Inept Climate Policy
Germany’s decision to scrap its nuclear reactors before having replacement energy is in play.
In April, then UK Prime Minister Boris Johnson bragged his Energy Security Strategy would “bring clean, affordable, secure power to the people for generations to come.”
In the US, California marches on with the blessing of president Biden, preposterous targets for electric cars without having the faintest idea where the minerals and mining for those batteries will come from.
Global Crisis of Climate Policy
The Wall Street Journal comments on the Coming Global Crisis of Climate Policy.
A crisis isn’t coming, it’s already here, and obviously so.
The Federal Reserve, Bank of England and European Central Bank, among others, want to know how global temperature variations a century hence might weigh on Citi’s or Barclays’ or Deutsche Bank’s capital and risk weightings today. The fad is for quantifying, with preposterous faux-precision, the costs of reinsuring flood risks, or fire, or the depressed corporate profits of a dystopian hotter future.
Well, if you seek “climate risk” to financial stability, look around you. It has arrived, although in exactly the opposite manner to what our current crop of eco-financiers predicted. Europe’s plight tells a tale that could become all too familiar in the U.S. soon.
The U.K. may be facing a wave of business bankruptcies exceeding anything witnessed during the post-2008 panic and recession. Some 100,000 firms could be forced into insolvency in coming months, bankruptcy consultancy Red Flag Alert warned this week. These are otherwise healthy firms with at least £1 million in annual revenue. Business failures on this scale would dwarf the roughly 65,000 firms of any size that went under from 2008-10.
Matters are probably worse in Germany, the eurozone’s largest economy. Some 73% of small and medium-sized enterprises in one survey reported feeling heavy pressure from energy prices, and 10% of those say they believe they face “existential” threats to their businesses over the next six months. And that poll, from the small-business association BMD, is the optimistic one. A separate survey published this week by the BDI, a major industry association, found 34% of respondents describing energy prices as an “existential challenge.” Business failures will ripple up and down supply chains and quickly into the banks.
Does anyone know what exactly any of this will mean for the financial system? Of course not. No one has seriously bothered to “stress test” catastrophic increases in energy prices, even though the Bank of England claims to have modeled the economic impact of allowing global temperatures to rise by 3.3 degrees Celsius over the next few decades. By the way, the BOE also predicted the economic impact of the transition to a net-zero-CO2-emissions future would be modest.
Inflationary Madness
Policy decisions by clueless heads of state bow down to Saint Gretta, AOC, and president Biden.
They have put in place an inflationary inferno that central bankers do not know how to stop.
Even more ridiculous, President Biden, Elizabeth Warren and others want the Fed to take on a third mandate and stress test the economic impact of continued rise in temperature.
What needs to be stress tested is the reverse, the inflationary impact of a push for clean energy before battery storage technology exists, grid improvements exist, and whether or not physical metals for all the batteries that will be needed are even available.
Germany to Loosen Insolvency Rules as Energy Crisis Hits Hard
Please note Germany to Loosen Insolvency Rules as Energy Crisis Hits Hard
Germany’s justice minister is planning a temporary relaxation of insolvency rules to help keep afloat companies that have fundamentally sound business models but are struggling with debts due to high energy costs, he said on Friday.
Marco Buschmann, whose portfolio includes insolvency rules, said his plan would exempt firms from the obligation to file for insolvency if an expert finds they have a “positive going concern prognosis” for four months, down from 12 months now.
This week, toilet paper manufacturer Hakle, shoe retailer Goertz and car supplier Dr. Schneider filed for insolvency, and Economy Minister Robert Habeck said he could imagine parts of the economy stopping production due to rising energy prices.
That’s my Hoot of the Day!
In California …
Meanwhile California Demands More Inflation, Bans Gasoline in New Car Sales by 2035.
Questions Abound
- Will the production of lithium, cobalt, manganese, and nickel be sufficient to make all the batteries? At what price?
- Can the electrical grid take the strain?
- Will there be enough charging stations?
- Who will pay for all the charging stations?
Those are good questions and no one has the answers. But I do have the answer to one driving question.
Q: Will this do much of anything for the environment by 2035?
A: No, and possibly not 2050 either.
Central bankers had the disinflationary wind of globalization at its back. Now it has a stiff breeze of de-globalization and de-carbonization blowing in its face.
Good luck with that.
This post originated on MishTalk.Com.
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Mish
We certainly do not need these unnecessary nonsense, at all:
To me, this is going to be the achilles heel for quite a while. Throw money at it and there can be charging stations all over the joint. That’s not the issue. The problem is charging time. I have a Toyota Rav4 gasser, which gets about 22 mpg. The average gas pump runs at 5 gallons/minute, so the Rav4 adds 110 miles of range per minute. I also have a Ram 3500 pickup that gets 16 mpg. It adds 80 miles of range/minute.
Tesla’s so-called “superchargers” add 4 or 5 miles of range per minute, and often less because the station is full and sharing a trunk line. The so called “DC fast chargers” that the EVangelists are promoting are lucky to add 3 miles of range/minute. As EVs go mainstream, drivers will learn the hard way about stopping for an hour every couple hundred miles. And that electricity is going to be marked up like crazy.
1. The average car is driven 32 miles a day. (Federal Highway Admin.) No one can definitively say how far the average EV is driven, but they have less range so for my calculations I used 30 miles a day.
2. The typical EV gets 3.5 miles/kWh. But as they become more popular that number will probably decline because the first EVs are almost entirely compacts. I used 3 miles/kWh for my calculations.
3. #1/#3 = 10 kWh/day
4. The average household uses 30 kWh/day (Energy Information Admin.)
5. >95% of EVs are charged at home overnight when electricity demand is low. (Commonly reported, and logical.)
6. There are 108 million light-duty passenger vehicles (cars, SUVs, pickups) in the United States (Federal Highway Admin.) For my calculations, I rounded it to 110 million. 110 million x 10 kWh = 1.1 billion kWh/day for EVs or 401.5 billion kWh/year.
7. In 2021, the U.S. generated 4,115,540,000 kWh. That’s 4,115.54 billion, or 11.275 billion kWh/day (Energy Information Admin.)
8. #6/#7 = 9.7% extra electricity needed to convert the entire personal vehicle fleet. Almost all of which will be used overnight.
A bit of trivia: The vast majority of EVs are charged at home on the same circuit as an electric dryer: 240 volts, 30 amps. This makes them the equivalent of an electric dryer, which uses 5 kW an hour at the highest setting. The average EV will need the equivalent of running an electric dryer for 2 hours. In the middle of the night. There will be variations: more in the winter, less in the summer for starters.
So, every day, the U.S. generates 11.275 billion kWh/day, or 11.275 TWh (terawatt hours, trillions of watt hours) a day. Multiply it by 365, and that 4.115 petawatt hours a year. Trust me, I’ve made mistakes with those zeroes, but not this time.
If I somehow wanted to promote EV adoption, I’d target single-family dwellers because a) they almost certainly have a higher rate of vehicle ownership and use, and b) overnight charging will be virtually universal in that group, and will put no extra stress on the grid subject to the qualification that it’s a big country and there’ll always be exceptions.
I need to say: I am not an “EVangelist.” I am a “Factangelist.”
It is unfounded, unscientific, preposterous hype (not news) of a ridiculous AI projection.
The ongoing costs of both climate change and the transition from fossil fuels to renewables is going to be high. You raise a lot of excellent points.The transition is going poorly so far. So poorly, that the demand for fossil fuels is still increasing. Which was foretold by the prophets on this site over two years ago. It’s why I sold my tech and loaded up on energy.Mish. You should also do some stories on how much climate change is already costing us and how much more it is going to cost us in the future as the world continues to warm.Thanks.
featured products and services, I can see the overall US GDP growth
rising from recent avg 2-3% to 20+% in 10 years This is a seismic shift,
which is really hard to think and reason about… https://twitter.com/mobav0/status/1566821955033911302