Global renewable investments topped $1.8 trillion in 2023, yet fossil fuels still supply over 80% of the world’s primary energy. In this dissonance, EnergyNews.biz staged a rare debate that cut through green gloss and industrial bravado. Karim Megherbi, renewable expert and executive at Orisun Invest, sparred with conventional energy investor and energy economist Lars Schernikau in a no-filter face-off.
This wasn’t a climate kumbaya. It was a technical confrontation about whether our transition plans align with physical, financial, and political reality.
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Net Zero Narratives vs. Operational Reality
The debate opened with net-zero targets. Megherbi presented it as a data-driven imperative. Backed by IPCC models and carbon budgets, he argued that delaying action increases costs—both human and economic. In his framing, we have a finite emissions budget. To avoid overshooting 2°C of warming, industrial economies must structurally decarbonize between 2050–2070.
But Schernikau dismantled the roadmap with a single hierarchy: first reliability, then affordability, then environment. In his words, “You can forget the climate if you don’t have energy.” He challenged the premise that net zero can be achieved without jeopardizing grid stability, especially if dispatchable baseload generation is prematurely displaced.
Evidence Hierarchy: What the Market Builds
While the world debates hydrogen valleys and direct air capture, Megherbi pointed to a simpler truth: market trends. In 2023, 95% of new power generation capacity was wind and solar. Utility-scale developers are not guided by ideology, he argued, but by comparative LCOE (levelized cost of electricity), cost volatility, and public pressure.
Schernikau pushed back. Wind and solar, he said, fail under system-level scrutiny. Their marginal costs may be low, but their integration costs are high. According to his analysis, every additional percentage point of variable renewables increases the cost and complexity of balancing the grid. Backup systems, overbuild requirements, and seasonal intermittency amplify the total system cost, even if CAPEX on panels or turbines is falling.
Moreover, he cited Germany’s Energiewende as a cautionary tale: high renewable penetration, but also the highest industrial electricity prices in Europe. German chemical plants are relocating to cheaper grids—an economic signal he says the green narrative ignores.
Batteries and Density: The Physics Problem Behind the PR
At the heart of the debate was a fundamental engineering issue: energy density. Schernikau drove home a stark comparison. A 1-ton battery stores about as much usable energy as 40 kilograms of coal. Add to that the energy cost of mining, refining, and manufacturing battery materials, and the ROI—energy return on energy invested—drops dramatically.
Megherbi countered with system-level optimization: you don’t need batteries to mirror fossil systems, only to complement them. He argued that EV efficiency (4–5x more efficient than ICE engines) and distributed solar systems can still outperform fossil models if implemented at scale. China’s domestic EV boom and grid electrification strategy were his Exhibit A.
But Schernikau questioned China’s motives. For him, it’s not climate leadership—it’s industrial strategy. By dominating lithium, solar module production, and EV exports, China is restructuring global manufacturing, not decarbonizing in good faith.
Who Pays: Subsidy Realities and Externalities Debate
The discussion on subsidies exposed deeper philosophical divides. Megherbi leaned on IMF data estimating fossil fuel externalities at $6–7 trillion annually. Pollution-related healthcare, climate disasters, and infrastructure degradation remain unpriced in fossil-based systems. From that perspective, renewable subsidies are not distortions, but corrections.
Schernikau reframed the cost landscape entirely. He argued that per-kWh subsidies for wind and solar remain the highest in history, even after decades of support. More concerning, he said, was the increasing dependence on policy guarantees and capacity payments to prop up renewables that can’t ensure 24/7 generation.
Moreover, he challenged the sector’s ROI. ESG funds, he noted, underperform traditional energy indexes. Chinese solar firms are operating at a loss. Without perpetual subsidies, the model isn’t economically durable.
Hydrogen’s Place in the Grid: The 80% Efficiency Question
When the topic turned to green hydrogen, the debate reached its most technical depth. Schernikau called it an “energy sink,” citing up to 80% conversion losses from electricity to hydrogen and back to usable power. He views hydrogen for seasonal storage as a theoretical solution that lacks economic viability.
Megherbi didn’t dispute the inefficiencies but underscored its role in system balancing. In grids increasingly reliant on weather-based generation, hydrogen could serve as a pressure valve during periods of overproduction. Countries with significant renewable potential—like Morocco or Australia—could become hydrogen exporters to balance seasonal gaps elsewhere.
Systems Thinking vs. Technical Absolutism
The debate exposed two paradigms: Schernikau believes the current transition trajectory leads to reduced net energy efficiency, higher costs, and industrial decline. Megherbi believes smart system design—diverse generation, data-driven modeling, policy alignment—can compensate for variable sources and unlock new economic pathways.
Schernikau’s logic is rooted in physics and cash flow. Megherbi’s in market behavior and systems thinking. Both have merit. But when one side frames green technologies as economic suicide, and the other dismisses fossil lock-in as irrational nostalgia, meaningful dialogue becomes elusive.
Rethinking Transition Metrics
What this debate makes clear is that the metrics we use to judge the energy transition are insufficient. LCOE doesn’t account for system costs. Subsidy tallies rarely normalize by dispatchability or lifecycle emissions. ROI calculations often ignore stranded asset risk and carbon pricing forecasts.
If there is a common ground, it may lie in new models that evaluate energy pathways based not only on generation cost but also on security of supply, lifecycle emissions, domestic economic multipliers, and long-term resilience.
Conclusion? There Isn’t One. That’s the Point.
In a polarized energy discourse, this debate refused easy answers. It instead delivered what the sector needs most: uncomfortable questions. Can net zero be achieved without compromising affordability and reliability? Can solar and wind scale without tipping the grid into instability? Can we build a market system that rewards long-term decarbonization over short-term arbitrage?
The energy gamble isn’t just between technologies. It’s between models of risk. Between who bears the cost today and who inherits it tomorrow. And between whether we solve for physics or finance first.
