Trading One Problem for Another

There is a Hungarian saying: “Csöbörből vödörbe.” It describes a situation in which a decision fails to move us forward. Although we leave important problems behind, the new solutions may create different challenges—perhaps even ones we have not yet recognized.

This may well describe today’s approach to energy production.

We want to escape the pollution and environmental burden associated with fossil fuels. Yet the vision of a fully electrified world does not necessarily bring real relief to the economy.

A historical example from Hungary illustrates this point. During the 1970s and 1980s, the country’s political leadership created an extensive public water supply network. However, they failed to provide an adequate wastewater collection and treatment system, creating a new set of problems.

The lesson remains relevant today in the transition from fossil fuels to electrification. An investment never exists in isolation within an economy. If we fail to view it as part of a broader system, essential complementary elements may be overlooked, and adding them later often requires significantly greater resources.

It is clear that economic realities and climate objectives require us to reduce our dependence on coal, oil and natural gas. Yet there is a real risk that, in escaping one dependency, we simply create another.

There are already several warning signs suggesting that abandoning fossil fuels and accelerating electrification may generate challenges for which we currently have no satisfactory answers.

As renewable energy capacity has expanded rapidly, the parallel development of large-scale energy storage and electricity grids has received far less attention. Such investments would undoubtedly have reduced the short-term profitability of many renewable energy projects, but they would also have significantly strengthened the security and reliability of energy supply.

Likewise, we still lack a precise understanding of the total energy and raw material requirements of many new technologies. Without reliable life-cycle data, we cannot accurately determine their true carbon footprint throughout their entire period of use.

This raises an important question: why are we not reducing conventional energy production more gradually while continuing to improve its environmental performance?

The acceleration of the transition is driven by several factors, including European climate objectives, regulatory requirements and investor interests. The real question, however, is whether the pace of the transition is fully aligned with economic and technological realities.

Will we recognize its social, economic and political consequences—and the reactions they may trigger—in time?

The rapid pace of the energy transition is already creating challenges for today’s economy, while its long-term consequences remain impossible to predict with confidence.

Consider the automotive industry. Traditional manufacturers are struggling to compete with low-priced electric vehicles produced in East Asia.

The European Union provides significant benefits to its member states. Nevertheless, in my view, the accelerated phase-out of fossil fuels is also likely to create considerable economic costs.

CO₂ emission standards, together with safety and other regulatory requirements, have made the production of small urban cars increasingly difficult and, in many cases, economically unattractive. As a result, vehicles have become larger, heavier and more expensive.

Even the most affordable electric cars remain considerably more expensive than comparable mid-sized petrol-powered vehicles.

Electric vehicle manufacturers themselves are beginning to recognize the affordability challenge. Increasing numbers of compact, lower-cost electric city cars are entering the market, suggesting that consumer demand for affordable urban mobility has not disappeared.

Traditional car manufacturers are finding it difficult to adapt to an industry that is becoming increasingly software-driven, while remaining dependent on external suppliers for their single most expensive component—the battery.

What challenges will emerge when millions of today’s conventionally powered vehicles eventually become hazardous waste?

What environmental and economic risks will arise when the recycling and safe disposal of today’s batteries become a large-scale necessity?

How will the price of electricity evolve when our passenger cars, buses and heavy trucks all rely on electric power instead of liquid fuels?

What happens if another technological breakthrough introduces a cheaper propulsion system that rapidly replaces today’s battery-powered vehicles?

What economic and social costs will result if investments in technologies that have not yet completed their natural life cycle have to be written off prematurely?

These are only some of the many questions surrounding the transformation of energy production and consumption. Are we replacing existing energy systems too quickly before fully understanding the long-term consequences?

In my view, the production and use of both conventional and renewable energy sources should be evaluated within a comprehensive framework. Assessing their complete life cycle is essential if we are to build an energy system that is not only cleaner, but also economically sustainable, resilient and capable of meeting society’s long-term needs.

By: Viktor Szentkiralyi