Some inconvenient truths about the energy transition

Without question, America’s commitment to the “energy transition” is now in high gear.  Assisted by nearly $400 billion in federal spending and subsidies for clean energy over the next several years, thanks to the American Recovery Act and the Inflation Reduction Act, investment in renewable power generation has jumped markedly of late and electric vehicle sales increased by two-thirds to nearly 6 percent of all vehicles sold last year in the U.S. Today, about 25 percent of America’s electric power generation comes from renewable sources.

These trends are all well and good. But fossil fuels aren’t going away soon, either here or around the globe.

In 2022, the U.S. maintained its position as the world’s number one oil producer at 18.6 million barrels per day, just slightly below the pre-pandemic record. The abundance of domestic oil has been a lifeline for Europe, since those countries have purchased more crude and refined products from us while curtailing purchases from Russia. At year’s end, we were exporting more than 4 million barrels per day.

We’re also the largest producer of natural gas, by far, with output of nearly 80 billion cubic feet per day at the end of 2022. What is more, the U.S. is now tied with Qatar as the world’s biggest exporter of liquefied natural gas (LNG). Our LNG exports to Europe have quadrupled over the past year, from 2 billion to 8 billion cubic feet per day, helping those countries wean themselves off Russian gas.

Coal is also making a comeback, in part due to energy disruptions caused by Russia’s invasion of Ukraine. For example, exports of steam coal from the U.S. to Europe grew 50 percent by volume and 184 percent by value in 2022, as power generators fired up shuttered coal plants to keep the lights on and the factories running while Russia turned off the gas taps.

But it’s not just the war in Eastern Europe that has improved the outlook for fossil fuels. Despite pledges at the recent COP 27 climate conference in Egypt to reduce carbon dioxide and methane emissions, fossil fuel use in fast-growing countries such as India and China will continue indefinitely. Indeed, both countries are buying growing volumes of oil, natural gas and coal from Russia at a deep discount and are likely to continue doing so even after the Russia-Ukraine conflict is resolved.

A dose of realism is also required when assessing the outlook for electric vehicles. It will take decades to build out the infrastructure required to sustain a total electric vehicle fleet, not to mention uncertainties about the costs and supply chains needed to secure the rare-earth elements required for battery production. In a best-case scenario, according to the International Energy Agency, only 35 percent of global car sales in 2040 will likely be electric.

Though investment in renewable energy is projected to grow rapidly in the U.S. over the next 30 years, even in the year 2050 oil and natural gas will account for triple the BTUs of wind, solar and hydropower. Fossil fuels will also remain the dominant energy sources for the world 30 years from now.

Energy and the environment will remain key policy issues — here and abroad — for the foreseeable future. But the appropriate policy response to the environmental consequences of more fossil fuel use should be to explore technologies such as carbon sequestration and methane capture, rather than passing bans on hydraulic fracturing, fighting new pipelines, or requiring new office buildings and homes to be all electric.

Bernard L. Weinstein is emeritus professor of applied economics at the University of North Texas, retired associate director of the Maguire Energy Institute at Southern Methodist University, and a fellow of Goodenough College, London.