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Commentary By Mark P. Mills

‘Energy’s Digital Future’ Review: The ‘Transition’ From Oil

Energy Technology

Transnational elites and American politicos want society to rearrange the energy market. For ‘society’ read ‘government.’

Amy Myers Jaffe’s “journey thinking about energy as a problem” began in 1973, waiting in those infamous gasoline lines. She hasn’t been alone in that journey. OPEC’s oil embargo was a defining event that has haunted the thinking of policy makers for decades. It inspired hundreds of books on energy policy. Some now argue that we inhabit an entirely different world from that of OPEC’s heyday. That is Ms. Jaffe’s theme in “Energy’s Digital Future: Harnessing Innovation for American Resilience and National Security.” She wants our policies to shift accordingly.

First, Ms. Jaffe notes, our central concern these days is no longer energy shortages or import dependencies. We’ve gone “from scarcity to abundance.” The new worry is about having too much oil and too much of it burned: ditto for natural gas, oil’s hydrocarbon cousin. That reversal is, of course, driven by worries about climate change and the fact that hydrocarbons still fuel 80% of the world economy. Ms. Jaffe, a research professor at Tufts, joins many others calling for an “energy transition” to a supposedly inevitable lower-carbon future.

Second, Ms. Jaffe argues, our era is different because the world now has what she terms “digital energy technologies,” defined as “the convergence of automation, artificial intelligence, big data, and the Internet of Things.” The effect of all those, we’re told, will be a drop in oil demand. Ms. Jaffe embraces the idea of “stranded assets” coming to those hapless companies that stay invested in hydrocarbons as “digital energy” suppresses demand and governments require “a regulated transition to cleaner energy sources.” Her position: “Society . . . cannot afford to let the private sector keep creating infrastructure that undermines long-term societal goals.” By “society” she means government. 

One of the challenges “society” must keep in check is the potential for “digital energy technologies” to encourage more energy use. Autonomous vehicles—about which Ms. Jaffe devotes many pages—will require the government to “lead in framing the rules” on how they’re used. And when it comes to electric vehicles, she writes approvingly about the benefit of “an entire country” that would “ban today’s car technology” based on the internal combustion engine. Ms. Jaffe assures those bitter clingers (to adapt a phrase) that no one is “proposing repossessing” their gasoline car. It will be a natural transition—enforced by government.

For all her focus on digital energy, Ms. Jaffe spends a great deal of time exploring the politics, geopolitics and economics of oil—and for good reason. Aspirations aside, petroleum is central to meeting today’s global energy needs; it powers more than 95% of all transportation of goods and people. Even the International Energy Agency’s most aggressive “transition” forecast sees global oil use in 2050 still roughly 25% higher than in 1973. 

Politicians properly fear a repeat of anything like 1973 gasoline lines, and especially the overnight 400% jump in oil prices. Witness what happened in May when hackers took the Colonial Pipeline offline and triggered brief shortages and gas lines in a handful of southeastern states: The administration promptly issued orders to temporarily relax an assortment of regulations to restore supplies quickly.

It’s a mystery why this administration and Congress, or indeed scholars and academics like Ms. Jaffe, evince so little concern about the supply-chain risks associated with the “energy transition.” All the green technologies progressives want the U.S. to move to—wind turbines, solar panels, batteries—depend on imports of the machines themselves, or key parts for them, and especially the critical minerals with which they’re made. Ms. Jaffe does note that China is “the dominant country with the majority of the world’s processing plants for vital minerals and materials for the green revolution.” But she brushes past the problem by observing that “as demand for the minerals rises, more mines will be developed.” True, but few if any of those new mines will be in the U.S. Increasing our dependence on foreign powers, some of them hostile, seems like a bad idea.

Instead, Ms. Jaffe focuses somewhat admiringly on China’s vaunted “leadership” and subsidies for electric cars and solar panels. She contends, correctly, that American innovators are at a disadvantage competing with “government-funded Chinese counterparts.” She believes that amped up R&D is one key to charting a path to new kinds of energy production. So do many transnational elites and American politicos in both parties. So does Microsoft, which in its 2020 climate-policy manifesto conceded that the energy plans it and others favor “will require technology that does not exist today.” That we are rearranging our economy based on technologies we don’t in fact possess should probably cause more alarm than it does. 

For Ms. Jaffe, and many others in the “transition” camp, the “geopolitics of green energy can be a friendlier place” but it will, she acknowledges, “require strong regional and multinational institutions that regulate trade and enforce global rules and norms, requiring stronger diplomatic efforts and global governance.” The motivation has changed, but the concept is old and familiar.

In one respect, anyway, the new solutions are the same as the old. Ms. Jaffe and like-minded analysts believe that government should spend far more on alternative energy pursuits. We are back to 1974, when Congress, traumatized by OPEC’s embargo, began trying to cut oil use and fund energy alternatives. Ms. Jaffe observes that today the government must engage in the “reshaping” of “business models.” But she claims “this not about having the government ‘pick winners,’ an idea often met with derision by libertarians and others who have more faith in free markets than in politicians to allocate resources.” The importance of that division in energy policy—faith in markets vs. faith in politicians—hasn’t changed a bit in the past half-century.

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Mark P. Mills is a senior fellow at the Manhattan Institute; a partner in Cottonwood Venture Partners, an energy-tech venture fund.

This piece originally appeared in The Wall Street Journal