A Turning Point in the Necessary Energy Transition? Let’s Face the Inconvenient Truths
Nobel laureate Al Gore used the phrase “an inconvenient truth” in 2006 to refer to the challenge of climate change. Today, we must also consider other inconvenient truths because, if they are not addressed, we will not be able to make progress with the huge undertaking of working toward a low-carbon economy.
- Being active agents in the capital goods industry of a low-carbon economy means partially postponing decarbonization for a time. The energy transition is intensive in metals and metalloids, which have a deep fossil-fuel footprint. China may gain one of its main competitive advantages in this crucial industry from the intensive use of coal.
- The Chinese and Indian poverty alleviation models are increasing their carbon footprint long before they start decarbonizing their economies. Some African countries favor following this path. These three geographic areas alone account for more than half the world population. That’s why greenhouse gas emissions keep growing every year.
- Digitalization, including artificial intelligence, virtual currencies and data centers, consumes such a steady flow of electricity that its exponential deployment may currently be incompatible with the supply of massive amounts of decarbonized electricity. We may be facing a clear conflict between digitalization, decarbonization and increased productivity.
- The same could be said of so-called strategic autonomy. Among other measures, it would require the intensification of primary activities such as mining and agriculture. It would also be necessary to reexamine the part of industry that is currently delocalized.
In recent years, new sovereign initiatives by certain states have therefore flourished, far removed from the orthodox liberal order of the Bretton Woods system of 1944, the Washington Consensus of 1989 and the Single European Act of 1986. A new, previously heterodox orthodoxy is now making its way.
The Inflation Reduction Act, the Biden administration’s 2022 initiative, and the EU’s proposed border tax, the Carbon Border Adjustment Mechanism of 2023, attempt to address some of the inconvenient truths we are now experiencing. Part of the unrest with a potential for destabilization started in 2018 in France with the Yellow Vests movement and has continued with recent protests in the agricultural industry.
For all these reasons, energy policy must take into account every aspect of the problem. It is critical to advance with utopian realism toward a low-carbon economy without damaging the system of freedoms we have acquired or compromising people’s welfare.
What we are seeing so far is growing divergence between what is said about climate control and what actually happens. There is an urgent need for convergence between what is said and what is done.
Institutional action is also urgently needed to meet the challenges at stake. In its capacity as regulator, processor and arbiter, the state must continue to address the deficiencies identified.
It is in fact of great interest for the European Union to keep alive its commitment to the Green Deal while making it dependent on the competitiveness of the economy, industry and agriculture.
We’ll go deep into these topics at our next Energy Industry Meeting.
