The Challenges of Achieving Net-Zero Emissions by 2050
Authored by GoldFix ZH Edit
This weeks Grant's newsletter had an interesting brief write up about some pragmatic realities serving as obstacles for the current administration's pie in the sky proposals surrounding Net-Zero. Here is our summary of that with some choice quotes
President Biden’s Energy Problem
“Reworking the global energy system is the single largest, most far-reaching industrial activity ever proposed,”
President Biden's ambitious goal of achieving net-zero emissions by 2050 aligns with the Paris Accords. However, the U.S. still heavily relies on oil, gas, and coal, which accounted for 79% of energy production in 2021.
Where Would You Start?
Everyday items, such as a simple ceramic coffee mug, have intricate supply chains with various carbon-intensive processes. Making such items without emissions poses challenges.
“I’ve got a ceramic coffee mug, on my desk right now filled with coffee,” says Thomson by way of homely example. “The ceramic mug was made in a kiln that was probably fired with natural gas. The coffee comes from coffee beans in South America that were grown with fertilizer that was probably produced using natural gas. It was put on a ship that used diesel fuel, then in a car or a truck that used diesel fuel. It was roasted, using natural gas. Some of these things, we absolutely have zerocarbon solutions for. Some of them, we don’t.
But the question isn’t so much whether we have a solution for it or not, in regards to whether this is the largest industrial activity of all time. It’s that all of them need to change under this new ideology regardless of whether we have a solution or not.
And How Would You Deliver These New Materials?
Transporting emissions-free materials presents another hurdle. Specialized chemical carriers would be required, as regular container ships are unsuitable. These transportation challenges highlight the complexities and limitations of transitioning entire industries. The process of reshaping the transportation sector adds to the monumental nature of the endeavor.
The “Market” is in LaLa Land on Inflation
"I don’t think that the market has come to grips with it because I don’t think the market comprehends how physical and tangible the world actually is,”
Reality is Not Going Away
"There is not a thing on my desk right now that doesn’t have some metal that has been refined or some plastic or some chemical that doesn’t have a significant hydrocarbon-associated component in its value and creation chain,” Thomson adds. “Oil and hydrocarbons come in at some point, in every single value chain.”
Achieving net-zero emissions extends beyond the energy sector; it affects all aspects of life. For instance, everyday items on a desk, from metals to plastics and chemicals, have significant connections to hydrocarbons and oil. This comprehensive transformation represents the largest industrial challenge in human history. Consequently, natural resource markets and commodity-related equities are experiencing low performance, highlighting the difficulties faced by these sectors during the transition.
Achieving net-zero emissions by 2050 is loaded with real issues. It requires:
Significant reductions in fossil fuel reliance
Substantial investments in renewable energy
A fundamental transformation of supply chains across industries.
It can be done, but it ain’t free, and it ain’t overnight. Time for the pollyana types to get serious if they are serious. This can happen, but it has to be a real transition, not a flicked switch. Geopolitical aspirations of making Russia and the Rest of the BRICS lives miserable are one thing, but domestic hyperinflation is quite another.
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