The most significant wealth generator in history has now become a burden for taxpayers.
Energy has generated greater wealth than any other sector; however, it is now depleting resources in advanced economies.
The Rockefellers, the Gettys, and the Middle East share a commonality in their wealth derived from energy resources. Historically, these fortunes were amassed during a time when energy's influence on economic growth and production was significantly less pronounced than it is today. Currently, energy investments account for an astonishing 5 percent of global GDP, while income to this sector exceeds 10 percent of world GDP, highlighting its increasing significance. Despite this potential for wealth generation, there is a noticeable absence of progress in this area, raising questions about what has gone awry.
The root of the issue lies in a structural problem. The transition from fossil fuels to renewable energy has largely been propelled by utilities and political agendas, neither of which prioritize efficiency. This lack of accountability allows for wastefulness, as costs can be easily transferred rather than mitigated. Consequently, advanced economies are grappling with escalating energy expenses, prompting industries to relocate. This situation has not led to meaningful reductions in emissions or fossil fuel consumption, yet it seems to attract little concern. Many observers view this as a sign of decline for the Western world, and they may be correct. The vast, purpose-built infrastructures that have been established are unlikely to be repurposed or dismantled in the foreseeable future, with some commentators suggesting that countries like Germany are facing dire consequences.
Secondly, those who possess the knowledge to navigate the transition away from fossil fuels are often marginalised in the discourse. Special interest groups associated with wind, solar, and electric vehicles are effectively suppressing critical perspectives. While numerous viable solutions exist for achieving net-zero emissions, they remain unheard, as their implementation would undermine the reliance on current inefficient technologies and fossil fuels. The alignment of environmental organisations, such as WWF and Greenpeace, with these ineffective strategies further exacerbates the likelihood of failure.
Currently, nearly all renewable energy sources, aside from electrical ones, are competitively at current market prices. For instance, wood pellets, despite their low energy content and high logistical costs, can surpass coal in competitiveness when carbon dioxide costs are factored into electricity generation. Similarly, palm oil, which carries significant environmental and logistical burdens, outperforms other fats as a feedstock for sustainable aviation fuel (SAF) in the EU. The inefficiency of our system is starkly illustrated by the fact that deforestation for palm plantations and the subsequent processing of oil in Indonesia or Malaysia can be cheaper than any carbon capture technology, and even more cost-effective than wind or solar energy generation. Additionally, a global biomass trade exists where half of the cargo consists of water.
This scenario presents a unique opportunity for efficiency to yield substantial benefits. Current prices are significantly inflated, yet available technologies can capitalis
e on this situation. For example, SAF can be produced with negative emissions at a cost of under USD 30 per barrel, with the potential for large-scale production reaching millions of barrels daily. Given that market prices exceed USD 200 per barrel, this creates a lucrative margin of USD 170 multiplied by billions of barrels annually. Numerous other opportunities exist to generate wealth within the world's largest industry, but success will depend on the initiative of early adopters, as has historically been the case.