The Green Transition

A recent publication by Boston Consulting Group estimates that an investment of $37 trillion will be needed by 2030 to finance the green transition in energy production. That’s roughly the entire U.S. federal budget every year. With global GDP running at $100 trillion, the expenditure will amount to 6 percent of global output per annum.

These are huge numbers. Of course, “will be needed” and “will actually be allocated” are not the same thing. Many note that “net zero” (making the entire global economy carbon neutral) is a goal that cannot be achieved anytime soon, certainly not by 2030 or 2040. But it won’t be for lack of trying. To stimulate green energy investment, the 2022 Inflation Reduction Act authorized an expansive tax credit scheme that researchers estimate will cost more than $1.2 trillion over the next eight years. California and other states have imposed draconian measures. (California will prohibit the sale of new internal-combustion-engine cars by 2035, Vermont by 2030.) Though these restrictions do not spend tax money, they impose huge costs that include increasing electricity supply and transmission capacity, and multiplying charging stations—in effect, building an entirely new energy infrastructure.

I could go on. In just a few years, the green transition machine has grown to gigantic proportions, and it grinds forward. But instead of itemizing the costs, let me make some straightforward observations.

We presently have an economy based largely on carbon molecules, which are super-efficient storage units for energy. Carbon-based energy is durable and does not degrade with time. Unaffected by heat and cold, it is easy to transport. Over nearly two centuries, we have built a system of energy production, distribution, and use based on carbon. Sunk costs are in the tens of trillions.

I do not dispute that carbon-based energy has negative “externalities,” as the technocrats say. Pollution is a problem, and perhaps the consumption of energy in this form causes climate change. I wish only to make two simple points: We have this system; it works very well. The green transition will not improve upon the carbon-based system; it will replace it.

The very best outcome, as far as I can tell, is that the new, carbon-neutral system will work as well as the old one. This means that, in the most optimistic scenario, over the course of a decade or more we will spend six percent of global GDP per year in order to get the efficiency, productivity, and consumer satisfaction that we presently have.

Count me among those who doubt that we will get the best outcome, or even an only slightly worse one. I get that wind is free. But batteries, transmission lines, transformers, and the rest of the non-carbon-based system are more complicated and less diversified than the elements of the system we currently have. The new system will be subject to more frequent failure, which means it will require expensive measures to ensure reliability. Moreover, every system has negative externalities. The disposal of batteries and toxic rare earth metals required for solar and wind energy may prove a far greater threat to public health than nuclear waste storage.

I’m not an economist. But my inexpert mind has difficulty seeing how spending trillions of dollars to create a new energy system that merely replaces what we have (perhaps with less convenience and reliability) won’t make everything more expensive. (Part of the green transition will be paid for by government subsidies, but energy consumers will bear most of the costs.) And as huge sums are spent in this effort, won’t the infrastructure we take for granted deteriorate due to underinvestment? In short: Aside from those who have their snouts in the trough of money being spent on the green transition, the entire effort, which we are told is a civilizational imperative, is very likely to cause a decline in the standard of living for those in the most developed and carbon-dependent part of the world. Which is to say, us.

As is the case with immigration, in matters of climate policy the Francis pontificate sides with elites. In Laudate Deum, a recent apostolic exhortation, the Holy Father dismisses dissent from today’s environmental orthodoxy, suggesting that doubts about the wisdom of the green transition reflect the West’s (and especially America’s) selfishness. To implement unpopular green policies, he calls for “more effective world organizations,” a notion that warms the hearts of oligarchs like Bill Gates, who are eager to impose “fact-based” solutions on a supposedly ignorant general population that can’t be trusted to vote in the right way. For all the talk about going “to the peripheries,” I’m convinced that historians will describe the Francis pontificate as an attempt to turn Rome into a chaplaincy for the global elite.

Demographic change has been ongoing, and the West has developed ideological explanations for why the challenges it poses are really blessings. (Diversity is our strength!) We’re only beginning to embark on the massive experiment of remaking the energy foundations of our economy. It is an endeavor that not only will be more expensive than present estimates say, but also is unlikely to attain its stated goals. It’s hard to imagine the degree of popular anger that will be caused by the toxic combination of declining living standards with constant calls for redoubled efforts requiring still more expenditure, regulation, and restriction. Meanwhile the targets will invariably be delayed. The great cause of carbon neutrality will be reframed and rebranded. The climate catastrophe never arrives, but as the non-elite citizens of the West face declining standards of living a political catastrophe very likely will.