While a groundswell rises worldwide to replace hydrocarbons with renewable energies—and sooner rather than later—do physical realities support such a revolutionary change to energy domains? The short answer is no.
A growing chorus of voices is exhorting the public, as well as government policymakers, to embrace the necessity—indeed, the inevitability—of society’s transition to a “new energy economy.” Advocates claim that rapid technological changes are becoming so disruptive and renewable energy is becoming so cheap, so fast, that there is no economic risk in accelerating the move to—or even mandating—a post-hydrocarbon world that no longer needs to use much, if any, oil, natural gas or coal.
Central to that worldview is the proposition that the energy sector is undergoing the same kind of technology disruptions that Silicon Valley tech has brought to so many other markets. Indeed, “old economy” energy companies are a poor choice for investors, according to proponents of the new energy economy, because the assets of hydrocarbon companies will soon become worthless, or “stranded.” Betting on hydrocarbon companies today is like betting on Sears instead of Amazon a decade ago.
Mark P. Mills is a senior fellow at the Manhattan Institute, a faculty fellow at Northwestern University’s McCormick School of Engineering, and author of the recent report, “The ‘New Energy Economy’: An Exercise in Magical Thinking.” Follow him on Twitter here.
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