Episode Details

Today I wanted to expand on a theme I have been writing about for a while: that the green energy revolution is anything but green. 

In fact, the amount of metal required and the amount of fossil fuel needed to be burnt to make it happen means it will be extraordinarily damaging to the environment, while unprecedented amounts of CO2 will be released into the atmosphere.

Moreover, unlike the inflation that resulted from Covid and the Ukraine war, which might yet prove temporary, Net Zero will produce inflation that will be prolonged and entrenched. 

In other words, Net Zero is not only deluded, but it will also be extremely damaging, both to the planet and to people’s lives.

Here we explain why - and what to do to protect your wealth.

How much more metal do we need to achieve Net Zero?

I stumbled across a super talk this week by Mark Mills, author and senior fellow at the Manhattan Institute, called "The Energy Transition Delusion: Inescapable Mineral Realities". 

He argues that the current energy transition to renewable is based on a flawed understanding of the resources required to make it happen. Most of the evidence cited here is cited from that talk.

Today the world gets a little under 4% of its total energy supply from wind and solar. That’s one-third as much energy as it gets from burning wood. I couldn’t believe that stat when I read it - are we still burning that much wood? - but that’s what the International Energy Agency (IEA) says. Wood still provides 350% more energy to the world than all the world's wind turbines and solar power combined.

To get to this 4% level the world has directly spent something like $5 trillion (more than double UK GDP) in the last 15 years, and probably the same amount again in indirect spending, says Mills. 

An electric vehicle requires 400% more metal than a conventional car. To build a machine to replace a gas turbine, you need 1,000% to 2,000% more mineral to deliver the same unit of power. To deliver the same mile of driving, the same hour of heat, the same hour of lighting or the same hour of computer time the extra minerals required amount to anything from 2,000% to 7,000%

Overall this amounts to an increase in mineral demand in the order of 700% to 4,000%. 

“Not to put too fine a hyperbolic a point on this,” says Mills, “this would be the largest single increase in demand or supply of metals in all of human history. It's never happened.”

Where is all this metal going to come from?

Mining cannot increase output whether by 700% or 4,000%, not in the next decade, nor in time for the Net Zero deadlines.

We are thinking in terms of kilowatt hours instead of in terms of tonnage - and tonnage is what’s required to get those kilowatt hours. Mills says, “It requires both the extraction and movement of a quantity of materials equal to or greater than the quantities of materials that humanity extracts and moves and grows for all other purposes combined. The world's not capable of doing that with the technologies that exist.”

Where is all this new metal going to come from? To take a mine from exploration and discovery to production takes 16 years. Even if you relax regulation (unlikely) and accelerate investment (not so easy) you are only at best going to shave a few years off that. 

To go out and explore for mines and develop them requires investment, which the industry has been starved of since 2011. What’s more, there’s no guarantee you will ever get a payback: exploration has a success rate of about one in a thousand. Let’s say you do discover something and start building a mine, what if commodity prices come down? You lose a lot more than your shirt.

Then there’s the political risk, wheth