By Foundation for Economic Education (FEE)
Climate change is real, but you should be skeptical of lawmakers who refuse to repeal legislation that is contributing to the problem.
Here’s a thought: Let’s start addressing climate change by ending government policies that make it worse. Let’s repeal laws and regulations that force people and companies to act in inefficient ways that waste energy and produce unnecessary emissions. Stop creating perverse incentives by penalizing efficient companies, subsidizing inefficient ones, and pushing production to nations that produce more pollution for every item produced. Ending these destructive policies will improve both our environment and our economy.
1. End “Emit More Elsewhere” Policies
The ecologists’ slogan “Think Globally, Act Locally” is entirely appropriate to the issue of anthropogenic carbon dioxide (CO2). Emissions anywhere impact the climate everywhere. Policies that, instead of reducing emissions, simply move them to other countries accomplish nothing.
Domestic regulations, taxes, and tariffs aimed at reducing global warming may have the unintended effect of increasing the cost of domestic production to the point that companies offshore their operations. Similarly, increasing energy costs here will shift energy-intensive industry from the United States to places like Mexico, China, and India. At best, such policies merely move emissions elsewhere, at worst they increase them.
Shifting the production of goods and resources away from countries with efficient economies to less efficient nations does more harm than good. Making a widget with 10 BTUs of energy in the United States is better for the planet than making the same widget in China with 40 BTUs. Producing a barrel of oil here is better for the planet than producing it in Russia, Venezuela, or Iran – countries that have proved unwilling or unable to protect the environment.
2. Admit Fossil Fuels Are Needed—for Now
The federal government’s Energy Information Agency (EIA) projects that the nation’s energy needs will continue to grow for at least the next thirty years, and that “[p]etroleum and natural gas [will] remain the most-consumed sources of energy in the United States through 2050.” One reason is that gas turbines are the only practical backups for the wind turbines and solar panels that the government has determined will replace traditional power plants.
Because the sun doesn’t always shine and the wind doesn’t always blow, backup is necessary. Currently, battery storage can power a city for no more than a few hours. That leaves pumped storage plants and natural gas fired turbines as the only reserve power sources that can come online quickly enough to stabilize the grid when wind and solar fail. However, pumped storage plants, which pump water up into reservoirs during times of low energy demand and then release the water through turbines during times of peak demand, are limited by geography and by environmentalists opposed to constructing new reservoirs.
Mandating wind and solar, then, means mandating natural gas. Without reliable backup, homeowners and companies will relocate or install their own generators. Burning gasoline, diesel, and natural gas at hundreds of thousands of homes and businesses across the nation will do nothing to reduce CO2 emissions.
Given that natural gas plants are essential—having been made so by government dictates—the infrastructure needed to supply them is also essential. That includes production, refining, and transportation.
The EIA’s report also predicts that “the transportation sector will consume the majority of [petroleum and other liquid] fuels, particularly motor gasoline and diesel” through 2050. Electric vehicles (EVs) currently make up less than 5% of the global auto market and about 4% of the American market. While they may someday replace gasoline and diesel-powered cars in significant numbers, that day is not yet here.
3. End “Produce Elsewhere” Policies
The Biden Administration is intent on shutting down natural gas and oil production in the United States while, at the same time, asking other countries such as Saudi Arabia, Venezuela, and Iran to increase their production. But burning Iranian or Venezuelan natural gas instead of American gas does not reduce emissions.
The Administration is accusing domestic oil companies of greedily raising the price of gasoline (at a time of general inflation, when all prices are rising) while expressing surprise that those same greedy corporations don’t take advantage of higher prices and produce more petroleum. But why would an oil company invest millions of dollars to expand operations when Biden is promising to shut down production once he’s solved his immediate political problems caused by rising prices? Why, after Democrats have proposed taxing away oil company profits, would anyone invest in firms that are targeted for extinction?
4. End Pipeline Restrictions
When President Biden killed the Keystone Pipeline on his first day in office, City Journal noted:
The symbolic victory of the pipeline’s cancellation will not have any measurable effect on the decarbonization of the U.S. economy. Keystone’s untimely demise will not change the rate of our national consumption of fossil fuels; instead, American consumers will simply be forced to buy more oil from countries like Saudi Arabia, Russia, and Venezuela. More of our gas will be imported by plane or ship rather than from a net-zero emission pipeline—and we’ll pay more for it at the pump, too.
Pipelines are the safest and most efficient way in which to transport natural gas, petroleum, and petroleum liquid products. Forcing oil and gas to be moved by ship, rail, or truck instead makes little sense economically or ecologically.
Under Governor Andrew Cuomo, the state of New York banned fracking for natural gas and obstructed the construction of new natural gas pipelines. As a result, the state has had to generate more electricity with fuel oil, which produces more CO2 and pollution than does natural gas, and the state has also had to import natural gas from Russia and Trinidad and Tobago.
“In 2016,” according to the Wall Street Journal, “Officials in Massachusetts and New Hampshire blocked financing for the $3 billion Access Northeast Pipeline, which would have reliably provided fuel to three New England states.” Consequently, a tanker sailed into Boston Harbor in 2018 carrying Russian LNG (liquified natural gas).
5. Repeal the Jones Act
The Merchant Marine Act of 1920 (the “Jones Act”) forbids transporting goods between American ports on ships that aren’t American built, owned, registered, and crewed. The Act’s carbon footprint is enormous because it prevents us from taking advantage of the veritable conveyor belt of foreign-flagged ships that circle the nation and frequent American ports. A Japanese ship, for example, dropping off goods in, say, Seattle, can’t pick up goods from there and deliver them to San Francisco or Los Angeles.
Because there are currently fewer than one hundred cargo ships that are compliant with the Jones Act, many American products must be sent by rail, truck, or air even though they could be far more efficiently —and with far fewer CO2 emissions—transported by sea.
The Act also increases Americans’ cost of buying domestic goods by raising the cost of transporting them. As a result, Americans are led to import more foreign products than they otherwise would, producing more CO2 in the process. Moreover, there are currently no Jones Act-compliant LNG transport ships. As a result, Puerto Rico buys natural gas from Russia rather than from Texas or Louisiana. Similarly, prohibitions on new pipelines have forced states like Massachusetts and New York to ship in natural gas rather than buying it from Pennsylvania. And, because of the Jones Act, they must purchase their gas, not from the U.S., but from countries like Russia, France, Algeria, and Norway.
6. Allow LNG Transport by Rail
After pipelines and ships, the safest, most efficient, and least polluting way by which to transport petroleum products is rail. Working to kill any option save keeping gas in the ground, however, the Biden Administration suspended authorization for transporting LNG by rail tank cars.
7. Stop Blocking Loans to Oil Industry
In September 2021, President Biden nominated Saule Omarova to lead the Office of the Comptroller of the Currency (OCC). Omarova supported a “National Investment Authority” (NIA) that, in her words, would be responsible for “devising, financing, and executing a long-term national strategy of economic development and reconstruction.” Banks, under control of the NIA, would direct capital investments toward politically approved technologies and investments and away from industries, such as petroleum, that are out of favor.
In January 2022, not dissuaded by his earlier failure, Biden nominated Sarah Bloom Raskin, an advocate of climate-related banking regulation, to the Federal Reserve Board.
The current strategy for addressing climate change—using wind and solar—requires natural gas-fueled turbines for backup. Yet the current administration is doing everything in its power to short circuit the strategy by blocking domestic production and transport of natural gas and starving the industry of capital.
We are quickly leaving ourselves with the only option of importing natural gas from Saudi Arabia, Venezuela, Russia, and Iran—countries that don’t necessarily wish us well. Putin is threating Europe with gas cutoffs to force them to acquiesce to his takeover of Ukraine. Do we really want to subject ourselves to the same sort of extortion?
8. End Ethanol Mandates
Clear-cutting forests in the United States and rain forests in the Amazon to grow biofuel crops isn’t green. This commonsense notion is backed by research in 2007-2008, 2014, and now in 2022. In February of this year, the National Academy of Sciences published a study that found that corn-based ethanol is “likely at least 24% more carbon intensive than gasoline due to emissions resulting from land use changes to grow corn, along with processing and combustion.”
This article’s proposals for reducing domestic CO2 emissions are, admittedly, only a drop in the ocean. While the United States emits about 11 percent of global CO2, China emits 27 percent, exceeding all other developed nations combined. Moreover, emissions from Asia and Africa are growing rapidly. Yet even though our political leaders are unwilling or unable to eliminate domestic laws and regulations that decrease efficiency and increase emissions, they confidently assure us that they can overcome global economic and political issues and craft international agreements that will address global warming.
I am neither a climate change denier nor a skeptic. Climate change is real, and we should address it. But I am skeptical that legislators who cannot or will not repeal legislation that is contributing to the problem will provide any real solutions.
Richard Fulmer worked as an engineer and a systems analyst, and is now retired and a free-lance writer. He has published some thirty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource, which was required reading in classes at four different universities, including the University of Texas and the University of Toronto. He is currently working on another book, Caveman Economics: Basic Economics in 25 Prehistoric Tales.
EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.
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