27 Feb Energy and Reality
Contra David Hume – and JS Mill, and countless others – there is no Newtonian “science of mankind” that can approximate the natural sciences. In the study of man his infirmities, struggles, strengths, and triumphs – all of which constitute what we know today as the social “sciences” – precious little can be known for certain.
Among those few bits of information that can be known for almost certain, however, are the following two propositions:
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- Economic growth and technological progress are inseparably connected. One enables the other, which facilitates the other, which, in turn, produces the other, etc., etc., ad infinitum.
- Both economic growth and technological progress are contingent upon cheap and abundant energy.
The conditions that permitted England (and then, the rest of Great Britain) to industrialize rapidly, to become an economic giant, and quickly to evolve into the first modern global superpower were innumerable, but among the most important was the country’s quick and easy access to unusually large stores of coal. Likewise, the United States was transformed from a massive, predominantly rural and agricultural nation into an economic, military, and industrial powerhouse practically overnight, in significant part because of the easy access to the world’s largest stores of bituminous coal in its mid-Atlantic and Appalachian regions. The Soviet Union industrialized quickly – despite its embrace of a backward, economically illiterate ideology – because of its access to huge stores of coal and oil. Saudi Arabia is a global economic lynchpin, rather than an austere religious backwater because of oil. And on and on it goes. Energy is – and always has been – one of the most significant drivers of…well…everything.
Given this, the “sustainability” agenda has always been of dubious merit at best. In the West, both the public and private sectors embraced the agenda based almost exclusively on utopian promises, the practicability of which virtually no one in either camp was qualified to assess. These promises, which guaranteed results that were always literally unbelievable, were evaluated far less skeptically than they should have been and were adopted primarily in response to naïve and occasionally misanthropic political pressure.
As a result, today, the economies of the West are plagued by financialization and the collapse of productivity, while their capital markets and market participants bristle at excessive regulation. Investors fret about the long-term value of their capital allocations and the true, underlying worth of the shares they hold, while state and local governments are constantly compelled to punish taxpayers to compensate for the underfunding and underperformance of public pension plans.
Meanwhile, non-Western economies that are reportedly struggling mightily and societies that have been effectively declared dead, maintain hope, in large part because their leaders shunned the politics of sustainability and internalized the two truths detailed above. Energy is everything. Energy is life. And two recent developments confirm this – yet again.
Over the last couple of months, the global alliances constructed at the height of the sustainability moment and designed specifically to restrict energy production and usage have become proverbial anchors around the necks of banks, asset managers, and other financial services providers. Both the Net-Zero Banking Alliance and the Net-Zero Asset Managers initiative have seen cascading defections, as executives and others begin to see participation in such groups as liabilities rather than advantages. Part of this, of course, is recognition of the changing direction of political winds, but that’s not all there is to it. More and more players are learning the hard way that their propensity to capitulate to political pressure is not shared by reality. Reality – economic, technological, social, etc. – conforms to the truths about energy’s criticality to progress. These truths cannot be ignored forever, and reality always asserts itself, even if belatedly:
The largest climate-finance group for banks is exploring a list of fundamental adjustments to how it operates, as it seeks to right itself after a wave of high-profile exits.
The Net-Zero Banking Alliance is considering an overhaul of its membership terms that may include abandoning a requirement for signatories to align their portfolios with a goal of limiting global warming to 1.5C, according to a person familiar with the group’s thinking who asked not to be identified discussing private deliberations.
If enacted, such changes would amount to a clear departure from the founding tenets of the alliance. Deliberations are ongoing and it’s not clear what the final result will be.
In short, banks and the global organizations that crave their membership have been drubbed over the head by reality. The always unrealistic and economically suffocating goals NZBA and its members adopted have proven disastrous, as fantastical ambitions are wont to do. In order to survive, banks were forced to abandon their membership in the NZBA, and the NZBA, in turn, has been forced to concede its utopian hubris – or at the very least, to contemplate conceding it.
At the same time, while both gullible and malicious actors praise the Chinese Communists for embracing the sustainability agenda and accelerating the development and deployment of renewable energy resources, the very same Chinese Communists openly flout the agenda and align their policies with reality’s dictates:
Despite soaring solar and wind power installations, China launched construction of as many as 94.5 gigawatts (GW) of new coal power projects in 2024, the highest level since 2015, new research showed on Thursday.
China also approved 66.7 GW of new coal-fired power capacity in 2024, as approvals picked up in the second half after a slower start to the year, found the report by the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM).
Apart from the new coal power construction starts, China last year resumed construction of 3.3 GW of suspended projects.
All these approvals and construction start to signal that “a substantial number of new plants will come online in the next 2-3 years, further solidifying coal’s role in the power system,” the report says.
Years ago, the conservative media provocateur Ben Shapiro suggested that any serious earnest effort to control emissions and reduce the anthropogenic component of climate change would have to start with the nuclear annihilation of China and India, given their ongoing and intensifying reliance on coal power. Obviously, Shapiro wasn’t serious about wiping two nations and billions of people off the planet. He was, rather, trying to make two points. First, China and India were never going to give up coal or, at least not until they had become fully “developed” economies, because cheap energy is the primary driver of economic growth. Second, the failure to acknowledge this reality exposed the ridiculousness of the “sustainability”/climate-change agenda.
Today, Shapiro stands vindicated. Both the NZBA and the CCP confirm his insight.
