Editors’ Note: If Manchin thinks this will end the war on fossil fuels, he of course is wrong. The legislation through taxation and subsidies still directs energy choices through a top-down, central planning model, rather than allowing free competition among choices. It also does nothing to challenge the dubious science of global warming, rather it embraces it. Nor does it stop wrecking our existing energy infrastructure while new plans fail to deliver. You would think with the example of Germany right before us, our leaders would have more sense.This defection could have been predicted as he is, after all, a Democrat. With such a narrow margin in the Senate, this capitulation by Manchin is of serious consequence to the nation. Senator Sinema of Arizona remains, but we doubt she has either the nerve or philosophical gumption to resist caving as well.

After months of being portrayed as a villain or worse in the mainstream media, Joe Manchin suddenly has become a Democratic Party hero—all because he has declared he will support legislation that he and President Joe Biden claim will “reduce inflation” and give us better weather. Not surprisingly, the New York Times is leading the way in effusively praising the legislation, claiming the bill “would be the most ambitious action ever taken by the United States to try to stop the planet from catastrophically overheating.”

The “newspaper of record” continues:

The bill aims to tackle global warming by using billions of dollars in tax incentives to ramp up wind, solar, geothermal, battery and other clean energy industries over the next decade. Companies would receive financial incentives to keep open nuclear plants that might have closed, or to capture emissions from industrial facilities and bury them underground before they can warm the planet. Car buyers with incomes below a certain level would receive a $7,500 tax credit to purchase a new electric vehicle and $4,000 for a used one. Americans would receive rebates to install heat pumps and make their homes more energy-efficient.

Biden declared: “This is the action the American people have been waiting for,” adding that the proposed bill provides “investments in our energy security for the future.”

Progressives claim this combination of new taxes, tax credits, and political favoritism will promote wind and solar energy, vastly curb carbon dioxide emissions, save the US government billions of dollars via cheaper drug prices, and curtail inflation (it is currently titled The Inflation Reduction Act of 2022). And—to ensure Manchin’s endorsement—it supports a natural gas pipeline in Manchin’s home state of West Virginia.

If anything can embody the current disconnect between progressive elites in politics, academe, and the media with how things operate in that sphere we call reality, it is the response to this legislation. We are told that increasing taxes on individuals and businesses, putting in a regime of price controls for drugs (which have artificially high prices in the first place because of government favoritism toward that industry), installing a system of tax credits for vehicles that are mostly a plaything of wealthy people, along with creating credits and subsidies for wind and solar power is going to reduce inflation and improve most Americans’ lives.

While each portion of this hodgepodge of wish lists needs scrutiny, one can sum up the entire ordeal by pointing out that the gap between what supporters of something like this claim it will do and what it actually does is enormous. Not surprisingly, the media concentrates upon the political aspects of passing the legislation, the “big story” being Manchin’s willingness to go along with it after having opposed similar legislation before.

Rarely, if ever, are the results of legislation—and especially the kind of legislation progressives tout—scrutinized after passage. Instead, progressives assume that the legislation in question will do everything its supporters claim. One should not expect to see an assessment of the results of this latest “historic” bill on the NYT op-ed page a year from now.

For example, any bill with the goals and actions presented in this “inflation reduction” legislation needs to be examined based on real costs and benefits. Tax credits and subsidies for “renewable” energy (which many unrenewable components go into producing) will mask the prices people must pay for these goods, but what are the real costs? What is the value that people will receive in return?

The first thing to remember is that while one can argue over whether a tax credit is a government subsidy or a real benefit, the fact that often is lost in the argument is that without the possible tax reduction, many people would not purchase the subsidized good in the first place. The tax credit incentivizes car buyers to make choices they would not have made otherwise, and it further distorts structures of production.

For all the happy talk about electric cars and the slick advertisements that herald a new age of electricity, the so-called transition is not about political goals and NYT editorials that claim otherwise. When we go past the rhetoric, we are dealing with government central planning, an energy-focused form of the Gosplan, which made the USSR’s economy nonfunctioning. Central planning can call for reallocation of resources and lay out the plans, but without market prices and profits and losses, resource allocation will become an economic train wreck.

While progressives give lip service to profits and losses, even trying to tilt the economic landscape with tax credits, bans on certain goods, and other coercive means, resources still will move in the direction of consumer choice. Economies depend upon real information, real goods, real prices, and real resources. If we do not have these things, along with free consumer choice, then there inevitably will be resource dislocations as production is pulled onto an unsustainable path.

Take the automobile industry, for example. Although some companies have announced their intention to go all-electric in the next decade, one doubts that anyone in those industries believes that operating vehicles purely with batteries is going to have the outcomes that progressives are promising. While battery costs have declined in recent years, they are decreasing at a decreasing rate. The gasoline-electric hybrids have more potential both in terms of unit cost declines and lowering emissions (when one takes in the entire scope of emissions per mile), but the political climate is pointing everything toward the exclusive use of batteries.

When politics and reality collide, reality always must win, no matter the rhetoric progressives give us. Joe Manchin can claim this newest version of “Build Back Better” is going to reduce inflation and improve life for most Americans, but the reality is that it is going to result in more inflation and shortages. The government can create new tax credits for electric cars, but that will not change the technological reality of building those cars. Consumers still are going to have to wait weeks and even months for their new electric cars, and after they get them, they will have to deal with the limitations those cars place upon them.

As for the progressives in the Democratic Party, the propaganda machines will move in reverse. Manchin now is a hero instead of a villain, and Gail Collins may even write something nice about him for a change.

The hard reality, however, is that central economic planning will create unnecessary hardships for many Americans—and this legislation attempts to do just that. In the end, the rhetoric accompanying this bill cannot overcome the reality that when politicians direct economic resources, bad things happen.

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This article was published by the Ludwig von Mises Institute and is reproduced with permission.

West Virginia v. EPA is a blockbuster ruling of great consequence to the current reign of the administrative state over the lives of Americans. It restores core foundational principles that have been ignored or trampled for far too long—namely that lawmaking power is vested in Congress and cannot be usurped by agencies engaged in off-road driving. Its holding will rein in other lawless initiatives waiting in the wings, prominent among them, the Securities and Exchange Commission’s recent implausible assertion that Congress’s grant of power in 1933 and 1934 to regulate exchanges to ensure honest markets gives it power today to impose Environmental, Social and Governance (ESG) regulations on publicly-traded companies.

How the Case Came About

This dispute about the power of the Environmental Protection Agency (EPA) was close to a decade in the making, reaching back to the Obama Administration’s 2015 adoption of a Clean Power Plan (CPP). Simply put, the question before the court was whether the EPA could deploy an obscure provision of the 1970 Clean Air Act to reconfigure what components should compose the nation’s entire electric grid. Prior to that time, the “best systems” section of the 1970 Act had only allowed EPA to set source-specific emission levels for existing coal, natural gas, and renewable energy plants. Under the Obama plan, what once had been EPA’s power to require scrubbers had now become the agency’s unilateral power to convert entire power plants from one type of energy to another—or eliminate them altogether.

The rule never went into effect because the Supreme Court issued a stay of this extraordinary power grab in early 2016. The Obama CPP was then repealed by the Trump administration in 2019 and replaced with the Affordable Clean Energy Rule (ACE) which more modestly sought to make coal-burning energy plants cleaner and more efficient. But on January 19, 2021, ACE, in turn, was struck down by the D.C. Circuit Court of Appeals on the eve of a new administration, leaving EPA wide open to put into effect a reading of “best systems” that empowered the agency to orchestrate the composition of the energy sector.

The decision—and the dissent—both open with a scuffle over standing and mootness common in environmental litigation that veers from one President’s vision to the next. The government argued that as there was no plan in place, the Court should not rule at all. Such strategic “mooting” explains how such disputes can and do drag out for years and through changes of administration. Unfortunately, this bob-and-weave embroils the courts in a protracted dance with the Executive that shuts Congress out altogether.

Accordingly, the Court applied its mooting precedents (which provide that a policy that may recur is justiciable) to halt this decade-long waltz and reach the core question of “who decides?” national energy policy. While this justiciability question could have gone either way, the Court made the right judgment call to end this dispute because neither EPA nor the Courts possess the power to determine national energy policy. Protracted litigation based on the fiction that Congress has somehow delegated this power to the EPA only lets Congress off the hook, serving the interests of no one but the activists and the lawyers. Indeed, one of the best consequences of this case is that Congress will have to decide our energy policy to more lasting effect than “plans” imposed and replaced by politicized agency bureaucrats. And that decision will be with the consent of the governed as it must be, under the Constitution.

What is a “System”?

In West Virginia, EPA explicitly proffered and vigorously defended its 2016 reading that “best systems” permits the agency to engage in macro regulation that includes determining what site- and source-specific plants will make up the energy sector. Both the majority opinion and the concurrence refused to buy this reading of the statute. In the majority’s view, EPA can only set standards within the bounds of a given energy source’s existing “system.” To the dissent, “system” means, well, the whole power industry, with which EPA can tinker like some distant autocrat orchestrating shutdowns of coal plants, and pop-ups of wind and solar farms. The dissent even argues that the EPA could “simply require[e] coal plants to become natural gas plants under this power to determine ‘best systems.’” The majority demurs, eyebrows raised, noting that the agency has never ordered anything remotely like that, and “we doubt it could.” The 1970 Section 111(d) only empowers EPA to guide States in “establishing standards of performance” for “existing source[s],” not to direct existing sources to effectively cease to exist.”

The majority recognized that EPA’s seizure of life and death control over the power plants of America is “eyebrow raising,” invoking a well-established line of precedent which rejects such self-conferred expansions of agency power. For example, in 2000, the FDA could not self-assert power to regulate tobacco. More recently, the Court ruled that the Centers for Disease Control had been given no power by Congress to regulate state housing policy and invalidated CDC’s shocking nationwide shutdown of state court evictions. The Court must enforce these guardrails, or our polity will be at the mercy of bureaucrats gone wild, as our national experience of the plague years vividly demonstrated, at incalculable and continuing cost to Americans.

The majority also explicitly invoked the Major Questions Doctrine, which counsels that Congress must decide such major law and policy questions, not agencies straying far out of their regulatory lane. In doing so, it quoted two respected scholars of the administrative state’s witty formulation: agencies only have the powers expressly given to them by Congress, and their organic statutes are not an “open book to which the agency [may] add pages and change the plot line.”

The Court’s decision to read “system” in this narrow, sensible manner rather than endorse EPA’s grandiose vision (that, by the way, no one seriously believes Congress conferred upon it in 1970), has resulted in a firestorm. Heightened rhetoric swirls around West Virginia: President Biden described the decision as “devastating,” accusing the Court of “sid[ing] with special interests that have waged a long-term campaign to strip away our right to breathe clean air.” “Supreme Court Declares War on Governing” gasped Vanity Fair. “The U.S. Supreme Court has declared war on the Earth’s Future,” keened The Guardian. Mainstream media and the climate change clerisy have accused the Supreme Court of a meanspirited, anti-environment, military attack on the planet and administrative governance. The Twittersphere is abuzz with doomsday.

Deconstructing the Dissent

The stridency that now pervades the public discourse disturbingly starts with the first words of the dissent, which incant the almost religious tenets of the Climate Change Creed, prefaced with its solemn assertion that those tenets “are no longer subject to serious doubt.”

And what are these tenets? Unequivocal, not-to-be-questioned human influence in global warming. This malign human influence brings death, coastal inundation, and erosion, severer and severer hurricanes, floods, droughts, ecosystem destruction, and disruptions in the food supply. Children born in 2022 will witness the Eastern seaboard slide into the Atlantic. This weather may “force mass migration, political crises, civil unrest, and even state failure.” By the year 3000, 4.6 million excess yearly deaths could be caused by climate change.

The Supreme Court declined to accede to “experts” flexing unilateral power to control the energy sector.

This parade of horribles serves to distract the reader from noticing that the very next sentence of Justice Kagan’s dissent is untrue. She asserts that in 1970, “Congress charged EPA with addressing those potentially catastrophic harms” by enacting Section 111 of the Clean Air Act. Nonsense. The very text of the statutory provision provides that EPA must apply best systems to “existing sources.”

Moreover, in the 1970s, the scientific consensus was that the climate was facing another ice age, with Newsweek reporting “a significant chilling of the world’s climate, with evidence accumulating ‘so massively that meteorologists are hard-pressed to keep up with it.’ … shorter growing seasons and poor crop yields, famine, and shipping lanes blocked by ice, perhaps to begin as soon as the mid-1980s. Meteorologists … were ‘almost unanimous’ in the opinion that our planet was getting colder.” Some alarmist scientists were offering up potential solutions such as melting the arctic ice cap by covering it with black soot—by human agency! So much for relying upon experts! Congress simply did not have the dissent’s apocalyptic vision in mind—at least not as to warming—in 1970. Clearing smog was Congress’ sensible and admirable goal.

Kagan’s dissent ends with a glowering scold: “The stakes here are high,” followed by: “The Court appoints itself—instead of Congress or the expert agency—the decisionmaker on climate policy. I cannot think of many things more frightening.” The dissent is right that the stakes are high, but dead wrong in its unfair accusation. The majority and concurrence have insisted that Congress must be the decisionmaker on these major questions, and that neither the Court nor an “expert” agency—nor a President with a pen and phone—can be the decider.

The majority’s quiet, reasoned insistence upon observing the foundational principles of representative government and healthy skepticism of the EPA’s lunge for power—at a time when those foundational concepts are being flouted by agencies prepared to expand far beyond their remit, could not be more important and timely.

Most important constitutional cases boil down to “Who decides.” We all know that Congress is supposed to make the law. Agencies must never make such momentous decisions. The lawmaking power is vested in Congress, and it uniquely has the tools to gather facts, engage in debate, weigh the myriad interests at stake, and then legislate—or not. And it is always accountable, along with the President in the exercise of presentment power—for the outcome. In sum, this case is about one thing, and one thing only: Consent of the governed.

It’s that simple. EPA’s own calculations of the costs of the CPP acknowledged billions in compliance costs, higher energy prices, the retirement of dozens of coal-fired plants, and the elimination of tens of thousands of jobs across economic sectors. If you are a resident of West Virginia who finds your coal-powered plant shut down, jobs lost, utility costs, and gas and food prices skyrocketing by double digits, who can you blame? If the dissent had its way, these economic displacements would be imposed by distant, unaccountable bureaucrats who, by the way, may be just as fallible as any politician as to the wisdom of a plan entailing such massive scientific, social, environmental, and economic impacts. This is why law-making should be hard and made through a combination of powers of the two politically accountable branches.

Sri Lanka

Speaking of the fallibility of experts, international news would soon abound in irony. Just two weeks after the dissent’s litany of catastrophe, news of, wait for it, “significant disruptions in the food supply … mass migration … political crises, civil unrest and … even state failure” erupted from Sri Lanka. The cause, as reported by Michael Shellenberger:

The underlying reason for the fall of Sri Lanka is that its leaders … fell under the spell of Western green elites peddling organic agriculture and “ESG,” which refers to investments made following supposedly higher Environmental, Social, and Governance criteria. Sri Lanka has a near-perfect ESG score of 98—higher than Sweden (96) and the United States (51). What does having such a high ESG score mean? In short, it meant that Sri Lanka’s two million farmers were forced to stop using fertilizers and pesticides, laying waste to its critical agricultural sector. …

The numbers are shocking.

One-third of Sri Lanka’s farmlands were dormant in 2021 due to the fertilizer ban. Over 90 percent of Sri Lanka’s farmers had used chemical fertilizers before they were banned. After they were banned, an astonishing 85 percent experienced crop losses. Rice production fell 20 percent and prices skyrocketed 50 percent in just six months. Sri Lanka had to import $450 million worth of rice despite having been self-sufficient just months earlier. The price of carrots and tomatoes rose fivefold. All this had a dramatic impact on the more than 15 million people of the country’s 22 million people who are directly or indirectly dependent on farming.

Americans should rejoice that its Supreme Court declined to accede to “experts” flexing unilateral power to control the energy sector—to be followed in short order by ESG dominion by a Wall Street regulator. Understanding that this flawed ideology directly led to the tragic humanitarian crisis in Sri Lanka is essential to the exercise of enlightened franchise by Americans refusing to submit to the wokeism that has already imposed enormous costs upon Americans. The SEC’s ESG rules suffer from the same flaws as the CPP—a lack of statutory authority, arrogation of agency power over a major—and debated—question, and enormous economic disruption that would affect nearly every aspect of the country’s economic and political future. The principles restored by the Court in West Virginia foreclose SEC’s costly ESG regulation.

The Spirit of Liberty

In 1944, as the world was engulfed in the most widespread and destructive war in history, brought on by the horrors of unchecked autocratic rule, Judge Learned Hand tried to define what comprised the spirit of liberty.

The spirit of liberty is the spirit that is not too sure that it is right; the spirit of liberty is the spirit that seeks to understand the mind of other men and women; the spirit of liberty is the spirit which weighs their interests alongside its own without bias.

In other words, “Experts, bureaucrats, administrators, consider that you might be wrong!” David Mamet notes that when the experts get it wrong, it is the rest of us who pay. As he puts it, [t]he virus here is government—or at least the incompetents who advise our rulers and cannot admit the legitimacy of dissension,” an all-too-apt description of the tone and reliance upon the expertise of the West Virginia dissent. The Covid years have been a crash course in the incalculable and enduring damage caused by turning government over to experts. The humanitarian disaster in Sri Lanka is a sobering here-and-now reminder that autocratic imposition of expertise by unchecked bureaucrats comes not only at great cost to a society’s well-being and economy but also to its liberty.

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This article was published by Law & Liberty and is reproduced with permission.

Suppose everything you hear in the news about climate change is true. Suppose climate change is real, suppose it is primarily due to the burning of fossil fuels, and suppose that if this continues, the costs will be significant. Suppose all this is true. How should those who disagree with the likely massive government response that could follow actually challenge it?

According to many on the left, accepting the above would mean game over for a wide range of liberties. But buying into this assumption is a mistake. When leftists claim that only a bigger government can deliver affordable health care or quality education, the response from conservatives and libertarians is not to deny that illness or ignorance exists. Instead, those who love liberty argue that more government is not the best way to achieve these goals, and in fact have developed their own set of conservative policy responses — such as high-deductible savings accounts and school vouchers — in place of government-based solutions.

The same approach can and should be taken with respect to climate change. The reality is that some of the best ways to reduce greenhouse gas emissions and protect against the dangers of a hotter world involve less government, not more. I’ll focus here on three: 1) cutting regulatory red tape for clean energy sources, 2) removing restrictions on energy competition, and 3) eliminating environmentally harmful subsidies.

Cutting Regulatory Red Tape

Some of the most promising forms of zero-carbon energy are hamstrung by regulations. Nuclear power, for instance, provides the majority of zero-carbon energy used in the United States today and is a proven source of safe and reliable electricity. Yet between 1978 and 2012, no nuclear reactors were approved in the United States. And of the new plants announced since then, most have been canceled due to cost overruns.

The costliness of nuclear power has many causes, but regulatory compliance is a major factor. A recent study by the American Action Forum found that the average nuclear reactor faces $219 million in regulatory liabilities, with some companies facing regulatory liabilities of more than $8 billion. Granted, nuclear power involves a unique set of risks that may call for special regulation. But the costliness of the current approval process in both time and money is vastly out of proportion to the risks involved.

Hydropower, another zero-carbon energy source, faces similar permitting problems. Hydro-power had the potential to grow by as much as 50 percent, and many existing dams that could be used for power generation currently cannot do so. The permitting process, however, is full of redundancies and can be gamed for delay. Removing these obstacles would help clean energy thrive without increasing the state’s footprint.

Expanding Market Competition

Conservatives and libertarians have long recognized the power of market competition to drive innovation. Yet in much of the United States, market competition for electricity is illegal.

Instead, electricity is provided by monopoly utilities, which are protected from competition and have their rates approved by some form of government body. Decisions as to whether to keep a power plant online are as much political as they are economic.

This system was not designed to keep emissions high but, in practice, it has had that effect. In the past decade, emissions from the power sector have fallen rapidly as low-cost natural gas has displaced higher-emitting coal as the nation’s largest power source. More recently, falling prices for wind and solar power have started to make those technologies more competitive as well. Yet states, where electricity providers are insulated from competition, have often resisted this change. Electricity rates in monopoly states are set based on “cost recovery,” which means that the more money a utility spends, the higher the rates it can charge. As a result, utilities face less market pressure to close uneconomical plants and may even spend large amounts of money to keep plants in operation because they are guaranteed cost recovery.

The lack of competition has also made utilities less responsive to the growing consumer demand for so-called “green energy.” The number of “green choice” customers in states with retail competition increased by 142 percent over a two-year period (from 2010 to 2012) while remaining flat in states without retail choice. And Texas, which has the freest electricity market in the nation, also has the most wind-power generation.

Finally, even those coal plants that have remained in operation under competition have tended to emit less CO2 than comparable plants elsewhere. Between 1991 and 2005, states that restructured their electricity market to allow more competition saw improved fuel efficiency from coal plants, resulting in a 6 percent reduction in CO2 emissions from those plants.

Eliminating Environmentally Harmful Subsidies

As the Hippocratic Oath states, the first duty of a physician is to do no harm. Yet all too often in the political realm, the government encourages environmentally destructive behavior through subsidies and other government spending. Climate change is no exception.

Consider flood insurance. Even if we were to radically reduce greenhouse gas emissions, we would still need to prepare for the warming from past emissions, part of which will involve adapting to higher sea levels. Yet current federal and state policies encourage people to live near the coast, where they will be in greater danger from storms and flooding.

The National Flood Insurance Program, for instance, provides below-market-rate flood insurance policies to people living in flood-prone areas. Originally meant as a way to provide people with insurance not available on the private market, the NFIP has racked up billions in debt while undercutting the private flood insurance market. For our purposes, the critical fact is that the NFIP encourages people to live and build in flood-prone areas, increasing our national vulnerability to climate-related harms. As Hayek famously observed, prices convey information. In a market system, if a property in an area is at an increased risk of flooding, the cost of insuring the property will be higher, which will discourage unnecessary development. By contrast, when the NFIP offers below-market-rate insurance policies along the coast, they are sending people the (false) signal that the risks are lower than they really are. Stopping this perverse practice would help people better assess how to minimize the risks that come from a warming climate.

The examples given above are only a few of the many possible conservative responses to climate change. My goal has not been to offer a comprehensive list, but rather to show that it is simply not true that policies to address climate change must result in bigger government. Advocates of liberty should not be afraid to tackle the climate issue directly. Instead, we should be bold in proclaiming what we know from other political issues. Limited government principles are perfectly capable of dealing with the most pressing problems of the day, including climate change.

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This article was published by Law & Liberty and is reproduced with permission.