Despite the dream of alternative energy, oil is stilll a big part of future

There are several challenges and contradictions facing the transition to cleaner energy sources, suggesting that oil will continue to be part of the future energy landscape.

IEA's Contradictory Calls: The International Energy Agency (IEA) issued contradictory statements about the need for new oil and gas exploration. While initially stating that alternative energy sources were rapidly taking over, the IEA later called for increased exploration due to tight supply and rising demand. This highlights the complex and unpredictable nature of the energy transition.

High Costs in Wind and Solar: The wind and solar sectors are facing challenges due to high costs of raw materials and project development. Wind developers are urging governments to increase subsidies as wind power projects struggle to turn a profit. Solar, while currently affordable, relies heavily on cheap Chinese solar panels, which is a concern for European panel producers.

Electric Vehicles and Heat Pumps: Electric vehicle adoption faces hurdles in the U.S., where EVs are struggling to sell, and in Europe, where competition from cheap Chinese EVs poses a threat. Even heat pumps, promoted as a key element of the transition, face obstacles, with concerns about increased costs due to the EU's ban on fluorinated gases used in heat pumps.

Transmission Grid Expansion: The transition to distributed power generation requires a significant expansion of electricity transmission and distribution grids. The IEA estimates that grids need to grow by around 2 million kilometers annually to 2030 to accommodate this distributed power, with permitting and cost challenges ahead.

Political Shifts and Rising Costs: Some political leaders in Europe are reconsidering their net-zero plans as the economic burden on citizens becomes evident. Revisions to targets and policies, such as delays in banning ICE car sales and changes to gas boiler phaseouts, reflect the growing recognition of the transition's costs.

Overlooking Transition Costs: The the transition narrative often glosses over the costs, focusing instead on EV sales, green jobs, and climate goals. The concentration of green jobs in specific regions and the potential job losses are not widely discussed aspects of the transition.

Source: OilPrice.com “Wind And Solar Dreams Clashing With Hard Economic Facts”