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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Why Energy Innovation Needs Room to Grow



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It’s been gratifying to see lots of people engage with Room to Grow, the new collection of policy essays from the YG Network, where I’m an advisor. Recently, there’s been some discussion of Adam J. White’s chapter on energy policy. A number of critics, including Matt Yglesias of the new liberal news site Vox, have taken White to task for failing to address climate change in his discussion of energy policy. Yglesias writes:

They don’t mount an argument that the scientific consensus on anthropogenic global warming is mistaken. They don’t mount an argument that despite the scientific consensus, inaction is nonetheless the right policy. They don’t mention it at all. Not even as something their political opponents wrongly care about.

The thought process that ended with this approach is easy enough to understand. Whether climate change is a massive conspiracy orchestrated by Al Gore, 99 percent of scientists, and a dazzling array of foreign governments or a genuine problem is hotly debated inside the conservative movement. Whether or not fossil-fuel producers should be hampered in their activities by regulatory concern about pollution, by contrast, is not controversial. For smart, up-and-coming conservatives to mention climate change, they would have to pick a side on the controversial issue. Do they sound like rubes by siding with the conspiracy theorists, or do they alienate the rubes by acknowledging the basic facts and the coming up with some other reason to favor inaction?

The optimal choice is not to choose.

This is all very stimulating. But as White points out, he does address climate change, albeit briefly:

My paper highlights the most contentious greenhouse gas issue in the fracking debate: fugitive methane emissions. On that point I discuss the recent study, in the Proceedings of the National Academy of Sciences, putting the methane debate in context and finding that it does not pose a great risk of exacerbating climate change. And I also quote White House energy and climate adviser John Podesta, who urges that natural gas development is key to the Administration’s goal of “moving toward a clean-energy future.”

White acknowledges, however, that he doesn’t center his discussion on climate change, as his chapter was first and foremost about how energy policy impacts the well-being of middle-income U.S. households. Why might that be the case? It helps to understand that from the beginning, the reform conservative project has rested on the idea that conservative elected officials, particularly at the national level, haven’t been sufficiently responsive to the interests and concerns of their constituents, including their conservative constituents. And so we have called for crafting an agenda that is more responsive, as Ramesh Ponnuru, who played an important part in the Room to Grow effort, explains:

The establishment assumes that the party’s most fundamental problem is its position on immigration and social issues, and the resulting perception that it is intolerant. The reformists believe that the deeper problem is the party’s economic agenda, and the resulting perception that it is indifferent to the interests of most people. And so while some of us want to enact the kind of immigration legislation that has passed the Senate and some of us do not, none of us believe that enactment would go a long way toward fixing what ails the Republican party.

At least some members of the establishment also believe that GOP opposition to cap-and-trade makes Republicans look short-sighted and foolish, and the wince at the criticism that it represents nothing more than crass political opportunism. (A related argument is that conservative skepticism about whether or not anthropogenic climate change is a real phenomenon is damaging to the right, and in this regard, I’m far more sympathetic to the establishment view.) But Republican opposition to cap-and-trade, and support for the vigorous development of domestic hydrocarbon resources, is actually very responsive to the views of the constituents represented by conservative lawmakers. As of last September, for example, 84 percent of self-identified Republicans supported building the Keystone XL pipeline, a proxy for some of the larger issues surrounding energy policy.

Yglesias’s critique reflects a misunderstanding of what Room to Grow is trying to accomplish. There is plenty of room for conservatives to address climate change. Room to Grow, however, seeks to craft a new, more responsive approach to domestic policy, and White’s (correct) assessment is that middle-income voters are primarily concerned with energy prices, and so measures designed to address rising energy prices, via supply-side reforms, were the focus of his chapter.

As it happens, I think there is plenty for conservatives to say about energy policy as it relates to climate change. My new column for Reuters Opinion does just that, and I draw on Jim Manzi’s recent analysis of the EPA’s new power plant regulation proposal. Jim, along with Oren Cass and Samuel Thernstrom of the indispensable Energy Innovation Reform Project, is one of the most articulate conservative proponents of what I call a “technology-first” strategy, and I channel them both in the column. Jim reminds readers that in 2007, he called on conservatives to both embrace the scientific consensus that anthropogenic climate change is a real phenomenon (a view still held by only a minority of GOP voters) and to strongly oppose new carbon taxes in favor of public investment in basic technological research designed to deliver energy breakthroughs that private entrepreneurs could then exploit. And in the years that followed, it is this playbook that has helped decarbonize the U.S. economy:

Suppose I told you that I believed that America could within a decade develop a new green-energy technology that could lead us to have the fastest rate of reduction in CO2 emissions of any major country in the world, and permanently reduce absolute emissions such that we never again emitted what we did in the 2005 baseline year? And further, instead of this requiring us to trade-off emissions reductions against the costs of lower economic growth, that this technology would increase economic growth, and add jobs, because of greater productivity? And it was able to radically reduce our reliance on overseas sources of energy so much that North America could be practically self-sufficient for energy? And it was a proprietary American technology that would provide competitive advantage to our manufacturing industries, and would itself become a significant source of exports?

This sounds like a fairy tale. But in fact, this is precisely what has happened in the seven years since I wrote that article. America has created a technology-driven energy revolution, in a manner that has been orthogonal to the whole policy debate in Washington. It is the classic entrepreneurial response to the question “Do you want A or B?”  Invent C. 

It was not done through some Ayn Randish Private Sector Good, Government Bad morality tale. But the story of how this happened (which I reviewed in National Affairs this spring) should make clear that the role of the government in this area should be very different than what the Obama administration and its allies believe. 

There are many, many issues that Room to Grow doesn’t address, the most important of which, in my view, are housing policy and immigration, areas where there is considerable disagreement among conservatives. Yet Room to Grow is best understood as the start of an ongoing effort to craft policies that are responsive to the interests of low- and middle-income voters and that will help revitalize the American economy. Energy policy is going to be an important part of this effort, and we will have more to say about it.

One of the energy policy ideas I’m most excited about is Robert Zubrin’s call for shifting America’s transportation system from its current reliance on gasoline as a fuel to methanol. William Ahlgren has similarly touted the benefits of a “dual-fuel strategy,” in which methanol would play a crucial role. The “methanol solution,” as Zubrin calls it, offers economic, strategic, and environmental benefits, and it appears to be a good example of the kind of win-win, technology-first strategy we ought to pursue. If methanol is such an attractive fuel, why haven’t entrepreneurs driven a shift from gasoline to methanol? As Zubrin explains, one of the biggest obstacles has been the EPA. Eliminating the regulatory hurdles would in itself do much to fuel a methanol boom. The goal is not to dictate choices regarding energy choices. Rather, it is to invest in basic research and to allow commercially competitive technologies the “room to grow” they need to flourish.



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