‘Dangerous delusion’: High demand for oil, gas impedes green transition, expert says

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Despite at least $5 trillion of spending on non-hydrocarbon globally, the world’s dependence on and consumption of hydrocarbons remain high, hampering the global energy transition as a result, an expert told Al Arabiya in an interview on the ‘Future of Energy’ TV show.

“The fact is after at least $5 trillion of spending globally on nonhydrocarbons, the world has only reduced its dependence on hydrocarbons by two percentage points in the last 20 years… And the absolute consumption of hydrocarbons: oil, gas and coal, have increased since then,” said Mark Mills, senior fellow at the Manhattan Institute and faculty fellow at Northwestern University’s School of Engineering and Applied Science.

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“The total supply for wind and solar to the world energy systems is barely approaching 4 percentage points now. This is not a transition happening quickly, and frankly it is not a transition. We have a nomenclature problem.”

Mills added that throughout history, when new ways of producing energy were introduced to society in a manner where they are useful and affordable, they tended to “add to” without fully replacing what was already there.

“The transition is impossible as it is imagined and proposed in the timeframes that are being suggested or mandated.”

“It’s not happening at those scales, and it won’t happen on those scales. And it’s locked into the engineering economics and physics of energy systems, not aspirations. It’s not a money issue, it’s a practical issue in the domains of energy, so we have to ask the question of what is possible as opposed to what our aspirations are.”

But shifting from one energy source to another does not come without its consequences.

“If you are trying to push and accelerate a shift away from one form of energy to another, you should know what the consequences are… the environmental consequences, the social consequences, the geopolitical consequences and the economic consequences,” he explained.

“This is poorly understood and its poorly explained in the public space but is extremely well understood in the science domain. Energy science is not a mystery, and it’s not in fact debatable. So, there is no denying reality when it comes to what you can and cannot do with the sun, wind and with batteries.”

‘Counterproductive’ policies

“Governments are capable of many policies that are counterfactual or counterproductive, or both,” said Mills.

He explained that the “underinvestment” in global oil and gas production, which has been going on for almost a decade, “bears negative fruit,” leading to higher prices and greater price volatility.

In five years or so, it could become increasingly difficult to meet global oil demand “no matter how much governments push alternatives to oil,” he said, adding that it will cause wind, solar and electric vehicles to become more expensive because the hydrocarbon machines needed to create green machines will become more expensive.

“It’s the opposite of what you would call a virtuous circle; it’s a negative cycle to create higher costs and higher prices, and it will be accelerated by the fact that the green machines require fundamentally astonishing increases in the quantities of minerals that should be mined.”

The demand for copper and nickel needed for the world’s green energy aspirations are 1,000 to 5,000 percent beyond existing mining capabilities, according to Mills.

“This is profoundly inflationary for the entire economy. I don’t think it’s sustainable. I think it will end. And it won’t end because of any policies, it will end because governments and economies won’t be able to tolerate the economic impacts.”

Russia-Ukraine war

Mills believes that there are three types of wars happening within the context of the Russia-Ukraine conflict: the war on the battlefield, a geopolitical war, and an energy war.

He said that both Russia and Europe are currently losing the energy war, and that although the West can continue to ostracize countries like Russia, the possibility of Russia embargoing the West itself is not so far-fetched.

“The possibility of Russia embargoing the West itself, imposing a ban on the exports of oil and gas, outright now, just to Europe, to punish world markets, would be extraordinarily consequential in both price terms and inflationary terms. And I think a lot of planners are naive to rule out the possibility that Russia will lash out and decide that enough economic damage has been put on their nation and they want to impose it on the nations that are doing that to them.”

“These are high consequence games for a region… that is a very significant share of the world’s critical energy supply.”

Russia’s invasion of Ukraine has shown how “economically and strategically ineffective the mobilization of windmills and solar panels have been for Europe,” he said, adding that this is a dangerous policy, one that he calls a “dangerous delusion.”

“…we are seeing the evidence of how dangerous it is to implement energy policies at societies’ scale that are not achievable or affordable in timeframes that are meaningful, for keeping people safe and healthy and economies growing.”

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