PM GoldFix: Grants on Biden's Energy Transition Problem
“I don’t think that the market has come to grips with it because I don’t think the market comprehends how physical and tangible the world actually is.”
“Reworking the global energy system is the single largest, most far-reaching industrial activity ever proposed,”
Grants Interest Rate Observer
Having read the most recent Grants IRO, there were two pieces that stuck out. The first one on interest rates was top notch. The second one on the reality of Net-Zero Energy was also very interesting, especially in light of some recent research we’ve seen and will share in coming days. It seems the banks are now coming around to how expensive Net-Zero would be in inflation terms. Jim Grant certainly is
Here’s our summary of that second part, with considerably more at bottom.
The Challenges of Achieving Net-Zero Emissions by 2050
From energy production to everyday items, Energy transition affects all aspects of life. Understanding and addressing the complexities of emission-free production, transportation, and inflation will be crucial in successfully overcoming these challenges.
President Biden’s Energy Problem
President Biden's ambitious goal of achieving net-zero emissions by 2050 aligns with the Paris Accords. However, the U.S. still heavily relies on oil, gas, and coal, which accounted for 79% of energy production in 2021.
To meet the deadline, a significant shift towards wind and solar power is necessary, aiming for a capacity of at least 70%, up from the current 25%. Additionally, updating the outdated electrical grid to accommodate intermittent and remote sources of power generation is a massive task requiring substantial investments.
Where Would You Start?
Everyday items, such as a simple ceramic coffee mug, have intricate supply chains with various carbon-intensive processes. Making such items without emissions poses challenges.
For instance, creating an emissions-free coffee cup requires new ceramic kilns that don't rely on natural gas. Similarly, producing gas-free fertilizer for coffee beans would involve new factories producing "green" ammonia using renewable hydrogen and electricity. However, developing and scaling these new methodologies present significant obstacles.
Continues at bottom…