Dispatches from the Duke Conference on “Conservative Visions of Our Environmental Future”

Today I am at Duke to participate in a conference on “Conservative Visions of Our Environmental Future,” sponsored by the Duke Environmental Law and Policy Forum, Nicholas Institute for Environmental Policy Solutions, Nicholas School for the Environment, Duke Federalist Society, Duke College Republicans and the Energy & Enterprise Initiative. The conference is being live streamed here, and I’ll be offering comments on the proceedings below.

First up is Nicolas Loris of the Heritage Foundation. He starts by lamenting the polar extremes of the climate debate between those who deny human contributions to climate change and those who claim there is an imminent apocalypse. Although acknowledging that human activity contributes to climate change, he noted that most green house gas emission control proposals impose substantial costs and would do little to forestall climate change. Developing nations in particular could be unduly burdened by emission controls that could prevent needed development and growth. Many policies would also benefit special interests more than they would produce environmental benefits. Loris urged the elimination of all energy subsidies (including those for fossil fuels) and mandates that distort energy markets and drive up prices. Such policies are wasteful, encourage “crony capitalism,” and do little to improve the energy mix. For my part this is all well and good — I certainly agree with ending energy subsidies and getting the government out of the business of picking winners and losers — but I did not hear much about why climate change should be addressed at all, and whether there is a case for government intervention at all. As longtime readers know, I’ve made the libertarian case for taking climate change seriously here.

Next on this panel is Jeffrey Holmstead, former Assistant Administrator of the United States Environmental Protection Agency (EPA) for Air and Radiation in the George W. Bush Administration and now head of the Environmental Strategies Group (ESG) at Bracewell & Giuliani. Holmstead did not deny the seriousness of climate change either. Holmstead noted instead that meaningful progress on climate change will not be possible until there are technological advances that make it possible to do at a lower cost. There is a “political imperative and even moral imperative” in much of the world for economic development. Meeting this imperative and stabilizing greenhouse gas emissions cannot be done with present technologies, making it important to develop policies that encourage technological innovation. (Alas, he did not mention prizes.)

Holmstead also quarreled with the conference title. While there may be a progressive “vision” of the environmental future, and the sort of technologies and energy sources that should be used, he doubted whether there is an equivalent conservative (or classical liberal) vision for the environmental future. What conservatives and classical liberals want is to create an institutional framework to guide future policies without predetermining what type of future that will bring. The aim is to enact those sorts of policies that allow markets to function in the energy and environmental sphere, not to dictate results. Holmstead also lamented the decline of the rule of law in environmental law (a concern I share). I will confess that I did not expect Holmstead to make these points.

The first question put to Loris and Holmstead was the obvious one: How would you address climate change? Holmstead replied the problem is “too big for government” right now, reiterating the point that available policies would impose substantial costs without producing a corresponding climatic benefit. Loris concurred, adding that economic growth provides better insurance against climate change than emission controls. Both points may be true (and I believe they are), but neither suggested any policy measures that might solve this problem by, among other things, accelerating technological innovation. Pushed on whether this means just letting the market do whatever it will, both acquiesced, though Holmstead suggested that short of a global, uniform carbon tax would be worthwhile (and that sort of policy would never be adopted). Given that Holmstead had expressly stated that avoiding the tragedy of the commons is an important role for government, the lack of a more productive answer was disappointing.

The first speaker on the second panel on “Cutting the Budget, Greening the Planet” was Eli Lehrer, founder of the R Street Institute (a group that spun off from the Heartland Institute after their mad billboard stunt). Lehrer’s remarks began noting both right and left have adopted caricatures of each other’s environmental views and sought to outline how to improve environmental protection by shrinking the state. Lehrer talked about the “Green Scissors” project, which produces an annual report identifying environmentally harmful government programs. The federal government is the nation’s largest employer and consumer, Lehrer notes, and subsidizes all sorts of environmentally harmful behavior. Among the subsidies Lehrer noted were those for oil development, coastal zone flood insurance, cropland erosion, legacy air travel, and more. Going after such programs is just a start, Lehrer noted. He would go farther and eliminate all subsidies of industry, green or otherwise, and seek to replace many environmental regulations with price mechanisms (i.e. taxes). Lehrer noted the market is not perfect, and will not preserve all environmental values — but, of course, what is? Governmental intervention is not guaranteed to preserve environmental values any more than the marketplace. In either case, the question is “compared to what?”

The second speaker on this panel was Jeremy Carl of the Hoover Institution. Carl opened noting that many on the right fall prey to a reflexive hostility to environmentalism and blind affinity for industrial activity, and yet most major environmental legislation was adopted under Republican Presidents and with Republican support. Today, there is little bipartisan support for new environmental measures. Why? Carl suggests the broadening ideological rift over environmental policy is due, in part, to the climate change debate – a debate that has become cultural as much as anything else – and the proliferation of alarmist and biased claims in environmental debates. Too often environmentalism operates as a religion that does not accept dissenting views.

Moving to practical policy, Carl noted how public-private partnerships helped save some California state parks faced with dramatic budget cuts. As Carl noted, without such innovations to help parks and environmental resources pay their way, such things are threatened by the need to slash government budgets. He also suggested that property rights could play a larger role in conserving environmental resources and encouraged the embrace of new technologies. Unlike some others, Carl supported ‘smarter” energy subsidies, without suggesting why we should expect government agencies to deploy resources in a “smarter” way than they do today.

Asked whether the U.S. government should maintain subsidies for alternative energy sources to match those provided by foreign governments so as to keep U.S. industry competitive, Lehrer rejected the notion that subsidies make industries competitive. A predictable and stable regulatory environment combined with relatively low taxes is far more important to international competitiveness than specific subsidies. Carl added that the U.S. benefits from foreign companies subsidizing certain industries. For instance if China subsidizes solar manufacturing, the U.S. benefits from lower installation costs, and that installation and the like lead to more jobs than manufacturing.

Asked about the effects of the Green Scissors program, Lehrer noted some progress limiting flood insurance, curtailing (though not eliminating) ethanol subsidies, and fighting some specific Corps of Engineers projects. I can’t speak to the effect of Green Scissors today, but my experience in D.C. ten years ago was that many environmental groups paid lip service to the initiative’s efforts, but failed to make serious efforts to oppose subsidies, preferring to focus their efforts on preserving or expanding regulations, even when Republicans were in charge.

Asked why conservatives fail to engage productively on environmental issues, Carl suggested the religious fervor and “cultural self-righteousness” some activists bring to environmental policy debates have turned off some on the right and strengthened the hand of conservative obstrucitonists. Lehrer added that some on the right view these issues in equally doctrinaire and rigid ways.

Former Congressman Bob Inglis (R-SC), President of the Energy & Enterprise Initiative, delivered the conference keynote. He opened suggesting that the reason conservatives are not more active in environmental policy debates is because many conservatives don’t think they have answers to many environmental problems (and there is a tendency to deny the existence of problems that one’s political agenda cannot solve). Since leaving Congress, Inglis has sought to convince conservatives that conservative principles can provide solutions to serious environmental problems. According to Inglis, if it’s not profitable, then it is not sustainable, so the key to solving environmental problems is to encourage things that can be profitable. Although he said he’s more comfortable with government interventions than some on the libertarian right, Inglis argued muscular free enterprise has greater potential than liberal altruism or government mandates.

The primary thrust of Inglis’ talk was the need for carbon pricing. Inglis argued that conservatives believe in accountability, that regulatory uncertainty discourages investment and economic growth, and that conservatives have always argued for tax reform and creating sound economic incentives. For these reasons, Inglis argued (quoting Arthur Laffer), that it makes more sense to tax carbon emissions than income (a case they made a few years back in the NYT). Specifically, Inglis argued, there should be a dollar-for-dollar tax swap, reducing existing taxes on income, labor or wealth creation and enacting a tax on carbon. Were such a tax adopted, international competitiveness concerns could be addressed through border tax adjustments, effectively rebating the tax to exporters so they are not made less competitive overseas. Inglis also argued that such a tax should be adopted because many high-carbon energy sources are also the source of external costs for which they are not held accountable. Adopting a revenue-neutral carbon tax and eliminating all subsidies for all energy sources, Inglis argued, should be a conservative policy agenda.

One obstacle to such a reform, Inglis suggested, is the existence of “populist rejectionism” within the Republican Party which has encouraged scapegoating others for systemic problems and discouraged elected representatives from proposing meaningful solutions. This is a problem because if conservatives cannot offer answers to environmental problems that many people care about, they’ll eventually lose the support of those who care about such problems. Inglis also suggested that just as only Nixon could go to China and Clinton could sign welfare reform, only a Republican President could sign a carbon tax swap of the sort he proposes, though he also suggested this would be a more fruitful energy policy agenda for a second Obama Administration than a renewed effort to enact cap-and-trade. (He also noted that a fully rebated carbon tax, unlike some other proposed tax reforms) would not violate the Grover Norquist tax pledge.)

First up to discuss “North Carolina’s Energy Future” is John Hood, President of the North Carolina-based John Locke Foundation. Hood cautioned against adopting well intentioned policies without fully understanding their consequences. He suggested that many environmental policies are themselves poorly informed by economics. North Carolina’s “Clean Smokestacks” bill, he argued, was enacted without any meaningful consideration of its costs and benefits, and has (since enactment) imposed substantial economic costs for minimal-to-no environmental benefit for the state. For economically struggling states like North Carolina, Hood suggested, the imposition of additional environmental regulatory burdens like these matter. Similarly, Hood cited his own research showing that energy prices are negatively correlated with economic growth.

State Rep. Chuck McGrady offered the view of a current legislator. Though a Republican, Rep. McGrady is former Sierra Club chapter President. To start, McGrady reminded the audience that many aspects of energy (and environmental) policy are out of state hands. Though regularly lauded by NC environmental groups, McGrady voiced strong support for the free market and opposed imposition of a renewable portfolio standard in the state. In his view the free market should dictate energy choices, but the status quo is not particularly free market. To level the playing field without imposing new costs on taxpayers McGrady would allow third-party sales of electricity. (Under current law, power can only be sold to or from the dominant utility.) This creates an unnecessary barrier the deployment of renewable energy technologies. On fracking, McGrady is less supportive than some of his Republican colleagues, but not unalterably opposed to it. He believes environmentalist groups “way overstated” the problems with hydraulic fracturing, but also thinks the industry overstated fracking’s economic benefits and did not adequately address real potential environmental concerns. This sort of thing, in his view, is symptomatic of the problems in the broader environmental policy debate. He also suggested that conservatives (like environmentalists) increasingly play to an ever-shrinking base, a course which risks political irrelevance.

A third perspective on North Carolina policy was offered by attorney Christopher Ayers, who also serves on the NC Environmental Management Commission. He first provided an overview of how public utilities are regulated in North Carolina, noting the regulatory barriers that limit the ability of regulated utilities to open new facilities. In considering policies to encourage (or even mandate) alternative energy sources, he noted that it is important to consider how variable power sources, such as solar or wind, affect baseload capacity and electricity reliability, and to keep in mind that coal maintains a fairly strong cost advantage, at least for the time being. If and when that changes, the market will likely drive a shift. The key policy question going forward is the extent to which we want government policymakers to try and push the market in a particular direction or to act more quickly.

[Next panel is mine, so may not be able to live-blog that one.]

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