The American Interest
Analysis by Walter Russell Mead & Staff
The Future Of Energy?

As longtime readers know, I’m not particularly skeptical about climate science, suitably wrapped with the inevitable cautions and caveats about complex natural systems whose history and dynamics are imperfectly understood, but I am deeply skeptical about climate policy.  Green climate policies tend to be otherworldly utopian fantasies like the global carbon treaty or heavy handed, poorly thought through schemes (like the ethanol scam) that are better at lining the pockets of well connected lobby groups than at fixing the planet.

It appears that I have a new ally: Daniel Yergin, co-founder of an influential energy consultancy, and the author of a new book out called The Quest: Energy, Security, and the Remaking of the Modern World. Fareed Zarakia’s New York Times review of the book suggests that Zakaria has also been won over by Yergin’s sharp eyed skepticism about green energy nostrums.

In his review, Zakaria draws attention to Yergin’s argument that the world, especially energy-hungry developing nations like China and India, will rely on fossil fuels for energy needs for decades to come. Renewable, clean sources of energy are not ready to displace oil or coal. These are arguments Via Meadia has been making for a long time.

Predictions of the end of oil have, so far, been wrong, and Yergin predicts they will continue to be wrong…And with natural gas, shale gas and new technologies for extraction becoming more important, fossil fuels are likely to play a central role for decades to come.

As Zakaria summarizes Yergin’s position:

There tends to be a view, perhaps most prominently propagated by Al Gore, that we have — or are on the verge of having — the technologies that will make it possible to wean ourselves from fossil fuels. All that stands in the way of a green future is our cowardice. As Yergin’s book makes plain, that is simply not true. The renewable technologies that are currently being deployed are highly unlikely to provide enough reliable and cheap energy to replace fossil fuels.

Examining each technology carefully and thoroughly — wind, solar, biofuels, nuclear — he points out the difficulties of expanding their reach beyond a niche market.

So far, government action has not made the switch to renewable energy easier or more attractive for industries that rely on fossil fuels. As Zakaria notes:

Politics are an inevitable part of the energy business. Government has a huge role to play because of the public costs and benefits — when you put something into the atmosphere, it affects everyone. But Yergin points out that government decision-making has often been guided by narrow political reasons rather than a broader scientific approach. The huge subsidies for ethanol are an example of government involvement that has clearly caused more harm than good. The truth is that energy is such a complicated area, with so many potential technologies and pathways, that having the government pick a few is probably not very useful. What government can do well is two things: making carbon emissions more expensive through a carbon tax and, crucially, providing much greater support for basic research into green technologies — to take a quantum leap in one or preferably many of them.

It has long seemed to me that replacing the payroll tax (the employer and employee taxes for Social Security and Medicare) with a revenue neutral carbon tax would shift the tax burden from job creation and wages to carbon consumption.  This would be good social policy in the United States whether or not you are worried about global warming.  It would encourage employment and accelerate the development of a high tech and service economy in the US. (Michael Lind and Ted Halstead proposed this idea more than a decade ago.)

Research into energy production and storage to promote energy security and reduce pollution in the US plus a tax shift (not a tax hike) to stimulate job creation and energy conservation: from the Via Meadia perspective, this looks like good policy if global warming isn’t a threat — and great policy if it is.  To reduce our dependence on foreign energy sources and to promote job creation, I would support this package if atmospheric carbon levels hadn’t budged in 500 years.

As more serious establishment figures like Yergin and Zakaria continue to distance themselves from the sterile posturing and irrational policy prescriptions of the conventional green movement, we may yet see a serious national conversation about energy and tax policy take shape.  It is possible to be pro-growth, pro-capitalism and pro-conservation at the same time.  Daniel Yergin, whose previous work on energy and on the importance of economic liberty has won him a reputation as one of the country’s most thoughtful people, is once again shedding light on a critical issue.

Published on September 27, 2011 9:55 pm
  • http://garyjones.org/mt back40

    Taxing energy is dumb.

    Taxes on job creation and wages are dumb too, but as the wise man said “reversed stupidity is not intelligence”.

    To be credible you need to do more than align yourself with a lesser evil, you need to propose non-evil solutions.

    Think about it. The desire to improve the tax structure to avoid strangling society must not increase energy costs. Energy is a key part of job creation and wages.

    A broader based general consumption tax rather than one explicitly targeted at energy would be as benign as you can get. Eliminating subsidies to energy would reduce the tax burden as well, though it might lead to higher energy costs as they rise to their true value. It has the added virtue of reducing the friction of government meddling and waste.

  • nadine

    I don’t understand why you are not “particularly skeptical” about climate science, since you plainly understand how it is being held hostage by climate policy. Which means it is politicized science. Politicized science generally becomes junk science in short order, and climate science is no exception. You don’t need a Ph.D. in climatology. All you have to do is listen to hundreds or thousands of media reports, all uniformly reporting that every conceivable weather event — cold, hot, wet, dry, it matters not — is evidence for global warming, whose effects are as bad as they are certain, to understand that the whole thing has become an unfalsifiable thesis.

  • Kenny

    ” … serious establishment figures like Yergin and Zakaria continue to distance themselves from the sterile posturing and irrational policy prescriptions of the conventional green movement,..”

    Good Lord! These two geniuses have finally noted that the sun rises in the east. Let give them a pat on the head. Who knows what they’ll discover next — maybe that neo-Darwinism is another hoax.

  • http://www.everymanblog.com Everyman

    via Meadia is big on “establishment figures”, I’ve noticed, and apparently unmindful of the consequences of further inflating their importance. And then there’s this bit of keen analysis:

    Politics are an inevitable part of the energy business. Government has a huge role to play because of the public costs and benefits — when you put something into the atmosphere, it affects everyone.

    I breathe; I enjoy a fire in the fireplace every now and then; I drive an automobile. Do those activities – particularly my exhalations – require that I acknowledge the need for a “huge role” for government?

  • John

    But wouldn’t there be huge politics involved in determining the rates of a carbon tax? How does one determine who gets taxed what? I think it makes a bad situation worse.

  • http://failinggracefully.com Mason Inman

    I’d be careful taking anything Yergin says at face value. I found many mistakes and biases in his treatment of oil supplies.

    See my article for Grist:
    http://www.grist.org/oil/2011-09-27-the-quest-questioned

  • Russ

    Or we could jusy get serious about *modern* nuclear energy and *modern,* safe nuclear power-plant designs, grab the uranium out of the seawater, and have the whole thing be over and done with. Lots of energy AND a blissful lack of smog-free days.

    Maybe even some DOE kickbacks so that K street will be able to get its pound of flesh, too?