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Why Net Zero Will Never Happen
the essential costs that nobody ever talks about
Tim Vollans
September 27, 2023 • Estimated Reading Time: 6 minutes
Why Net Zero really isn’t viable plus
Homebuilders finally getting whacked by rising mortgage rates & an unintended consequence of EV popularity…
🧠The Big Brain
Net Zero Will Bankrupt Us
Not sure there’s a more emotive topic than Net Zero right now. Guaranteed to divide a room.
If you’re permanently online, you’re in one camp or the other.
It’s non-negotiable. The planet’s dying
It’s nonsense. Studies proving that homeopathy is effective are more reliable than this ‘science’
Or at least, those are the climate narratives we’re sold every day.
And the social media ‘discussions’ are pure dumpster fires…
Most people know there’s a huge middle ground in between those two positions, but like so many heavily politicised issues, it’s hard to have an honest, open conversation.
So we’re gonna do that now. Starting with the actual issue…
See, while everyone argues about wind, solar, nuclear or whether carbon emissions are even the right thing to measure, there's one thing that regularly gets left out of the conversation.
The electrical grid
Everything that will reduce emissions involves producing and delivering electricity to replace the fossil fuels.
Vehicles burning petrol & diesel? Electricity fixes this.
Gas boilers to heat your home? Electric heat pumps fix this.
The problem is that these two things are the majority of our energy demand…
Generating the electricity is only the first part of the problem. The bigger issue is figuring out how to deliver it…
Upgrade the grid, duh!
I’ll rephrase. The bigger issue is the cost of upgrading the grid. And this is an issue for every country, regardless of their chosen energy source.
‘Research’ like this doesn’t help…
Genuine University of Oxford research…
All we need is a little ambition , guys! Positive vibes and magical thinking. Ignore the fact that these are both intermittent energy sources and we have no reliable way of storing the energy they generate.
The COST of this plan further undermines that argument. The comments are often the best places to find gold:
Have you read it? And were you sober?
This calls for 658GW of offshore wind. We currently have 14GW. You think 47x more offshore wind is reasonable? We would need to build 25GW of offshore every single year for 24 years.
Where would it go? There are only so many suitably windy areas, nearly all in the East. And the deeper and further we go the more expensive it gets, and it's already expensive. The report says all 25m+ offshore.
Even at Dogger prices, that's nearly £2 TRILLION in offshore wind alone.
And how would be handle all that capacity? It's costing us £54bn to upgrade the grid to handle 36GW more of offshore. How much to handle 644GW more? At the same rate that's another £900bn.
This might be the most insane fucking thing I've ever read on energy policy.
One thing we’re expecting to see more of is this:
Small modular nuclear reactors to power data centres (and potentially more) for big companies.
Corporate energy independence.
Maybe once big tech does it, policymakers will realise they need to be spending more on nuclear and upgrading grids than wind farms.
âš¡ The Spark
Rising Borrowing Costs Start to Weigh on New Home Sales
Higher mortgage rates have finally hit homebuyer demand. We questioned the wisdom of buying homebuilder stocks five months back, and again when the WSJ ran with this headline:
That pretty much marked the top for the sector…
So why does it suddenly matter? Because the key risks have materialised:
Signs of a genuine credit crunch, a re-acceleration of inflation, pricing out of 2023 rate cuts and/or long rates moving higher are key risks to a sector pricing something close to perfection.
Mortgage rates are well above 7% now and there’s little sign of them falling in the near future.
For the average lender, a top tier 30yr fixed rate is now over 7.5% for the first time in at least 22 years
Wells Fargo note how the pressure is building on homebuilder margins. More incentives & discounts are required to shift homes…
In order to reinvigorate buyer interest, builders may be furthering the use of price discounts.
As of August, the median new home price has declined 2.3% on a year-over-year basis.
The September NAHB homebuilder survey found 32% of builders reported offering price discounts, up from 25% in August and the highest share since December 2022.
And the idea that higher interest rates are here to stay is likely to put homebuyers off from even looking.
💡 The Lightbulb
Costs & Unintended Consequences
One thing that the energy overhaul guarantees is change. Which is a nightmare for insurance companies trying to price future risks & costs…
One example to get the brain whirring:
Can you all stop buying expensive EVs please? You are driving all of our car insurance premiums through the roof, should we own one or not, based on the costs of EV repair or replace should we ding you.
— Polemic Paine (@PolemicTMM)
3:42 PM • Sep 26, 2023
Insurance premiums for Electric Vehicle owners are already higher. Now insurers have to consider the premium non EV owners should pay because there are so many more (expensive to repair) EV’s on the road.