Net Zero Will Pose Massive Risks For Global Economy
PAUL HOMEWOOD
Meanwhile the Earth Edition of the Telegraph discusses some of the real risks associated with the mad rush to Net Zero.
Associate Political Editor, Tony Diver, uncovers the government’s own report into Net Zero, which it tried to bury:
Labour’s net zero drive risks taking Britain back to the 1970s and could have the same effect as an “oil price shock” on the economy, leaked documents reveal.
A report by the Department for Business and Trade (DBT) found that the transition to net zero by 2050 could have a significant impact on growth and could spur inflation.
Officials warned that green policies “could act like a supply side shock, with some similarities to a standard oil price shock”, like the global financial crisis caused by the 1973 oil embargo imposed by Arab states on Israel during the Yom Kippur War.
The document, written in November 2023, reveals significant scepticism about the Government’s net zero plans by civil service analysts.
The report said that the shift to net zero could see a drop in private-sector consumption because companies will be forced to retire “stranded” machinery and other goods earlier than planned.
That will redirect money from spending into unplanned capital investment, which would pose a “particular challenge” to the economy, it said, adding: “Estimates suggest that by 2030, 10 per cent of GDP will have been subtracted from consumption to turn unsustainable output into sustainable output.
“A decrease in consumption levels poses a particular challenge following a decade of relatively weak real wage growth and households facing an extended cost of living crisis due to high inflation.”
Read the full story here.
And Matt Ridley also has a piece:
A leaked government analysis has found that Net Zero could crash the economy, reducing GDP by a massive 10 per cent by 2030. Yet the spectacular thing about this analysis is that it expects this to happen not if Net Zero fails – but if it succeeds. In effect, it is saying that if the government really does force us to give up petrol cars, gas boilers, foreign holidays and beef, then there would be perfectly useful things left idle: such as cars, boilers, planes and cows. Idling – or stranding – productive assets in this way is an expensive economic disaster.
Even more intriguing was the government’s economically illiterate response to the leak. A spokesman said: “Net zero is the economic opportunity of the twenty-first century, and will deliver good jobs, economic growth and energy security as part of our Plan for Change.”
Do they really think that economic growth is the same thing as spending money? Because it isn’t.
He uses the broken window analogy:
“Imagine the government saying that it is going to require the entire population to throw out all their socks and buy new ones by next Thursday. Under the logic it espouses for Net Zero, this would result in a tremendous burst of economic growth. Think of all the jobs created in the sock industry and the shops! They would be better off. Ah, but you, the consumer, would be poorer: you would have as many socks as before but less money. This is the broken window fallacy, exploded by Frederic Bastiat nearly 200 years ago: going around breaking windows makes work for glaziers but does not create growth.”
In reality the risk to the UK goes far wider than these domestic issues. The DBT report also highlighted global risks of stranded assets, from which the UK won’t be immune. If the global economy crashes, ours will as well.
Moreover UK banks and pension funds are heavily invested in all sorts of international businesses, many of which stand to be badly affected – and these won’t just be oil companies.
SOURCE: Not a Lot of People Know That
See Related Article Below
Halfway Between Kyoto and 2050: Zero Carbon Is a Highly Unlikely Outcome
VACLAV SMIL
From the Fraser Institute
The global goal to achieve “net-zero” carbon emissions by 2050 is impractical and unrealistic, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“The plan to eliminate fossil fuels and achieve a net-zero economy faces formidable economic, political and practical challenges,” said Vaclav Smil, professor emeritus at the University of Manitoba and author of Halfway Between Kyoto and 2050: Zero Carbon Is a Highly Unlikely Outcome.
Canada is now also committed to this goal. In 2021, the federal government passed legislation mandating that the country will achieve “net-zero” emissions—that is, will either emit no greenhouse gas emissions or offset its emissions through other activities (e.g. tree planting)—by 2050.
Yet, despite international agreements and significant spending and regulations by governments worldwide, global dependence on fossil fuels has steadily increased over the past three decades. By 2023, global fossil fuel consumption was 55 per cent higher than in 1997 (when the Kyoto Protocol was adopted). And the share of fossil fuels in global energy consumption has only slightly decreased, dropping from 86 per cent in 1997 to 82 per cent in 2022 (the latest year of complete production data).
Widespread adoption of electric vehicles—also a key component of Ottawa’s net-zero plan—by 2040 will require more than 40 times more lithium and up to 25 times more cobalt, nickel and graphite worldwide (compared to 2020 levels). There are serious questions about the ability to achieve such increases in mineral and metal production.
Although the eventual cost of global decarbonization cannot be reliably quantified, achieving zero carbon by 2050 would require spending substantially higher than for any previous long-term peacetime commitments. Moreover, high-income countries (including Canada) are also expected to finance new energy infrastructure in low-income economies, further raising their decarbonization burdens.
Finally, achieving net-zero requires extensive and sustained global cooperation among countries—including China and India—that have varied levels of commitment to decarbonization.
“Policymakers must face reality—while ending our reliance on fossil fuels may be a desirable long-term goal, it cannot be accomplished quickly or inexpensively,” said Elmira Aliakbari, director of natural resource studies at the Fraser Institute.
Summary
- This essay evaluates past carbon emission reduction and the feasibility of eliminating fossil fuels to achieve net-zero carbon by 2050.
- Despite international agreements, government spending and regulations, and technological advancements, global fossil fuel consumption surged by 55 percent between 1997 and 2023. And the share of fossil fuels in global energy consumption has only decreased from nearly 86 percent in 1997 to approximately 82 percent in 2022.
- The first global energy transition, from traditional biomass fuels such as wood and charcoal to fossil fuels, started more than two centuries ago and unfolded gradually. That transition remains incomplete, as billions of people still rely on traditional biomass energies for cooking and heating.
- The scale of today’s energy transition requires approximately 700 exajoules of new non-carbon energies by 2050, which needs about 38,000 projects the size of BC’s Site C or 39,000 equivalents of Muskrat Falls.
- Converting energy-intensive processes (e.g., iron smelting, cement, and plastics) to non-fossil alternatives requires solutions not yet available for largescale use.
- The energy transition imposes unprecedented demands for minerals including copper and lithium, which require substantial time to locate and develop mines.
- To achieve net-zero carbon, affluent countries will incur costs of at least 20 percent of their annual GDP.
- While global cooperation is essential to achieve decarbonization by 2050, major emitters such as the United States, China, and Russia have conflicting interests.
- To eliminate carbon emissions by 2050, governments face unprecedented technical, economic and political challenges, making rapid and inexpensive transition impossible.
Author:
This article (Halfway Between Kyoto and 2050: Zero Carbon Is a Highly Unlikely Outcome) was created and published by Todayville and is republished here under “Fair Use” with attribution to the author Vaclav Smil
Featured image: pixabay.com
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