Why a Great Reset Based on Green Energy Isn’t Possible

It seems like a reset of an economy should work like a reset of your computer: Turn it off and turn it back on again; most problems should be fixed. However, it doesn’t really work that way. Let’s look at a few of the misunderstandings that lead people to believe that the world economy can move to a Green Energy future.

[1] The economy isn’t really like a computer that can be switched on and off; it is more comparable to a human body that is dead, once it is switched off.

A computer is something that is made by humans. There is a beginning and an end to the process of making it. The computer works because energy in the form of electrical current flows through it. We can turn the electricity off and back on again. Somehow, almost like magic, software issues are resolved, and the system works better after the reset than before.

Even though the economy looks like something made by humans, it really is extremely different. In physics terms, it is a “dissipative structure.” It is able to “grow” only because of energy consumption, such as oil to power trucks and electricity to power machines.

The system is self-organizing in the sense that new businesses are formed based on the resources available and the apparent market for products made using these resources. Old businesses disappear when their products are no longer needed. Customers make decisions regarding what to buy based on their incomes, the amount of debt available to them, and the choice of goods available in the marketplace.

There are many other dissipative structures. Hurricanes and tornadoes are dissipative structures. So are stars. Plants and animals are dissipative structures. Ecosystems of all kinds are dissipative structures. All of these things grow for a time and eventually collapse. If their energy source is taken away, they fail quite quickly. The energy source for humans is food of various types; for plants it is generally sunlight.

Thinking that we can switch the economy off and on again comes close to assuming that we can resurrect human beings after they die. Perhaps this is possible in a religious sense. But assuming that we can do this with an economy requires a huge leap of faith.

[2] Economic growth has a definite pattern to it, rather than simply increasing without limit. 

Many people have developed models reflecting the fact that economic growth seems to come in waves or cycles. Ray Dalio shows a chart describing his view of the economic cycle in a preview to his upcoming book, The Changing World Order. Figure 1 is Dalio’s chart, with some annotations I have added in blue.

Figure 1. New World Order chart by Ray Dalio from an introduction to his theory called The Changing World Order. Annotations in blue added by Gail Tverberg.

Modelers of all kinds would like to think that there are no limits in this world. Actually, there are many limits. It is the fact that economies have to work around limits that leads to cycles such as these. Some examples of limits include inadequate arable land for a growing population, inability to fight off pathogens, and an energy supply that becomes excessively expensive to produce. Cycles can be expected to vary in steepness, both on the upside and the downside of the cycle.

The danger of ignoring these cycles is that researchers tend to create models of future economic growth and future energy consumption that are far out of sync with what really can be expected. Accurate models need to include at least some limited version of overshoot and collapse on a regular basis. Models of the future economy tend to be based on what politicians would like to believe will happen, rather than what actually can be expected to happen in the real world.

[3] Commodity prices behave differently at different stages of the economic cycle. During the second half of the economic cycle, it becomes difficult to keep commodity prices high enough for producers. 

There is a common belief that demand for energy products will always be high, because everyone knows we need energy. Thus, according to this belief, if we have the technology to extract fossil fuels, prices will eventually rise high enough that fossil fuel resources can easily be extracted. Many people have been concerned that we might “run out” of oil. They expect that oil prices will rise to compensate for the shortages. Thus, many people believe that in order to maintain adequate supply, we should be concerned about supplementing fossil fuels with nuclear power and renewable energy.

If we examine oil prices (Figure 2), it is apparent that, at least recently, this is not the way oil prices actually behave. Since the spike in oil prices in 2008, the big problem has been prices that fall too low for oil producers. At prices well below $100 per barrel, development of many new oil fields is not economic. Low oil prices are especially a problem in 2020 because travel restrictions associated with the coronavirus pandemic reduce oil demand (and prices) even below where they were previously.

Figure 2. Weekly average spot oil prices for Brent, based on data of the US Energy Information Administration.

Strangely enough, coal prices (Figure 3) seem to follow a very similar pattern to oil prices, even though coal is commonly believed to be available in huge supply, and oil is commonly believed to be in short supply.

Figure 3. Selected Spot Coal Prices, from BP’s 2020 Statistical Review of World Energy. Prices are annual averages. Price for China is Qinhuangdao spot price; price for US is Central Appalachian coal spot index; price for Europe is Northwest European marker price.

Comparing Figures 2 and 3, we see that prices for both oil and coal rose to a peak in 2008, then fell back sharply. The timing of this drop in prices corresponds with the “debt bust” in late 2008 that is shown in Figure 1.

Prices then rose to another peak in 2011, after several years of Quantitative Easing (QE). QE is intended to hold the cost of borrowing down, encouraging the use of more debt. This debt can be used by citizens to buy more goods made with coal and oil (such as cars and solar panels). Therefore, QE is a way to increase demand and thus help raise energy prices. In the 2011-2014 period, oil was able to maintain its price better than coal, perhaps because of its short supply. Once the United States discontinued its QE program in 2014, oil prices dropped like a rock (Figure 2).

Prices were very low in 2015 and 2016 for both coal and oil. China stimulated its economy, and prices for both coal and oil were able to rise again in 2017 and 2018. By 2019, prices for both oil and coal were falling again. Figure 2 shows that in 2020, oil prices have fallen again, as a result of demand destruction caused by pandemic shutdowns. Coal prices have also fallen in 2020, according to Trading Economics.

[4] The low prices since mid-2008 seem to be leading to both peak crude oil and peak coal. Crude oil production started falling in 2019 and can be expected to continue falling in 2020. Coal extraction seems likely to start falling in 2020.

In the previous section, I showed that crude oil and coal both have the same problem: Prices tend to be too low for producers to make a profit extracting them. For this reason, investment in new oil wells is being reduced, and unprofitable coal mines are being closed.

Figure 4 shows that world crude oil production has not grown much since 2004. In fact, OPEC’s production has not grown much since 2004, even though OPEC countries report high oil reserves so, in theory, they could pump more oil if they chose to.

Figure 4. World crude oil production (including condensate) based on data from BP’s 2020 Statistical Review of World Energy. Russia+ refers to the group Commonwealth of Independent States.

In total, BP data shows that world crude oil production fell by 582,000 barrels per day, comparing 2019 to 2018. This represents a drop of 2.0 million barrels per day in OPEC production, offset by smaller increases in production for the US, Canada, and Russia. Crude oil production is expected to fall further in 2020, because of low demand and prices.

Because of continued low coal prices, world coal production has been on a bumpy plateau since 2011. Prices seem to be even lower in 2020 than in 2019, putting further downward pressure on coal extraction in 2020.

Figure 5. World coal production based on data from BP’s 2020 Statistical Review of World Energy.

[5] Modelers missed the fact that fossil fuel extraction would disappear because of low prices, leaving nearly all reserves and other resources in the ground. Modelers instead assumed that renewables would always be an extension of a fossil fuel-powered system.

The thing that most people do not understand is that commodity prices are set by the laws of physics, so that supply and demand are in balance. Demand is really very close to “affordability.” If there is too much wage/wealth disparity, commodity prices tend to fall too low. In a globalized world, many workers earn only a few dollars a day. Because of their low wages, these low-paid workers cannot afford to purchase very much of the world’s goods and services. The use of robots tends to produce a similar result because robots can’t actually purchase goods and services made by the economy.

Thus, modelers looking at Energy Return on Energy Invested (EROI) for wind and for solar assumed that they would always be used inside of a fossil fuel powered system that could provide heavily subsidized balancing for their intermittent output. They made calculations as if intermittent electricity is equivalent to electricity that can be controlled to provide electricity when it is needed. Their calculations seemed to suggest that making wind and solar would be useful. The thing that was overlooked was that this was only possible within a system where other fuels would provide balancing at a very low cost.

[6] The same issue of low demand leading to low prices affects commodities of all kinds. As a result, many of the future resources that modelers count on, and that companies depend upon as the basis for borrowing, are unlikely to really be available.

Commodities of all kinds are being affected by low demand and low selling prices. The problem giving rise to low prices seems to be related to excessive specialization, excessive use of capital goods to replace labor, and excessive use of globalization. These issues are all related to the needs of a world economy that depends on a high level of technology. In such an economy, too much of the output of the economy goes to producing devices and to paying highly trained workers. Little is left for non-elite workers.

The low selling prices of commodities makes it impossible for employers to pay adequate wages to most of their workers. These low wages, in turn, feed through to the uprisings we have been seeing in the last couple of years. These uprisings are part of “Revolutions and Wars” mentioned in Figure 1. It is difficult to see how this problem will disappear without a major change in the “World Order,” mentioned in the same figure.

Because the problem of low commodity prices is widespread, our ability to produce electrical backup of all kinds, including the ability to make batteries, can be expected to become an increasing problem. Commodities, such as lithium, suffer from low prices, not unlike the low prices for coal and oil. These low prices lead to cutbacks in their production and local uprisings.

[7] On a stand-alone basis, intermittent renewables have very limited usefulness. Their true value is close to zero.

If electricity is only available when the sun is shining, or when the wind is blowing, industry cannot plan for its use. Its use must be limited to applications where intermittency doesn’t matter, such as pumping water for animals to drink or desalinating water. No one would attempt to smelt metals with intermittent electricity because the metals would set at the wrong time, if the intermittent electricity suddenly disappeared. No one would power an elevator with intermittent electricity, because a person could easily be trapped between floors. Homeowners would not use electricity to power refrigerators, because, as likely as not, the food would spoil when electricity was off for long periods. Traffic signals would work sometimes, but not always.

Lebanon is an example of a country whose electricity system works only intermittently. It is hard to imagine that any other country would want to imitate Lebanon. Lack of reliable electricity supply leads to protests in Lebanon.

[8] The true cost of wind and solar has been hidden from everyone, using subsidies whose total cost is hard to determine.

Each country has its own way of providing subsidies to renewables. Most countries give wind and solar the subsidy of “going first.” They are often given a fixed rate as well. Both of these are subsidies. In the US, other subsidies are buried in the tax system. Recently, there has been talk of using QE to help wind and solar providers lower their cost of borrowing.

Newspapers regularly report that the price of wind and solar is at “grid parity,” but this is not an apples to apples comparison. To be useful, electricity needs to be available when users need it. The cost of storage is far too high to allow us to store electricity for weeks and months at a time.

If we were to use intermittent electricity as a substitute for fossil fuels in general, we would need to use intermittent electricity to heat homes and offices in winter. Sunshine is abundant in the summer, but not in the winter. Without storage, solar panels cannot even be counted on to provide homeowners with heat for cooking dinner after the sun sets in the evening. An incredibly huge amount of storage would be needed to store heat from summer to winter.

China reports that it has $42 billion in unpaid clean energy subsidies, and this amount is getting larger each year. Countries are now becoming poorer and the taxes they are able to collect are lower. Their ability to subsidize a high cost, unreliable electricity system is disappearing.

[9] Wind, solar, and hydroelectric today only comprise a little under 10% of the world’s energy supply. 

We are deluding ourselves if we think we can get along on such a tiny total energy supply.

Figure 6. Hydroelectric, wind, and solar electricity as a percentage of world energy supply, based on BP’s 2020 Statistical Review of World Energy.

Few people understand what a small share of the world’s energy supply wind and solar provide today. The amounts shown in Figure 6 assume that the denominator is total energy (including oil, for example), not just electricity. In 2019, hydroelectric accounted for 6.4% of world energy supply. Wind accounted for 2.2%, and solar accounted for 1.1%. The three together amounted to 9.7% of the world’s energy supply.

None of these three energy types is suited to producing food. Oil is currently used for tilling fields, making herbicides and pesticides, and transporting refrigerated crops to market.

[10] Few people understand how important energy supply is for giving humans control over other species and pathogens.

Control over other species and pathogens has been a multistage effort. In recent years, this effort has involved antibiotics, antivirals and vaccines. Pasteurization became an important technique in the 1800s.

Humans’ control over other species started over 100,000 years ago, when humans learned to burn biomass for many uses, including cooking foods, scaring away predators, and burning down entire forests to improve their food supply. In my 2018 post, Supplemental energy puts humans in charge, I wrote about one proof of the importance of humans’ control of fire. In the lower layers of a cave in South Africa, big cats were in charge: There were no carbon deposits from fire and gnawed human bones were scattered around the cave. In the upper layers of the same cave, humans were clearly in charge. There were carbon deposits from fires, and bones of big cats that had been gnawed by humans were scattered around the cave.

We are dealing with COVID-19 now. Today’s hospitals are only possible thanks to a modern mix of energy supply. Drugs are very often made using oil. Personal protective equipment is made in factories around the world and shipped to where it is used, generally using oil for transport.


We do indeed appear to be headed for a Great Reset. There is little chance that Green Energy can play more than a small role, however. Leaders are often confused because of the erroneous modeling that has been done. Given that the world’s oil and coal supply seem to be declining in the near term, the chance that fossil fuel production will ever rise as high as assumptions made in the IPCC reports seems very slim.

It is true that some Green Energy devices may continue to operate for a time. But, as the world economy continues to head downhill, it will be increasingly difficult to make new renewable devices and to repair existing systems. Wholesale electricity prices can be expected to stay very low, leading to the need for continued subsidies for wind and solar.

Figure 1 indicates that we can expect more revolutions and wars at this stage in the cycle. At least part of this unrest will be related to low commodity prices and low wages. Globalization will tend to disappear. Keeping transmission lines repaired will become an increasing problem, as will many other tasks associated with keeping energy supplies available.

This entry was posted in Energy policy and tagged , , , , , by Gail Tverberg. Bookmark the permalink.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

2,325 thoughts on “Why a Great Reset Based on Green Energy Isn’t Possible

  1. “The Covid-19 crisis has taken a big bite out of the chocolate market, causing a collapse in demand that has sent cocoa prices sharply lower and created “disastrous” conditions for farmers…

    “The pandemic has already created a crisis for farmers, said Nestor Yao, president of the Capressa farmer co-operative, which represents about 3,200 farmers in Abengourou, in eastern Ivory Coast.”


      • “A global squeeze on disposal income and a lockdown in the key Indian market caused a collapse in demand for gold jewellery in the first half of the year, according to new figures that underscore how record precious metals prices are being driven by demand from financial investors…

        “…weak physical demand for gold was more than offset by record inflows into gold-backed exchange traded funds…”


      • The US government is extending credit to practically every business, including junk rated businesses. The programs were originally scheduled to end Sept. 30. Now they look like they will end December 31.

        • So after Christmas, that’s nice. Unhappy New year!
          Surely the UK will now follow suit? UK furlough due to end in Oct, what’s a couple of extra months?
          Looks like collapse is going to be postponed until next year.
          Fast, what you thinking these days?

        • It sounds like this is another natural gas producer that was having problems even before COVID-19 hit. It sounds like there is a plan for the company to keep operating, after wiping out some of those providing funding.

          • As long as shale oil is thermodynamically providing a net energy return on the energy required to extract, (EROEI) process, and distribute, investors will be made whole by stealth government/FED bailouts. To keep the PONZI finance going, I suspect that the FED will have to even pay a hidden premium for this toxic garbage through some sort of special purpose vehicle (SPV). Of course, it will be argued that these are merely typicsl Buffet-like vulture capitalists who are buying up these distressed assets because they are a “bargain.”

            • “To help ease the economic impact of the COVID-19 crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriated $454 billion to the Treasury Department to support the Federal Reserve Board’s emergency lending facilities.

              “The oil and gas sector, which was already facing serious financial difficulties unrelated to the coronavirus crisis, could be a key beneficiary of this relief… the Main Street Lending Program was established to provide emergency support to small and midsized businesses.

              “Yet after extensive pressure from the oil and gas industry, its allies in Congress, and the Trump administration, the program was changed to scope in heavily indebted oil and gas companies that were struggling well before the current crisis.”


    • According to the article:

      “As oil demand recovers, I expect the international business will continue to be a more meaningful contributor to our revenue going forward,” Chief Executive Officer Jeff Millerwas quoted this week. “North America production is likely to remain structurally lower in the foreseeable future and has slower growth going forward.”

  2. “Covid-19 has sucked up the political capacity of virtually every European nation, leaving every other area of policy playing second fiddle as the world tries to fight this invisible threat.

    “This has created a uniquely difficult problem for Boris Johnson, the UK Prime Minister, who faces the harrowing prospect of two unprecedented crises taking hold simultaneously before the end of 2020.

    “Brexit might not be at the top of anyone’s in-tray at the moment, but the clock is ticking on the UK’s current transition period with the European Union (EU), which allows the UK to operate as though it is more-or-less still a member state while both sides negotiate their future relationship. This expires on December 31.”


  3. “The coronavirus struck at the heart of the British banking system yesterday as it wreaked havoc on the finances of two of the country’s biggest lenders. In a grim economic sign, Barclays has earmarked £3.7billion so far this year to cover the cost of loans to households and businesses turning sour, up £1.6billion since March.

    “And Spanish giant Santander Group wrote down the value of its UK arm by £5.4billion as profits dwindled.”


      • How does a bank cope with a 10.8 billion euro half-year loss, when the worst is still to come, without going bankrupt? Presumably they are being propped up?

        • Santander is an icon of predatory capitalism. Backed to the hilt by the Spanish government, it acquires overseas businesses, drains them of capital, and offers them as sacrifices to the bankruptcy courts. It will not bear those book losses: the taxpayers of other countries will. Score another win for European Union corruption.

      • Covid 19 stopped us burning fuel/consuming energy at an ever increasing rate

        that kicked away the foundations of what money requires in order to exist.

        how difficult can it be to understand that?

        Yet everybody has a different take on it.

        Billions of the earth’s inhabitants no longer possess the means to survive, the rest no longer possess the means to thrive in basic energy terms.

        yet discussions ramble on about putting up sunshades and other nonsense.

        Which is roughly the same as offering a sun shade to a man in the sahara who’s had no water for week

        • The nearest analogy I can think of is The Matrix. No-one wants to take the pill (i.e. accept reality). Almost no-one.

        • A note of positivity here please:

          TSLA shares are up for the year from $234 to $1,487, so that shows that a brave green future awaits us.

          Damn doomers always looking for the bad news.

  4. Almost all commenters here seem to be Boomers…well…
    Bye, boomer: the coming cull of workers over 50
    Brett Arends
    July 29, 2020, 12:01
    Employers seize on slumps to purge more expensive, more experienced workers, study warns
    Uh-oh. Those of us who remember when ’80s music was new had better start bracing ourselves for those big-box-store greeter jobs earlier than we expected.
    It doesn’t take a genius to see that the jobs market is probably heading for a massive, rolling shakeout. And that means plenty of employers may be using the cover of COVID-19 to get rid of lots of expensive older workers
    Age discrimination in the jobs market, which is supposedly illegal, goes up in recessions. Some employers take the opportunity to ax experienced workers who are paid a reasonable wage, and replace them with cheap, desperate kids who will put up with anything
    ……Bottom line: The higher the unemployment rate, the likelier employers are to favor younger women applicants over older women applicants. “All else equal, an older female is 6.8 percentage points less likely to receive a callback when she is competing against two additional younger female applicants, which translates to a 63% reduction relative to the mean.”
    They conclude: “Taken together, our two analyses provide compelling evidence that age discrimination rises as labor markets deteriorate. As far as we know, this is the first direct evidence for age discrimination varying with the business cycle, both for the firing and hiring margins
    ……s Let’s hope when this is all over there are actually some stores left hiring greeters
    Basically, we Boomers are not ready to retire and can’t rely on the financial sector to support us and employers are pushing us out the door with window dressing early retirement offers like those in the Airline Industry….
    If the Airline files for Chapter 1 1, bankruptcy….those packages go into receivership…haha


  5. The French not in on the controlled demolition, apparently. Or could this be a double bluff? Or a smokescreen for an even more devious psy-op? The mind boggles.

    “As concerns grow of a return of Covid-19 in France… the French government is ruling out a nationwide lockdown in the event of the continued spread of the virus.

    “Prime Minister Jean Castex has been clear on this saying that a full confinement must be “avoided above all”.

    “Castex said the shutting down of the country again after the strict two month lockdown between March and May, would be “catastrophic” at an economic and social level…

    ““We will adapt,” Castex said.”

    [Guardian live news]

      • 197 daily deaths in CA.

        how can they possibly cope with such masssive carrrnage?

        same day deaths in NY = 6

        in a couple of months, CA will be there.

        the down slope usually mirrors the up slope.

        • 197 deaths in a day in a population of about 40 million is not a whole lot. California has had 142,821 deaths from all causes on the table the CDC shows https://www.cdc.gov/nchs/nvss/vsrr/COVID19/index.htm, which seems to be from February 1, 2020. So that would be six months time. The next column indicates that actual deaths year to date are 104% of expected deaths, so about 137,328 deaths are expected in a half-year, and 274,656 in a full year. So something like 753 deaths would be expected from all causes, on any given day. The 197 deaths would be a 26% increase in expected deaths, relative to expected.

          When I look at the same table for other states, I see hugely worse death statistics. New York City, for the six month period, is at 198% of expected deaths. The remainder of New York is at 125% for the six-month period. New Jersey is at 144% for the six-month period. Massachusetts is at 124% for the six-month period.

          California got its COVID problems postponed with its early shut down. The problems don’t go away, however. The deaths could start looking like Massachusetts (at 124% for the six-month period), if it keeps up the current death rate for six months.

    • Any attempt to enforce a real lock-down in the immigrant suburbs in France would no doubt fail – rather spectacularly – in the summer heat which is now upon us.

  6. Jiří Beran, a Czech physician, says Isoprinosine, which is used against dengue fever, is effective against coronavirus. He tried it on himself and his son:


    The seniors in a care centre in the Czech Republic were also prescribed Isoprinosine (inosin prinobex) and no one died.

    “Viete koľko umiera v Českej republike nakazených nad 85 rokov? Vo vekovej kohorte 85 plus ochorelo do konca minulého týždňa 430 osôb a 119 zomrelo. Zomiera každý tretí človek,” povedal Baran.

    V prípade litovelského domova seniorov sa však štatistiky nepotvrdili. Z dvadsiatich seniorov, ktorým ošetrujúca lekárka Isoprinosine hneď po prvých príznakoch predpísala, nepodľahol chorobe ani jeden.”

      • If people developing serious symptoms are given this and the symptoms go away, why would double blind medically supervised testing be required? It would be nice to know that a treatment works and is free from horrible side-effects, but we already know that Isoprinosine has few major side effects and is effective for many viral infections.

        Isoprinosine (inosine pranobex) is an old drug that has been extensively studied and used in many countries for herpes, genital warts, influenza, melanomas, other tumors, hepatitis B, and a rare brain inflammation in children caused by the zoster virus (subacute sclerosing panencephalopathy). No one really knew how it worked (not that it always did) until someone noticed that it seemed to be boosting people’s immune response, perhaps by helping the body recognize that it was under attack. When the AIDS crisis struck, it was one of the first drugs evaluated.

        Isoprinosine seems to be well tolerated. The few side effects reported included: dizziness, problems with digestion (for example, slight stomach pain and feeling full after you ate only a small amount of food), and itching.

        Incidentally, how many vaccines pass double blind medically supervised testing before they are rolled out on a massive scale? Those annual flu shots don’t have time to get proper testing because by the time the test results were in they would be useless for this year’s flu.

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