Peak green seems to be arriving years before peak oil will, and investors are heading back to oil and gas fields and away from windmills and solar as consumers eschew electric vehicles. Investing in renewables has proven to be unprofitable and the smart money is going elsewhere. Once the darling of the "climate change" adherents and governments which propped them up with diktats and massive subsidies, investors are throwing in the towel.
Sweden’s government has ditched plans to go all-in on “green energy,” green-lighting the construction of new nuclear power plants. Fossil fuel giant Shell announced it was scaling back its energy transition plans to focus on . . . gas and oil! Specific wind farm projects began to topple due to strong economic headwinds because the cost of the electricity to be generated was deemed too high.
British Prime Minister Rishi Sunak announced his decision to open the North Sea to more oil and gas drilling. French President Emmanuel Macron is surrendering to reality and asked for a “regulatory pause.” Now comes the news that investors are fleeing renewable energy funds due to rising costs and escalating rates.
Meanwhile, six governors have asked the federal government for financial help because the overruns on off-shore wind farms keeps escalating;
The need is urgent as the offshore developers are demanding immediate power price increases of around 50% lest they leave for better opportunities elsewhere. They can do this because offshore wind is a global boom. Even mid-income developing countries like Indonesia are talking big offshore numbers. Ironically, it is this boom that is driving some of the sticker-shocking price increases. There is even a shortage of highly specialized crane ships to erect these huge towers. The supply chain is a seller’s market, at least on paper. Rising interest rates are another big driver.
Norway is asking energy companies to step up their oil and gas exploration, and Chevron just announced it had made a $53 billion bid for Hess Corporation “because it knows the world will need oil and gas for the foreseeable future no matter how much politicians subsidize green energy.” Both BP and Shell are cutting back on renewable investments and focusing instead of fossil fuels:
If Chevron believed that demand for hydrocarbons would soon peak and decline—as the International Energy Agency (IEA) claimed last month—it instead could have boosted investment in heavily subsidized green-energy ventures such as hydrogen or increased shareholder buybacks. But oil and gas are yielding a higher return on capital than renewables, even with government’s enormous green subsidies.
Automobile companies' investments in electric vehicles have also proven to be a bust. Slowing consumer demand has caused GM and Tesla to slow down production, and it’s clear that part of the reason for the UAW strike is the fact that fewer auto workers are required in the production of electric vehicles -- cars that are not selling in any event. Honda has joined the pack of auto makers stepping on the electric vehicle production brakes.
The bloom is off the rose, kids.
Automakers Honda and General Motors have ditched a $5 billion plan to create more affordable electric vehicles amidst an industry-wide slowdown in EV development. The manufacturers agreed in April 2022 that they would combine powers to slash the battery costs on eco cars and develop vehicles below GM's $30,000 Chevrolet Equinox. The partnership was intended to compete with Elon Musk's Tesla which has aggressively cut prices this year. Honda CEO Toshiro Mibe, however, confirmed the project had been scrapped.
From the mid-50’s on there’s been a well-publicized warning about peak oil—that the world will soon run short of it and the cost of extracting the remaining dribble will be too high .The International Energy Agency (IEA) just recently argued that demands for hydrocarbons would peak:
Demand for oil, coal and natural gas is set to peak before the end of this decade, with fossil fuels' share in the world's energy supply dropping to 73% by the year 2030 after being "stuck for decades at around 80%," the International Energy Agency said Tuesday. A transformative shift in how the planet is powered is also underway, with the "phenomenal rise of clean energy technologies" like wind, solar, heat pumps and electric cars playing a crucial role, according to a statement accompanying the IEA's World Energy Outlook 2023 report.
In fact, the demand for cheaper, reliable fuels seems to be increasing. Along with the notion of "climate change," and the unmistakable probability of corruption by sending tank loads of tax revenues to supporters of government-directed new technologies, the notion of "peak oil" has provided a significant impetus for "green" investing. Obviously Chevron didn’t fall for this fairytale.
Instead, the company checked its figures and came to the conclusion that even with all that government largesse, oil and gas investments provide a substantially higher return on capital than do renewables. Another grand scheme by big thinkers championed by the usual politicians and major media bites the dust as both consumers and investors opt for pragmatism over fantasy. Bank on Chevron’s projections over those of the IEA.