The transition to a low-carbon economy should be avoided


“The transition to a low-carbon economy” is a mantra mouthed by almost every political party, environmental group, global bureaucracy and media outlet. It is invoked not just as a policy prescription but as a moral signpost. However, like all the catchphrases of the Big Green Agenda – sustainable development, corporate social responsibility, climate crisis, environmental justice, social licence, etc. etc. – it demands trenchant analysis.

Free markets are always in the process of transition due to innovation and ingenuity, but the low-carbon transition is to be forced. Its great proponents are the enforcers, and we are talking about something far more radical than merely the way we generate energy. Leading Transitionistas such as the late Maurice Strong and UN climate Suprema Christiana Figures have admitted that they want a fundamental change in the global economic and political system.

Whenever I hear such people assert both the necessity and viability of the Great Transition, I think of the introduction to my old paperback copy of Joseph Schumpeter’s great book, Capitalism, Socialism and Democracy, which was first published in 1942.

In that introduction, written in 1976, British Marxist academic Tom Bottomore declared that the book’s popularity was explained “by the fact that it undertakes a serious and thorough examination of the great social transition of the present age, from capitalism to socialism.” Bottomore, failing to see Schumpeter’s ironic message – “Socialism is coming, and won’t you be sorry when it arrives” – went on to praise Soviet satellite Yugoslavia as a likely model for the state enterprise that would bring about heaven on earth.

Fast forward 40 years and the Soviet Union has collapsed, but radical socialism has far from disappeared. It has simply gone green. The transition to a low-carbon economy is still code for a transition to more political control, less freedom and less wealth.

Fortunately, like that “inevitable” transition to socialism circa 1976, the transition to the low-carbon economy has profound practical problems. Unfortunately, the public’s slowness to grasp those problems will prolong the pain, although the pain is already being felt in much of Europe and in the People’s Republics of Ontario and Alberta.

The natural tendency of markets is always to use less energy per unit of output. ExxonMobil, the now criminally-persecuted Great Satan for the radical green movement, projects that global GDP will be 80 per cent higher per capita by 2040, but this will require only a 35 per cent increase in energy use. That energy won’t be wind and solar.

According to optimistic projections from the International Energy Agency (which, like all multinational bureaucracies, is a node of transitionspeak), these alternatives will account for just over two per cent of the world’s energy needs in 2040, when the use of fossil fuels will be greater. How does that equate with the alleged essential reduction of greenhouse gas emissions by 80 per cent by 2050? It doesn’t.

Despite the success of radical greens and their political puppets in bringing new pipelines to a halt in Canada, the fossil fuel industry shows no prospect of dying either here or elsewhere. Ironically, thanks to the fracking revolution, U.S. output has enjoyed a resurgence under the most anti-petroleum president ever. Crude oil production in 2015, at 12.7 million barrels a day, was 72 per cent higher than in 2010. Natural gas production was also at a record, at 74.2 billion cubic feet a day.

According to Harvard guru Michael Porter, not only does cleaner-burning natural gas promise further to lower emissions, but its sudden abundance and cheapness has revitalized the entire U.S. economy. Wind and solar still account for just three per cent of U.S. power generation, despite all the grants and subsidies.

If lowering emissions really is the radicals’ priority, natural gas should be environmental NGOs’ ideal transitional fuel. Thanks to the shale gas boom and the (market-based) switch from coal, the U.S. is leading the world in emissions reductions. But ENGOs are not delighted at the fracking revolution. They hate it, and have pulled out every piece of fear-mongering and misinformation available to close it down, particularly in Europe, where they are eagerly supported by Vladimir Putin.

They want fossil fuels dead, and they want them dead now.

Schumpeter was among those who warned of the dangerous leftist trends that were building during and after the Great Depression. His work was followed by similar warnings in Friedrich Hayek’s Road to Serfdom and fictional works such as Nineteen Eighty-Four and Atlas Shrugged. And yet societies continued down paths warned against by those authors for three or four more decades before socialist economic policies were exposed as disastrous. Exposed, that is, to everybody but reflexive socialists, who continue to fret and strut in countries such as Venezuela, or seek new rationalizations, such as catastrophic climate change and the related need for a forced transition to a low-carbon world.

Schumpeter wrote that capitalism was doomed partly because it funded a “scribbling class” of leftist intellectuals and academics committed to its destruction. These “judges,” he wrote, “have the sentence of death in their pockets.”

The costs of the new transition to green socialism are – or should be – already clear in soaring energy bills and sluggish economies, but the faithful – and the self-interested scribblers – claim the problem is merely one of denialism, obstructionism and, ultimately, moral turpitude. The transition is still inevitable in their minds, and their sentence for free-market capitalism is still death.

Peter Foster's columns for the Financial Post have twice been shortlisted for the International Bastiat Prize.

Story: Financial Post