Global Trend

For over 50 years, the industrialized world has been immersed in what we call “the Great Stagnation,” a period of relatively slow productivity growth. Compared to the previous era, a much larger proportion of economic growth has been due to added labor and capital introduced into the system via globalization.

As we explained in prior issues, a big contributor to this productivity growth plateau was the normal impact of the transition between Techno-Economic Revolutions. That is, the Mass Production Revolution reached maturity well before the Digital Revolution was ready to broadly contribute to productivity growth.

However, that was not the only factor contributing to stagnation. During the 70s, the flood of less productive young Baby Boomers temporarily cut into productivity.

But more consequentially, oil boycotts in the 1970s were soon joined by the cries of environmentalists seeking to “save the planet.” And it was this combination of higher energy costs and a growing regulatory burden, which institutionalized the Great Stagnation. Some studies indicate that today’s U.S. economy is at least 25% smaller than it would have been had regulations been frozen at 1980 levels.

Today, safe & abundant low-cost energy is technologically feasible because of revolutionary North American oil & gas fracking and fourth-generation nuclear technology. Yet environmental zealots have increasingly impeded production and distribution of this energy largely on the basis of “fraudulent” claims about environmental dangers.

By fraudulent we don’t not mean to imply that every environmentalist has criminal or malevolent intent. Rather, most have been indoctrinated to accept a set of flawed assumptions, while the incentives have been rigged by the so-called “climate-industrial complex” to discourage reexamination of those assumptions.

To understand how we got into this situation, we need look no further than academia, mainstream media and woke political activism.

Consider the facts.

In the early 1980s, a famous Wendy’s commercial asked, “where’s the beef?” Today, every objective consumer or manager needs to ask environment zealots, “where’s the crisis?” It was one thing to speculate about pollution, climate, and famine in 1973. It’s something entirely different to cry “Wolf!” for the 10,000th time, 50 years later.

Objectively, environmental realities are improving almost everywhere. But the general public rarely hears this truth.

Official records recently assembled by environmental expert Bjorn Lomborg reveal that global climate-related deaths have decreased by as much as 97 percent over the past 100 years.

And it is not just climate-related deaths that are falling; the economic cost associated with “climate events” has decreased by roughly 20 percent over the past 30 years.

Furthermore, even though experts tell us that climate change will harm food production, data from the UN Food and Agriculture Organization shows a steady increase in global food production since 1961.

The increase has slowed more recently, but production in 2020 (the latest available year) was still eight per cent higher than in 2010. And most importantly, those figures show large increases in per capita production.

Some might ask, “what does this mean for the poorest and most vulnerable?” There is good news on that front, too. The UN estimates that the number of people suffering from undernourishment has dropped significantly over the past 20 years.

Numbers rose slightly in 2021 (the latest year of data), but that was largely due to COVID lockdown policies, which contributed to global poverty.

Meanwhile, other statistics indicate that nothing amazing is happening to global temperature trends or sea levels. And polar bears, penguins, forests have never had it better.

Yet despite this good news, every National Climate Assessment or UN IPCC report invariably contains faulty projections of dire consequences, based on models that never work. Year-after-year and decade-after-decade, we hear that disaster is “just around the corner.”

Then, when the date of the forecasted apocalypse arrives, we find that the forecast was wrong. But amazingly, the new report now forecasts another catastrophe for the near future.

And invariably, the new report tells us that all we need to do is spend trillions of dollars and make billions of people miserable in order to avert this next crisis.

It all sounds a bit suspicious, doesn’t it?

Normally, this would be written off as the mad prophesying of a doomsday cult or more likely a running fraud perpetrated by conmen. However, we’re expected to accept it because so-called experts are being paid to tell us it’s true.

Europe’s situation illustrates where this green self-delusion can lead. In December lower-than-expected wind power generation was a major factor sending electricity prices higher and forcing suppliers to turn back to coal and natural gas.

That’s a problem because, EU policymakers have aggressively pushed for the retirement of traditional fossil fuel and nuclear power plants and a large expansion of green energy alternatives including wind and solar.

The EU announced its so-called European Green Deal outlining plans for the continent to massively reduce carbon emissions by investing more in renewables and limiting gas-powered vehicle purchases.

In Germany, the EU’s largest economy, wind power alone accounted for the largest share of electricity production between 2019 and 2021. However, due to its intermittent nature, heavy reliance on wind power has left the nation vulnerable when the wind produces less output than expected.

Consequently, there has been under-investment in fossil fuels in Europe including closures of coal and nuclear power plants. Unfortunately, wind turbines produce only 34% of their listed capacity, while solar panels produce just 25% of their capacity.

Meanwhile, coal, natural gas and nuclear power plants, produce 49%, 54% and 93% of their listed capacity, respectively. That means we can’t simply rely on wind and solar for our power, it’s too expensive and unreliable.

And the physics indicates that it always will be everywhere except in deserts, near the equator. And even there, these systems require enormous storage for overnight service.

Amazingly, America’s Blue States are pursuing Europe’s path with increasing enthusiasm. Let’s consider some implications of existing mandates. As it stands, California’s electric grid faces decades of potential blackouts and failures as state leaders continue pushing aggressive measures to transition to renewable energy sources.

The state’s grid, which is still mainly powered by fossil fuels, is undergoing a forced shift from natural gas, coal and nuclear power to renewable energy from wind and solar.

Simultaneously, state officials are pushing an electrification of the economy, particularly in the transportation sector through electric vehicle mandates, which will only increase pressure on the grid.

California Gov. Gavin Newsom said last fall, “California is drastically cutting our dependence on fossil fuels and cleaning our air,” creating the “world’s first detailed pathway to carbon neutrality.”

The state’s goals involve slashing greenhouse gas emissions by 85%, cutting oil usage by 94% and deploying extensive solar and wind capacity over the next two decades.

The latest plan to overhaul the state’s energy system came three months after a top California environmental agency moved forward with a rule requiring all new vehicle sales to be electric by 2035.

Yet, despite the bravado associated with this plan, progressive academics understand that these mandates will require everyone to make do with less. That means fewer cars, smaller homes, and a significantly lower standard of living. 

For example, a recent report from UC Davis identifies three barriers, previously documented by the Trends editors, which indicate that the planned transition to battery-electric vehicles doesn’t make sense.

First, electric-vehicle batteries require large quantities of minerals such as lithium, cobalt and nickel, which must be extracted from the ground like fossil fuels.

If today’s EVs replaced fossil-fueled vehicles by 2050, the lithium requirements of just the U.S. EV market would require triple the amount of lithium currently produced for the entire global market.

But unlike fossil fuels, these minerals are mostly found in undeveloped areas. Large-scale mining will entail social and environmental disruption, irreversibly damaging ecosystems without the consent of affected communities.

Second, this mining requires huge amounts of energy and water, and the process of refining minerals requires even more.

Today, mining accounts for 4% to 7% of global greenhouse-gas emissions. More mining to make more EVs will increase CO2 emissions. Notably, that mining will also destroy tropical forests and deserts that currently suck CO2 out of the atmosphere. And,

Third, electrification of the U.S. transportation system will massively increase the demand for electricity while the transition to a decarbonized electricity grid is still underway.

Building the wind and solar facilities and the related energy storage and transmission capabilities will require even more invasive mining and construction than that related to EVs themselves.

Increased electrical demand and a transition to wind and solar generation will inevitably increase costs because of the need for excess capacity and backup systems. Already in Q4 2022, drivers of typical mid-priced Internal Combustion Engine cars paid about $11.29 to fuel their vehicles for 100 miles of driving.

According to a report from Anderson Economic Group that was around $0.31 cheaper than mid-priced EV drivers paid when charging at home, and over $3 less than the cost borne by EV drivers who charged commercially. And this cost differential will only grow, making transportation less affordable for rank-and-file Americans.

So, why then, knowing the impossibilities of the future and the disasters of the present, have the half-baked solutions of the environmental movement gained so many adherents in the government, finance, media, and academia?

The answer is simple: a desire for power and influence. The green movement is far more about controlling the lives of others and giving purpose to the lives of bureaucrats, professors, pundits, and investors who benefit from riding an unaccountable and seemingly unstoppable “gravy train.”

The problem is that like so much of the woke agenda, the realities of climate fraud are becoming increasingly transparent to those suffering the harm and paying the bill. And the biggest bill of all is the constrained productivity growth caused by regulatory overreach and inflated energy costs.

Here again a new consensus is desperately needed.

Given this trend, we offer the following forecasts for your consideration.

People in the OECD countries simply won’t settle for “ubiquitous rolling blackouts” and losing the freedom associated with affordable automobiles. The cost and unreliability of solar and wind make them non-starters for base-load electricity.

Similarly, the ecological damage and cost of replacing today’s fleet of automobiles, trucks and aircraft with battery-electric alternatives is simply inconceivable. Mandates intended to move us entirely to such solutions by the 2030s represent a “suicide pact,” which will lead to a complete loss of credibility by the green elites.

But like the various IPCC reports from the United Nations, this report will contain plenty of footnotes and disclaimers intended to give contributors cover when the predictions reported by the mass media inevitably fail to materialize. Meanwhile, the mainstream media will initially accept, and even exaggerate, the official projections.

This will set the stage for pulling the plug on the administration’s environmental and energy programs for 2024 and beyond. In 2023 and 2024, the House Natural Resources Committee and the House Energy and Commerce Committee will aggressively challenge the summary conclusions of NCA#5 and hold bureaucrats accountable for prior abuses of trust. And,

Among the proposals that will dominate the agendas of the House Natural Resources Committee and the House Energy and Commerce Committee in the coming months are bills prohibiting restrictions on hydraulic fracking without congressional approval, expanding natural gas exports and repealing the Greenhouse Reduction Fund created under the so-called Inflation Reduction Act.

They will also focus on amending the Clean Air, Toxic Substances Control, Solid Waste Disposal, and National Gas Tax acts. Within the tranche of proposed legislation on the committee’s “unleashing American energy agenda” are bills calling for “permitting reform,” promoting development of “critical minerals,” and prohibiting the import of Russian uranium.

One particularly important bill is the American Energy Act which increases the maximum length of time companies can drill under a permit from two years to four years and ensures that the Bureau of Land Management, approves applications for permits to drill (or APD) in a timely fashion. “Permitting delays” have increased from an average of 94 days in June 2019 to 182 days under the Biden administration last year.

During fiscal year 2022, the BLM approved an average of 233 drilling permits per month, while it approved 400 drilling permits per month under the Trump administration.

Tying this legislation to must-pass bills like “raising the debt ceiling” provides their best chance of becoming law. However, merely forcing votes on these items which highlight the contrast between Make America Great Again and the Green New Deal will represent a win for Republican’s ahead of the 2024 elections.

Meanwhile, the tone that can be expected from the Supreme Court was indicated by its 2022 ruling in the West Virginia vs. EPA case.