Are We Headed Down Folly Ave?

I’m a big believer in the power of imagination and always have been. I’m equally a believer in human ingenuity. Unfortunately, I find myself worrying more and more about what I perceive as a disconnect between narrative and reality, and I wonder when someone is going to ask if the Emporer has clothes?

Ok. What I am talking about is what seems to be the modern trend of thinking it enough to imagine something is true. Increasingly, I get a sense that politicians imagine all sorts of things about ending fossil fuels and shifting to a sustainable and green economy that simply is, well, far-fetched and perhaps even dangerous. In recent weeks, I have begun to pick up on an undercurrent of those who seem to be signaling the same thing. Don’t get me wrong. I think adding renewables into the mix is a good thing. I’m concerned about plastic, fiber, and particulate pollution. I think many things can be optimized, improved, and innovated and, I am a believer in human ingenuity. Just there is a gap emerging….

Part of the problem is that everything has become politicized. It’s no longer about the facts, setting objectives, coming up with risk-managed plans to reach goals, and so on. No. It’s you must follow my narrative or you will be canceled, de-platformed, and ridiculed. This sort of juvenile behavior is all very well on campus I suppose, but in the real world of complexity and heavy lifting, it poses serious risks.

Increasingly, we hear murmurs of concern over grid stability. One major outage in Texas and a near-miss in Europe have already occurred. Increasingly, we hear worries about abandoning fossil fuels too rapidly, before we are ready. There are also whispers of well, what happens when oil starts to go into short-supply? Prices go up. Countries who aren’t that friendly towards us benefit from a sudden dollar bonanza while we all face massive inflationary pressures. One has only to look at China and its attempts to control raw material prices and dampen speculative pressure to get a glimpse of what we might see in coming years.

Now, add to that the whole COVID thing and lockdowns. We now have pent-up demand. We have a short supply of all kinds of materials and goods. We see price volatility and upward pressure for most commodities. This is a good thing temporarily for the commodity industry but long term as rising costs feeds through the system, that will change. Add to that political targets to migrate away from one set of commodities to another and I think we will find we are ill-prepared to meet these political imaginings and goals. Glencore’s CEO rightly points to the impact of the energy transition to demand for copper and other battery metals. Demand is set to increase at a staggering rate and there will almost certainly be a lag between demand and production.

But something else has come from the lockdown period that worries me a bit that perhaps not too many have considered. It came up talking to an industry colleague yesterday. None of us have traveled this last 18-months. We have been trapped in our own countries listening to the narrative there and not sharing experiences as much as we once did. I believe this is adding to problems because people assume that everywhere is like where they are. And, as I found out talking with people in the Netherlands, UK, USA and so on. This is an incorrect assumption. In other words, our industry conversations and sharing of knowledge have been wound down considerably this last 18-months.

Unless we are all very careful and honest when it comes to ensuring that politicians and various pressure groups and activist investor groups don’t send us down Folly Avenue, that is exactly where we seem to be headed. Unstable grids, lagging regulations and market setups, massive inflation and shortages of raw materials, and almost certainly, conflict over resources.

I hear hints and murmurs about all of this from others. We heard in a recent podcast how the vision of EVs isn’t supported in reality by the grid and utilities, for example. We have observed experts talking about ERCOT and California and Europe and the risks of going too fast. We now hear CEO’s of major miners expressing concerns as well….

There is nothing wrong with planning for a vision but when the powers that be decide that they know best and anyone who disagrees is simply moved out of the way…. I think we are headed to a problem. Having a vision is all well and good. Admirable in fact. But if we deny the complexity and do not think through the risks properly, it will end in tears. I do think people in the industry need to start expressing concerns and applying ingenuity fast because we are entering an era of significant basic challenges. We are shifting the paradigm and are ill-prepared for what lies in wait. In fact, we are not even willing to listen to those who have concerns. It’s all about the narrative now.

This article represents my opinions and not necessarily that of ComTech.

 

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