“Capitalism won’t solve the energy transition fast enough”

These are the notes for a recent speech at my local Constituency Labour Party. The title and the quote at the beginning is from Jason Hickel, who is the Energy editor at the Financial Times; so has something of a horses mouth quality to it.

There’s too much to do and, given the urgency and the need to get the solutions right, this isn’t a task for your favourite ESG focussed portfolio manager, or the tech bros. The sheer scale of the physical infrastructure that must be revamped, demolished or replaced is almost beyond comprehension. Governments, not Blackrock, will have to lead this new Marshall Plan. And keep doing it. The Western nations that did so much of the damage will have to finance the transition in the developing world – it is astonishing that this is still debated. Massive deficit funding will be necessary.(my emphasis)

For all the clean tech advances and renewable deployment in recent decades, fossil fuels share of global energy use was 86% in 2000, and 82% last year.”

The scale of the challenge

According to Adam Tooze we need to be investing $4 Trillion per year in energy transition. 

Others have argued as much as $6.5 Trillion per year

As the world economy is roughly $100 Trillion a year, between 4 and 6% of it needs to be invested in the transition.

A large sum, but to put it in context, last year (2022) subsidies for fossil fuels amounted to $7 Trillion and Fossil fuel profits were $4Trillion.

This is an opportunity – because there’s your magic money tree…but also a problem, because fossil fuels are so entrenched in everyday life and political power.

Fossil fuel companies have known about the effect of greenhouse gases for 60 years, and have reacted in the same way as the tobacco and asbestos companies did over the links between their products and cancer.

Even now, Shell is arguing that – to be compatible with their interests – Net Zero will only be achievable some time in the 22nd century (so between 50 and 100 years too late).

This entrenchment in political power is seen in Sunak’s latest announcements and more structurally in the high level of climate denial in the US Congress – where Senators and Congresspeople are bought up by FF companies. Showing once again that the USA is the best democracy money can buy.

This leads to a mind boggling level of cognitive dissonance. In 2019 the US military produced a report which stated that the impact of climate breakdown would lead not only to states collapsing around the world, but also that extreme weather events in the US itself would lead to infrastructure and civil society collapsing to a degree that they would expect to be called in to fulfil para state roles, before collapsing themselves from the overstretch that would impose. At the same time, they projected a need to be ready to intervene as the Arctic ice melts, to make sure that the US gets its customary lion’s share of the fossil fuel resources revealed under the ice; thereby helping fuel the collapse that they predict.

Which brings us to a related problem. The ratio of military to green transition spending. In the US, for every $1 allocated to green transition via the Inflation Reduction Act, they are currently spending $18 on their military. And this will get worse as the US and its allies, already responsible for two thirds of global military spending, are sharply increasing it.

The figures on this for China might surprise you. For every $1 they spend on their military, they spend $2 on green transition.

This means two things

  1. A shift from military to green transition spending is an urgent task for the climate and labour movement globally – and therefore the Atlanticist foreign policy framework of the current Labour leadership is as wrong as it can be – and will be thrown into complete crisis should Donald Trump be re-elected next year (which is highly possible).
  2. Countries that see themselves as Socialist are more part of the solution than they are given credit for. The one relatively developed country that the UN considers operates on sustainable lines is… Cuba.

Going back to Tooze to underline this point.

$4Trillion per year needed for energy transition.

Last year, $1.7 Trillion invested in renewable energy, but $1 Trillion was invested in fossil fuels. So, the net gain of 700 billion amounts to about 20% of what we need to be doing. Another way of looking at this is that we need to be doing five times as much as we are at the moment.

According to Tooze, China is the only country investing at anything like the scale and pace we need.

This is underlined by the International Energy Agency that reports that last year China invested 70% more in the transition than the USA and EU put together. And next year the projections are that their investment will be double that of the US and EU combined.

Specifically, in 2024, China is projected to account for 

50% of global solar installations

60% of new onshore wind

70% of new offshore wind.

Labour’s projected £28 billion a year would get us up to US or EU levels; so about half of where we need to be.

This week the IEA put out an updated road map to Net Zero and keeping under a 1.%C increase.

Their essential point is that this is still possible, but only if advance (rich) countries in particular up their targets and ambitions – the opposite of what Sunak has done this week – with an enhanced target of 2045 for Net Zero. No new oil and gas is a bottom line.

To have any chance of getting to that £28 billion, what we need is Just transition bodies with union and community involvement at every level in every sector – so plans for investment – and community mobilisation around them – can be made. This transition can’t happen as a “trickle down” process. It has to be forced up, and the unions in particular will need to take the lead on this, not react defensively.

Full English Brexit

In the ironically named “Planet Normal” Daily Telegraph podcast, truculent rosbif Lord Frost – AKA “Frosty the no man” – spells out the way ahead for the go for broke Tory right.

He has two main points.

Lockdown was a bad idea.

In that breathtaking way that Tories have of stating the exact opposite of the facts with breezy self confidence, he says that when the pandemic is viewed in hindsight, the UK has “come out relatively positively” but that the country will look back on lockdowns as a “serious public policy mistake”.

“Relatively positively”? Compared with who I wonder? With a death rate of 2,257 per million (and rising) the UK is 25th worst out of 207 countries. We have done better than 24. Worse than 182.

So, relatively positive compared with the USA (2,567 per million) or Poland (2,670 per million) Croatia (3,197) or Peru (6,248); but really grim compared with Ireland (1,221) or Kazakhstan (987) or Cuba (735) or Vietnam (364); let alone Japan (145) or South Korea (121) or Australia (101) or New Zealand (11) or China (<4).

The only comparable West European countries that have done worse are Belgium and Italy.

The countries that have done worst are mostly in Eastern Europe or Latin America; often countries that had a denialist leadership for at least part of the pandemic – like the USA or Brazil. The countries that have done best are those that have followed an active Covid suppression policy throughout the pandemic, like China, or for most of it, like New Zealand or Australia; or large numbers of countries in the Global South in which the average life expectancy does not reach the elderly age groups most at risk of death.

Please note the difference in scales between this graph and the European one. The Japan block here is far fewer people (151) than the Norway block above (258).

To get into a reductio ad absurdum with the country that has done best, for every 1 person who has died of Covid in China, 650 have died in the UK. Quite an achievement.

Perhaps he is less concerned with deaths – which disproportionately affect people who are old, or poor, or live in overcrowded conditions, work in front line jobs or are ethnic minority – than with “the economy”. As he says, “There haven’t been enough voices challenging the epidemiologists. There hasn’t been enough of a voice of the economy in this, [or] an attempt to get to grips with the trade-offs.” So, there we have it. On the one hand we have mass deaths. On the other, money to be made. As the Deputy Business correspondent of the Daily Telegraph put it at the start of the pandemic, a viral cull of the economically inactive elderly – sitting in care homes costing a fortune – would be “mildly beneficial”. Not something to lose any sleep about. With 175,000 excess deaths since March 2020, that’s that box ticked.

Had there been no lockdown early on, far more people would have died. The most recent waves have been blunted by mass vaccination. Vaccination did not start until December 2020. The only way to stop the first wave was to lock down hard. It worked. Even though it came late and reluctantly – with many Tories wanting to “take it on the chin”; in the hope that if enough infections ripped through the population quickly enough, the survivors would be immune by the Summer, we could bury our dead and move on. But a collapsed Health Service in the meantime would have scuppered their government, so they couldn’t risk it.

By May, cases were low enough that another couple of weeks could have had them in the sort of territory that would have required an effective test, trace and isolate system to keep them under control. Instead the government opened up too quickly. Resistance to school reopening from the teaching unions helped slow down the inevitable viral rebound, which took off apace from the start of the autumn term. The influence of people like Lord Frost in the Conservative Party stopped the government taking the necessary action before it was too late to stop another wave of mass infections, hospitalisations and deaths last winter.

So, unless Frost is rewriting History, or has a serious case of amnesia, it is quite clear that without the lockdowns in 2020 we’d have had an awful lot more dead people. Obviously “a serious policy mistake.”

He is also against what he calls “Covid theatre” – like masks – possibly because, as well as helping stop infections spreading, they are a visible sign of both the seriousness of the virus and an act of conspicuous social solidarity that shows there is such a thing as society (and that will never do).

‘Don’t rush on net zero’

As if that’s what they’re doing! Because there’s really no hurry is there?

He says, “I think climate change is a significant problem. I just don’t think it’s necessarily the most significant problem that the country faces at the moment.”  By the time it is, it will be too late. This is like the Veneto Regional Council voting against climate control measures minutes before having to evacuate their council chamber to escape rising flood waters. As for them, so for Lord Frost. Everything will be under control and normal. Until it isn’t. As he says, “I would not run at it. I would pace it a bit, if we must set ourselves this net zero objective.” IF WE MUST…get off our arses and do something, lets not go at the pace needed (7% CO2 reductions on an annual basis) let’s amble along hoping that someone else will take up the slack.

In California and British Columbia this summer, people in small towns like Greenville and Quincy would have seen everything looking normal until minutes before wildfires burned them to the ground. Perhaps Lord Frost didn’t get a look at the news during the Summer to see all those wildfires and floods. Perhaps he hasn’t noticed the melting permafrost and glaciers and the impending sea level rises. Or the droughts. Or the hurricanes and typhoons that are multiplying and moving into more “temperate” zones. Or the mass extinctions. Or the Amazon being on the verge of tipping into savannah. Still, there’s no rush is there and we have to pace ourselves…

What he is against is exactly what’s needed.

  • As fossil fuel bills rise because of rising gas prices, he wants to slow down the transition away from them. An argument that the investment in transition should not be loaded onto consumer’s bills is one thing, arguing to scrap them altogether is another. Neither he, nor anyone in the Net Zero Watch group makes the distinction.
  • He is against state investment in renewable technology (“picking winners”) because, unlike Deng Xiao Peng, he doesn’t care whether the cat catches mice as long as its privately owned. The record of leaving it to the market – when it comes to insulation and retrofitting for example – holds no lessons for him. At the current pace of insulation, 50,000 houses a year – many of them bodged by half trained white van men – we will have finished doing the 26 million homes the UK needs doing to hit net zero by 2050 in 2541. I’m not sure if that’s a leisurely enough pace for Lord Frost, but it doesn’t look like they are breaking much of a sweat to me.

As he puts it, with great precision “We’re bringing in measures that are sort of unnecessary, too soon.” He doesn’t specify what these are, but presumably he’d rather bring them in when its too late.

He is also in favour of using Brexit to go for wholesale deregulation of course.

So – the programme for a proper Tory government, with none of this leveling up pinkwash posturing: Freedom for the virus! Lord make me green but not yet! Take back decontrol!