Identifying barriers to the energy transition: from lobby groups to the ‘degrowth’ movement

A number of factors can be identified today as barriers to the energy transition. In a general way, it’s not difficult to see why these barriers might exist: most people don’t like change. Change requires acquiring new knowledge, new skills, new ways of living, and represents a hurdle to our collective or individual pathway through life, whether it’s the process of charging an electric vehicle or having a heat pump installed. This is the case because convention is respected, as wisdom is acquired and refined over time. Many people are averse to even a minor disruption to their way of life.

However, as the impacts of climate change are experienced, collective thought as reflected by many media channels and our political leaders is starting to shift towards looking for pathways away from the disasters we can see occurring around the world, and the shocking statistics that climate scientists implore us to listen to.

So this particular demographic is starting to decline in relevance: consensus is forming in the public sphere that something must be done to mitigate the effects of climate change, if the steps taken do not impinge on our lifestyles to such a great degree (I will argue that it may not necessarily be electric vehicles and heat pumps that come to the rescue, but that's for another chapter).

On the contrary then, we can start to search elsewhere for those proponents who by fault or design, are taking an active role in slowing the progress of the energy transition, and seeking to undermine it’s legitimacy, merit or a belief in it’s effective outcome.

And this is where things get complicated.

As I will show, the list of those proponents blocking meaningful action on climate change is much longer than many people may realise.
While the list is long, I’m going to focus on two particular groups: lobby groups (and those with implicit ties to fossil fuel companies or shareholders in the form of funding) and certain proponents of the ‘degrowth’ movement, both of whom have in various ways resisted the realities of the current situation, and furthermore resisted the practical pathways to emissions mitigation which have been so far identified.

I am going to label both groups as ‘energy transition denialists’; much like the ‘climate change denialists’ that have since been debunked over the past decade or more.

These climate denialists — who have similarly been labelled as ‘inactivists’ by Dr Michael Mann, or ‘merchants of doubt’ by professor and author Naomi Oreskes — are very similar to those who now believe that the energy transition cannot (or should not) be achieved. This new school of thinking is equally cynical and insistent: on Twitter and throughout the climate/energy discourse a recognised and familiar argument appears disparaging the energy transition, throwing liberal amounts of cold water on the idea that the climate change problem can be remedied via the many agreed frameworks that now exist. A graphic example of this outright rejection of the energy transition as a realistic option in it’s current format could be the 100 activists and scientists (led by Peter Kalmus and others) who recently urged the United Nations to dismantle the Sustainable Development Goals framework ahead of a disaster preparedness summit (any form of ‘development’ is obviously unwanted, from their perspective). Such a contrarian form of degrowthism is in some ways not to be taken seriously; but in fact some of the central tenets of the degrowth movement can now be recognised throughout IPCC reports and even within government policy. By actively combating the progress being made to mitigate climate change, by undermining the many necessary components it entails (carbon markets and pricing, CCS, carbon dioxide removal, hydrogen, the concept of ‘net zero’ itself), these groups seek to offer us a worldview that does not provide any practical or viable means to genuinely reduce emissions.

Overall, degrowth (or energy transition denial) is an unfortunate ideological conclusion to arrive at, as it stems at its core from a disillusionment in the many systems and institutions that make up the functioning of modern life in the developed world.

However, more dangerous than this is another form of energy transition denialist, and this group operate much closer to the levers of power, and have a much more developed set of motivations: often reinforced by funding from their respective supporters who direct the narrative away from successful outcomes, often for financial gain. I will be exploring the role of lobby groups in more detail throughout the book, however it’s important to recognise that in contrast to specialist consultancies, many lobby groups (often operating under the ‘non-profit’ or ‘non-governmental organisation’ label) have consistently advocated specifically against the single outcome that has the most chance of success: hydrogen, and the use of hydrogen in replacing fossil fuels throughout the energy system.

The problem ultimately is far more complex than some casual observers realise. To understand how complex the problem is, it may be useful to understand the conventional fossil energy funding model as it exists. The funding model is based on a simple precept: the supply of energy is critical, and no alternatives exist to fossil fuels. Because of this monopoly situation, oil companies and shareholders are able to negotiate financing arrangements which maintain the high rents traditionally returned from the sale of oil. These financing arrangements can be recognised as subsidies, which in the EU are about €56 billion for transport, compared to a total expenditure on oil imports of about €211 billion within the EU 27 in 2019. These subsidies have not changed significantly over the years, despite governments repeatedly announcing that they will phase out ‘inefficient fossil energy subsidies’ within various time periods. If we look at recent reports such as an IEEFA study from 2021, we can see that among the top 7 IOCs, these companies received 63% more than they earned in revenue during the 2010–2020 period. While some of this was asset sales, most of the additional profits paid to shareholders came directly from subsidies.

So we can understand that within the monopoly system that exists, oil does not necessarily have to be profitable to earn significant dividends for shareholders. This is, however, dependent on there not being any alternative to oil available, which would negate the need for governments to maintain the subsidy system that exists.

And so finally we can see how certain lobby groups — while not directly funded by oil companies — are still dependent on donations from various sources who have some connection to the shareholders who wish to maintain the status quo. The situation becomes obvious when we observe the campaign against hydrogen waged by most large lobby groups in Brussels today: E3G, Transport & Environment, Bellona, the EEB and others following the policy guidance of these larger groups. All of these groups have called on the European Commission to essentially block the use of hydrogen in passenger vehicles, in pipelines for heating, hydrogen blending or the use of curtailed electricity for hydrogen production. Some, like Transport & Environment, have gone even further by suggesting that hydrogen should not be used in trucks or short-haul aviation. Others such as the EEB have misrepresented conclusions arrived at by respected research groups regarding hydrogen, to support their arguments. And this is also in sharp contrast to those industries who wish to actually use the hydrogen (among them renewable energy producers): most are very aware that limiting the production and application of hydrogen will seriously limit the market for hydrogen as a whole, where practical alternatives look unlikely to happen.

So we are left with a situation where all major consultancies are now in agreement: McKinsey, KPMG, EY, CapGemini Invent, Deloitte and others explicitly state through detailed studies and reports that hydrogen is by far the least cost overall replacement to fossil fuels across a wide range of industries; and yet lobby groups — who are funded by anonymous donors, stand firm that hydrogen cannot and should not be used in all but the most niche applications.

This situation has been put into even sharper focus today, as the price of diesel and other fossil energy commodities has risen sharply following the Russian invasion of Ukraine. Where hydrogen was already on average the same cost as diesel per km before the war, as the price of diesel has jumped 60% or more, hydrogen is now far less expensive. The reasoning behind trying to block the use of hydrogen in cars becomes even less and less credible.

Then, to top it all, the Commission has implemented it’s new ‘REPowerEU’ initiative, which at its heart seeks to replace almost 20% of gas-equivalent energy consumption with hydrogen by 2030. So far from being the ‘least best option’ when contemplating the shift away from fossil fuels, hydrogen has now taken center-stage.

All of this should mean that a serious reconsideration of these groups and their motivations should be undertaken; however despite trying to block hydrogen at every juncture they operate with impunity; in many ways continuing to shape the discourse surrounding the energy transition. This is unfortunate, because as we are starting to recognise, hydrogen represents the most viable option to replace almost all fossil fuels: from transport to industry, heating and power generation. Providing implausible or barely-credible alternatives to the varied and overlapping issues now presented by rising energy prices and the need for genuine alternatives is seemingly the only thing these lobby groups are good at — and continuing to listen to the narrative they shape is likely to end in disaster.

All this being said, I should also concede that as the market for hydrogen is growing at such an exceptionally rapid pace, it may be wise to give some of these groups the benefit of the doubt. While an NGO such as Transport & Environment may be fully aware what an expansion in the market for hydrogen might mean for oil imports across a range of transport modalities, those without specialist knowledge of the sector or the key data points may be led to believe that full electrification of all transport types is possible, and therefore preferable. Similarly, some NGOs may be led by the same ideological reasons as the degrowth movement; and in fact this has been acknowledged by environmental organisation the European Environmental Bureau; whose agenda does not fit with established economic thinking or consensus regarding what can and must be achieved via the energy transition. It is not enough to say ‘we must drive less’ to reduce emissions — this is not an effective strategy, and for the parent organisation of all environmental groups in Europe, this is an extremely simplistic perspective to have on what is a far more technical and multifaceted issue.

Unfortunately, the list of those seeking to undermine a swift transition away from fossil fuels (mostly via hydrogen) does not stop here. Additionally, we may identify public institutions (such as the IEA and IRENA, at times), research groups (such UK FIRES, or to a lesser degree, the Fraunhofer Institute and others), certain climate scientists (watered-down or unintelligible IPCC reports, possibly led in part by oil funding, noticeable by the inclusion of Saudi Aramco employees within the author list), the media generally (either to cater to the views of their respective audiences, or other reasons — for example Leigh Collins breaking with all established consensus in a recent attack against hydrogen trucks within the otherwise hydrogen-literate Recharge website), political factions, industry groups, or indeed the oil and gas industry themselves.