Climate Conference Panelists Address Energy Policy

Published June 19, 2015

The “Energy Policy” panel discussion at the Tenth International Conference on Climate Change – Panel 4 on June 11 – featured Competitive Enterprise Institute Senior Fellow Marlo Lewis, Heartland Institute Science Director Jay Lehr, and Heartland Institute Research Fellow Isaac Orr. 

Social Cost of Carbon Unknown

Lewis addressed the social costs of carbon dioxide, defining the concept as a “guesstimate” of the cumulative damage to society resulting from a ton of carbon dioxide (CO2) emitted in a particular year.

According to Lewis, Obama administration analysts would have the American people believe it’s possible to objectively determine the social cost of carbon. “In fact,” he said, “the social cost of carbon (SCC) is an unknown quantity, discernible in neither meteorological nor economic data.”

The SCC is not discernible in the data, Lewis said. Rather, analysts make estimates using integrated assessment models, or IAMs.

“These are computer programs that combine a climate model with an economic model,” Lewis said. “They project how CO2 emissions over time will affect the climate and then how climate change will damage the economy.”

Modelers must plug three input figures into IAMs: climate sensitivity, how much warming occurs from a doubling of carbon dioxide concentration in the atmosphere; the so-called “damage function,” how much economic growth (measured as gross domestic product, GDP) decreases as global temperatures increase; and the discount rate, used to compute the present value of future climate damages.

Fiddling with Model Inputs

“By fiddling with these and other inputs, the social cost of carbon analysts can get almost any result they desire,” Lewis said. “Why would they fiddle? Well, the higher the estimated social cost of carbon, the greater the ostensible benefit of regulations that curb carbon dioxide emissions. So consequently, agencies have an incentive to continually inflate social cost of carbon estimates to increase the purported net benefits of their regulations. They have an incentive to find that climate change is always worse than we thought.”

Lewis also noted the SCC is never weighed against the social benefits of carbon.

“Even if this social cost of carbon analysis were an exact science and rigorous economics, which it’s not, it would still be one-sided and partisan and unsuitable as a basis for policy making, because it is never paired with a rigorous assessment of the social benefits of carbon energy and consequently of the social costs of carbon mitigation. And those costs are potentially staggering,” he said.

When lawmakers fail to consider the social benefits of carbon, Lewis warned, they are more likely to adopt policies that result in increased energy prices, put energy security at risk by endangering the shale revolution, make affordable energy less available in developing countries, and damage both scientific integrity and democratic accountability.

Future of Fossil Fuels

Lehr opened his discussion of the future of fossil fuels by noting his acquaintance with Albert Einstein during his studies at Princeton University.

 “As great as [Einstein] was, he made a huge mistake in his calculations. He predicted in 50 years we would be using fission nuclear energy. Today, the average nuclear scientist predicts in 50 more years we’ll be using fission energy. And I think I can tell you with great confidence, 50 years from now they’ll be saying they’re 50 years away,” Lehr said.

Lehr highlighted the abundance of fossil fuels and said the entire world could be energized with nuclear energy. He said wind power and solar energy are impossible to harness economically due to “the laws of physics of the universe.”

 “The day Congress finally recognizes they’re flushing your tax money down the toilet in order to subsidize people making money on wind turbines and solar installations … when that subsidy ends, they will be gone,” he said.

Lehr said policymakers must take four actions to harness the cheap and abundant energy of fossil fuels: rein in the Environmental Protection Agency; get rid of regulations passed in the name of stopping global warming; stop funding energy research and picking winners and losers; and repeal Corporate Average Fuel Economy (CAFE) standards. 

Fracking Revolution

Orr closed the panel with remarks on the environmental and economic impacts of hydraulic fracturing, a technology that has made the United States the largest producer of oil and natural gas in the world. By 2020, he said, the fracking revolution will allow oil and gas industries to support a total of 600,000 direct jobs, 900,000 indirect jobs, and 1.5 million induced jobs.

Orr said environmentalists exaggerate concerns about water contamination and the threat of earthquakes to impede development of fossil fuel resources.

The liquid used in the fracking process is about 4.9 percent chemicals, Orr said, mostly rust inhibitors and bleach. Orr pointed out bleach is commonly poured down household drains.

With respect to earthquakes, Orr said they aren’t caused by the process of fracturing the rock, “because that only creates the impact of dropping a gallon of milk from the counter onto the floor.” Disposal of waste water in injection wells can, he said, cause small earthquakes, generally no more than a magnitude of three on the 10-point Richter scale.

Orr described the infamous scene in the movie Gasland, where a resident supports his claim of water contamination from fracking by lighting on fire the water coming out of his kitchen sink.

“The guy drilled his well through a coal bed,” Orr said, “which is a natural source of methane. Whether fracking had ever been invented or not, he was going to be able to do that. That image isn’t even associated with natural gas or fracking.” 

Alyssa Carducci ([email protected]) writes from Tampa, Florida.