Essay by Eric Worrall

China is apparently doing such a good job at transitioning to renewables, we should all ditch democracy and copy their example.

Capitalism Can’t Solve Climate Change

BY BRETT CHRISTOPHERS
MARCH 20, 2024 9:00 AM EDT

Christophers is professor at Uppsala University in Sweden, and author The Price Is Wrong: Why Capitalism Won’t Save the Planet and Our Lives in Their Portfolios: Why Asset Managers Own the World

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Veiled by discussion of headline global trends in new renewables capacity investment is the fact that almost all the incremental progress is currently being made in one country: China. …

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While China surges ahead, the rest of the world remains stuck.

This raises a crucial question. What is different about the development of solar and wind resources in China from the rest of the world?

The main answer is that in China, such development is capitalist in only a very limited sense. Certainly, the entities centrally involved in building out new solar and wind farms in China are companies. But almost all are state-owned. Take wind. Nine of the country’s top 10 wind developers are owned by the government, and such state-owned players control in excess of 95 percent of the market.

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Add to this the fact that the banks financing all the new renewables development in China are generally also state-owned and directed, and a stark reality comes into focus. This is essentially central planning in action.

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Why are renewables returns so low? Numerous factors conspire to drive down profits, but one is particularly important: competition. … There is no OPEC-like cartel in renewable electricity.

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The alternative? To face a growing risk of climate catastrophe.

Read more: https://time.com/6958606/climate-change-transition-capitalism/

The reality is Chinese central planners have made a colossal mess of their economy, because of their incompetence, economic mismanagement and Covid lockdowns. For at least 30 years the Chinese Government has been keeping interest rates too low to encourage development, but the result has been enormous resource misallocation and huge asset bubbles. The Chinese realestate bubble has popped, creating a catastrophic mess of bad loans in their realestate sector. Even worse, Chinese regional governments have for years been creating fake economic growth to meet central targets by issuing government bonds, and many are now likely bankrupt.

One day soon Chinese people will realise most of their investment savings have been lost by incompetent and corrupt bank managers and government officials, or even worse, that their savings are still in the bank, but have lost all their value. There have already been minor bank runs and collapses, though so far the Chinese government has somehow contained the situation, my guess is by printing more money to rehydrate the failed banks.

And of course there is the other side of China’s energy policy which Professor Brett Christophers conveniently ignores – China’s massive investment in new coal capacity.

China is not a model to copy. At least Professor Brett Christophers admitted renewables are unprofitable, but Chinese government officials directing banks to invest in unprofitable renewables is not helping China’s beleaguered banks to balance their books, and has almost certainly exacerbated the Chinese Communist economic crisis.

Professor Brett Christophers is right that the free market has not produced the climate outcomes he wants, but this is because the free market is driven by demand. People just don’t want expensive unreliable energy. The communist part of our economies, government subsidies for green energy and other boondoggles, is not something to be admired, it is something to be excised, like the political tumor it is.

Let us hope the 2024 election cycle delivers us the politicians we need, to set our societies right.