It’s been another disastrous month for Net Zero. So many of the myths which the emissions target relies on are unravelling simultaneously that it’s hard to keep up. More importantly, it now has us all in quite a tangle, because we’re only discovering the ‘challenges’ of Net Zero after committing to it.
We’re in the midst of rolling out renewables and winding down fossil fuels without having figured out whether that’s even viable. We put the cart before the horse and the horse has turned out to be a real ass.
The month’s misery began with the UK’s failed wind energy auction, which attracted precisely zero bids. This in the midst of what’s supposed to be a vast rollout of wind energy.
Instead of a rapid rollout, even many of the existing projects around the world are now on ice. They’re demanding higher prices due to spiking costs for their ‘free’ energy.
BP and partner Equinor are demanding a 54% hike in electricity prices produced at three offshore wind farms in the US according to Reuters, because the projects may no longer be viable at current costs. That’s something competitor Orsted also announced, causing its share price to crash.
The Empire Centre collected the remarkable data:
‘Ørsted and Eversource have asked for a 27 percent increase for their Sunrise Wind project, which would raise their strike-price from around $110 to nearly $140 per MWh.
‘And the joint venture of Equinor and BP has asked for increases on all three of the projects it is developing. For Empire Wind 1, they want a 35 percent increase that would raise its strike-price from $118 to almost $160, for Empire Wind 2 a 66 percent increase that would bring its strike-price from $107.50 to almost $178, and for Beacon Wind a 62 percent increase to lift its strike-price from $118 to over $190.
‘This is despite a leading analyst’s recent prediction that offshore wind should only cost $72 to $140 per MWh.’
How can wind farms be uneconomical when they’re supposed to provide the cheapest form of energy?
Don’t ask me!
What about solar and onshore wind?
The Empire Centre continues:
‘The demands for price adjustments are coming from onshore wind and solar power as well. The Alliance for Clean Energy New York (ACE), a renewable energy industry group, has filed a petition to increase the prices paid to as many as 86 of 117 onshore wind and solar projects awarded by NYSERDA between 2016 and 2021. NYSERDA estimates the requested changes would increase strike prices an average of 63 percent for solar projects and 71 percent for onshore wind projects.
‘Like the offshore wind projects, these facilities are not yet built but already the prices developers agreed to are allegedly no longer financially viable. If the Public Service Commission does not agree to their request, ACE says, these projects “cannot proceed economically on existing contract terms.”’
No longer viable? Perhaps they never were. Developers just know how to deal with politicians and their propensity to pay for things with other people’s money.
What about hydro?
‘As if increases in prices for uncompleted solar and wind projects aren’t enough, an unfinished hydropower project—the Champlain Hudson Power Express, a high-voltage direct current line transmitting hydroelectric power from Quebec to New York City—has also asked for a price increase.’
These aren’t small increases, either. And they seem to be global.
Perhaps President Biden’s Inflation Reduction Act, which includes the energy transition rollout, is keeping with the time-honoured tradition of government policies having the precise opposite outcome to what was intended. It is causing so much inflation that it undermines the rollout of the energy transition.
Net Zero’s transition of the car fleet to EVs, which first alerted me to its impossibility, also hit turbulence this month with The Financial Times reporting, ‘Ford is pausing construction on a $3.5bn plant in Michigan where it planned to make batteries for electric vehicles using technology from a Chinese company, amid controversy over the plan and an ongoing auto workers’ strike.’
How the times have changed and the worm has turned! US companies using Chinese technology to fail to produce car parts because of labour disputes…
Even the environmentalist movement began to turn on renewables this month, with a new documentary gaining traction online. It claims that wind projects risk the extinction of North Atlantic Right Whales.
This shouldn’t come as a surprise given the incredibly low energy density of renewable power. It takes up vast tracks of land per megawatt of energy produced.
That land is now causing quite the NIMBY backlash against the vast amounts of energy infrastructure needed. The poor Prime Minister even got booed by locals in Port Stephens who hadn’t been consulted about future transmission lines properly.
Don’t they know he’s saving the planet by erecting vast steel towers across the country?
Popular backlash was less of a problem in energy transition paragon Germany, where the dismantling of a wind farm went ahead this month in order to expand a lignite coal mine beneath. It’s like the industrial revolution all over again, with an energy transition from wind to coal…
The month’s bad news for Net Zero got unambiguously worse when UK Prime Minister Rishi Sunak announced he’d delay several of the UK’s Net Zero targets because of a lack of honesty about their implications.
Yes, he is willing to destroy the planet to save a few quid. Outrageous, isn’t it?
The crisis of confidence in Net Zero has struck even Lego, which abandoned its attempt to use recycled plastic to produce its bricks. Not because of costs, but because it would result in more, not less, emissions over the life cycle of the project.
If only we applied the same calculations to certain other carbon emissions projects…
But back to oil it is for Lego, at least.
Things are getting so bad for the Net Zero campaign that they’re raising ideas such as microwaving solar power down from space.
Perhaps worst of all for the more moderate Net Zero fanatics, the Guardian and climate analysts at Corporate Accountability analysed the top 50 carbon offsetting projects around the world and found…problems.
The Guardian summed it up like this:
- A total of 39 of the top 50 emission offset projects, or 78% of them, were categorised as likely junk or worthless due to one or more fundamental failing that undermines its promised emission cuts.
- Eight others (16%) look problematic, with evidence suggesting they may have at least one fundamental failing and are potentially junk, according to the classification system applied.
- The efficacy of the remaining three projects (6%) could not be determined definitively as there was insufficient public, independent information to adequately assess the quality of the credits and/or accuracy of their claimed climate benefits.
- Overall, $1.16bn (£937m) of carbon credits have been traded so far from the projects classified by the investigation as likely junk or worthless; a further $400m of credits bought and sold were potentially junk.
The trouble is, if we can’t offset our carbon effectively, then all activities which produce carbon must cease.
Of course, some myths persist in the face of obvious facts. Perhaps the most delusional bit of editorial out there was published on News.com.au when it compared nuclear small modular reactors to renewable energy:
‘However, in practice, there are some very big problems with SMRs.
‘The most pressing is that they do not currently exist. There are only two working prototypes worldwide. They might exist in the future in economic form if many of them are manufactured. But, for now, only China and Russia are operating them, and they were very expensive to build.
‘Australia would not want to become dependent upon such tyrannies for strategic technology. Nor should we punt an urgent energy transition on an unproven technology that could take decades to become economic.
‘Other drawbacks include NIMBYs and nuclear waste. The latter could be turned into a new industry, but the former is unlikely to be happy about it. Nor are NIMBYS likely to be keen on 80-plus SMRs operating directly adjacent to cities, within fallout zones.
‘Conversely, wind, solar and batteries do not face these problems.’
Renewable energy’s reliance on China makes nuclear’s political risk look boring.
People have no issues living next to nuclear reactors around the world and nuclear waste is not an issue where nuclear is used.
The real punt is to rely on intermittent energy and the absence of effective scalable energy storage.
The idea that nuclear is unproven relative to a transition to renewables is just…
Anyway, the real question is whether the Net Zero Titanic has finally begun to attempt evasive action after spotting the iceberg about a year ago. Is UK Prime Minister Sunak just the first of many to try and weasel his way out of legal commitments? Or is this the beginning of a trend?
My former mentor Greg Canavan believes he has the answer. And he has found opportunities that investors could benefit from in Net Zero’s eventual failure. If News.com.au is anything to go by, you’ve still got time to take a position…
Editor, The Daily Reckoning Australia Weekend