"United Nations Secretary-General Antonio Guterres has warned that humanity is threatened by "global boiling." Migrant laborers working outdoors in Kuwait are suffering kidney problems because of prolonged exposure to temperatures above 120 degrees Fahrenheit. Naval planners are contemplating the consequences of shrinking Arctic sea ice for warfighting in the far north.
A year of record heat, unusual weather, destructive storms and raging wildfires has intensified the clash between the seemingly irresistible political momentum of the climate-change movement and the apparently unyielding economic and political realities of the world system.
Meanwhile, even as carbon-dioxide emissions increase, the backlash against the cost of climate policy grows. In Germany, business executives and politicians warn about deindustrialization as spiking energy prices drive manufacturers to contemplate moving production abroad. The shift from internal-combustion engines to battery-powered electric vehicles threatens to reduce global employment in automotive manufacturing and make China the dominant producer. With 25 million unsold vehicles glutting markets at home, subsidized Chinese EV producers are flooding world markets. China has passed Germany and is challenging Japan as the world's leading car exporter.
China, which continues to open coal plants at a record pace, has gamed the new era of green subsidies as effectively as it gamed the World Trade Organization and is emerging as the prime beneficiary of the West's shift to renewable energy. From solar power cells and wind turbines to EVs and batteries, Chinese-owned firms are poised to capture the subsidies Western taxpayers are pouring into the fight against climate change.
The growing mass of environmentally driven subsidies and policy changes is intersecting with the real world in ways that undercut green hopes for more progress. Efforts to restrict fossil-fuel production in countries like the U.S. handed massive market power back to Russia and the Organization of the Petroleum Exporting Countries. This fills the coffers of the world's most determined defenders of the fossil-fuel industry.
As oil and gas profits flow into the sovereign-wealth funds of OPEC producers, countries such as Saudi Arabia and Kuwait have powerful tools to influence policies in emerging markets around the world. Reflecting the unintended green boost to OPEC's power, the president-designate of the coming United Nations environmental conference, COP28, will be the United Arab Emirates's Sultan Al Jaber, who heads the Abu Dhabi National Oil Co., one of the largest fossil-fuel companies in the world.
Looming over it all is yet another grim reality that the technocrats crafting the energy transition failed to predict. Their optimistic calculations about the cost of the transition assumed that the artificially low interest rates of the past decade would persist indefinitely. Now that the world is back to normal interest rates, many green investment projects no longer make sense and fossil fuels are becoming more attractive to consumers.
Green-energy producers are demanding a mix of larger subsidies and higher prices and in some cases have abandoned wind-farm developments as uneconomic.
As governments face higher financing costs because of rising interest rates and consumers resist price increases in an inflationary era, it's not easy to see how this higher bill will be paid.
Yet despite the backlash green policies are creating globally, so far they haven't succeeded in stopping the increase in emissions. In 2022 carbon-dioxide emissions were up about 1% globally over the previous year, a figure that would have been significantly higher if not for China's slow post-pandemic recovery.
The world's energy system is complicated and interlocks with other complex systems ranging from finance to geopolitics. Heavy-handed interventions in intricate and finely balanced systems will have surprising, expensive and undesirable side effects.
Environmentalists should understand this better than most. The key insight driving the environmental movement historically was that complex natural systems must be treated with respect. Crude interventions, however well-intentioned, can make things worse. Removing an apex predator can change a whole ecosystem. A flood-control dam that eliminates natural wetlands can make floods more dangerous. Attuned to the costs of unanticipated consequences, environmentalists urged caution and restraint by policy makers and advocated letting nature take its course.
Today's green activists have largely forgotten these truths. The consequences are visible all around, and the payback has only begun. Ham-fisted, poorly thought-out green policies, too often designed by self-interested renewable-energy lobbyists, will exact economic and political costs even as their effects on emissions continue to disappoint. The most likely result, sadly, is that the political temperature over climate interventions will keep rising even as green climate policies fall short." [1]
1. Climate Policy and World Order. Walter Russell Mead.
Wall Street Journal, Eastern edition; New York, N.Y.. 19 Sep 2023: A.15.
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