Talk of a smooth transition to clean energy is fanciful
Per Mark Trexler, the low carbon transition will be a lot more complicated than we would like to think. Here are some notes from Mark about this ForeignAffairs.com article entitled “Green Upheaval”:
1. Talk of a smooth transition to clean energy is fanciful.
2. The clean energy economy will require a complete transformation of the global economy, and will require spending $100 trillion additional dollars on capital.
3. That transition will not happen in an optimized way.
4. A low carbon transition will transform geopolitics, producing new forms of competition and confrontation.
5. The demand for oil will eventually fall significantly, but in the meantime global production and market power is likely to be concentrated in fewer hands. The same goes for natural gas.
6. The demand for critical minerals and rare earths will also give certain countries more market power. China has already demonstrated its willingness to flex that influence.
7. The path to decarbonization will also create substantial conflict between rich and poor nations as the pressure to reduce emissions mounts.
8. The failure of rich nations to assist poor countries will be a growing source of geopolitical tension.
9. A growing reliance on electricity is likely to reduce energy trade. Importing electricity creates security risks.
10. Clean energy is leading to increased protectionism, e.g. duties and tariffs on Chinese solar panels.
11. Imposition of tariff-like “carbon border adjustments” will lead to global fragmentation.
12. Policy makers should promote flexibility and as deversified and interconnected energy system as possible.
13. Willful blindness to the barriers involved could lead to the failure of a low carbon transition.