The Folly of Net Zero

The Democratic Party is pushing for net zero legislation in the U.S.–demanding that on net, America not contribute to global CO2 emissions. Is this a good idea? We can answer that question because it has been tried, as for example by Great Britain. How has that turned out? Rupert Darwall authored this report for the RealClear Foundation titled “The Folly of Climate Leadership: Net zero and Britain’s disastrous energy policies.”

The report is lengthy, but well worth your attention. Britain’s net zero policy was adopted carelessly:

The Climate Change Act was presented as Britain showing climate leadership ahead of the 2009 Copenhagen climate conference, one of many UN climate conferences that was going to save the planet. In 2019, the target was raised to the elimination of 100 percent of net emissions by 2050 and became law after an 88-minute debate in the House of Commons.

Net zero was sold on the basis of misrepresentations of the costs and reliability of wind and solar energy:

Net zero had been sold to politicians on the basis that the falling costs of renewable energy meant that the costs of net zero would fall within the envelope of the previous 80 percent target. The narrative of a dramatic and sustained fall in the costs of renewable energy also underpinned governmental analyses of the economic consequences of net zero that promoted the fiction that the cost of net zero is trivial and could even act as fairy dust boosting Britain’s abysmal lack of productivity growth.

In fact, both wind and solar energy are ruinously expensive, and their costs are not declining. Rather, as their low intensity drives extraordinary demand for raw materials like copper, cobalt and lithium, their costs will inevitably continue to rise.

Sadly, almost all of Britain’s ruling elite, including the “Conservative” Party, signed on to “green” foolishness:

Thus, Britain’s decision to adopt net zero was based on false claims about the cost of offshore wind and wishful—indeed, nonsensical—optimism about the economic consequences of net zero. At a virtual UN climate summit in December 2020, then–prime minister Boris Johnson spoke of turning Britain into the Saudi Arabia of wind power. It is delusory to equate production of a commodity that yields more government revenues than any other with one that, as the International Energy Agency’s May 2021 Net Zero by 2050 Pathway shows, requires more inputs of labor, capital, and land to produce less energy. Net zero therefore constitutes an antigrowth economic strategy that near-zero- growth Britain can ill afford.

This, then, is a story of a massive deception practiced by Britain’s governing class, leading to the biggest resource misallocation in British history—done in the name of saving a planet, which the vast majority of its inhabitants has no intention of emulating.

It is hard to understand how anyone could have thought that energy sources–wind and solar–that are low-intensity, and therefore require vastly more inputs than fossil fuels or nuclear power, and moreover are intermittent, so that most of the time they don’t produce any electricity at all, could possibly be cheaper than the reliable and abundant fossil fuels on which the world has long relied. Someday perhaps a psychologist will try to untangle this mystery. In the meantime:

Hughes, who specializes in applied statistics and economics and advised the World Bank on environmental standards for power plants, estimated that meeting the government’s 2020 renewable energy target would require 36 GW of wind capacity backed up by 13 GW of open-cycle gas turbine (OCGT) plant.
Including investment in additional grid infrastructure and allowing for the shorter life of wind turbines, this would require £120bn of capital investment. This, Hughes suggested, constitutes a plausible Wind Scenario.

On a comparative basis, the same electricity demand could be met by 21.5 GW of CCGT plant at a capital cost of £13bn. Wind farms have relatively high operating and maintenance costs, but no fuel costs. “Overall, the net saving in fuel, operating and maintenance costs for the Wind Scenario relative to the Gas Scenario is less than £500m per year,” Hughes concludes, “a very poor return on an additional investment of over £105bn.” A prospective return on investment of less than half of 1 percent a year is spectacularly poor, by any standard.

In other words, a recipe for economic stagnation and increased poverty, with zero–actually negative, but that is a story for another day–environmental payoff. Another way of looking at the data:

Between 2009 and 2020, the switch to renewables saw 19.4 GW of dispatchable capacity replaced by wind and solar with a nameplate capacity of 33.5 GW, resulting in a 13.6 GW increase in notional capacity. Here we see how intermittency embeds capital inefficiency in the grid:

• In 2009, 87.3 GW of generating capacity, comprising only 5.1 percent of wind and solar, produced 376.8 TWh of electricity.

• In 2020, 100.9 GW of generating capacity, with wind and solar accounting for 37.6 percent of name- plate capacity, produced 312.3 TWh of electricity.

Thus a 15.5 percent increase in nameplate generating capacity produced 21.6 percent less electricity. In 2009, 1 MW of capacity produced 4,312 MWh of electricity. In 2020, 1 MW of capacity generated 3,094 MWh, a decline of 28.3 percent (Fig. 10).

So wind and solar mean less electricity at vastly greater cost, with a potentially horrifying loss of reliability.

And so, in conclusion:

The higher costs of generating electricity from a grid with a high proportion of renewable capacity reflects a basic economic fact: more inputs are needed to produce less output. The outcome is structurally higher energy prices, with adverse knock-on effects sapping the supply side of the economy.

Productivity growth propels long-term economic growth. Net zero throws this into reverse. It is an antigrowth strategy because it consumes more resources to produce less. Beyond its direct and negative impact on living standards, net zero will have an increasingly debilitating macroeconomic effect on
the sustainability of public spending and of public and private debt. It shrinks the economy’s growth potential, which implies higher interest rates to bring inflation back to target. Net zero presents a cocktail of higher energy costs, higher inflation, higher interest rates, higher taxes, squeezed family budgets, less opportunity, and prolonged public-sector austerity.

Net zero policies have devastated Britain and Germany, and damaged other countries. And yet, the Biden administration and the Democratic Party are determined to bring them to the United States. They have already gone a considerable distance down that road. Why? If you do not actively wish for America’s terminal decline, on what possible basis could such destructive policies be advanced?

I don’t think there is any good answer to that question. I think the time is long past when anyone, acting in good faith with even a modest understanding of the facts, could advocate for a “green” transition in the United States. Meanwhile, China, India, Indonesia and many others are laughing at our stupidity. As we mindlessly increase our cost of producing goods and services, they stand ready to outcompete us by virtue of rational energy policies. Along with illegal immigration, insane and deliberately destructive energy policies are the defining issue of our time.

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