(Bloomberg Opinion) -- Senator John Barrasso of Wyoming chairs the Environment and Public Works Committee and sits on the Energy and Natural Resources Committee. This week, he wrote something on the subject of climate change, published in the New York Times.
Structured as “three truths” for the delegates to the recent United Nations climate talks in Poland, it quickly displays a certain artfulness:
The first [truth] is, the climate is changing and we, collectively, have a responsibility to do something about it.
You really have to take your hat off to whomever managed to get the words “climate,” “changing” and “responsibility” into the same sentence without actually just coming out and saying climate change is man-made.
The real meat is in the second and third “truths” though:
Second, the United States and the world will continue to rely on affordable and abundant fossil fuels, including coal, to power our economies for decades to come. And third, innovation, not new taxes or punishing global agreements, is the ultimate solution.
Strictly speaking, that second one is more of a prediction than a truth. And it leaves something to be desired. Clearly, the senator represents the largest coal-producing state in the U.S. (you may have noticed the shout-out there). Even so, while I wouldn’t advocate merely extrapolating the recent past into the future, I like to think that if I were aware that almost half the generating capacity closed over the past decade was coal-fired, I would refrain from making confident predictions about that fuel’s bright future.
As for the third “truth,” he’s right about the need for innovation. We don’t get to make wholesale changes to the energy system underpinning our standard of living without some truly fresh ideas.
Barrasso’s central argument is that such innovation doesn’t require a tax on carbon or regulations. He cites the fact that the U.S. appears to be on track to reduce its carbon emissions below 2005 levels by perhaps 17 percent by 2025, almost two-thirds of its pledge under the Paris Agreement. Barrasso puts this down to “innovation and advanced technology, especially in the energy sector” rather than government regulations or carbon taxes. He’s right: Much of that gain has come from cheap shale gas making coal-fired power uneconomic. The dissonance between this and Barrasso’s second “truth” about coal having a bright future is the first sign that there may be some nuance to tease out here, however.
Shale hasn’t been the only factor in displacing coal; for example, efficiency regulations have flattened U.S. energy demand without derailing the economy. (Incidentally, Barrasso supports President Donald Trump’s efforts to roll back fuel-economy standards.) Moreover, analysts at the Rhodium Group expect emissions to start rising again after 2025, in part because cheap gas, along with rising renewables penetration and tepid demand growth, will cause more nuclear plants to shut down.
Barrasso is a fan of nuclear power as well as carbon capture and utilization. And his desire for federal legislation to help them pushes the dissonance to new levels.
The senator wants innovation to mitigate carbon emissions, but he dismisses carbon taxes, citing their rejection in recent instances such as Washington state’s initiative 1631 or France’s gasoline tax. It is interesting the senator advocates for nuclear power – which, according to Pew Research Center polling published in May, is favored by less than half of Americans – but dismisses the idea of a carbon tax partly because of a vote in Washington state and some protesters in France.
Yet he raises a valid issue: It is hard to get people on board with paying directly to address climate change. On the other hand, this is tough to take from someone who says things like: “The climate is constantly changing. The role human activity plays is not known.” Such climate-change denialism, sadly prevalent among Barrasso’s colleagues and the current administration, hardens the very resistance to measures like carbon pricing the senator now cites as an obstacle.
And yet, as he admits by writing in the first place, something must be done. While streamlining regulations is a good thing, if done responsibly, price signals work best in spurring innovation. Pricing carbon need not be regressive, if paired with proper tax cuts. Nor need it necessarily be sold as a down-payment against doomsday or a sin tax. Innovation doesn’t just displace things; it creates opportunities, infrastructure and jobs of its own – not just in renewable energy, but also possibly nuclear power and carbon-capture technologies. It would also, let’s not forget, be doing the right thing by future generations.
Easy? No, otherwise we’d be there already. What’s needed is honest, inclusive debate about what’s at stake and the means of addressing it. Denying the problem for years and then saying certain policies aren’t worth proposing because people aren’t convinced isn’t realism; it’s abdication.
It is curious indeed that a senior Republican politician, of all people, should champion the government picking winners instead of proposing a price parameter and letting capitalism do its thing. It is curious, too, that he focuses entirely on such incumbent technologies as nuclear power and fossil fuels. Barrasso’s characterization of the latter as “affordable” undercuts the very premise of his piece; if they’re affordable – in every sense, including their externalities – then why do anything? Packaging all this up as a clarion call for getting government out of the way of innovation is artful, yes, but that’s about the best that can be said for it.
To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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