SNL Energy: Your organization champions free markets and limited government. From that perspective, what is the biggest threat to the energy industry today, particularly for fossil fuels like natural gas and coal?
William Yeatman: The biggest threat to the energy industry today is regulatory capture by environmental special interests. Most environmental statutes were enacted during the 1970s, at a time when intellectuals and policymakers alike believed that New Deal-era regulatory agencies had been “captured” by the industries that they regulated. In order to mitigate this regulatory capture, these environmental laws accorded then-nascent green litigation groups legal privileges to influence both implementation and enforcement of regulatory regimes.
Fast-forward 40 years, and circumstances have reversed course. Environmental organizations like the Sierra Club and the Natural Resources Defense Council now operate with near-hundred-million-dollar annual budgets. It is from their ranks that political positions are filled in federal agencies. Most importantly, they now run sophisticated and expensive political campaigns, including heavy media buys and get-out-the-vote efforts. Thus, they are now big-time political players. In short, green groups are exhibiting virtually the same behaviors as industry in the 1970s, which, at that time, were pejoratively labeled as regulatory capture.
To be sure, if these groups’ purposes were purely in the public interest, then regulatory capture wouldn’t necessarily be a concern. But that’s not the case. Instead, they’ve made a political cause of demonizing fossil fuels.
SNL Energy: What do you think is right about the current climate debate, and what is wrong? And what is our best bet for addressing the issue of climate change?
To me, much of the climate policy debate is, unfortunately, akin to the famous Dickens character Mrs. Jellyby, who neglects her own children due to her obsession with philanthropy in Africa. There are 2 billion people enduring abject poverty and for them cheap energy is a solution. And yet, these fantastic passions in the West have been funneled into the mitigation of an issue, climate change, that’s supposed to affect our grandchildren and great-grandchildren. To me, climate change is just one of many risks that we must manage, and it is, moreover, lower on my risk list than those issues that are unequivocally causing human suffering right now.
As for what’s right with the climate debate, I think a positive development is that the public and policymakers are starting to gain an appreciation that there are costs attendant to any climate change mitigation policy. A misunderstanding perpetuated by green special interests and their political benefactors is that greenhouse gas emissions reductions will somehow stimulate the economy and create “green jobs,” rather than depress it. It appears reality is starting to pierce this fog obfuscation. Last week, for example, the United Nations’ Intergovernmental Panel on Climate Change estimated that climate change would cost 4% of the global gross domestic product in 2030.
What is our best bet to address climate change? I think it’s adaptation because I believe mitigation to be either dangerous or impossible and the likelihood of catastrophe to be no more than that posed by the “population-bomb,” “peak oil,” “ecocide,” supervolcanoes, asteroids, and any other past or future planetary threats.
First, mitigation carries costs. Indeed, it carries steep cost, and these costs carry harm. Namely, they inhibit wealth creation and poverty reduction. The threat with an all-out mitigation strategy is that the costly policies can do more harm than the underlying problem.
There’s a second problem with mitigation, one that is an inevitable result of our international system of sovereign states. Climate change is a global matter. No one country, or even continent, can control global greenhouse gas output. “Stopping” climate change would cost trillions. These costs, in turn, would be shared primarily by 35 or so wealthy states. Here’s the problem: There’s absolutely no precedent for international burden-sharing of this magnitude, short of world war. And climate change, by its nature, can never achieve the alarm of a global battle. Historically speaking, then, climate change mitigation is an impossibility.