Rupert Darwall has edited a new paper responding to the International Energy Agency's much-hyped report, Net-Zero by 2050: A Roadmap for the Global Energy Sector. The whole paper is worth your time, as is Darwall's write-up on it at RealClearEnergy. Suffice to say, the IEA report, for all the adulation it received from ESG activists, doesn't stand-up to any amount of real scrutiny.
According to Darwall, "The fundamental assumption underlying the IEA’s net-zero roadmap is that the superiority of alternatives to hydrocarbons—principally wind and solar —will cause demand for coal, oil, and natural gas to wither away." He refers to this as the "Friedrich Engels theory of renewable energy." Just as Engels believed that his imagined communist utopia would, over time, cause the state to "wither away," bringing about the end of coercive government, the IEA holds that eventually traditional energy sources will simply disappear.
This theory is likely to work out about as well as Engels' did when exposed to harsh reality. But Darwall highlights the rather strange and contradictory use that activists have put this argument to. "Progressive groups seized the IEA’s report to justify—indeed, to require—a ban on investment in new oil and gas projects." After all, they'll wither away even faster if the jack boot of the States stomps them to death. Here's one example:
Last year, a resolution filed at the ExxonMobil annual meeting... cited the IEA net-zero report and requested the company’s board to produce an audited report on the impact of applying the IEA’s net-zero assumptions on the company’s financial statements. The resolution received the support of 51.0 percent of voting shareholders.
Darwall's point if so-called "renewables" are so clearly superior to hydrocarbon-based energy that the former will, organically, cause the latter to disappear, then why do they need to ban oil-and-gas investment? Won't those investments just naturally cease? Apparently activist investors are as unconvinced by the IEA's claims as we are. In fact, the IEA explicitly rejects fossil fuel divestment as a net-zero strategy. Says Darwall,
The IEA itself highlights the dire consequences of unilateral action designed to suppress supply. “Reducing fossil fuel investment in advance of, or instead of, policy action and clean energy demand would not lead to the same outcomes as in the NZE Scenario,” the IEA warned in its World Energy Outlook 2022. “If supply were to transition faster than demand, with a drop in fossil fuel investment preceding a surge in clean technologies, this would lead to much higher prices—possibly for a prolonged period."
How's those renewables working out for ya?
Meanwhile, their contention is , once again, that with no change at all, oil and gas will simply get cheaper -- they predict oil prices to halve by 2030, for instance -- as they are relied upon less and less. You'd think that the plummeting price of oil would make it more attractive as a fuel, but not according to the IEA. That's because in their scheme, wind-and-solar will also fall in price, and even more precipitously. Naturally. But this might be their most ridiculous claim of all:
“Ever-cheaper renewable energy technologies,” the IEA claims, “give electricity the edge in the race to zero.” Yet the IEA’s own numbers demonstrate the inferiority of its post–fossil fuel energy future as it will require enormous increases in capital, labor, and land to produce less energy.... Renewables require nearly 38.5 percent more labor, global energy employment rising by nearly 25 million. Yet this new energy system produces 7 percent less energy, implying a calamitous 33.0 percent fall in energy output per employee.
If that’s not bad enough, solar and wind require an area equivalent to the combined size of California and Texas and bioenergy for electricity production an area the size of France and Mexico combined. There is no theory in growth economics that says that more inputs of land, labor and capital for less output is a formula for sustained economic growth. Quite the opposite.
The IEA report is an exercise in unreality, just like all of the recent attempts to show that the revolutionary goal of net-zero will be, in fact, both easy and cheap. In reality, it will be anything but.