months; and in Italy, electricity bills jumped by 55% by January 2022. In the United Kingdom the number of homes that cannot pay their energy bills is set to triple by April 2022.
The new regime of expensive, often intermittent energy also threatens to make permanent the poverty of the developing world, which already suffers from a lack of cheap and reliable energy. The fossil fuels now being targeted by Western policymakers and financial firms like Blackrock are critical for industrialisation, and it is unlikely they can be replaced by wind and solar alone: fossil fuels still account for 81% of all energy supplies, and even if every country meets their climate promises, they will still account for roughly three quarters in 2040.
It’s hardly surprising, then, that in Africa there is a growing scepticism toward Western policies of “sustainability” — even though these policies, draped in the language of socially conscious “stakeholder capitalism”, pledge to address “systemic racism”. Already in 2015, for example, the president of the African Developmental Bank stated that “Africa cannot function because we have no power” and affirmed the continent’s need for “renewable and conventional” energy, including “natural gas and coal”.
Similarly, in the lead-up to the UN Climate Change Conference last year, Nigerian President Muhammadu Buhari warned that the climate policies favoured by Western governments investors and aid agencies could lead to an Africa-wide energy crisis. Just last month, the president of Senegal made it clear ahead of the EU-African Union summit that Africans are not prepared to pay for Europe’s carbon levy. South Africa’s Energy Minister, meanwhile, criticised NGOs and universities that promote “climate-driven solutions” with money from European think tanks.
And African leaders have every reason to be concerned about the dangers of expensive energy. Fuel riots have occurred in the recent past in Senegal, Malawi, South Africa, and Nigeria, while energy costs were a catalyst for the Arab Spring, when a spike in oil prices drove up the price of grain. Earlier this year in Kazakhstan, soaring energy prices nearly sparked a revolution.
Given that more than half of all Africans live in energy poverty, perhaps their politicians have every right to be worried. Even relatively advanced South Africa no longer produces adequate and reliable electricity and now faces opposition to developing its own fossil fuel and nuclear capacity. The resulting crisis — the country’s manufacturers are closing shop in the face of high electricity prices, leaving two-thirds of young adults are out of work — is threatening the stability of South Africa’s democracy.
In the rest of Africa, meanwhile, in population centres such as Nigeria, Ethiopia, and the Democratic Republic of the Congo, energy supplies are woefully inadequate to meet daily needs. Without more reliable energy supplies, the continent will remain mired in poverty — and civil strife is bound to follow.
No doubt aware of this, some governments, such as those in Senegal and Ethiopia, have set ambitious targets for full electrification by 2025. Similar plans are underway across the continent, with the African Developmental Bank promising to help finance electrification by 2030. How likely that is to work remain unclear. It’s striking, though, that while Africa cripples itself in pursuit of eco-friendly energy, Western-backed environmental activists are protesting offshore gas exploration in South Africa’s poverty stricken Wild Coast region.
Contrast what is being recommended for the developing world with the behaviour of the United States and a tale of hypocrisy slowly comes into focus. Thanks in part to the rise of fracking, the US is slated to become the world’s largest producer of liquified natural gas. This growth in the American energy supply has coincided with falling greenhouse gas emissions, largely driven not by environmental regulations but by the replacement of coal with natural gas.
The natural gas boom has been particularly important for those who have suffered from the loss of manufacturing, driving an industrial renaissance in economically hard-hit regions such as the Midwest as well as historically poor parts of the South. Low natural gas prices, notes the Cleveland Fed, have been critical to the manufacturing job growth now transforming large parts of the nation’s heartland. By contrast, green policies have driven high prices in states like California, harming the once thriving industrial economy and driving up the cost of basic necessities like electricity.
It seems odd, then, that President Joe Biden and most Democrats are insistent on ignoring these lessons. Biden and most of his party favour utilising the Federal Reserve and other executive departments to enforce “net zero” policies. Everything from gas pipelines to new leases for offshore oil are being cancelled, while new regulations are making it harder to build new fossil fuel plants. The green-dominated media, meanwhile, is trying to blame energy shortages on climate change and the hated fossil fuel companies.
These policies, both in the US and the rest of the world, are the product of the view that anthropogenic global warming is as an existential threat to life on Earth rather than a long-term nuisance that will have to be managed gradually via adaptation, particularly in light of China and India’s continued fossil fuel growth. To the extent the apocalyptic as opposed to pragmatic view is adopted, the policy agenda moves towards “de-growth”, which seeks to reduce consumption, effectively lowering the living standards of the masses to “save the planet”. This may seem a small price to pay for affluent people in Europe and America, but one doubts that the governments of the developing world will be willing to tell their poor that environmental piety matters more than basic survival.
Does this mean that we’re doomed to an eco-apocalypse? Not necessarily; it is possible to gradually decarbonise the developing world without hamstringing its economies. On the nuclear front, for instance, there is currently talk of Small Modular Reactors (SMR), which are theoretically smaller and easier to build than existing reactors. But even proponents admit these technologies will take significant investments and a few decades to mature. Some suggest that lithium batteries will allow us to make renewables more viable by vastly improving grid storage technology, but these batteries require enormous amounts of rare earth minerals.
Perhaps the most promising technology is geothermal energy. Thanks to the advances in deep drilling technology from hydraulic fracking, two pilot projects are in progress in Serbia and Canada that might allow for the heat of the deep hot biosphere to be exploited at an affordable cost.
But as the Africans recognise, in the short run we are left with a choice between a net-zero regime based on expensive solar and wind powerand one relying on the only energy sources we know are cheap and reliable — fossil fuels. Coal, nuclear power and especially natural gas are here to stay; the imperatives of Greta Thunberg won’t be adopted by people in the slums of Africa’s cities or rural Chinese looking to share in their country’s prosperity. Outside of the talking shops, in the real world, net zero remains a distant prospect. But the mounting energy crisis is already here — and sacrificing the world’s poorest countries, and many in the West as well, in pursuit of a green agenda won’t make it disappear.
(Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His new book, The Coming of Neo-Feudalism, is now out from Encounter. This story was feature din UnHerd.)
(Hügo Krüger is a structural engineer from Pretoria, South Africa.)
