We’ve just been at CERA Week in Houston, Texas, the premier international energy conference showcasing the big oil and gas companies along with renewable and energy transition companies.
Trump’s Energy Secretary Chris Wright promised to reverse Biden energy transition policies and turbocharge more domestic oil/gas production. He maligned renewables like solar, wind and batteries as expensive, unreliable and barely moving the needle. Big old oil/gas, he claims, will drive American energy dominance and provide cheap energy for US consumers. Our kids, Wright contended, will be more thankful for cheap energy than upset about climate change impacts.
Standing in Texas, he should have known that solar, wind and batteries now supply over 37% of the power for the Texas power grid at less cost than building new natural gas, coal or nuclear power plants. Even more important, Texas would be blacked out on the dozens of 90 degree plus days during May till October without solar, wind and battery power (See ERCOT.com).
Moreover, the cost curves for solar, wind and batteries continue sharply downward. China’s master planned economy now produces solar panels at $35 a copy, 40% less than just a year ago. The same with utility scale lithium batteries, which are also down 35% from a year ago. Chinese companies make EVs for half the cost of a US built internal combustion vehicle. The Chinese have added 400 gigawatts of utility scale solar to their power grid in just the past two years. In contrast, the entire US grid runs on only 1200 gigawatts including, coal, gas, nuclear, hydro and renewables. China’s going to export a lot more solar panels, wind turbines, lithium batteries and EVs to the rest of the world than what the US can do exporting liquified natural gas (LNG). In 2023, the US earned $34 billion in LNG export revenues while China collectively earned $150 billion from EVs ($42 billion), lithium batteries ($65 billion) and solar panels ($44 billion).
Ironically, the big oil/gas companies aren’t even dancing to Trump’s tune. To a one, they fully acknowledge the dangers of climate change due to fossil fuel emissions and they are putting increasing amounts of capital to work on energy transition projects. Even the Exxon CEO Darren Woods opposed Trump’s decision to again withdraw from the Paris accords.
The domestic oil/gas companies aren’t even going to fulfill Trump’s goal of more crude production from US sources. It’s not economic for them. The problem is OPEC countries can produce crude at half what it costs US companies to frack crude in the Permian Basin. The costs of production from Alaska or the deepwater Gulf are even higher. It’s tough for domestic producers to consistently make good returns on new capital invested given they are the globe’s high-cost producer -- and amid heavily fluctuating oil and gas prices. They would rather buy existing production than explore for new.
Donald Trump has promised us clean air and water, but his EPA Administrator Lee Zeldin delivered his CERA week message from DC with a promise to gut the Agency. Does that mean that systemic air and water pollution in Houston, Texas and the U.S. Gulf Coast will get worse? YES! The air Houstonians breathe has never complied with national air health standards and its waterways like Galveston Bay are packed with dioxins, PCBs and fecal bacteria. The same is true up and down the coastline from Corpus Christi to the south and all the way along Cancer Ally into New Orleans, Louisiana to the east. The envisioned re-industrialization of America will mainly happen on the US Gulf Coast with more LNG, petrochemical plants and other big industrial polluters. If you live along that coastline and want clean air and water, you might, if you can, move somewhere else.
We also discovered a big reason why there’s so little pushback at CERA Week on the Trump Administration’s scenario of higher emissions indefinitely into the future. Scientists doing real science just can’t exactly predict how a sharply warmer planet will wreak damage on the planet. They haven’t even been very good on the overall pace of global temperature change. The planet passed a 1.5 Celsius increase in 2024 ten years before the 2035 projection from the UN scientists. They are even worse at predicting the follow-on effects. They don’t have sufficient statistical data or the models to say how soon and how much worse the damage will be from hurricanes, floods, tornadoes, droughts, heat waves, fires, etc. Climate change is happening faster than expected. We are literally flying blind on the planetary impacts just ten or twenty years from now. One of the leading scientists at the conference compared what scientists are capable of doing with how an Army General or CEO operates. If you wait to act until you’ve got 95% certainty, you’re toast.
