in Recent InterviewsSecretary General of the World Energy Council Angela Wilkinson She told me that one of the main obstacles to the energy transition today is a lack of what she calls “systems thinking.”
“The energy transition is a change in the social fabric,” she noted, “It’s not as simple as replacing one technology with another and leaving everything else as it is. But we have this very simplistic idea that if we take the petroleum system and introduce renewables, it will happen quickly and nothing else will change. That’s like saying we’re going to amputate your femur but we want you to run a marathon.”
But this simple story is just as likely to be misleading as it is to suggest that President Joe Biden and congressional Democrats are persuading the public, and reluctant Democratic senators like West Virginia Sen. Joe Manchin, to use the Orwellian-named Inflation Control Law IRAs during 2021 and the first eight months of 2022. (Related article: The good, the bad and the ugly: Biden’s climate change bill hits its second anniversary)
Given that Friday marked the second anniversary of the day Manchin abandoned his political future as a member of the House of Representatives; Deciding vote Now that this landmark bill has been passed, it is a good time to look back at where it has taken the country since August 16, 2022.
The first thing to understand about the IRA is that the Democrats, who enacted it on a strict party line, only see it as a down payment on an ultimate goal. Green New DealIt has set a goal to transform the entire American economy, and I say this not just to myself, but to Democratic officials like Treasury Secretary Janet Yellen as well. He recently told an interviewer The global energy transition towards net-zero targets will require $3 trillion in new capital investment each year through 2050.
This is a conservative estimate, by the way. McKinsey & Company The estimate was published Two years ago, I estimated that achieving this goal would require $275 trillion between 2021 and 2050. This estimate was before we began to learn about the energy demands of data centers and AI technologies, and before we experienced the Biden-Harris inflation. By now, that number would surely be more than $300 trillion, a cost so high, so economically catastrophic, so completely unimaginable to the human mind.
The $369 billion in touted green energy tax credits and direct subsidies included in the IRA pales in comparison. Goldman Sachs Estimation Last year, the actual long-term cost was predicted to be in the range of $1.2 trillion, but that’s still just a sliver of a dollar amount.
Clearly, future presidents and Congresses will need to undertake much more IRA-type debt-financed spending to have any hope of truly reaching the glamorous utopia envisioned by the Green New Deal and its sponsors.
So, two years later, what has this down payment actually accomplished? It hasn’t actually accomplished much in terms of transforming the energy system. In the US, the share of electricity generated by wind and solar has increased slightly, especially for solar. Installation capacity It is expected to rise by more than 10% in 2023 and continue to rise sharply in 2024. Growth will be particularly rapid in Texas, which has quickly established itself as the nation’s leader in solar capacity after focusing on wind growth over the past two decades. (Related story: Solar executives donate millions to Democrats, help push Biden’s signature climate bill. Now they’re drowning in cash.)
Solar power plant in operation. Photo credit: Zbynek’s Burial On Unsplash.
Despite this growth, natural gas and coal Still make-up It accounts for more than 60% of the country’s generation mix, only slightly less than in 2021. With demand projected to grow faster than expected over the next few years, grid managers and utilities are considering the need to inject more capital to build more 24/7 capacity using natural gas and nuclear power.
The influx of IRA grants and tax breaks has also had the inevitable effect of encouraging the launch of companies that aren’t based on sound business models. This is especially evident in the electric vehicle sector, where nearly every pure electric vehicle manufacturer in the country, except for Tesla, is either in bankruptcy or on the brink. Legacy automakers such as Ford, GM and Stellantis, who were eager to commit to the Biden-Harris platform, have spent much of the past year scaling back or halting investments in electric vehicles amid a sluggish consumer market. (Related: Report: $84 billion worth of manufacturing projects subsidized by President Biden fall flat)
The much-vaunted Biden-Harris offshore wind project is also becoming a waste of money as companies like Orsted, BP and Equinor cancel projects one after another. suffered a major economic blow It’s been linked to high inflation, rising interest rates, and disrupted supply chains. The recent collapse of a wind turbine blade at Vineyard Wind, the only offshore wind project to have been operational so far, has left the shores of Nantucket littered with dangerous fiberglass insulation and is now forcing a reexamination of the entire wind industry in the United States.
Finally, another aspect of the deal Manchin made with Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi in exchange for his crucial vote on the IRA – a bill to streamline permitting procedures related to energy projects – also failed. Manchin’s first bill was defeated in late 2022, and a bipartisan version he introduced was also defeated. Currently pursuing Prospects for final passage seem equally bleak.
As the IRA approaches its second anniversary, it’s fair to say that its disjointed mix of environmental subsidies and tax breaks has produced the harmful effects that critics warned about when Biden signed it into law.
It’s all been a disaster so far, and whoever takes office in 2025 should make energy a top priority by rethinking their entire approach, perhaps even hiring Angela Wilkinson to lead the effort.
David Blackmon is a Texas-based energy writer and consultant who worked in the oil and gas industry for 40 years and specializes in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not necessarily reflect the official position of the Daily Caller News Foundation.
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