A study released last week by big energy consultancy Wood Mackenzie says a Republican (i.e., Trump) win in November’s elections could “decelerate [the] energy transition,” and result in a reduction of “energy investment” of $1 trillion.
Anticipating a possible Trump victory, Wood MacKenzie’s study includes what it calls a “delayed transition” scenario, in addition to a “base case” assuming current policy trends, and a “net zero” case that assumes an acceleration of more and more debt-funded “green” subsidies at the federal level. The firm estimates its net zero scenario requires overall U.S. energy investments of $11.8 trillion in the coming 26 years, compared to $7.7 trillion in its base case and $6.7 trillion in the delayed transition case.
“This election cycle will really influence the pace of energy investment, both in the next five years and through 2050. Investments in low-carbon supply need to be made in the near term to realize longer-dated decarbonization targets,” David Brown, director of Wood Mackenzie’s Energy Transition Research, said in a release.
None of this should be surprising to anyone who has been paying attention. It is no secret that Donald Trump has a dim view of many of the subsidy provisions for so-called “green” energy and EVs that were included in the Orwellian-named Inflation Reduction Act.
In Wood Mackenzie’s release, Brown speculates that “It is not likely that the IRA will be fully repealed. However, a second Trump presidency would likely issue executive orders that would abandon the 2035 net zero target for the power sector, establish softer emissions goals from the EPA, and issue tax-credit regulations that could favor blue hydrogen.”
Obviously, less subsidy money flowing out of Washington, D.C., will result in less overall investment in the chosen rent-seeking industries favored by the Biden administration. Certainly, Brown is correct to say a full repeal of the IRA is unlikely — really, politically impossible is more accurate.
But a second Trump administration would have myriad means of cutting back on money outflows from the federal Treasury via the same executive branch means Biden has used more often than any other previous president to saddle the nation with his radical agenda.
A few days after the publication of this study by Wood Mackenzie, Bloomberg NEF released a study of its own that found that added energy demands from power hungry AI tech, data centers, EV recharging and transition-related manufacturing has now raised the global price tag for achieving net zero by 19%, an additional $34 trillion over its previous estimate.
On a somewhat ironic note, that $34 trillion increase in needed global debt-funded spending on weather-dependent power generation and electric vehicles that few citizens really want to buy is roughly equivalent to the U.S. national debt, at least as of this writing. Of course, at the pace Biden’s rapacious spending has been adding to the debt, that number will be another trillion dollars higher in a few months.
Even more ironically, America’s entire GDP for 2023 came to $27.23 trillion. Simply put, neither the U.S. nor most other western countries, most of which are also funding their net-zero efforts by taking on more debt, can afford this. Numbers of this magnitude are simply not sustainable.
Wood Mackenzie gives a nod to this reality, noting that “U.S. government spending could be limited to address the country’s debt burden – the U.S. Congressional Budget Office (CBO) expects the U.S. debt-to-GDP ratio to reach 109% by 2030 and hit 155% by 2050.” It is more than fair to point out that CBO estimates such as this have historically proved to be extremely conservative in nature.
The practice of throwing out numbers like these, so huge that the human mind can barely comprehend their real impact to their own lives, has become an increasingly disturbing trend in today’s society. It has become common practice to talk about trillions today in the same way we talked about billions barely a decade ago.
The late Sen. Everett Dirksen reportedly said, “A billion here, a billion there, and pretty soon you’re talking about real money.” Imagine what he might say now at the prospect of pouring more and more trillions of dollars into this energy transition money pit.
