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Sacrificing Humanity on the Green Altar? (pt. 3)
Part 3 – First Do No Harm
In the final installment of this series, we shift from numbers, charts and graphs to highlight the human impact environmental and energy policies are having on the world’s poorest. We borrow a framing described by Chris Martenson at Peak Prosperity and use a few recent examples.
Consider three concentric circles where the outermost circle represents the developing world’s poorest countries, the middle circle the developing world’s next tier, and the inner circle the prosperous Western world. For simplicity’s sake, think of the inner circle as nations with over $1 trillion in annual GDP, the middle $100 billion to $1 trillion in GDP, and the outer circle under $100 billion in GDP.
Our first example comes from the outermost circle. In his 2019 campaign former Sri Lanka President Gotabaya Rajapaksa, encouraged by Western environmentalism, promised to transition the country away from nitrogen/ammonia-based agricultural fertilizers to organic farming within a decade. In Spring 2021, already on precarious economic and political footing, he decided to rapidly increase that pace and banned chemical fertilizers and pesticides.
What ensued over a little more than a year is a cautionary tale about “organic” farming and the connection between petroleum hydrocarbons (natural gas is a key ingredient in modern agricultural fertilizers), global food production and human prosperity. A country that three years earlier had been a net food exporter and one of the world’s leading tea exporters suffered what might be the quickest collapse of a nation’s agricultural sector not caused by weather or war in modern history, simply by the choice to ban chemical fertilizers and pesticides.
Food shortages and rampant inflation ensued. By July 2022, “Gota” Rajapaksa had to be quickly removed by military forces as tens of thousands of protesting Sri Lankans stormed the Presidential Palace. While the throngs never caught him, they did have a nice afternoon in the Palace pool.
In Pakistan (our middle circle example) natural gas provides the largest share of electricity generation (~28%). In June 2022, Pakistan LNG Limited (PLL) conducted four tenders (bids) for month-forward LNG purchases (July delivery). Three of the four tenders had no bidders. The fourth had only one bid, from Qatar, at $39.80/million British Thermal Units (MMBtu) - the highest bid ever received by PLL - which it declined as too costly. For reference, at that time the natural gas price at the U.S. (benchmark) Henry Hub was ~$6/MMBtu.
Priced out of the global natural gas market thanks to Europe, as Pakistan’s domestic media noted, citizens suffered blackouts and loss of grid reliability (emphasis ours):
“.. sources in the Power Division said that electricity shortfall in Pakistan had reached 5,550MW as the country was producing 21,350MW against a demand of 26,900MW, leading to power outages of up to eight hours in different parts of the country.”
PLL issued new tenders in August and September, then changed and extended both to October 3, 2022. It didn’t change the outcome. For 72 total LNG shipments between January 2023 and December 2028, PLL received no bids.
European “leaders” and citizens are paying the higher natural gas and electricity prices because they have the wealth (at least today, albeit with printed money) to do so and have few alternatives. But effectively, European environmental and energy policies are now causing Europe to outbid the developing world for critical basic resources with disastrous potential consequences.
A second example from the middle circle is Poland. In Summer 2022, citizens fearful of natural gas shortages this winter lined up for days outside the Bogdanka coal mine to stock up on coal for winter heating fuel. They did so, in Reuters’ words, (emphasis ours….) “in queues reminiscent of communist times”.
According to a 57-year-old Polish pensioner who waited for three days in his tiny red hatchback (emphasis added):
"This is beyond imagination; people are sleeping in their cars. I remember the communist times but it didn't cross my mind that we could return to something even worse."
Our two examples from the >$1 trillion GDP countries are the Netherlands and Germany. The first example is related to food production, the second to electricity.
Ammonia-based agricultural fertilizers, produced from natural gas using an industrial nitrogen fixation process known as Haber-Bosch, feed ~4 billion people. Due to the (non-trivial) environmental impact from nitrogen loading on surface waters, they have become a target of environmentalists worldwide (see Sri Lanka above).
The Netherlands is Europe’s largest producer of meat, the world’s second largest agricultural exporter by value (behind the U.S.), and supplies many vegetables to western Europe. Its government is moving forward with plans to reduce nitrogen emissions from livestock and fertilizer use by the country’s agricultural sector 50% by 2030. The policy will shut down large amounts of livestock and other farming near EU-designated “Natura-2000” areas.
In July, ordinarily peaceful Dutch farmers rallied, blocked major highways with tractors, and sprayed manure at government offices. In November, the government announced plans to conduct forced buyouts of ~3,000 farms to support the nitrogen reduction plan anyway. Reducing fertilizer use, acreage in production and livestock will lead to less food production and likely result in more food inflation. Higher food prices, like higher energy prices, hurt the poorest the most.
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In Germany, after Russia invaded Ukraine, we noted a similar strange energy regression to the one in Poland (where people lined up at coal mines to get fuel). The cost of a cord of firewood quickly doubled (or more) throughout Germany.
German average electricity rates are now about 50% higher than California’s, which are ~91% higher than (U.S. state) Georgia’s. As we noted in Part 2, Germany has already “earmarked” more than $250 billion Euros to protect consumers from high electricity and energy costs. German inflation is running ~10% with food inflation closer to 20%. High energy prices caused by Germany’s Energiewende are largely responsible for both.
Others have written extensively about the risk of de-industrialization facing Germany’s high-value industries due to high natural gas and electricity prices. As Credit Suisse analyst Zoltan Pozsar noted in August, “In Germany, $2 trillion of value added depends on $20 billion in gas from Russia”. As we wrote in Part 1 of this series, Putin’s tragic invasion of Ukraine did not cause this situation, it only exacerbated it.
The European energy/environmental absurdity knows no bounds. German energy firm RWE is knocking down wind turbines for hurried expansion of the Garzweiler coal mine to protect German industry and citizens by (..wait for it…) burning more coal. One of the world’s leading green scolds over coal burning for the last 30 years (Germany) is now knocking down wind turbines to mine lignite coal (the world’s dirtiest in terms of actual contaminants) because they closed all but three of their (zero CO2 emissions) nuclear power plants over the last decade. For good measure, those three remaining nuclear plants are currently scheduled to close in April this year.
This is the new world that environmentalism made.
Last week climate protesters from across Germany and Europe descended on the western German village of Lutzerath to protest RWE’s Garzweiler mine expansion. It did not occur to the them that they were protesting the only logical, physics-defined outcome of the very Energiewende they successfully achieved and imposed on their fellow citizens.
Or that the alternative may be sitting in the dark, freezing, losing most of their high-value industry, slashing their living standards, and a regression to the civilizational mean (or worse). Given the art they left behind on the door of a barn from which they were chased by police, it’s possible many of them do realize these things - and that’s exactly their point.
As the protesters rightfully noted, the hypocrisy of Western “leaders” scrambling to obtain whatever hydrocarbon energy they could last summer and fall didn’t square with their hawkish “climate change” commitments or rhetoric. Presidents and Prime Ministers found themselves in the uncomfortable position of having to go beg all the world’s largest oil and gas producers to increase production. These included everyone’s favorite petrodictators, sponsors of global terrorism and failed states, from Saudi Arabia to Iran to Venezuela. Most offered little to no help. Some (like Saudi Arabia) diplomatically laughed in their faces. In the U.S., President Biden alternated between threatening the energy industry with a “windfall profits” tax and asking the producers he blames for climate change to produce more oil and gas.
To our great pleasure and entertainment, Uganda’s President Museveni rightfully exposed the European Charlatician’s™ hypocrisy. Just prior to COP27 in Sharm El Sheik, he had the following to say (emphasis added):
"We will not accept one rule for them and another rule for us. Europe's failure to meet its climate goals should not be Africa's problem. It is morally bankrupt for Europeans to expect to take Africa's fossil fuels for their own energy production but refuse to countenance African use of those same fuels for theirs."
Seeing the hydrocarbon molecules weren’t going to be found quickly nearby, in August German Chancellor Olaf Scholz traveled to Canada to beg for Canadian LNG. Canadian Prime Minister Trudeau “could not make the business case”, especially after landlocking most of Alberta and Saskatchewan’s natural gas with the help of his environmental allies in Toronto, Ottawa, Montreal and Vancouver.
Realizing this, both Charlaticians™ quickly pivoted and introduced the “Canada-Germany Hydrogen Alliance”! The ammonia-from-electrolysis-from-wind energy project will require over 150 wind turbines (that don’t presently exist) on the Newfoundland coast to power hydrolysis to produce hydrogen, combine it with nitrogen from a Haber-Bosch plant (that doesn’t currently exist), and ship hydrogen in the form of ammonia via a fleet of supertankers burning bunker fuel (that also don’t presently exist) to Europe (which doesn’t presently have sufficient infrastructure to receive and process it). Doomberg’s excellent analysis showing why the project defies logic based on energy returned on energy invested is a must read.
All of these examples come back to the intersection of environmental and energy policy. This is not how adults make important decisions on critical issues that affect the well-being of humanity on a global scale.
Could the consequences of misguided environmental/energy policies become so bad that they become the issue that literally unites a hyper-partisan polity in western nations and forces citizens to examine what and who caused their misery? We can’t predict. The examples above and in Part 2 merely scratch the surface. They are before the food, inflation, electricity, and fuel impacts have reached actual crisis stage in the countries in the innermost concentric circle in our model.
We don’t have the perfect solution, because no one does frankly. As they so often do, Doomberg puts it best and most succinctly: “in energy, there are no solutions, only tradeoffs.”
We do see a macro direction for advanced nations. Space limitations permit only a brief overview.
Borrowing from the abbreviated Latin version of the Hippocratic oath, primum non nocere: “first do no harm”. Western environmental and energy policies must do no further harm to the developing world.
As we’ve previously stated, we see no path to a CO2 emissions-free world without nuclear energy. Reform the entire western framework for subsidies and design/regulatory approval/permitting/construction toward achieving 75-80% of electricity production from nuclear energy sources in the West within 25 years. Immediately redirect the $250 billion+ in the U.S. Inflation Reduction Act set aside for wind/solar/biomass and 90% of all future U.S. energy subsidies to this effort.
By the end of this year, the EU will have spent around $1 trillion on the response to its self-inflicted energy crisis. In the U.S., Texas electricity customers will pay around $10 billion over 20+ years for their electricity grid nightmare in February 2021 (exclusive of ensuing litigation) which lasted little more than a week. In both cases, no new sources of CO2 emissions-free electricity generation will be left behind.
How much closer would we be today toward our 75-80% goal above had this money not been wasted? Or had the almost $5 TRILLION spent on climate change policy by Western nations since 1997 been spent differently?
Conserve fossil fuel resources and use them more strategically and wisely. Stop burning them for electricity generation as quickly as the transition to nuclear will allow. There is no present substitute for diesel (food production, mining, commercial transport), for jet fuel, or natural gas (fertilizer production, industrial process heat, chemical feedstocks).
Remove all subsidies for EV’s and battery storage. Let them find their own market level. Saving the earth to death by mining billions of tons of metals for EVs, battery storage, wind and solar is not going to eliminate climate change. It won’t allow advanced nations to maintain their living standards or enable the developing world to reach our living standards.
Some advanced nuclear technologies show promise across several dimensions. One example is the natrium reactor described on a recent Decouple Podcast by Signal Power & Light Chief Technology Officer Cal Abel. It has the potential to repower coal-fired power plants, limit the purview of the Nuclear Regulatory Commission, and create synthetic fuel from coal.
Advanced energy technology and political change are vital to continued improvements in human prosperity while reducing environmental impacts per unit of economic growth. The present solution set is unfit for purpose and it is time to stop pretending otherwise at the expense of the world’s poorest.
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