Guest essay by Eric Worrall
“You look at where California is now going, the federal government needs to get there.” – radical greens are rushing to offer their guidance to Joe Biden on climate policy. But the immediate risk facing the US people is not climate change. The greatest near term risk is an abrupt structural economic adjustment, in which even people who keep their jobs lose an estimated 30% or more of their spending power.
A Biden victory positions America for a 180-degree turn on climate change
New administration will seek to shift U.S. off fossil fuels and expand public lands protections, but face serious opposition from Senate GOP.
Joe Biden, the projected winner of the presidency, will move to restore dozens of environmental safeguards President Trump abolished and launch the boldest climate change plan of any president in history. While some of Biden’s most sweeping programs will encounter stiff resistance from Senate Republicans and conservative attorneys general, the United States is poised to make a 180-degree turn on climate change and conservation policy.
Biden has vowed to eliminate carbon emissions from the electric sector by 2035 and spend $2 trillion on investments ranging from weatherizing homes to developing a nationwide network of charging stations for electric vehicles. That massive investment plan stands a chance only if his party wins two Senate runoff races in Georgia in January; otherwise, he would have to rely on a combination of executive actions and more-modest congressional deals to advance his agenda.
League of Conservation Voters President Gene Karpinski pointed to California — which has already adopted a low-carbon fuels standard and requirement that half its electricity come from carbon-free sources within five years — as a model. “You look at where California is now going, the federal government needs to get there.“
“It’s really important to remember that personnel is policy,” said Tom Steyer, a billionaire environmentalist who ran against Biden during the primary but who then raised money for him. “And every Cabinet position has to be staffed by somebody who has an awareness about climate.”
…Read more: https://www.washingtonpost.com/climate-environment/2020/11/07/biden-climate-change-monuments/
The Congressional Budget Office estimates national debt will hit 98.2% GDP this year, and will blow through 100% next year. On its current trajectory, the CBO estimates national debt will hit $25.657 trillion by 2024, 107% of GDP.
100% GDP debt is bad. The European experience suggests 130% gets really bad. Greece entered the 2009 Global Financial Crisis with 130% debt, a debt which rapidly ballooned. Since then, although Greece has enjoyed a few years of anaemic growth, investors have shied away from Greece, because of a persistent credit shortage caused by investor concern over high public debt.
How close is the USA to 130% debt to GDP? The answer is too close for comfort. After deducting borrowing which will occur anyway, to service baked in government deficits, the next US President has room to borrow around $5 trillion, before US national debt hits 130% of GDP.
Biden seems to be well aware of the $5 trillion limit – Biden claims his green revolution will cost $5 trillion. If Biden had costed his plan at more than $5 trillion, his plan to push US national debt beyond 130% of GDP would have attracted a lot of negative comments from US economists.
How does the USA solve its debt problem? Cheap energy and a return of manufacturing to the USA could have cut the baked in deficit, by stemming the ongoing haemorrhage of cash to foreign trading partners.
President Trump’s support for the shale revolution cut the US trade deficit to two thirds of what it would have been without shale. Returning manufacturing jobs to the USA could finish the job, by reversing the structural trade deficit, eliminating a significant underlying reason US public debt keeps rising.
The other option is for the USA to become a leader in a valuable new technology. The post WW2 US public debt crisis was resolved by the post war manufacturing boom; the USA leveraged new technology, the USA’s newly developed manufacturing skills, to grow the economy out of the wartime debt trap.
If the USA found a way to say make renewable energy work, and created an energy system which was cheaper than existing technology, the world would flock to buy a piece of US knowhow.
But there are good reasons to think this isn’t possible. Solar panels and wind are already close to theoretical efficiency. Squeezing a few percent additional efficiency is not going to significantly tip the balance in favour of renewables.
And nothing can solve the horrendous capital cost of collecting diffuse, low density renewable energy.
The Limits of Clean Energy
If the world isn’t careful, renewable energy could become as destructive as fossil fuels.
BY JASON HICKEL | SEPTEMBER 6, 2019, 8:51 AM
We need a rapid transition to renewables, yes—but scientists warn that we can’t keep growing energy use at existing rates. No energy is innocent. The only truly clean energy is less energy.
In 2017, the World Bank released a little-noticed report that offered the first comprehensive look at this question. It models the increase in material extraction that would be required to build enough solar and wind utilities to produce an annual output of about 7 terawatts of electricity by 2050. That’s enough to power roughly half of the global economy. By doubling the World Bank figures, we can estimate what it will take to get all the way to zero emissions—and the results are staggering: 34 million metric tons of copper, 40 million tons of lead, 50 million tons of zinc, 162 million tons of aluminum, and no less than 4.8 billion tons of iron.
In some cases, the transition to renewables will require a massive increase over existing levels of extraction. For neodymium — an essential element in wind turbines — extraction will need to rise by nearly 35 percent over current levels. Higher-end estimates reported by the World Bank suggest it could double.
The same is true of silver, which is critical to solar panels. Silver extraction will go up 38 percent and perhaps as much as 105 percent. Demand for indium, also essential to solar technology, will more than triple and could end up skyrocketing by 920 percent.
And then there are all the batteries we’re going to need for power storage. To keep energy flowing when the sun isn’t shining and the wind isn’t blowing will require enormous batteries at the grid level. This means 40 million tons of lithium—an eye-watering 2,700 percent increase over current levels of extraction.
…Read more: https://foreignpolicy.com/2019/09/06/the-path-to-clean-energy-will-be-very-dirty-climate-change-renewables/
The USA can survive four years of Biden. Even a USA at 130% of debt to GDP can recover, if the President you elect in 2024 is an economic literate. But the opportunity to address deep structural US economic problems without severe economic hardship for ordinary people is closing fast.
A continuance of Trump’s cheap energy manufacturing boom might have worked, though even this was not a guaranteed escape from the looming US debt trap.
The alternative, if the US government fails to address underlying economic problems, is the US government could lose control of the situation. If the USA runs out of money and creditors pull out, a painful structural economic adjustment could occur, in which ordinary people abruptly lose an estimated 30% or more of their spending power.
US government borrowing has held back the looming structural adjustment for at least 20 years, but the US government cannot defy the laws of market economics forever. There is a narrow window of opportunity to fix the problem without severe economic pain. Renewable energy is unlikely to be part of the solution.
History teaches us that even the world’s great powers eventually hit their credit limit. The road to ruin is paved with seductive but ultimately unsustainable opportunities for short term relief, like the US government’s frantic government borrowing to hold back a painful economic contraction. The other old standby is running the printing presses, to try to fill a growing hole in public finances and inflate away the debt, but we all know how that ends. Collapse is not inevitable, but if a collapse occurs it will be sudden.