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July 27 - September 16, 2024
Governments around the world spend more than $140 billion every year subsidizing inefficient solar energy and wind power. Yet despite this huge expenditure, together these renewable sources provide only about one percent of global energy needs.
But globally, 85 percent of all renewable energy comes from wood and hydropower, what we can call “old” renewables.
The sheer scale of battery storage capacity that would be needed for solar power to work is vastly underappreciated: today the United States has enough batteries across the entire nation to store just fourteen seconds of average US electricity use.
Wind power produced less than 7 percent of US electricity in 2018, and solar power less than 2 percent. In total, renewable energy sources produced 17 percent of the United States’ electricity, but most of this came from old renewables, with the majority coming from reliable hydroelectricity.
We need to be honest: reaching 16 percent of total US energy in 2050 does not mean that renewable energy is taking over from fossil fuels. That percentage is actually less than what US renewable energy sources contributed in 1900. And even by 2050, solar and wind power are projected to make up less than half of the 16 percent of renewables (four and three percentage points respectively), with most of this still coming from the reliable old sources of wood and hydropower.
The US experience reflects global trends. Today, solar panels and wind turbines together deliver only 1.1 percent of global energy. The International Energy Agency estimates that even by 2040, solar and wind power will cover less than 5 percent of global energy needs.
The jarring fact is that humanity just finished spending two centuries getting rid of renewable energy and replacing it with fossil fuels (see figure 7.2). When everyone was poor, the whole world cooked and kept warm using polluting renewable energy sources like wood and dung. Over a century and a half, we shed our reliance on renewable energy and powered the industrial revolution with fossil fuels. For the last fifty years, the level of renewables globally has hardly budged from a level of around 13–14 percent.
IN THE POOR WORLD, replacing fossil fuels with new renewable energy sources like wind and solar power is hard because most people desperately want much more power at lower cost, not fickle power at high cost.
Understandably, all of Rukua was thrilled to get access to energy and wanted to take full advantage. So more than thirty households purchased refrigerators. Unfortunately, the off-grid solar energy system was incapable of powering more than three fridges at a time, so every night the power would be completely drained. That led to six households buying diesel generators. According to researchers who studied this project: “Rukua is now using about three times the amount of fossil fuel for electricity that was used prior to installation of the renewable energy system.”
In Tanzania, a survey of households with solar panels showed that almost 90 percent still wanted access to the electric grid.
The Energiewende has cost $36 billion annually in recent years, and is the country’s biggest political project since reunification. Electricity costs have doubled over the past two decades and are now at 35¢ per kWh, almost three times the US average. Germans will have spent $580 billion on renewables and related infrastructure by 2025.19
Overall, fossil fuels have declined only slightly as a share of German energy. In the first decade of the new millennium, the fossil fuel share of the overall energy supply dropped somewhat from 84 to 80 percent. But in the years since the Energiewende was passed in 2010, the fossil fuel share has stayed almost constant, inching down just one percentage point to 79 percent today.
But there’s a catch. Most of this renewable energy does not come from solar and wind. In total, solar and wind make up 2.7 percent of all energy, whereas biomass makes up more than 10 percent. Biomass, which basically is a fancy-sounding name for wood, is one of the old, reliable renewables that can produce energy when it is needed. The problem for the planet is that wood is often imported from US forests in diesel-driven ships, and emits more carbon dioxide than even coal when it is burned.
Biomass is categorized by the EU only as carbon dioxide free because it is hoped that felled trees will be replanted and over many future decades will soak up as much carbon dioxide as was released by its burning. Needless to say, this is dubious accounting at best.
With this trickery and reliance on wood imported from the United States, the EU has managed to cut fossil fuel use from 79 percent in 2000 to 71 percent in 2018. Yet, the cost of this energy policy is now more than two percent of the EU’s economy, or about $400 billion every year. Indeed, about 20 percent of the EU budget is now being spent on climate policies.
Today, residential electricity costs in the EU are twice the US cost of 13¢ per kWh. This gap will grow quickly. Over the next decade, one 2019 study estimates that mostly because of stronger climate policies, the wholesale electricity price in the EU will quadruple.
The UN estimates that the additional infrastructure cost alone of achieving the 2.7°F (1.5°C) limit would come to almost a trillion dollars each and every year for the next thirty years. A 2018 Goldman Sachs report shows that the cost to build just the infrastructure for electric cars, such as charging stations and power networks, would be an astronomical $6 trillion, or 8 percent, of today’s global GDP.
If the European Union sticks to its climate promises for 2050, it alone could end up paying more than $2.5 trillion per year in climate costs—10 percent of its entire GDP. This is more than all the EU’s current spending on education, health, environment, housing, defense, police, and courts.
Equally, when a government spends $10 billion in subsidies on solar and wind power, that doesn’t mean a societal cost of $10 billion, because the money is not wasted; it is redistributed, often to the rich owners of the solar panels and wind turbines.
Every household, business, and organization that uses energy finds it a bit more expensive and has a little less money for other things. This slightly slows economic growth. This cost is the relevant social cost of climate policies—the reduction in welfare that comes from each nation insisting on using energy that is slightly more costly and less reliable than fossil fuels.
Unfortunately, politicians couldn’t help but push their economies to try to increase the amount of wind and solar power utilized. They used subsidies that made the policy’s cost much more expensive. In total, the researchers have found that the total EU policy will end up costing around 2.2 percent of GDP, more than double what the price tag could have been had the EU’s politicians made more effective choices.
Thus, without hyperbole we can say that the Paris Agreement will easily set the world back by at least $1 trillion annually by 2030—and more plausibly, with less efficient policies, the cost could climb to somewhere close to $2 trillion annually.
No matter which way you look at it, the Paris Agreement is by far the most expensive pact in history. At $2 trillion, it is at par with the entire expenditure on the world’s military each year. Every year, the Paris Agreement will cost about two to five times the total amount of the world’s previously most expensive global accord: Germany’s World War I repayment settled in the Versailles Treaty.
That means that an extra 6,000 Gt over the century will result in a temperature rise of about 5.7°F or so. Since we’re already almost 2°F above preindustrial levels, that means that the twenty-first century will see the planet get roughly 7.5°F hotter if we do nothing, similar to what we saw with the MAGICC model
This estimates a total reduction of 64 Gt carbon dioxide through to 2030. According to the UN’s estimate of 0.8°F per 1,000 Gt carbon dioxide, this translates to a reduction in temperature by the end of the century of about 0.05°F. What this tells us is that even in an optimistic scenario, the Paris Agreement isn’t going to come anywhere close to solving global warming. It will have a miniscule impact on the temperature by 2100.11
A 2018 study finds that of the 157 countries to have promised emissions cuts in the Paris Agreement, only seventeen have passed laws to do so. In other words, only one in ten countries is taking the necessary steps to get on track to achieve what they promised. These are not the biggest countries.
At the Paris climate summit, politicians also promised to keep global temperature from ever rising beyond 3.6°F (the so-called 2°C limit). Accomplishing this would mean cutting eighty times more carbon emissions than were actually promised (and remember, they are not on track to achieve even that much). To achieve the 3.6°F target, we would literally need new and additional carbon cuts of the same size as those in the Paris Agreement every single year from 2020 to 2100 (and we
Currently we have promised to spend $1–$2 trillion every year, and we won’t be able to tell the difference in temperature even in a hundred years. Indeed, it turns out that if we measure all the benefits of reduced climate damage in monetary terms, every dollar the Paris Agreement costs will avoid just 11¢ worth of long-term climate damage.
And it is only the cheapest cost of getting halfway to Ardern’s target. Getting all the way will likely amount to more than $61 billion annually, or 16 percent of GDP by 2050. That is more than New Zealand today spends on social security, welfare, health, education, police, courts, defense, environment, and every other part of government combined.
This is the choice the rich world faces today, when discussing the climate. And the choice is even starker for the world’s poor. Spurred on by activists and campaigners, many global leaders are poised to pick the lower-growth pathway, condemning our children and grandchildren to a worse existence, and ensuring that the world’s poorest are trapped in a future with fewer opportunities, less prospects, and less welfare, to the tune of $500 trillion. Per year.
But down the “fossil fuel” pathway, the average person will be 10.4 times as rich. That is a lot better. On average each person would earn $182,000 per year. This is $76,000 more per person per year in 2100. This is much better than the “green” scenario. A ten times increase in welfare is an astonishing success.
If we follow the “fossil fuel” pathway, the average welfare in 2076, after we have deducted the climate damage, will be $79,800 for every person in the world. Under the “green” scenario we won’t reach that welfare before 2100. Choosing the latter means we’re literally holding the world back by a generation.
But in a realistic world, less or no growth means that distributional fights become more vicious, and it seems naive to expect that ever-increasing shares of a small cake would go to the least powerful.
Researchers have looked at the impact of higher incomes and found that they lead to lower death rates, both because you can afford more health care and because you can afford to give your children better opportunities.
Yet, the result is that humanity will be $500 trillion worse off, with more poor people, more inequality, less opportunity, and millions of more premature deaths than if we decide on the “fossil fuel” pathway. We will be choosing to make each person on the planet $69,000 worse off per year, even after taking the costs of climate change into account.
What if, instead of cutting carbon, we helped Tacloban escape widespread poverty, and got more people out from under flimsy, corrugated roofs? That would transform the lives of today’s most vulnerable, making them more resilient, and of course it would dramatically improve the prospects for future generations.
One 2016 study shows that when income doubles for the average person in a poor community, fatalities from natural disasters will be cut by more than a quarter. What this tells us is that increasing incomes builds resilience.
Putting it bluntly, choosing climate policies over growth policies doesn’t just do nothing. It means more people die avoidable deaths.
Lifting incomes significantly reduces the damage from any potential climate-change-caused increase in hurricanes, droughts, and floods. Moreover, there have always been natural disasters and there always will be, even if we stopped climate change altogether. Lifting incomes doesn’t just help with the increase in natural disasters caused by global warming. It also helps reduce all the damage that would have happened anyway.
Which is to say that by insisting on cutting carbon through climate policies that push up food prices, instead of taking a broader view of how to best help people and the planet, we will have consigned fifty-four million more people to starvation. This is unconscionable.
While Africans will lose much less prosperity to climate change if we follow the “sustainability” (“green”) pathway, they will be much better off overall if we follow the “fossil fuel” pathway: they will be more than thirty times more prosperous in 2100 than in 2020, even after accounting for climate damages, compared to “just” nineteen times better off in the “sustainability” pathway. By choosing the latter, we would be leaving each African $55,000 worse off every year.
The truth is that climate change plays a relatively small role in determining future well-being. It is clear that if we’re motivated only by trying to reduce the impact of rising temperatures, we’re literally ignoring the most important factors—such as education, health, technology, and access to plentiful energy—in Africa’s future well-being.
We don’t often hear this concern anymore, thanks to tremendous success tackling malaria directly with insecticide-treated bed nets, indoor spraying, and treatment, which has halved the number of deaths over the last fifteen years. Imagine if we hadn’t focused on these simple approaches, but instead put all our efforts into cutting carbon dioxide. We would still have 840,000 annual deaths, 400,000 more than today, while we waited for the miniscule effects of moderate carbon cuts to have any impact.
Instead, lifting societies out of poverty is a much more important pathway to eradicating malaria. A study shows that when the average GDP per person reaches $3,100 per year, individuals have enough resources that most can afford to buy drugs to cure malaria, essentially ridding society of the disease altogether.
The charity ActionAid calculated that the amount of crops needed to fill an SUV’s fuel tank with biofuel would feed a child for an entire year, and every gallon of biofuel wiped out forty meals.
The huge growth in biofuel inevitably contributed to a reduction in food and an increase in food prices: a confidential World Bank report obtained by the Guardian found that biofuels had forced global food prices up by 75 percent. The results of the price hike were devastating. After food prices first spiked in 2008, the UN special envoy for the right to food, Olivier De Schutter, declared that a “silent tsunami” had pushed a hundred million people into poverty and thirty million into hunger.
This is one of the reasons why rich elites have no problem saying we should increase gas prices to $20 a gallon—they can easily afford it. Wealth also tends to be clustered in cities, where people drive much less.
Across the United States, many people are still struggling to pay their energy bills. The International Energy Agency estimates that 9 percent of Americans, or twenty-nine million, are “energy poor,” spending more than 10 percent of their income on energy. This means poor Americans often literally have to forgo other basics in order to heat (or cool) their homes sufficiently.
High energy prices literally kill people, as one 2019 study shows. Researchers looked at the natural experiment that happened around 2010, when fracking delivered a dramatic reduction in costs of natural gas. The massive increase in availability of natural gas drove down the price to heat homes. Cold homes are one of the leading causes of deaths in winter: there is a strong connection between low indoor temperatures and increased risk of strokes, heart attacks, and respiratory diseases. So reducing the price of heat saves lives. The study estimates that these new lower energy prices save about
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But they will get very little power, mostly because the focus is on getting them off-grid solar rather than on-grid, mostly fossil-fuel-based energy. Indeed, they will on average get just 170 kilowatt-hours per year. That is half of what one US flat-screen TV uses in a year.
