The Myth of Green Energy Transition

Despite much hype, the much-vaunted green energy transition away from fossil fuels is not happening. Achieving significant change with current policies is proving unprofitable. We need to radically change the direction of policy.

Globally, we are already spending nearly $2 trillion a year to force the energy transition. Over the past decade, solar and wind energy use has risen to historic highs. But that hasn’t reduced fossil fuel use—in the process, we’ve added more fossil fuels.

Countless studies show that when societies add more renewable energy, most of it never replaces coal, gas, or oil. It simply increases energy use. A recent study shows that for every six units of new green energy, less than one unit replaces any fossil fuel. An analysis from the United States shows that renewable energy subsidies simply lead to more energy use. In other words, policies to increase green energy lead to more emissions.

People have an unquenchable thirst for affordable energy, which is required in every aspect of modern life. In the past half-century, the energy we get from oil and coal has doubled again, hydropower has tripled, and gas has quadrupled—and we have seen an explosion in the use of nuclear, solar, and wind power. The world—and the average person—has never had more energy available to them.

Much of the grand plan behind today’s green energy transition is based on the belief that promoting heavily subsidized renewables everywhere will magically make fossil fuels disappear. But a recent study found that talk of a transition is “misleading.” In each previous addition of a new energy source, the researchers found, “it was completely unprecedented that those additions caused a sustained decline in the use of existing energy sources.”

What causes us to change our relative energy use? One study examined 14 changes that occurred over the past five centuries, such as when farmers switched from using animals to plow fields with tractors powered by fossil fuels. The main factor was always that the new energy service was either better or cheaper.

Solar and wind fail on both counts. They are no better because unlike fossil fuels, which can generate electricity whenever we need it, they can only generate energy depending on the vagaries of daylight and weather.

That means they aren’t cheaper either. At best, they’re only cheaper when the sun is shining or the wind is blowing at the right speed. The rest of the time, they’re mostly useless and infinitely expensive.

When you factor in the cost of just four hours of storage, wind and solar solutions become uncompetitive with fossil fuels. Achieving a true, sustainable transformation to solar or wind would require orders of magnitude more storage, making these options extremely uneconomic.

Moreover, solar and wind only solve a small part of a huge challenge. They are almost entirely deployed in the electricity sector, which accounts for only a fifth of global energy use. We are still struggling to find green solutions for most transport, and we haven’t even begun to address the huge energy needs of heating, manufacturing or agriculture. We are almost completely ignoring the most difficult and important sectors, such as steel, cement, plastics and fertilisers.

It’s no wonder, then, that despite all the talk of a global energy transformation, even the Biden administration believes that while renewable energy sources will dramatically increase globally by 2050, oil, gas and coal production will continue to grow as well.

On this trajectory, we will never achieve an energy transition away from fossil fuels. It would require much larger subsidies for solar and wind, as well as batteries and hydrogen, and for all of us to accept less efficient technologies for important needs like steel and fertilizer. But beyond that, a real transition would also require politicians to impose massive taxes on fossil fuels to make them less desirable. McKinsey estimates that the direct price tag of achieving a real transition is more than $5 trillion per year. This spread would slow economic growth, making the real cost five times higher. The annual cost to those living in rich countries could be more than $13,000 per person per year. Voters will not accept this pain.

The only realistic way to achieve this transformation is to significantly improve alternative green energy sources. This means investing more in green energy research and development. Innovation is needed in wind and solar, but also in storage, nuclear, and many other possible solutions. Getting the cost of alternative energy below fossil fuels is the only way green solutions can be implemented globally, not just by elites in a few climate-conscious, rich countries.

When politicians tell you that the green transition is here and that we need to get on board, they are really asking voters to support them by throwing more good money after bad. We need to be much smarter than that.

Bjorn Lomborg is president of the Copenhagen Consensus, visiting professor at the Hoover Institution at Stanford University, and author of False Alarm.