Hoping for the death of fossil fuels? Be careful what you wish for…
Fossil fuel usage is such a massive part of the landscape that it’s hard to imagine a life without it. Many dream of that day and for them it can’t come soon enough. If there was a new technology announced that would be available tomorrow that would render fossil fuels obsolete overnight, would you be dancing in the streets along with Greenpeace?
Well, you might want to think about that for a second. Actually it’s worth considering the whole transition away from fossil fuels and what that might entail. It’s not as rosy and clear cut as you’d think, even if you hate the stuff. I know, I know, I wrote a blog recently about moving to solar. I think that is coming, but not for a good little while. We should all hope for a gentle transition, even solar’s biggest groupies…
The first thing that would happen after the announcement would be a purely natural phenomenon, as natural as fall leaves changing colour: Wall Street would snap into action and lay waste to anything in its path, converting mayhem into vast profits. That is, they would instantly destroy any stock that might fall in value if oil was obsolete, and they would make money off anything that might benefit from the change. Faster than you could blink, which is a big problem. Two things would happen immediately: the stock price of the company that developed the technology would go through the roof, and the stock price of pretty much everything else would go to zero, or close enough not to matter. The average person might enjoy watching Wall Street’s famed bloodsuckers getting thrown around like a chicken in a hurricane, but the laughing would stop at what happens next…
When the stock values of all the energy companies go to zero, a lot of pension funds out there would see a good chunk of their value vanish instantly. So that would in a heartbeat cause chaos for pensioners, governments, and lord knows who else, whoever owns stock directly or indirectly in energy companies. Pretty much anyone expecting to collect a pension would be impacted.
On the same day, the debt of many energy companies would become worth zero as well. This is not incidental. Energy companies borrow a lot of money for infrastructure, well drilling, you name it. Anyone with savings may have lent money to these firms, including as pension funds yet again, private investors, etc. They would be wiped out. And if the debt they held was used as collateral to buy something else, those funds might be in jeopardy too. It would be a quick and deadly chain reaction.
Next would be the legions of people that would become unemployed almost instantly, with not much in the way of short-term job prospects. The new disruptive technology may or may not offer a lot of employment opportunities, but in the short term, not much at all. So hundreds of thousands of people, probably millions worldwide, would be thrown out of work.
It would be utter chaos, because no matter how beneficial the new technology was, it would take time for the infrastructure to be built to optimize it. If it was cold fusion, the world would need cold fusion reactors to be built. If it was some amazing battery, same – it would take a while to build and distribute them all, and make everyone’s power systems work with the new stuff.
The only way a new breakthrough technology could be implemented would be through careful central planning, meaning an active role for government to ensure a smooth transition. Now if that doesn’t make you quake in your shoes, nothing will…
So we’d get clean energy, AND boomers pensions would be effected negatively?.. And the downside is?
The same arguments were made in the US about abolishing slavery, that it would shock the economy because too much of the countries productivity relied on slave labour. We should make a slow transition too no slavery said the Republicans .. typical. Abraham didn’t have a bar of it, and he stopped it in it’s tracks because it was morally wrong to keep doing it. (hint hint) After that the industrial revolution started..
Wow did not see that analogy coming…my central point was that we should hope for an orderly transition as a very quick one could be enormously unsettling and destructive in the short term. If only it was boomers’ pensions at stake…if you recall 2008, the global financial system nearly collapsed when a few Wall Street firms got in trouble. Bailing out Wall Street bothers my ethical senses enormously, but it seems a fair point that doing so prevented enormous financial hardships for millions of people. Same principle here; it is not just boomers’ pensions at stake; among other things government revenues would be decimated while social program costs went up. In the short term. And there is no guarantee new green technologies would thrive in a tattered economy.
Your point stands though about taking a firm stand and doing the right thing. People just need to live that way, and it is happening. You will find elsewhere on the site that I am firmly in favor of a move to sustainable energy sources; I just hope it happens in an orderly fashion. Thanks for the comment.