The case for climate realism in an age of soaring energy demand

Engelsberg Ideas | Dieter Helm

Global energy demand is projected to double by 2050, driven by a massive technological shift toward energy-intensive industries like artificial intelligence. This surge severely undermines the conventional decarbonisation narrative, as intermittent renewable sources fail to meet the strict reliability requirements of these emerging digital sectors, forcing a reliance on fossil fuels.

Historically, European nations outsourced their emissions by offshoring heavy manufacturing to China, creating a false impression of decoupled economic growth. Now, the Jevons paradox dictates that efficiency gains actually lower prices and stimulate consumption. Clean energy is a myth. Every power source relies on destructive mining for critical minerals. Consequently, the world will likely miss the 2015 Paris Agreement target of keeping warming well below 2°C. Nations must therefore prepare to adapt to rising sea levels and peak temperatures while accepting that true mitigation requires a fundamental, politically difficult reassessment of global economic growth and consumer demand.

Comment

The pursuit of decarbonisation targets under the 2015 Paris Agreement has inadvertently hollowed out European industrial capacity. High electricity prices in Germany and the United Kingdom—which far exceed those in the United States—have driven energy-intensive manufacturing overseas. This shift directly weakens the European industrial base necessary to produce advanced dual-use technologies. Consequently, Western nations face a structural dependency on Chinese supply chains for refined critical minerals.

This erosion of industrial capacity directly constrains European production of defence materiel, as foundries and chemical plants shutter across the continent. Without cheap, firm power, European manufacturers cannot compete with heavily subsidised Chinese state-owned enterprises. The loss of these foundational industries directly limits the North Atlantic Treaty Organization's capacity to surge artillery ammunition and armoured vehicle production during high-intensity European conflicts.

Strategic Question for Discussion

If the North Atlantic Treaty Organization's European members continue to lose their energy-intensive industrial base to high electricity costs, what alternative mechanisms exist to secure the supply chains required for high-rate munitions production?

The current trajectory indicates that European allies will increasingly rely on bilateral supply agreements with the United States to offset domestic manufacturing deficits. However, this dependency exposes alliance procurement to American political volatility and transatlantic shipping vulnerabilities. Alternatively, the pattern suggests a shift toward joint production ventures in lower-cost partner nations, though this risks diluting technology controls and prolonging delivery timelines.

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