Sadly, renewable installs are not doing what's suggested here. Instead, it seems the industry is contributing to reducing demand for steel, glass, aluminum and factory and field jobs.

Everyone who reads this is familiar with the FUBAR situation with PV import tariff litigation and resulting fall off in installations, potentially 40% less than last year. The fall off in wind installations has generated little PR. Also down 40-60% I believe, without much hope for a rebound until offshore construction starts.




Subscription needed:


To the extent it's focused on "clean" energy at all, the Biden administration has directed all its energy towards items it thinks appeal to a few blue collar swing voters who Granholm understands. Hence the emphasis on CCS, nuclear and EVs (but from the Big 3 only) and domestic battery supplies. OK, offshore wind has seen a little love. The administration has not been helped by initial association, real or manufactured, with anti-FF supply policies which can be portrayed as contributing to inflation. And while solar and wind quickly reduce demand for gas, CCS never will, and nuclear might in a decade or so.

Expand full comment

I think this is my first time commenting, so let me start by thanking you for this podcast, from which I've learned so much. Every episode you post makes great points, and this one is no exception.

That said, I think that a couple of the points made here are weak, and distract from the very valid reasons that renewables will reduce volatility and inflation. The really critical point is that most of the inputs for renewable energy come up front; once a renewable facility is built, it just runs, and is no longer affected by supplies / prices of lithium, cobalt, etc. Of course you made that argument – "with fossil fuels, you never come out the other side" – and it's the best point to focus on.

In the discussion of "energy independence", you note that domestic prices for oil, gas, etc. are tied into the world market. However, on net, the US imports little or no fossil fuel, so we could decouple our domestic prices simply by banning exports. (I'm glossing over some details – it would be challenging to move some of the oil to the right places, etc.) We *choose* not to do that, probably because it would cut into oil company profits. But there's no fundamental reason that domestic and international prices need to be tied together in a country that's not a significant net importer, and so this isn't an inherent, immutable advantage of renewables; it's an artifact of current energy policies.

You note that if prices for renewable electricity ever were to spike, at least the profits would remain within the domestic economy. But the same is true when Exxon (or whoever) jacks up the price Americans pay at the pump for Texas oil! We look at it differently because we don't like Exxon, but the fundamental structure is the same; the supply and demand are both domestic, in the US at least. This is why I think this argument is a distraction. Suppose the political climate were to evolve such that the US does in fact ban oil exports; that would decouple domestic prices from the world market, but it wouldn't do anything to save the planet. So this isn't the strongest pillar for us to build our arguments on.

Then you note the seeming conflict regarding the impact that increased investment in renewables might have on inflation: shifting away from fossil fuels should *reduce* inflation, but many argue that the increased spending would *increase* inflation. I can't comment on the argument that the current inflation isn't the kind that would be made worse by increased government spending. However, I think the main point here is just a question of time scales. Investing in just about anything is bad in the short term (you have to spend a bunch of money / resources) and good in the long term. That seems to fit pretty well here? If we kick off a massive campaign to build renewables - which I would support – that should be great for inflation in the long run, but that doesn't mean it couldn't be bad for inflation in the short run.

In very tangible terms, to build those renewables we're going to need to produce a bunch of steel, deploy a bunch of diesel construction equipment, etc. Given our current industrial base, all that will use fossil fuels, and the world is currently experiencing a fossil fuel supply crunch, so... it seems pretty obvious that this would make the fuel crunch worse in the short run? It would be worthwhile, but the short-term pain would exist nevertheless.

Expand full comment