.WUWT today
At last month’s CERAWeek in Houston, Saudi Aramco CEO Amin Nasser poured cold water on the forced march of the energy transition, telling the conference, “the hopes and ambitions of 8 billion energy consumers around the world are at stake.” The message from consumers, he said, is that they want energy that protects the planet and their pocketbooks, “with minimal disruption to supplies and their daily lives.”
In the real world, Nasser pointed out, the energy transition is visibly failing despite the expenditure of $9.5 trillion over the last two decades. So far this century, the share of hydrocarbons in the global energy mix fell from 83 percent to 80 percent, while wind and solar supply less than 4 percent of world energy. Despite its marginally lower relative share, the absolute demand for hydrocarbons grew by almost 100 million barrels per day of oil equivalent. “Even coal is at record highs,” Nasser unfashionably observes.
Nonetheless, oil consumption in developing countries ranges from less than one barrel to below two barrels per person per year, compared with nine barrels for the EU and 22 barrels for the U.S. “The energy transition narrative will increasingly be written by the Global South,” Nasser points out. This leaves plenty of headroom for growing hydrocarbon demand. “Peak oil and gas are unlikely for some time to come, let alone [in] 2030,” Nasser concludes.
The Biden administration moved quickly to dismiss Nasser’s analysis. “Well, that is one opinion,” commented Energy Secretary Jennifer Granholm. “There have been other studies that suggest the opposite, that oil and gas demand and fossil demand will peak by 2030.” The other studies Granholm refers to are those by the IEA under its executive director, Fatih Birol. Most controversially, in 2021 the IEA published “Net Zero by 2050,” which claimed that investment in new oil and gas fields was no longer needed.
A June 2023 report by the Energy Policy Research Foundation (EPRINC) in collaboration with the RealClear Foundation shows that the IEA’s net zero analysis is unrealistic, internally inconsistent, and often supports the case for increased hydrocarbon production. Even though renewables allegedly drive oil and gas back into the ground through market forces, the IEA’s net zero scenario sees U.S. electricity prices rise by 50 percent on average by 2050. As for net zero being a counterbalance to OPEC: the cartel’s share of the global oil market would rise from 37 percent to 52 percent in 2050, a level “higher than at any point in the history of oil markets.” If oil demand continues to rise, but American and other non-OPEC producers cut their investment in new oil and gas fields, EPRINC reckons that OPEC’s share would rise to 82 percent. Who now is more in favor of boosting OPEC’s market share – Saudi Arabia or the IEA?
Three days after Nasser’s Houston speech, Birol wrote an op-ed in the Financial Times replete with falsehoods and misleading claims. It’s now cheaper to build onshore wind and solar than new fossil fuel plants, Birol maintains. But any accounting of wind and solar must incorporate the costs of their intermittency and their inability to match supply with demand, meaning that each megawatt of wind and solar capacity requires a matching megawatt of coal or natural gas.
Birol points to China, the world’s largest consumer of coal, as the clean energy superpower for its domination of the supply of solar panels, wind turbines, and EVs. “Regardless of where they stand on climate policy,” Birol argues, “if countries want to compete with China in the industries of the future, they need to double down on clean energy plans, not dial back on them.” This is economic nonsense, as every student of Adam Smith (specialization) and David Ricardo (comparative advantage) knows. Just because you might consume a lot of something doesn’t make you good at producing it. Ask the Germans. They were promised that their trillion-euro Energiewende would create thousands of green jobs. The green jobs did appear – in China.
