Policymakers should understand the fundamentals of energy supply and demand before they make major investments, especially when it affects large swaths of society and their wealth, or the lack thereof. At the recent Group of 20 Nations (G-20) meeting, the world’s wealthiest countries including the U.S. decided to back a $20 billion plan to steer Indonesia away from coal-fired power and toward renewable energy. This would be akin to installing a solar array to power a coal mine.
Indonesia is the world’s largest coal exporter. It burns a portion of the coal it produces to power the nation. The G-20 has volunteered to spend other people’s money to pay for expensive green power for the archipelago. What they fail to realize it that it will only shift more coal toward the export market. Indonesia and its coal operators are laughing all the way to the bank. This is another dumb idea brought to you by BlackRock, the United Nations, the World Economic Forum, and their agents in government around the world.
When this was announced, it must have been difficult for the Indonesians to keep a straight face. To understand the irony completely, however, one needs to follow misguided logic. Indonesia is establishing nickel smelters to wrestle metal refining away from China and essentially eliminate the middleman. Nickel is a vital ingredient for the batteries that society will eventually use to store power for cars and energy generated from the envisioned green grid. The problem is that Indonesia would power the smelters with coal, which means the nickel would be blue instead of green and would violate upstream emissions mandates. Meanwhile, Indonesia will export more coal to generate electricity to charge the batteries for the electric cars operating in the nations that do not have a green grid subsidized by the G-20.
The hypocrisy and stupidity of the developed world’s “let them eat cake” mentality toward energy policy were on full display as delegates were preparing for the COP 27 meeting. The world’s reaction to the Russian invasion of Ukraine has only hastened the demise of a renewable energy policy that looks more like a house of cards than the sensible green path climate activists want the world to follow. One politician, the president of Uganda, pointed out the hypocrisy on the way to COP 27 (see World News, p. 9) and his voice was heard around the world. Financial institutions are discouraging investments in oil and gas production that would benefit his country, while at the same time they are returning to reliability and security provided by coal.
The European Union and others say that the switch to coal is temporary and only “postpones” the eventual displacement of fossil fuels, as if they will be able to somehow offset and recover from the current energy market dynamics in the next few years.