Yergin and ‘The New Map: Energy, Climate, and the Clash of Nations’

Robert Bradley, Jr.
Founder and CEO of the Institute for Energy Research
Principal, MasterResource: A Free-Market Energy Blog
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[Editor’s Note: Daniel Yergin has written another energy tome and Bob Bradley reviews it with a critical eye, finding it quite good as a whole.]

Daniel Yergin’s tomes are fun reading and great cliff notes to the sweep of energy history. With many hundreds of energy books on my shelf, I find myself pulling down The Prize: The Epic Quest for Oil, Money & Power (1990), The Commanding Heights (1998), and The Quest: Energy, Security, and the Remaking of the Modern World (2011). I also peruse his edited/coauthored Energy Future (1979) to note Yergin’s incorrect embrace of the soft energy path when it was ‘the thing.’

Yergin

His latest is The New Map: Energy, Climate, and the Clash of Nations (Penguin Press, 2020). In a nutshell, this book is a sturdy nod toward energy realism with some political correctness thrown in. With climate change politics a given, Yergin surveys history with a dose of political economy to see two energy worlds: conventional, consumer-chosen, taxpayer-neutral, dense, reliable minerals vs. government-dependent, politically powerful, dilute, intermittent wind and solar, as well as battery-powered electric vehicles.

For the most part, unlike in Energy Future back in 1979, Yergin gets it right. (Today’s Green New Deal, ironically, harks back to the fallacious hopes of Energy Future, a story for another day.) But the discerning reader must peel the onion just a bit to see the political correctness/politeness in Yergin for him to remain in the mainstream energy intelligentsia.

Some quotations of note follow from Yergin’s latest, The New Map (2020). Note how the author repeatedly references politics, explicitly or implicitly, as the counterforce to what otherwise is the energy realism of free choice and free markets.

Overall Themes

Geopolitics focuses on the shifting balance and rising tensions among nations. Energy reflects far-reaching alterations in global supply and flows, driven in major part by the remarkable change in the energy position of the United States, and by the growing global role of renewables and the new politics of climate. (p. xiii)

The other is … the power that comes from policies that seek to reorder the world’s energy system and move toward net zero carbon in the name of climate. (p. xiii)

Shale Revolution

Together, shale oil and shale gas have proven to be the biggest energy innovations so far in the twenty-first century. (p. xiv)

“America’s new map” tells the story of the unanticipated shale revolution that is transforming America’s place in the world, upending world energy markets, and resetting global geopolitics. (p. xiv)

Though targeted for bans by some politicians, the shale revolution has fueled America’s economic growth, enhancing its trade position, generating investment and job creation, and lowering utility bills for millions of consumers. The supply chains supporting shale reach all across the United States, into virtually every state, creating jobs even in New York State, which prohibits shale development within its borders, owing to environmental opposition. (xv)

Starting with the energy crises of the 1970s, Americans became accustomed to thinking the country was vulnerable because of U.S. dependence on imported sources. But the geopolitical consequences for the United States, now that it is almost self-sufficient, are apparent in new dimensions of influence, increased energy security, and greater flexibility in foreign policy. (p. xv)

… shale was already in search of its next “revolution” when coronavirus sent it spinning into a new crisis. (p. xv)

Implications of Shale Revolution

Between the end of the Great Recession, in June 2009, and 2019, net fixed investment in the oil and gas extraction sector represented more than two-thirds of total U.S. net industrial investment. In another measure, between 2009 and 2019, the increases in oil and gas have accounted for 40 percent of the cumulative growth in U.S. industrial production.” (p. 27)

Climate Change: Then and Now

In [The Quest], I explored how “climate” went from being a subject of interest to a handful of scientists in mid-nineteenth century Europe, who feared the advent of another Ice Age that would obliterate civilization, to the consensus about warming that would bring 195 countries together in Paris in 2015 to forge a climate compact that has become the global benchmark. (p. xix)

Climate Cunundrum (and Yergin’s PC)

“Net zero carbon” will be one of the great challenges of the decades ahead, not just politically but also in how people live their lives and in the costs of achieving it. (p. xx)

The debate overt how rapidly the world can and must adjust to a changing climate, and how much it will cost, is unlikely to be resolved in this decade.

… while energy transition has become a pervasive theme all around the world, disagreement rages, both within countries and among them, on the nature of the transition: how it unfolds, how long it takes, and who pays.

“Energy transition” certainly means something very different to a developing country such as India, where hundreds of millions of impoverished people do not have access to commercial energy, than to Germany or the Netherlands.

Renewables Caution

Solar and wind have become the chosen vehicles for “decarbonizing” electricity…. Yet as their share of generation grows larger, they confront the challenge of “intermittency.” They can flood the grid with electricity when the sun shines and the wind blows, but then almost disappear when the day is cloudy or there is only a murmuring breeze. (p. xix)

Under the rubric of its Energiewende, or energy turn, Germany provided extensive subsides for wind and solar development…. Germany’s Federal Court of Auditors criticized government ministries for exerting ‘no oversight over the financial impact of the Energiewende,” for not asking “how much should the Energiewende cost the state,” and for failing to take into account “reliability and affordability.” (p. 87)

Electric Cars

At this point [2020], [electric vehicle] sales are still being driven largely by government policies–regulations and subsidies–and the increasingly determined response of automakers to those policies. But the costs were making it challenging for governments to provide subsidies for a mass market for electric vehicles. It would be far too expensive. (pp. 343–44)

The electric car may appeal to buyers in terms of its ‘coolness’ or ‘newness’ or status or because it delivers a message about climate change or values or brand or because of the quality…. Or because buyers receive financial or regulatory incentives for governments. But it is not clear how the overall utility of the electric car, on its own, is superior to that of the gasoline car. The electric car is still a car. (p. 345)

Governments will certainly have overriding and even decisive impact [on electrics]. (p. 346)

Governments can keep tightening the screws on emissions from gasoline-powered cars and on their efficiency, both of which would drive up their cost and thus by comparison make EVs more economically attractive; they can also adjust the tax code to favor electrics over gasoline-powered cares. (p. 346)

Correct Caution

[T]here are limits to this newfound [U.S.] self-assurance [of energy independence], for energy remains a globally-interconnected industry and … still only part of the overall nexus of relations among nations. (p. xv)

Public Policy

“… for many the determination and commitment to speed an energy transition are there and deeply felt. But will the money be there after the costs of the coronavirus crisis and the trillions of dollars and pounds and euros of government debt wracked up to deal with it? (p. 393)

Reposted, with permission, from the MasterResource “Free Market Energy Blog.”

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