Two new reports, one from the International Energy Agency (IEA), and one from the United Nations (UN), call for an energy revolution in the wake of the COVID-19 pandemic. Casting the potential revolution as an opportunity created by the need to rebuild the global economy after the pandemic, the two reports seek to re-package many of the flawed ideas put forward by those who have been seeking the end of hydrocarbon-based energy for over twenty years.
Can $9 trillion buy a transition?
The IEA estimates that the world is going to spend $9 trillion dollars to rebuild the global economy post-COVID-19, and the theme of its report is finding ways to apply that windfall to a new global economy based upon more wind and solar power; more vehicle electrification; more mass transit such as rail (and high-speed rail); and more stringent efficiency standards for buildings, appliances, and manufacturing equipment. In addition, the continued use of biofuels is on the agenda, as are still pilot-project-level ideas such as establishing hydrogen as a vehicle fuel. Some will argue that $9 trillion is not that much compared to the history of hydrocarbon industry subsidies, however, as analysis has shown, claims of extensive subsidization of the hydrocarbon sector do not stand up to scrutiny.
The UN report is perhaps more ambitious than is the IEA’s, with the title,“We need a total fossil fuel lockdown for a climate revolution.” The report observes that while renewable power has expanded in recent years, “Overall, global hunger for energy keeps increasing and eats up progress … The journey towards climate disaster continues, unless we make an immediate switch to efficient and renewable energy in all sectors in the wake of the COVID-19 pandemic.” This idea bodes particularly poorly for the economies of Alberta, Saskatchewan, and the Maritimes in particular, and for Canada as a whole.
The reports are wide-ranging, and a detailed critique of their many assumptions, projections of future technological growth, economic impacts, and feasible timelines of major energy-transitions is beyond the scope of this brief analysis. Here, I will focus only on four pillars of the proclaimed post-COVID-19 fossil fuel lockdown and climate revolution where we have experience and evidence to examine their feasibility.
Green jobs and green Investment
Perhaps the claim most often made about what has been called the green energy revolution is that such endeavors, funded and directed by governments, will not only create more jobs than such actions inevitably displace, but will actually perform better than markets or private investors at creating good jobs and picking winning technologies of the future.
Research has shown, however, that such claims are not supportable. Several studies, for example, have shown that when the government chooses to create a green job, (however loosely defined), the money diverted from other uses in the private sector comes at the cost of existing or potential future jobs. Jobs cannot be created out of whole cloth, and resources circulating in the economy are finite at any given time: trade-offs must be made.
- A 2005 study by economists at the University of Alberta unpacked the green jobs issue in a Canadian and Albertan context. Economists Jennifer Winter and co-author Michal C. Moore at the School of Public Policy concluded that, “By emphasizing ‘green jobs,’ policy-makers risk measuring environmental progress based on a concept that can often be entirely irrelevant, or worse, can actually be detrimental to both the environment and the economy. Too often, ‘green job’ policies reward inefficiency, while also failing to distinguish between permanent, full-time jobs and temporary or part-time jobs. In some cases, they can also discourage trade, limit or thwart competition, result in greater job losses elsewhere in the economy, and demand massive government subsidies, with some government ‘green job’ programs requiring hundreds of thousands of dollars, or even millions, to create a single job.”
- A 2007 study I authored at the height of the last U.S. Green Jobs initiatives looked at the experience of European countries that had pioneered the deployment of wind and solar power, justified on the green job creation argument. Coincidentally enough, that study took place as the US was implementing the first Green New Deal under the Obama administration. The 2007 study documented that “Green programs in Spain destroyed 2.2 jobs for every green job created, while the capital needed for one green job in Italy could create almost five jobs in the general economy. Wind and solar power have raised household energy prices by 7.5 percent in Germany, and Denmark has the highest electricity prices in the European Union.”
A rapid shift to a wind and solar powered future?
Another idea that permeates the two post-COVID opportunity reports is the focus on expanding wind and solar power. This is ostensibly supposed to be good for the environment, forestall some of the risks of manmade climate change, and to build resilience in global energy systems. But can politically-directed demands really create greater reliability and resilience using technologies that are inherently intermittent (the wind does not always blow and the sun does not always shine), are often at their most efficient when people need that energy the least, and are at their most inefficient at times when people need that energy the most? Experience and data suggest the answer is no.
There are two elephants in the bedroom of the wind/solar revolution. First, there is a need to maintain duplicative power generation capability that can produce all of the power society demands when wind and solar do not, 24/7/365. That means, in essence, that for all of the energy generated with wind and solar power, somewhere there must be backup power-plants (or vast arrays of super-batteries that haven’t been invented yet) that are sitting largely idle and burning maintenance money to not produce power.
The other elephant is the cost of building a massive grid to tie together hundreds of dispersed, low-density power sources rather than relying (as society has) on a much smaller number of high-density power sources such as hydrocarbons, hydropower, and nuclear power.
As physicist Mark Mills with the Manhattan Institute points out, this green energy revolution is nearly impossible. Mills observes in 2019 study that:
- “Solar technologies have improved greatly and will continue to become cheaper and more efficient. But the era of 10-fold gains is over. The physics boundary for silicon photovoltaic (PV) cells, the Shockley-Queisser Limit, is a maximum conversion of 34% of photons into electrons; the best commercial PV technology today exceeds 26%.”
- “Wind power technology has also improved greatly, but here, too, no 10-fold gains are left. The physics boundary for a wind turbine, the Betz Limit, is a maximum capture of 60% of kinetic energy in moving air; commercial turbines today exceed 40%.”
- “The annual output of Tesla’s Gigafactory, the world’s largest battery factory, could store three minutes’ worth of annual U.S. electricity demand. It would require 1,000 years of production to make enough batteries for two days’ worth of U.S. electricity demand. Meanwhile, 50–100 pounds of materials are mined, moved, and processed for every pound of battery produced.”
In a 2014 article in Scientific American, University of Manitoba energy scholar Vaclav Smil (who views climate change as a massive problem and actually favours wind and solar power over fossil fuels) writes:
“Ultimately mass adoption of renewable energy would require a fundamental reshaping of our modern energy infrastructure. For electricity, it would entail a shift from a relatively small number of very large thermal or hydropower plants to a much greater number of small, distributed wind and solar systems. For liquid fuels, it would require moving from extraction of high-power-density oil to production of lower-power-density biofuels. In many ways, a transition to renewables is more demanding than the prior shifts from coal to oil and then to natural gas.
“The final factor leading to a prolonged shift is the size and cost of existing infrastructure. Even if we were given free renewable energy, it would be economically unthinkable for nations, corporations or municipalities to abandon the enormous investments they have made in the fossil-fuel system, from coal mines, oil wells, gas pipelines and refineries to millions of local filling stations—infrastructure that is worth at least $20 trillion across the world. According to my calculations, China alone spent half a trillion dollars to add almost 300 gigawatts of new coal-fired generating capacity between 2001 and 2010—more than the fossil-fuel generating capacity in Germany, France, the U.K., Italy and Spain combined—and it expects those plants to operate for at least 30 years. No country will walk away from such investments.”
The problem of regressivity and energy poverty
The green energy revolution promises to increase social resilience, and increase social justice. But in reality higher energy costs are sharply regressive, and especially hard on low-income communities that often include newcomers to Canada. It also blithely ignores the reality that the vast majority of developing countries and emerging economies are desperately trying to build a modern energy economy in order to reduce almost unimaginable levels of energy poverty.
But it isn’t only far-away countries that have to deal with energy poverty: we have far more here in Canada than should be acceptable in a wealthy, high-tech, highly compassionate country. According to the Canada Energy Regulator (formerly the National Energy Board), eight per cent of Canadian households spend more than 10 per cent of their household income on electricity, heating oil, and natural gas. This is the most common metric of what is considered energy poverty. The Maritimes have it worse at 13 per cent of households suffering energy poverty.
Notice that gasoline consumption is not included in that estimate. In a Fraser Institute study from 2016, researchers found similar levels of energy poverty, but also looked at the numbers if transportation costs are added in. When accounting for the costs of household transportation, energy poverty numbers roughly doubled, to approximately 20 per cent of Canadian households being classed as energy poor. The Fraser study also confirmed a large body of research showing that high energy costs are regressive: that is, they hurt the poor more than they do anybody else. Some 80 per cent of households earning less than $73,000 (2013) were in energy poverty, compared to only about 23 percent of households earning more.
COVID-19 is a devastating pandemic that will have equally devastating economic impacts as society passes through it and then begins to rebuild. But nothing about COVID-19 has suspended the laws of physics, or people’s demand for abundant quantities of reliable, affordable energy of the sort that Alberta can provide partly through ethical, responsible development of its hydrocarbon resources. If anything, the need for such energy and petroleum products will be higher in the aftermath of COVID-19 than it has ever been before.
Rather than calling for a revolution that ignores history and its lessons about what does and doesn’t work, Canada should focus its attention on the art of the possible: rebuilding an economically vibrant Canada powered by hydropower, nuclear power, hydrocarbon power (and materials), and, where economically and environmentally responsible, incorporating renewable power sources such as wind power, solar power, and biofuels.
Dr. Green has studied energy and environmental science and policy for 25 years at think tanks in Canada and the United States. He holds a Doctorate in Environmental Science and Engineering (D.Env.) from the University of California, Los Angeles. Ken’s publications include numerous policy analyses, newspaper and magazine articles, book chapters, and two supplementary textbooks on climate change and energy policy. Dr. Green has appeared in most major media across Canada and the US and has testiﬁed before committees or subcommittees of the Canadian House of Commons, the Senate of Canada, the US House of Representatives, and the US Senate.