President Biden’s commitment to end fossil fuels has been ineffective in reducing the demand for oil – but very effective in both weakening the U.S. and empowering our primary global adversary, China. Assuming that a reduction in global carbon emissions is necessary to fight “climate change” (a disputed proposition), it nonetheless makes little sense environmentally, economically, or strategically to hobble the American fossil fuel sector (cancelling pipelines, discouraging financing, restricting leases, and slow walking permits) before sufficient sources of renewable energy with a proven capacity to meet global demand can be demonstrated.
In its World Energy Outlook 2022, even the International Energy Agency (IEA) warned that if the supply of oil “were to transition faster than demand, with a drop in fossil fuel investment preceding a surge in clean technologies, this would lead to much higher prices – possibly for a prolonged period.” The IEA’s warning had the advantage of being written after the war in Ukraine threatened worldwide energy supplies, which, more effectively than any desk-top research, demonstrated the global economic threat posed by a too-rapid retreat from fossil fuels.
Worldwide demand for crude oil is currently forecast to hit an all-time high in 2023. China’s demand, in particular, is surging. In May, the IEA “revised up” its forecast for growth in global demand, with “China accounting for nearly 60% of global growth in 2023.”
In the U.S., 79% of energy consumption comes from fossil fuels, while 13% comes from renewable energy sources, according to the Energy Information Administration (EIA). That’s after tens of billions of dollars in government spending in support of renewables, particularly wind and solar, which combined account for a mere 5% of our energy consumption. The bottom line: so-called renewables are insufficient – and lack the necessary dependability – to meet our energy needs.
Despite this heavy fossil fuel dependence, over the past two decades carbon dioxide emissions in the U.S. have declined by 15% while China’s have grown by 216%, according to the EIA. The U.S. emissions reductions were due, in great part, to an increase in the use of inexpensive and clean-burning natural gas, which, thanks to fracking, the U.S. has and can produce in abundance.
If the goal is actually to reduce global carbon emissions without causing global economic chaos, increased use of dependable and abundant American natural gas makes far more sense than curtailing U.S. production and spending billions on unreliable and expensive “renewable” energy sources. Let’s face it, if renewables were economically viable, dependable, and available in sufficient supply, the Chinese would be using them. In fact, they have every incentive to do so.
Most of the processing of the minerals needed for electric-vehicle batteries happens in China. Using wind, solar, and batteries for energy production and transportation requires significantly more metals (three times more copper, seven times more rare earths, 19 times more nickel, 25 times more graphite, and 42 times more lithium) than natural gas, oil, or coal production and transportation. The U.S. mines and processes a negligible amount of these metals, which primarily come from countries such as Australia, China, Congo, and Indonesia. Notably, 60% of rare earths are mined in China. Chemical processing, battery components, and assembly are mostly done by Chinese companies. China also processes 87% of rare earths, 65% of cobalt, 58% of lithium, and 40% of copper.
As a result, China’s economy has benefitted significantly from the global push toward renewable energy. Of the 12.7 million jobs worldwide related to renewable energy, 5.4 million jobs are in China, 0.9 million in the U.S., and 1.2 million in Europe. Of the worldwide jobs related to solar energy manufacturing, 68% are in China, as are 48% of jobs related to wind power.
To further reduce U.S. carbon emissions, the Biden administration proposes spending hundreds of billions to increase our dependence on unreliable wind and solar power. This plan is set forth in the so-called Inflation Reduction Act, a green energy bill that does virtually nothing to reduce inflation. According to a summary of the act by Senate Democrats, the bill would “reduce carbon emissions by roughly 40% by 2030.”
But there would be consequences. Using a clone of the Biden’s EIA’s energy model, a Heritage Foundation study found that reducing carbon dioxide emissions 44% by 2030 would cause 1.2 million in annual average job losses in the U.S., plus an aggregate GDP loss of $7.7 trillion through 2040 – or $87,000 per family of four. Average household electricity expenses for American families would increase by 23%. All to replace reliable and abundant energy sources that have been reducing U.S. carbon dioxide emissions for two decades.
Biden’s energy policies are needlessly weakening the U.S. and strengthening China. Since the 1970s, with the help of its innovative energy industry, America has won independence from OPEC. It makes no sense to implement policies that weaken our economy while once again putting our access to energy at the mercy of a hostile and even more dangerous adversary.
Andy Puzder is the former CEO of CKE Restaurants and a senior fellow at the Heritage Foundation and Pepperdine University, and he is a member of RealClearEnergy's Brain Trust, a group of strategists offering insight and guidance on today's critical energy topics.
Sanjai Bhagat serves on corporate boards, is author of Financial Crisis, Corporate Governance, and Bank Capital (Cambridge University Press), and Professor of Finance at University of Colorado.
