Source: Nick Oxford/Reuters
Market Herald logo

Subscribe to Art of the Essay

Be the first with the news that moves the market

It has long been said that the definition of insanity is doing the same thing over and over again and expecting a different result. By that definition, we’re the ones detached from reality if we keep accepting what the oil industry and the green movement keep telling us over and over again and expecting a different result.

The greens keep saying that because the price of wind and solar is now as cheap as, or cheaper than, fossil fuels, they’ve won the energy war. Game, set, match — welcome to the green planet.

The oil companies say — as they have in each previous energy crisis since 1973 — that the only answer to this energy crisis is the one they’ve offered for the past 49 years: drill, baby, drill. Welcome to reality.

Well, they’re both wrong, and accepting the repetition of either of these tired shibboleths is hurting us economically, environmentally and geopolitically — especially, of late, geopolitically.

Because our continued addiction to fossil fuels is bolstering Vladimir Putin’s petrodictatorship and creating a situation where we in the West are — yes, say it with me now — funding both sides of the war. We fund our military aid to Ukraine with our tax dollars and some of America’s allies fund Putin’s military with purchases of his oil and gas exports.

And if that’s not the definition of insanity, then I don’t know what is.

Have no illusion — these sins of the green movement and the oil industry are not equal. The greens are trying to fix a real, planet-threatening problem, even if their ambition exceeds their grasp. The oil and coal companies know that what they are doing is incompatible with a stable, healthy environment. Yes, they are right that without them there would be no global economy today. But unless they use their immense engineering talents to become energy companies, not just fossil fuel companies, there will be no livable economy tomorrow.

Let’s look at both. For too long, too many in the green movement have treated the necessary and urgent shift we need to make from fossil fuels to renewable energy as though it were like flipping a switch — just get off oil, get off gasoline, get off coal and get off nuclear — and do it NOW, without having put in place the kind of transition mechanisms, clean energy sources and market incentives required to make such a massive shift in our energy system.

It’s Germany in 2011, suddenly deciding after the Fukushima accident to phase out its 17 relatively clean and reliable nuclear reactors, which provided some 25 per cent of the country’s electricity. This, even though Germany had nowhere near enough solar, wind, geothermal or hydro to replace that nuclear power. So now it’s burning more coal and gas.

A 2019 working paper for the US National Bureau of Economic Research found that in Germany “the lost nuclear electricity production due to the phaseout was replaced primarily by coal-fired production and net electricity imports. The social cost of this shift from nuclear to coal is approximately $12 billion per year. More than 70 per cent of this cost comes from the increased mortality risk associated with exposure to the local air pollution emitted when burning fossil fuels.”

Today, the European Union is drawing up a plan to break its addiction to Russian oil and gas by 2027, but, in the meantime, Putin is laughing all the way to the bank. As CNN reported in April, citing a report by the Centre for Research on Energy and Clean Air: “Russian revenues from fossil fuel exports to the European Union soared during the first two months of the Ukraine invasion” — to $46.3 billion. That was more than double the value of Russian energy imported by the EU during the same two-month period a year earlier.

That was not because the EU’s volume of imports doubled. Higher oil and gas prices accounted for most of that increase. In other words, Putin starts a war that creates instability, which drives up oil prices, so he makes twice as much money exporting roughly the same amount of oil.

While Germany jumped off nuclear before it had a safety net of sufficient clean alternatives, at least it has been on a serious, path-defining quest to get them. Indeed, the whole world owes Germany a huge debt for driving down the price of solar panels and wind turbines through the subsidies and tax incentives it created. In Germany, wind turbines, solar panels and other renewables covered 54 per cent of power consumption this past January and February — which is AMAZING. In 2021, renewable energy sources accounted for only about 12 per cent of total US energy that was consumed.

Still, the most important delusion of the green movement today — of which I am a proud, if grouchy, member — is telling itself that because the price of wind and solar technology has fallen so low now that it can beat coal and natural gas in most markets, often even without subsidies, it’s “game over” for fossil fuels. I wish. PRICE IS ONLY HALF THE STORY.

If you can’t install the transmission lines — to get that sun and wind power from the vast open spaces where it is generated to the big urban areas where it is needed — and if you cannot set aside more land to install the scale of solar and wind farms you need to replace coal, gas or nuclear, it doesn’t matter that your renewables are cheaper on a per-kilowatt-hour basis.

And today transmission is a huge problem in the US and Europe, where many people don’t want wind farms, solar fields, electricity lines — or natural gas pipelines — in their backyard.

Philip Anschutz, an 82-year-old billionaire and conservative who made a fortune drilling for oil, “has been trying for the past decade to build a potentially lucrative $3 billion power line called the TransWest Express that would connect his massive new wind farm in Wyoming to the Southwestern US. It would supply renewable energy to about 2 million customers,” Bloomberg reported last month. “The US needs thousands of miles of new power lines to bring wind and solar power from prairies and deserts to cities in the transition away from fossil fuels.”

Anschutz, the report added, “spent years lining up hundreds of permits and easements from local governments and landowners along the route.” He secured all but one — for Cross Mountain Ranch, which did not want its pristine Colorado landscape scarred by power lines. So now, “17 years after the start of the project, not a single wire has been strung.”

Sorry, I wish this were not the case, but there is no immaculate pathway from brown energy to green energy. The road is paved with cruel trade-offs. Pick your poison — but grow up.

Meanwhile, ever since the 1973 Arab oil embargo, the big oil companies have basically said in each successive crisis: Sure, we need more clean energy, but you have to understand — it doesn’t scale. Right now, we’re in an emergency, so we just need to drill more. You hear the same refrain today, which is why we’re in danger of wasting yet another oil crisis and never breaking our fossil fuel addiction.

The oil companies better be careful, though, because this time could be different, thanks to more consumers demanding electric cars and more industries being forced by consumers and employees to quickly decarbonise. Recently, McKinsey issued its 2022 Global Energy Perspective, concluding: “As the world pivots to low-carbon resources, the global energy demand for electricity could triple to 50 per cent by 2050, and fossil fuel demand could peak as soon as 2023 — primarily driven by increased electric vehicle uptake.”

Net-net — both the greens and the browns need to get real: The greens need to up their deployment game. “That means tripling solar installation rates, roughly doubling long distance transmission lines, doing everything possible to accelerate the electric car transition and starting to roll out renewable hydrogen for industry,” said Hal Harvey, chief executive of Energy Innovation, which helps companies and countries transition to clean fuels. And we need to do this rapidly and intelligently, “while protecting local ecosystems.”

The fossil fuel companies, Harvey told me, “need to change their business model so that it is compatible with life on earth — while they still have a chance.”

For those oil companies sitting on large natural gas deposits — which are needed in this transition because gas is cleaner than coal — it means tapping those deposits but doing so with zero methane leakage; otherwise gas becomes as bad as coal. But it also means thinking much more seriously about how fossil fuel companies truly make the transition to become “energy companies,” not just oil companies, so they can leverage their amazing pools of engineering talent to provide more energy solutions that save the planet, not warm it.

The Stone Age, as they say, didn’t end because we ran out of stones. And the oil age won’t end because we run out of oil. It will end with millions of barrels still in the ground because we’ve made oil for transportation obsolete.

The serious oil companies will get ahead of that. The serious petrodictators will be taken down by it. We can’t make it happen soon enough.

This article originally appeared in The New York Times.

Thomas L. Friedman became the The New York Times’ foreign affairs Op-Ed columnist in 1995 after joining the paper in 1981. He was awarded the 1983 Pulitzer Prize for international reporting (from Lebanon) and the 1988 Pulitzer Prize for international reporting (from Israel), and also won the 2002 Pulitzer Prize for commentary.

More From The Market Herald

" Help Jamie Dimon, now!

How you can help JP Morgan Chase CEO Jamie Dimon weather the storm.

" The other war against women

Tolerance for one group need not mean intolerance for another.

" We must stop sleepwalking towards a surveillance state

Biometric technology is valuable for medical research but can also have malign uses.

" Europe has an America problem

Relying on the United States is ultimately a losing proposition.