SLP350 Benny Peiser – The Net Zero Agenda Will Crash

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Benny Paiser of Net Zero Watch joins me on the show to talk about ‘net zero’ and the inaccuracy in the presentation of arguments on renewables. We discuss:

  • What is ‘net zero’
  • Accurate treatment of costs and benefits
  • How much of it is regulation or market choice
  • ESG box ticking
  • The impact on everyday people
  • ‘Greenwashing’ by some countries
  • Why it will crash

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Sponsors: 

Stephan Livera links:

Podcast Transcript:

Stephan Livera:

Hi Benny, thanks for joining me on the show today.

Benny Peiser:

Hi Stephan. Very nice to be on your show.

Stephan Livera:

So Benny, I was coming across your website and your Twitter, and I just thought it was really interesting. And so I want to get a little bit of a background on you. What’s your background? And how did you come to be part of the Net Zero Watch?

Benny Peiser:

Oh, wow. I’ve been in this whole battle of ideas about the environment and energy at least for the last 45 years or so. I grew up in Germany, I was one of the co-founders of the Green Party in Germany when I was a student. So I’m very familiar with the environmental movement. My concerns were mainly about nuclear waste, nuclear energy in the late 70’s, early 80’s. And as you grow up and you read more and you experience more and you learn more, you realize a lot of the fear and fearmongering is driven by exaggerated claims by exaggerated risk. So over the years I became a more skeptical environmentalist. And for the last 30 years I’ve been living in Britain—I moved to Britain in the early 90’s, got a job at the university, and set up a scientific network, e-mail network many years ago, which eventually led to me becoming the director of a new organization which looked at climate and energy policies, which was the Global Warming Policy Foundation. And Net Zero Watch is an offshoot of that organization, so we are the official opposition in Britain to the old party consensus on climate and energy.

Stephan Livera:

Right. And so for people out there who are not familiar, what exactly is the Net Zero movement?

Benny Peiser:

Well, we are called Net Zero Watch. So we are observing, monitoring and criticizing policies that don’t add up, that are worse than the problems we may face in the future with climate change. So we are extremely critical of government policies where governments think they know what the solution is. They pick winners, and they tend to have a very poor track record in picking technologies that are very costly and very often failing. So we are a think tank that looks into policies and scrutinizes these policies, scrutinizes also the costs of these policies. And we work with a number of MPs. There’s also a group of MPs called the Net Zero Scrutiny Group, of backbench MPs who are all concerned about the rising cost of these Net Zero policies, and the cost of energy in general.

Stephan Livera:

Sure. And so just to outline—obviously I understand you’re part of Net Zero Watch and you’re scrutinizing, but just for the sake of people who aren’t familiar, what are some of the policies that the Net Zero advocates are pushing forward? What kinds of things are they driving?

Benny Peiser:

Oh, that’s very simple. Basically we have to reduce our CO2 emissions in Britain to net zero, basically decarbonizing the entire economy—that means everything. That means the electricity, that means heating, that means transport, that means food, agriculture—every single aspect of the economy has to be totally decarbonized. And we will power Britain by wind and solar, because wind and solar is free, as you know—the sun shines, the wind blows. So we will power Britain by wind and solar energy. That’s basically Net Zero, full stop. It sounds too good to be true, as usual, and it is causing all sorts of unbelievably destructive and costly damages to the economy, to consumers, to businesses, to everyone. And we are just feeling the beginning of this energy cost crisis right now, where energy costs have doubled within 12 months. The green movement claims it’s all down to the cost of gas, but of course the green movement is campaigning against domestic gas exploration. Because everything should be powered by wind and solar, the Net Zero movement is campaigning against the exploitation of domestic offshore and onshore gas, which in Britain is massive—massive. Some of the shale basins in Britain are even bigger and deeper than in the US. So the potential is there, but the greens are saying we can’t do this, and they have banned shale gas extraction. So it is a battle—political battle and economic battle and ideological battle—about what are the best ways to power an industrial society and still lead to a gradual decarbonization of the economy. This is the ongoing battle, and we are basically on the side of a cost-benefit kind of approach to this issue, so that you actually look at the pros and the cons—the costs and the benefits—of each and every policy that is being promoted.

Stephan Livera:

So when it comes to comparing the costs and benefits, as you say, what are some of the things that we need to consider, as opposed to just merely saying, Oh, wind and solar is free, so that must be the cheapest form of energy?

Benny Peiser:

Yeah. If you don’t understand the complexities of intermittent energy sources like wind and solar—in other words, if you don’t understand just the costs and the knock-on effects of how to balance a national grid that is reliant on energy that is only available at certain times of the day or certain windy days—if you don’t fully understand and scrutinize that kind of very unreliable energy system, then you underestimate the costs and the risks and the instability that comes with it. For the last 20 years, governments in Europe in particular have put almost all their eggs into the renewables basket. So in other words, they completely thought that you can drive and power an industrial society by renewables, because eventually there would be batteries that could store energy for those days when there isn’t enough wind or not enough solar energy generated. But what we’ve experienced in Europe is that the costs haven’t come down—for many reasons. The costs actually are increasing, because the costs of balancing out and the costs of removing reliable forms of energy, are staggering. Many European countries have phased out coal—which is obviously the dirtiest form of energy production, although nowadays modern coal power plants are not as dirty as they used to be, but still—and they are phasing out nuclear, so there’s an enormous demand for natural gas, which is driving up the prices. All of these policies are driving up the price of energy. And so you have to look at your energy system very carefully and unbiased. You have to look at really all the costs, including the transition costs, the balancing costs, the backup costs, and realize that if you add all that together, it is driving up the cost—it’s not bringing down the cost. And that’s what we are experiencing in Europe. But you can only do that if you are really unbiased. And this is very difficult, because most people have some kind of preference. Some people say, Oh, we prefer renewables, or we prefer nuclear, or we prefer natural gas, or we prefer this and that. And people who look at the energy system with this kind of tainted view tend to underestimate the costs of picking a certain form of energy. In an ideal world, you have a market where consumers pick and choose the forms of energy they want, because it’s the most competitive, the most reliable. But we don’t have that market anymore. When it comes to energy, markets have been so distorted that it’s almost impossible for anyone to build a power plant nowadays in Europe without guarantees of subsidies, because policy is so strong that no one can guarantee you that—you build a new gas-fired power plant—well how long is it going to last? And how much will it be actually be used? If you prioritize renewables, then half of the day gas-fired power plants will stand idle, and so lose money. So it’s a really big problem. And because it’s so complex, most people, including ministers, really don’t fully understand the complexities and the problems of the energy situation.

Stephan Livera:

So on that, now I’m coming from a free market libertarian perspective. I believe, obviously, it should be less government the minimized government regulation and mostly market choice. So the question I think some people might be thinking is, How much of this is down to favorable government regulation or subsidies versus the actual market choice? Let’s say people are being convinced that in their mind, they think wind and solar is better for whatever reason, even if it’s only narrowly considered. What are you thinking? How much of it is regulation versus true market choice?

Benny Peiser:

There is no market choice, for a start. There is no market choice. Companies are offering deals where they say, 100% of our energy is renewable energy—which of course is nonsense, because the national grid is a combination of renewables and gas and biomass and even coal and nuclear. It’s a whole mix. So no one can actually offer 100% renewables or 100% this or that—that’s impossible. And so there is no real market choice. People can only choose different suppliers, but all the suppliers are essentially getting more or less the same mix of energy. The question is, What is driving this energy mix? And that is entirely driven by policy. Of course sometimes, if let’s say the gas price is high like today, the remaining coal-fired power plants in Europe, even in Britain, will be fired up, because they are suddenly more competitive and less costly than gas, which used to be the opposite. But now, coal is so much cheaper, so there’s a real boom in coal in Europe, because gas is so expensive. And normally this is what you would expect in a market, that if one source is more expensive, you would switch to another energy source. But the fact is nuclear and coal is being phased out. In Britain, there are just two coal-fired power plants left. They will be closing down in the next two or three years, so they won’t even be available. So that market is gone. Nuclear is being slowed down. A lot of old nuclear power plants will be phased out. Whether new ones will be built in time is an open question. All of this is due to political decisions, subsidies, dictates, and so on. Nothing is left to the market—that is the biggest problem. So that, I’m afraid, is the problem we face, that government intervention is such that no individual business is going to invest unless they get the subsidies and support by government. Mind you, no one in Europe would build a wind turbine unless they get subsidies, because it’s just not commercially viable to sell wind energy without subsidies.

Stephan Livera:

So if you had to spell out, what do you think are the key regulations or subsidies that are driving this kind of outcome, at least in Britain? What are the top three government interventions that are doing this?

Benny Peiser:

Well, number one is the prioritization of renewables over all other forms of energy. So renewables are being heavily subsidized to the tune of £11 billion pounds in Britain per year. So consumers have to pay £11 billion to the energy suppliers and renewable investors every year. In Germany, it’s €25 billion euros. We’re talking here trillions of pounds and euros over the last 20 years that is taken from consumers on their energy bills, and businesses of course pass on the costs, because they have the energy cost as well. So food is more expensive than it should be, and so on. That’s number one. The second, of course, is regulations. So coal power plants simply are no longer allowed, essentially, because the government has decided to phase out coal. So it’s a political decision to say, We will close down all coal-fired power plants by 2024. And so they’ve gone. Gas is very difficult to actually build new gas-fired power plants, because again, there are very, very stringent regulations in terms of emissions, and in terms of how much you are actually allowed to run your gas-fired power plant, because increasingly they are used for backup for renewables. And then you have all sorts of targets for other forms of energy like biofuels, bioenergy burning whole forests in power plants. All of them—all—are driven by targets and regulations. There is not a single form of energy where you could invest which wouldn’t be totally dominated by government regulations and targets—not a single. So in that respect, it’s not surprising that no one is actually building a power project without government guarantees and subsidies.

Stephan Livera:

And perhaps this part is not as much of a government impact that we are seeing this in many companies, is this so-called ESG narrative or tickbox exercise that some companies and potentially some investors or potentially even banks—so as an example, if I’m going to get credit from the bank, they might even start asking some of these typical ESG enviro social governance questions. And typically on the environment question, they might say something like, Oh, what are you doing about renewables? And so on. So how much of that is a factor in your mind? And is that more of a government influence or is that more just like the propaganda, the narrative out there is so strong and so prevailing, that even presumably private or supposedly private organizations are trying to put on ESG requirements onto other actors in the market?

Benny Peiser:

Absolutely. This is again driven by government policies, because they are demanding that companies have their climate targets, Net Zero targets, that they are transparent about their investments, about their interests. This is all due—and we’re not talking here of some green activists—we’re talking highly influential institutions, government and international institutions, who are demanding that listed companies and not listed companies show what they are doing, their contribution to Net Zero. And of course, what it means is you have, as you said, most companies using that as a tickbox exercise. But it is a risk because, again, it drives companies into a direction where it’s not clear that it’s actually profitable or lucrative or makes any economic sense. It’s a political exercise. And think about all these pension funds that have divested from fossil fields in recent years. They’re losing millions if not billions this year, because they no longer hold oil or gas shares. And as we know, they are making billions this year. So it’s not always obvious that going into the green direction will benefit your company or benefit your pensioners or benefit your shareholders. In fact, very often it’s the opposite. We are currently facing a green bubble. The renewable shares are very low this last 12-18 months. So it’s a risk. It’s always a risk if you intervene into the market for political reasons—it has a very poor track record, and it always ends in tears. Because we don’t know—we don’t know what technology will win out in 2, 3, 4, or 5 years. We don’t know. If we think we can pick winners—as I said, very, very poor track record—we always get it wrong. It always surprises, because that’s what technology does. And that’s what the markets do. They come up with new solutions we don’t even know that they exist today. And if you go down the route that you thing is the future, it’s almost certain to be a cul-de-sac.

Stephan Livera:

I see. And so when it comes to the impacts of some of these government policies, this whole ESG narrative, one impact that I’m potentially seeing, and I’m curious if you could elaborate or spell out some of your thoughts, is it that we are seeing potential energy producers or companies less willing or less able to go and make long-term investments into coal, gas, even potentially nuclear, because of this climate, whether that’s government regulation or ESG narrative.

Benny Peiser:

That’s right. And that’s what we’re seeing in Europe. We’re seeing that hardly anyone is investing, which is interestingly the reason why the EU—I don’t know whether you’re aware of this—but the EU is proposing to classify natural gas and nuclear as green energy now. So in terms of ESG, as you said, gas and nuclear are now kosher, they are now green, because the EU is proposing to simply wash them green and say, Look, these are clean energies. Why are they doing that, knowing how the greens hate nuclear and natural gas? They’re doing that because without it, no one is going to build a nuclear power plant or a natural gas-fired power plant in Europe. No one is going to build a power plant without the EU guaranteeing that their investment will pay off, because a power plant has to run at least 20-30 years to actually be profitable. Nuclear has to run perhaps a bit longer, and gas a little less. But basically, unless you have these long-term guarantees, no one is going to spend €2 billion euros, nevermind €10 billion euros, for a power plant. So Europe is in a big pickle, and this is how they try to get out of it, by declaring suddenly that if you build a nuclear power plant or a gas power plant, you are green and it’s ESG-compliant.

Stephan Livera:

Isn’t it interesting then that they are, on one hand, trying to virtue signal about being green and look how renewable and everything we are, but then at the same time, they’re having to be at least a little bit pragmatic here, because they realize that they can’t actually run the grid entirely on wind and solar. So they’re having to try to actually bring the gas and nuclear into the ESG fold, as it were.

Benny Peiser:

Yeah, absolutely. But this is out of desperation, because they’ve done 20 years of saying, The future of Europe is renewable energy. They’ve put all the eggs into that basket, and suddenly they realize it’s not working, it’s too expensive, and we are suddenly completely dependent on Russia, and no one is building any power plants anymore in Europe. So they’ve realized that they are in trouble, and that explains the desperation and the irony of the EU suddenly declaring nuclear and natural gas as green energy. That’s the explanation. And by the way, this is what’s going to happen all over the world. This whole Net Zero agenda is going to crash on contact with voters, and most governments will switch back to more reasonable and more rational energy policies. I have no doubt about it. It’s just a question of time. The current Net Zero agenda is simply unaffordable, economically, politically, socially, geopolitically, completely self-defeating.

Stephan Livera:

As people like Alex Epstein point out—and I’ve interviewed Alex on my show also—he points out that just fundamentally, for hundreds of millions or potentially even billions of people to even get energy, we’re going to need to use a lot of fossil fuel just because that’s what’s cheap, reliable, and scalable, as he spells out in his book and the way he talks about it. And from what I’ve seen—again, I’m not an expert—but from what I see, it seems like energy costs are rising dramatically in Europe, and in the UK, we’re seeing discussions about families who are having to literally make the choice between heating or eating. And it’s just incredibly sad that the discussion and the outcome has gone this far. So why is it that people are not able to understand this aspect, that the costs are rising for energy, and that we need it to be cheaper?

Benny Peiser:

Well for a start, the greens have always claimed that going for renewables will bring down the cost of energy. And of course this has never really happened. Energy prices have always gone up, and depending, of course, on oil and gas prices. But the real breakthrough in energy costs actually happened about 10 years ago with the shale revolution. That brought down the price of gas—not just in the US, but internationally—tremendously. Look, the whole green agenda has a religious—it’s a belief system. It’s not a rational cost-benefit, policy-driven agenda. It is a very doomsday, end of the world-driven philosophy. People think that only wind farms and solar panels can save us from doomsday. It’s this kind of blinkered, fearful assessment, and it’s difficult to even discuss these issues rationally with believers. It’s very difficult even to have a rational debate about this. As I said, in Europe, all parties more or less are saying the same thing, so there is no proper debate or proper discussion about the pros and the cons. And this is only beginning to change because of the pain and the economic hurt and the security situation. So it’s only beginning to change now, but there has never been a proper discussion about the pros and the cons, and anyone who dared to say the things I’m saying, or my colleagues are saying, they were then decried and pushed to the fringes as climate deniers and being in the pocket of the fossil fuel industry and all these kind of attempts to shut down any proper debate. And that has led to this almost all-party consensus all over Europe, where everyone is saying the same thing. And no one is saying, Hold on, where are the emperor’s clothes? Is this actually working? That is part of the problem, the lack of a proper debating culture. This is obviously affecting now all institutions in Europe and in the Western world, this cancel culture mentality. But that causes often these political problems, that there is no proper debate, no proper scrutiny, and everyone is going just like a herd into one direction.

Stephan Livera:

So Benny, as you were mentioning earlier, there are the green believers. And so they might come back to you with arguments saying, Batteries are coming, and batteries are going to become cheaper. Or they might say, Look, over time, look how much the cost of wind and solar is coming down. These are the typical arguments you might hear if you talk to somebody who is from that viewpoint. How would you respond to those kinds of arguments?

Benny Peiser:

Well, first of all, you have to look at the situation and compare the current situation with the predictions they’ve made in the past. As I said, costs have come down over the last 20 years, but they’re not coming down very much more, particularly not for wind. And the inherent cost of growing wind is underestimated. What happens if a national system is overwhelmed with renewable energy is that the whole system becomes destabilized, because once wind is the predominant energy form, all other forms of energy will be pushed aside and will no longer run economically. So as I said, the gas-fired power plants or the coal-fired power plants will have to be subsidized just to keep running, because they will not no longer be profitable on their own. They will only be used when they are needed, when there’s not enough wind—that is extremely costly. These costs are never taken into consideration when looking at wind or solar. If you add those costs to wind, then the costs are not low. Then they’re very high, because of these backup systems that are required. Batteries are another story. Because, of course, if you had batteries, then you wouldn’t need the backup. Then you could store the energy for the windless days or the night. But these batteries are nowhere near, and where they exist, they are not only very expensive, but they store so little energy—for a few hours, and that’s it. So I don’t see any real prospect of large enough and economically sustainable forms of batteries anytime soon. That is still pie in the sky. That’s a big problem for renewables and for the whole energy system, as I said, because the more renewables you have on your system, you are essentially making everything else uneconomic, unprofitable. That’s the problem of the renewable. If you have 10%, 20% renewables, you can just get away with it. But if you have 50% renewables, all the other forms of electricity generation become unprofitable, because on a windy day, you have to shut down your gas power plant, you have to shut down your coal-fired power plant. You have to shut down everything else, because everything is driven by wind.

Stephan Livera:

I see. And that’s just because of the way the energy grid works, that you need to bring one down and while you bring the other up, and as you were saying, having to turn off and on, off and on the coal and the gas plants makes them uneconomical. When, if we were to use those more as the more predominant forms of energy, then they could be run economically and thus bring the overall cost of energy down. Is that how you would summarize it?

Benny Peiser:

Not only that, we actually published a paper showing that if Britain had continued its move towards shifting from coal to gas and shifting and building more nuclear, a combined nuclear-gas power system would be cheaper and would reduce CO2 more than the current form. Because the other thing that people don’t understand is, if you use gas-fired power plants on and off as backup, they actually emit more CO2 than if you run them efficiently 24/7. So the current system of running gas-fired power plants actually emits more than if you would run them 24/7 without the on and off and on and off. So even if you think it’s important to have an energy system which reduces CO2 emissions, a gas to nuclear energy system is more efficient and less carbon-intensive than the current one, which is a mix of renewables, coal, and gas.

Stephan Livera:

And there’s also an everyday cost even on their goods and services. Let’s say there’s a manufacturing industry in the country. If energy cost is going up because of all the renewable craze, then it might price out a lot of the manufacturers who might have otherwise been able to profitably be manufacturers in that country. So driving that business somewhere else.

Benny Peiser:

Well, you see, this is the other irony. The Europeans are proud to say how well they have decarbonized the economy, but what they have done essentially is to shift a lot of the heavy industry and manufacturing to low wage cost countries like Asian countries, China in particular. So a lot of what we use is actually produced abroad, and we don’t include the emissions that we import. We’ve only shifted the manufacturing to another destination, but the CO2 emissions are still the same, perhaps even higher because perhaps some of the environmental regulations in China are less than they are in Europe. We import the products, but we also import the CO2 emissions without, obviously, acknowledging that. So if you buy a television or you buy any product built in China, in all likelihood, the energy that went into building that product was mainly coal. And the emissions in building a product were emitted in China. For the atmosphere, it makes no difference whether the emissions are emitted in Britain or in China—it all goes in the atmosphere. But we then claim how green we are because we are not emitting the CO2, but we ignore that the stuff we actually buy and consume and import is being produced in a high-emission country. So as you said, it doesn’t actually make sense to just outsource our manufacturing for these green reasons, because the emissions are going up in any case.

Stephan Livera:

Yeah. It’s almost like the everyday person’s version of what the rich celebrities do when they fly to the World Economic Forum or Davos or something in their private jet and say, Oh, well see, I purchased this offset so that makes it okay. But it’s like a similar version when everyday consumers are just buying products that were made in China and then the emissions of that are just being done in China instead of locally in their country, or whatever country. And so I think part of that is almost like the culture that we are living in now, that it’s so difficult to just openly reject that thesis and just openly say, No, we are doing something that’s good for humanity. It’s almost like so many companies, entrepreneurs, people, they sense this need to virtue signal about it. And even countries like China and others, when they’re talking about what are the countries going to do? They almost make these overtures about, Oh look, yeah, even though in reality, they’re still doing a lot of coal—because they have to, and as they should be—but they still make this overture about, Oh see, we’re going renewable guys. We we’re trying to be good too.

Benny Peiser:

Yeah. This is, as I said, a very strong belief system that you have to adhere to if you don’t want to be attacked by the mob or the blob or by campaigners. And so a lot of countries and a lot of businesses do this greenwashing, and some are doing it more successful than others. But my guess is that the mood is shifting. People are becoming more worried about the cost of this virtual signaling, because, as you said, the costs are going through the roof and people are struggling to heat their homes. And once that happens—I mean, we’ve had two or three generations of welfare state—that is beginning to look very, very fragile now that inflation is going up, costs are going up.

Stephan Livera:

Now also related to the—some of it is greenwash, as you were saying—but I think it comes back to some countries are going to have to be more pragmatic, and maybe the richer ones can afford to play that game for a little bit longer. But there will be countries that just want to bring people out of poverty. And I think that’s part of what, as you said, will cause the Net Zero agenda to crash. I think it might be a good time to bring up the Bitcoin aspect of this also, because in the Bitcoin world, there’s a lot of discussion around, How should we consider the economic impact of Bitcoin’s proof of work system? And so there’s discussions saying, Oh, look, see the Bitcoin miners are boiling the oceans. So there’s almost this narrative within some of the Bitcoin circles of people who are saying, Look, it’s encouraging renewables and we should try to pander to the ESG narrative. And on the other hand, you’ve got those who are saying, No, outright reject the ESG narrative. That we should be openly saying, We want to use more energy, and that’s a good thing for humanity, that’s part of what keeps Bitcoin secure—and that’s the important part. So I wonder your thoughts as well on where we are going with the so-called ESG narrative that, as the Net Zero agenda crashes, let’s say the real cost starts to become apparent for people. Will the world shift back to saying, Actually yeah, coal, natural gas, nuclear, maybe hydro—these are the forms of energy that the market will be choosing, and we should be okay with the market choosing that?

Benny Peiser:

Well, it’s difficult to predict, but in all likelihood, countries will begin to prioritize energy costs and energy security over the Net Zero targets. China is doing that anyhow. India is doing it—most developing countries. They have no option than to focus on cheap, reliable, affordable energy. They want to raise hundreds of millions, billions out of poverty—that’s what they need. And that’s at the core of the international conflict between the West and the developing world—always has been—that the developing world has never agreed to any binding targets. And they always said to the West, Look, you’ve become developed, wealthy, on the back of cheap energy. Now you want to prevent us from using cheap energy—we’re not doing that. So there’s no question this will continue. Whether some of the Western nations will be able to actually come back to a rational form of energy policy, which would require a cost-benefit analysis, we’ll have to wait and see. Everyone is battling, and parties are deeply divided over this. Particularly, conservative parties are beginning to fracture over this green agenda. But there are alternatives that can do both: can be cleaner, greener, low carbon forms of energy generation that are a real alternative to the obsession with renewables. As I said, if the world were to go for more nuclear and more natural gas, rather than coal, for instance, particularly in more developed countries, that would be more efficient than going for the renewables, which come with all sorts of unintended complexity issues, cost issues. So I certainly think there are alternatives. Other countries might have to still rely on coal, because they are sitting on huge amounts of coal—and also the energy security issue. China, for instance, is not blessed with a lot of resources, but they do have coal, and they don’t want to become entirely dependent on Russia for their energy security, or the Middle East, for that matter. So China will continue using coal, as will India I’m pretty sure, for both economic and energy security reasons. The good news is—and we haven’t even mentioned that yet—is it would appear that the predictions of climate disaster and accelerated global warming have been exaggerated. And that the reality is that the climate warming is at the low end of the IPCC scenario. So the warming trend over the last 30-40 years is much lower than most models had predicted. So the warming is at the low end of the predictions, which I think is good because it gives us more time, and governments also more scope, to readjust and reassess and to revise policies accordingly. But that realization hasn’t yet turned into a consensus among the officials. The reality is, if you look at the climate warming trend over the last 30-40 years, it’s much, much lower and much slower than most models predicted. So that’s the good news, which will allow governments to slow down some of the policies they’ve adopted, and are not able to sustain politically or economically,

Stephan Livera:

Right. And speaking of government responses and policies, another thing that I’ve seen—I believe Net Zero Watch has commented on this also—is: so what we’ve seen recently is these very high energy costs in the UK, in Britain, particularly, and some gas producers have been potentially about to go bust. And basically it looks like Boris Johnson—there’s been talk about trying to bail these companies out. And you and Net Zero Watch have commented that this is more like a short-term band-aid than really a long-term fix. Could you just elaborate a little bit? What’s the story with that?

Benny Peiser:

Well, this is about energy suppliers, not the oil and gas producers. It’s not about the BPS or the Shells of this world—it’s about suppliers. So companies that supply your network with gas or electricity. And because there is a price cap—which another crazy idea which distorts the market—but there’s this price cap. So these suppliers have to buy the gas on the market for the market price, but they are not allowed to pass this on to consumers because there’s a cap of what they can charge consumers. Now that has driven 40-50 companies to bankruptcies, or they’ve all gone under. And those who are still surviving obviously would go under if they weren’t bailed out. And in effect, the government is bailing them out by handing over billions of pounds and saying, Okay, we are giving you that money, but you are not allowed to charge that right away, and we are giving this as a loan. You have to pay it back—this is unlikely to happen, because the companies will say, Well, in a year’s time or in five year’s time, if we have to pay those back we’ll have to raise energy prices, which would be very unpopular. But anyway, they’ve given them basically this hand-out called a loan. And the idea is that the companies will not charge consumers that amount of money, that they will get loaned by the government, which comes to about £200 per household on average which they will not charge, because they get the money from the government, but they will then try to call back in the next five years. So instead of paying it this year, consumers will then have to pay it over the next five years. That’s the idea. But it’s all complete nonsense, because it doesn’t actually address the underlying problem of the energy crisis. Part of the problem is that the subsidies for renewables, for instance, the £11 billion that I mentioned before, part of them will have to be paid by consumers through their energy bills. So you could theoretically reduce the energy bill cost or the burden by simply eliminating the green subsidies. Okay, so there’s a legal obligation, obviously. So the government could theoretically buy them off or take them into taxation and eventually eliminating them, but they would reduce the burden, the cost tremendously, by simply saying, We are no longer paying any subsidies for energy—full stop. And you have to stand on your own feet like any other company. You have to run and you either swim or you sink. This is normally how free markets work, because then you have competition and innovation, people trying to outcompete each other and bring down the cost and make your product more competitive and more attractive—none of this is working in the energy market. So the government is propping up these remaining suppliers, handing out billions, in the hope that in a year’s time this will somehow go away. Which is completely naive, because they will come back. This is just for one year. So next year we’ll have the same situation and the companies will say, Well look, unless you give us another £6 billion or whatever, we’ll have to raise price again. So it’s a vicious circle, and the government is incapable of addressing the underlying problems.

Stephan Livera:

I see. And so one other aspect I’m curious as well, why aren’t we seeing more of the fossil fuel companies actually push back on this? As opposed to try and do this whole British Petroleum becoming Beyond Petroleum and so on—this kind of marketing. Is it the climate? Is it the culture? Why aren’t they just giving a more of a strong pushback here?

Benny Peiser:

Because they are under enormous pressure from the government, essentially. Forget about the campaigners—they can live with green campaigners, that’s basically part of the business environment, that you have to confront campaigners. But no, it is the government and institutions and pension funds and so on who are demanding these changes. It’s essentially driving these companies into private hands, because eventually only the big oil majors of China, Russia, and Iran and the Middle East will survive. Western oil companies will have to basically sell off. They can’t survive that kind of political government pressure. It’s all the government driving this, and they are threatening them with all sorts of measures if they don’t take these actions. So it’s, again, something that is entirely driven by policies. And of course, many companies also have boards that have become much more activist. A lot of well-off investors think—either because their kids are driving them or they think they look good—if they become activists. So there’s also this new phenomenon of activist investors and activist shareholders who think they look good if they do push these populist or green agendas. And these companies have boards, and on the boards you have people from the banks, you have people from pension funds, from universities, whatever. And this green agenda is almost like a cult. It’s very, very difficult to stand up and say, Hold on, this is crazy from an economic perspective. They’ll say, What are you saying? We need to save the planet—it’s more important than your profits.

Stephan Livera:

Okay, Benny. So let’s just summarize a few of the points that we’ve spoken about. So there’s this Net Zero movement out there. They’re trying to “decarbonize” the economy. But when you really zoom out and look at the overall costs of this, it’s actually a bad thing for the average person and for the economy and for just people’s wellbeing if they’re having to make these decisions between heating their home and eating. And we’ve spoken a little bit about some of the influences, so things like government regulation, government subsidies, this ESG box-ticking exercise, ESG culture, if you will, that you’ve also pointed out that there’s a hope for optimism here, that the cost is potentially going to force people to really reconsider at some point. And so that this Net Zero agenda will eventually crash. So just for a final closing comment for listeners, if you had to leave them with a message, if they want to help or if they want to get involved in some way, how could they get informed or get involved in some way?

Benny Peiser:

Well, Stephan, thanks for having me on your program. Basically these are highly complex issues—very, very complex, very difficult—both the climate issue as well as energy policy. People interested need to be properly informed. And that does require, unfortunately, that they read up on these issues. Because they are difficult to understand. You need some time to read up, to understand the pros and the cons, because that’s required to come to a rational decision or rational debate. You really have to fully appreciate that whatever path you choose in economics and in your life, there are pros and cons, and you have to weigh them up. And you have to weigh up all the benefits and all the costs. And only when you are able to do that, you can come to a more reasonable approach. It doesn’t mean that it’s always the right one, but it’s more reasonable because you’ve at least weighed up the arguments in favor and against. That I think is missing, because it’s become too almost religious, this issue—too dogmatic. And that’s what we are trying to achieve, at least for those people who are interested in a proper debate and a proper discussion, a proper scrutiny of these issues. We want to provide our readers with all relevant information so that they can make up their mind on the basis of the most relevant facts. That’s what we are trying to achieve at Net Zero Watch. And as I said, we’re working with a few dozen MPs who are beginning to realize they have a problem on their hand, and they need to look more into it. There is no clear path, and it would be foolish to claim that there is a clear path. But as I said, there are alternative options that are potentially more cost-effective and can achieve better outcomes. We have to look at them. We have to see, for instance, how we can bring down the cost of nuclear, which is still far too expensive, but which is certainly the future of the global energy market. It’s just question of time, whether it’s in the next 50 years or the next 70 years, nuclear will play an increasingly important role, but it has to be cheaper than it currently is. It also, again, comes down to regulation and regulatory costs, but anyone interested in these matters whether it’s climate, whether it energy and energy policy, they can happily come to our website or subscribe to our newsletter and get the information that they normally don’t get in their newspaper or on the BBC.

Stephan Livera:

Fantastic. So listeners check out netzerowatch.com and Benny, thanks for joining me.

Benny Peiser:

Thanks, Stephan, for having me.

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