Many people—including many leaders in the developed world—are failing to weigh all the costs and benefits of different energy sources for people and the planet. They’re short-circuiting the evaluation process, making judgments about energy sources based on partial analyses of their costs and benefits. Almost without exception, those analyses have the following flaws: 

• They ignore the negative human and environmental costs of wind and solar power while exaggerating their benefits.

• They ignore the human and environmental benefits of nuclear power while exaggerating its costs.

• They ignore the human and environmental benefits of fossil fuels while exaggerating their costs. 

These biased analyses result in many governments, corporations, and NGOs enacting policies and investing trillions of dollars to promote energy policies that harm both the environment and people—especially people with lower incomes. 

These governments and organizations say their goal is to minimize damage to the environment, but in fact their policies and investment dollars are having exactly the opposite effect: they’re using more land and more materials, and they’re producing more waste. The people who are hit hardest by these changes are the poorest among us. In the developed world, lower- and middle-income families struggle to pay high heating and electricity bills. In the developing world, people living in poverty stay in poverty because of policies that prevent investment in the kind of energy infrastructure needed to fuel prosperity. Many examples around the world illustrate this misguided approach and its consequences. I’ll discuss two here.

Germany

Germany had the best of intentions. It set noble goals to reduce emissions and protect the environment. Over the past two decades, it’s spent nearly $500 billion on wind and solar power, restricted oil and gas development, shut down all its nuclear power plants, and increased its dependence on Russian gas. But these policies haven’t worked out as expected. 

Germany’s energy policies have done very little to help the environment. Its shift toward renewables has reduced its dependence on fossil fuels by only 6%: from 85% to 79%. And now its precarious energy situation threatens greater harm to the environment than before because it has been forced to increase its use of coal—one of the dirtiest of all fossil fuels. Germany burned 13% more coal in 2022 than in 2021, and as a result, it has increased its emissions of CO2 and air pollutants—exactly the opposite of what it had aimed to do. 

But the environmental impact of Germany’s energy policies are only half the story. The other half concerns the way those policies have hurt the German people and the European economy. German households saw their energy bills double between 2010–2020, and manufacturers of car parts, chemicals, fertilizer, and steel are struggling to survive. The pain of high energy prices does more than crush profit margins; it results in plant shutdowns, layoffs, and even bankruptcy. In response, German taxpayers spent $500 billion in 2022 to cushion households and businesses from hard-hitting energy costs and another $230 billion to bail out a giant energy company.

And the harm of Germany’s misguided energy policies extends beyond its own borders. The collapse of German industry has the potential to drag the rest of Europe down with it. Across the European continent, bankruptcies are skyrocketing.

California

California also set out with the best of intentions: it’s mandated 100% renewable power by 2045, placed a moratorium on nuclear plant construction, and is planning to prematurely shut down its last remaining nuclear power plant by 2030. That plant accounts for nearly 10% of California’s electricity production, so shutting it down will leave a gaping hole in the state’s baseload power. In addition, more than 50 California cities and counties have imposed new restrictions on the use of natural gas.

These energy policies are hurting residents. California has one of the highest poverty rates in America, and rising energy costs are a growing part of the problem. The state’s decision to shift energy production to solar and wind has contributed to soaring energy prices. From 2008 to 2021, California electricity rates rose three times faster than the US average. The state has distributed over $1.6 billion in financial assistance to 3 million households with overdue energy bills.

The shift to solar and wind has also increased the fragility of California’s electrical grid. Power blackouts are becoming more common. In 2020, for instance, the California grid operator cut power to nearly a half a million households in the midst of an extreme heat wave. When the state investigated the blackouts, it cited the unreliability of solar and wind power as among the three primary factors.

California’s misguided energy policies are also hurting the environment. Wind and solar farms destroy wildlife habitat on a massive scale because they require far more land than other sources of energy. A solar farm, for instance, uses 75 times more land than a nuclear power plant, and a wind farm uses 360 times more land.

In addition, solar panels and wind turbines are manufactured using toxic materials and fossil fuels. In fact, a solar power plant requires 14 times more materials to deliver the same quantity of energy as a nuclear power plant, and wind power requires 18 times more materials than a natural gas plant.

The production of solar panels, moreover, is overwhelmingly controlled by China, which manufactures 97% of wafers, 85% of cells, 79% of polysilicon, and 75% of modules used to make solar panels. But China has notoriously weak environmental regulations, and its factories keep production costs low by burning coal for fuel.

California’s rooftop solar installations have also become a major source of pollution. Solar panels last only about 25-30 years, and they’re difficult to recycle because they’re made from toxic materials such as lead, selenium, and cadmium. As a result, 90% of solar panels end up in landfills, and governments fear that groundwater will be contaminated by the disposal of hundreds of millions of solar panels in coming years. 

California has also restricted its production of oil, even though the state is home to about 4% of US oil reserves (1.7 billion barrels of oil). But restricting production doesn’t decrease demand. As a result, California has been forced to import oil from countries with weaker environmental regulations. About 50% of the state’s foreign oil imports now come from Ecuador (17%), Saudi Arabia (16%), and Iraq (15%). Pushing oil production to these countries has increased CO2 emissions and air pollution because about 70% of California’s oil now arrives on tanker ships that burn heavy oil—a fuel much dirtier than what’s used in cars or trucks. The unnecessary pollution disproportionately affects the lower-income communities near the Los Angeles port where oil imports get delivered. The state’s oil importation has also promoted the destruction of vulnerable habitats. Ecuador, for example, drills for oil in the Amazon rainforest—an ecosystem that is highly sensitive to industrial pollution. 

If California stays on its current energy trajectory, it’s likely that many businesses will close or move out of state in the next 20 years. As people exit, the real estate market will likely crash, and California residents who can’t leave will face higher taxes, power rationing, and limited access to clean water. Wildlife habitat will shrink as hundreds of thousands of acres are bulldozed for large solar farms. Massive wind turbines will kill thousands of birds and endanger aquatic species like whales, which are impacted by the noise, disruption, and pollution that occur when we industrialize coastlands. 

Germany and California demonstrate that good intentions don’t solve problems. If we want to help both people and the planet, we need a different approach—one that evaluates the costs and benefits of every energy source: The Better Energy Strategy.