This article is taken from the October 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

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Small misperceptions of value create opportunities for those seeking to profit from eventual market corrections. Such minor prospects are common — but extraordinary opportunities are offered by gross misperceptions. However, they are very rare. Nevertheless, they do exist, and we are living through one now: a deep, widespread error in global understanding of investments in and policies relating to the provision of fuels.

This has resulted in a drastic overestimation of the viability of renewable energy, and an undervaluation of fossils and nuclear. Contrary to popular opinion, renewables have no future free of subsidy. Paradoxical though this seems, they are harming worldwide climate policy.

Conventional energy remains essential for the creation and maintenance of human wellbeing, and thus there is a strong case for a green short, driven by individual profit-seeking, yes, but also with the aim of replacing counterproductive wind and solar-based low-carbon policies.

The opportunity for a virtuous short arises from the most unrelieved uniformity of opinion in the West (Asia is different, of course). Indeed, the imperative to adopt renewables has been so often repeated that it is now a primary and unquestionable assumption in the Western financial and political worlds.

Even those with the necessary education struggle to break free of this groupthink, and fewer still feel sufficiently secure to speak out. This isn’t surprising, since the penalties applied to dissidents are brutal (we know of a London fund manager who was demoted for expressing his doubts about offshore wind).

To borrow from The Matrix trilogy, the orthodox blue pill is everywhere, ensuring conformity and obedience to perceived group-wide beliefs. Yet, funnily enough, the transformational red pill is also everywhere, right in front of our eyes — though sadly in a cognitive blind spot — and unlocks straightforward, robust reasoning grounded in fundamental physics. It can be encapsulated in a single sentence:

Atmospheric winds and solar radiation at the surface of the earth are of high entropy and low free energy, rendering them incapable of the work required by the modern world.

What does that mean? As plentiful and appealing as wind and solar may be, these sources and the physical processes that comprise them are highly disordered, with very little free energy, making them all but incapable of doing useful work. This is the reason there are no organisms that derive their metabolic energy from wind, a truly notable fact given the widespread availability of this fuel at temperatures that are unthreatening to organic tissue. Plants do use solar radiation — narrow bands collected by specialised cells — but their needs are modest. Tolkien’s Ents are a fiction; trees cannot move rapidly or engage in rational thought.

Wind and solar flows are chaotic, whereas oil, coal and nuclear fuels are very richly ordered, low entropy states of physics, with high levels of free energy. They therefore have a far greater potential to do work and create the improbable states of the world that we call wealth.

They are also difficult sources for biological organisms to use, as the temperatures involved are destructive of tissue. But humans have accumulated sufficiently complex sciences and technologies, which are also improbable states of physics, to enable their use. Only such fuels can serve human requirements and create prosperous civilisations.

A greenhouse gas reduction strategy must respect both the climate and human flourishing

To turn our backs on this achievement and to try to rebase our societies on high entropy, low yield fuels is bizarre. It is also a very bad climate policy, putting emissions reduction on a collision course with human wellbeing. We need a better greenhouse gas reduction strategy, one that respects both the climate and human flourishing.

To the naive observer the term “green energy” is seductively inoffensive, but it conceals a dark truth. Because of the diffuse and disordered character of both wind and solar flows, collecting, converting and delivering this energy is extremely capital intensive.

In essence, all the real capital entailed — the vast wind turbines and extensive solar panel arrays, the web of grid cables, the batteries and the complex system-balancing tools — is needed to correct the disordered nature of the input fuels, wind and sun, and produce an orderly and regular supply of electricity.

The burden of turning disorder into order makes renewable electricity systems vastly less productive and much more expensive than a conventionally fuelled generating capacity.

Such green technologies impose costs on consumers and taxpayers that will significantly reduce standards of living, with the consequence that all such investments are extremely high risk. Distressed correction is very probable, and, we think, inevitable. Few appreciate that betting against thermodynamics in favour of weak, high entropy fuels is foolish and will no doubt be a time-limited enterprise.

For example, in August 2022, Paul Krugman welcomed the climate policies of President Biden’s Inflation Reduction Act (IRA) in the pages of the New York Times with the rhetorical question: “Did the Democrats Just Save Civilisation?” That such a headline could be published by so canny an economist, and with so little qualifying irony, is a clear index of just how unhedged if not unhinged discussions of energy policy have become.

Invoking the poetic vision of W.B. Yeats, without high quality energy “Things fall apart”; the centre cannot hold. All complex systems require maintenance; a neglected machine will wear and break. So, too, will economies and societies. From this perspective, the Inflation Reduction Act and the renewables it subsidises are a threat to human wellbeing, not its saviour.

Nothing has changed in the last two years. Indeed, the prejudice and misconceptions favouring renewables have grown deeper. The UK now has a government that is committed to an overwhelming further expansion of offshore and onshore wind power and yet more solar, whilst being at the same time positively hostile to gas generation and only lukewarm about nuclear energy.

In the United States the possibility that Kamala Harris will become president suggests the policies initiated by President Biden could be reinforced. Harris’s choice of Tim Walz as her running mate is a crucial indicator. As governor of Minnesota, Walz last year enabled legislation that will require the state’s electricity generators to be 100 per cent low-emitting by 2040. He also shortened the energy permitting process to enable rapid construction of renewables, even signing the latter into law whilst on a visit to a wind farm. The optics of the message could not have been clearer.

This naive enthusiasm for renewables persists in the face not only of physical energy theory, but also negative empirical economic experience, particularly in Europe where the costs to consumers have been vast. There has been no trend towards a significant fall in the capital, operating or system management costs of wind and solar.

On the contrary, green power remains stubbornly costly to the consumer. But the green juggernaut is now beyond rational audit. The governmental organisations of the West have taken the first step, and they will take the last.

How can we all have got renewables so terribly wrong? The answer probably revolves around our deep cognitive biases and intuitions about energy. Natural selection has equipped us with a wealth of mental structures to navigate the world, and as early as infancy these strong, factory-fitted intuitions guide our decisions. But our “folk physics”, as such intuitions are termed in cognitive science, don’t appear to include anything like a modern concept of “energy”, much less thermodynamics. That is, we are born more or less “energy blind”.

Of course, we have some notion of energy, or rather of its consequences, but we have very little understanding of energy in the sense employed by natural science. That isn’t surprising, since the modern, abstract, sense of “energy” is a recent concept, appearing only in the mid-19th century.

Our energy blindness can be disastrously misleading. When making the most momentous decisions about our fuel supply, it appears that our reasoning has been hijacked by intuitive notions, such as those of purity and contamination, not scientifically-anchored thermodynamics. Oil is dark, faecal-looking, and suggestive of decay. Eww! Coal is rock-like, dirty and non-comestible. Yuk! Nuclear conjures thoughts of disturbing mutant frogs. Gross! But breezes are refreshing and cooling, and sunshine warms the body and lifts the spirits. Ahh! Fossils and nuclear are being irrationally cast aside and stigmatised in part because of our primitive disgust psychology.

There is also intense social-coalitional pressure. If the received wisdom is that wind and solar are virtuous, and fossils and nuclear are evil, then few will take the risk of resistance. Moral majorities can be dangerous — ask Galileo or that humiliated fund manager we mentioned earlier. Our limited intuitions about energy, our disgust psychology, and our tendency to submit to socially approved norms appear to be guiding decisions regarding climate, emissions and fuel policies.

These are all processes derived from what Daniel Kahneman’s book, Thinking, Fast and Slow, has made famous as the impulsive and automatic approach of the mind’s System One. If ever there was a need for the deliberate, careful and laborious consideration of System Two, it is when designing energy and climate policy.

Only the operation of a minority of imaginative and informed market players betting against the policies, and misinformation that supports them, can now deal with this problem. Ruthless though it will seem, such action is critically necessary if human beings are simultaneously to thrive and address climate change. The Big Green Short would be a luminously good deed in an increasingly dark and foolish world. Is anyone up for the job?