In a recent interview, Angela Wilkinson, secretary-general of the World Energy Council, told me that one of the main obstacles to today’s energy transition is a lack of what she calls “systems thinking.” [emphasis, links added]
“The energy transition is a change in the organization of society,” she points out. “It's not a simple case of swapping out one technology for another and keeping everything else the same. However, we have a very simple narrative that we can take a petroleum system, we can put renewable energy into it, and that will Happens immediately and nothing else will change. It's like saying we're going to take out your thigh bone, but we want you to run a marathon.“
But this simplistic narrative is essentially what President Joe Biden and congressional Democrats are using to sell Orwellian inflation in 2021 to the public and reluctant Democratic senators like West Virginia Sen. Joe Manchin Reduction Act (IRA) and the first eight months of 2022.
Given that Friday marks the second anniversary of Manchin giving up his political future by casting the decisive vote to pass the landmark bill, Now is a good time to take a look at what has happened in the country since August 16, 2022.
The first thing you need to know about IRAs is Democrats, who voted along strict party lines to enact the bill, see it as just a down payment on their ultimate goal of transforming the entire U.S. economy, based on a Green New Deal.
It’s not just me saying this, it’s also Democratic officials like Treasury Secretary Janet Yellen, who recently told an interviewer, The global energy transition to net-zero will require $3 trillion in new capital expenditures per year by 2050.
By the way, this is a conservative estimate.
McKinsey & Company released an estimate two years ago From 2021 to 2050, US$275 trillion will be invested to achieve this goal. This estimate was made before we began to understand the energy needs of data centers and artificial intelligence technologies, and before we experienced all the Biden-Harris inflation.
By now, that number will undoubtedly reach $300 trillion or more, a cost so high and a destructive effect on the economy that humans simply can't really imagine.
promoted $369 billion in green energy tax credits and direct subsidiesWhat the IRA contained pales in comparison.
Goldman Sachs estimated last year Over time, the true cost will be around $1.2 trillion, but that's still a drop in the bucket.
Future presidents and Congress will need to implement more IRA-style debt-financed spending sprees if they have any hope of realizing the glorious utopia envisioned by the Green New Deal and its sponsors.
So, two years later, what has been achieved with this down payment? In fact, when it comes to energy system transformation, the impact is modest. The share of U.S. electricity generated from wind and solar energy increased slightly.
This is especially true in the solar field, where installation capacity will grow by more than 10% in 2023 and will continue to grow rapidly in 2024.
Growth has been particularly rapid in Texas, which has quickly become the nation's leader in solar installation capacity after focusing on wind power growth over the past 20 years.
Despite all this growth, Natural gas and coal still account for more than 60% of the country's power generation mix, which is only slightly lower than in 2021.
With demand expected to grow faster than expected in the coming years, Grid managers and power companies are considering whether they need to spend more money to build more 24/7 capacity using natural gas and nuclear energy.
IRA subsidies and tax breaks also inevitably encouraged the creation of businesses that did not have good business models.
This is especially true in the field of electric vehicles, where almost all pure electric vehicle manufacturers except Tesla are in bankruptcy or on the verge of bankruptcy.
Legacy automakers such as Ford, General Motors and StellantisThey are very eager to fully participate in the Biden-Harris agenda, Investments in electric vehicles have been scaled back and canceled for much of the past year due to a sluggish consumer market.
The much-touted Biden-Harris offshore wind venture is also about to go off the rails because Companies like Orsted, BP, Equinor and others have canceled project after project and taken huge financial hits from high inflation, rising interest rates and supply chain disruptions.
Vineyard Wind's latest collapsed wind blades fiascois the only offshore project to come online so far that litters Nantucket’s beaches with dangerous fiberglass insulation, Now threatening to force the United States to rethink the entire industry.
Finally, another aspect of the deal Manchin struck with Senate Majority Leader Chuck Schumer and then-House Speaker Nancy Pelosi — legislation to streamline the permitting process related to energy projects — in exchange for his support for the I.R. The decisive vote by the military – also failed.
Manchin's original bill failed in late 2022, and prospects for eventual passage of the bipartisan bill he's now pushing appear equally bleak.
As we celebrate the second anniversary of the founding of the IRA, it is fair to say The tangle of green subsidies and tax incentives is creating exactly the negative effects critics warned it would have when Biden signed it into law.
It's all been a pretty big disaster so far, and whoever takes office in 2025 should rethink the entire package and make it an energy priority. Angela Wilkinson might even be hired to help lead the effort.
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