An Issue of Science and Economics

An Issue of Science and Economics

July 17, 2008


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Abundant and affordable energy is one of the great boons of modern industrial civilization and the basis of our standard of living. Energy makes people’s lives brighter, safer, more comfortable, and more mobile. Unfortunately, billions of people in poor countries still do not have access to energy. For example, India’s per capita consumption of electricity is one-twentieth that of the United States. Hundreds of millions of Indians live “off the grid”—that is, without electricity—and many still use cow dung as a fuel for household cooking, a practice that contributes to half a million premature deaths every year. This continuing reliance on preindustrial energy sources is also one of the major causes of environmental degradation. 

Whether poor people around the world ever gain access to energy depends on a number of factors, such as the development of secure property rights in developing countries and continuing technological progress. One potential obstacle, however, could thwart any efforts to provide more energy. That threat is political pressure to reduce energy use worldwide for fear of global warming. The hydrocarbons— coal, petroleum, and natural gas—that are the source of anthropogenic greenhouse gas emissions provide over three-fourths of the world’s total energy. Although many alternative sources of energy exist, all of these sources combined cannot begin to substitute for hydrocarbons without further significant technological innovations and massive capital investments. This is not the work of a few years, but of several decades. 

Yet environmental activist groups and their supporters in legislatures around the world, backed by activist scientists eager to use the political process to advance their ideological agendas, demand action now. They propose massive, mandated cutbacks in hydrocarbon use, while at the same time objecting to reliable, proven technologies, such as nuclear power, that could contribute to such cutbacks. Although even the European Union (EU) is failing to meet its targets under the Kyoto Protocol, the activists and their political allies call for more ambitious targets. With every severe weather event touted as proof of global warming and shrill warnings about the world’s being only a few years away from climate catastrophe, together with exploitation of national security worries, legislators are coming under extreme pressure to “do something.” 

Support for putting the world on an energystarvation diet to avert catastrophic global warming has continued to gain traction among politicians, pundits, and public intellectuals in many countries. Notwithstanding this outcry, however, the scientific case for catastrophic global warming continues to be dubious. Moreover, environmental activists refuse to countenance adaptive strategies that would be demonstrably beneficial whether the world warms significantly or not.

Alarm over the prospect of Earth’s warming is not warranted by the agreed science or economics of the issue. Global warming is happening, and humans are responsible for at least some of it. Yet this fact does not mean that global warming will cause enough damage to Earth and to humanity to require drastic cuts in energy use, a policy that would have damaging consequences of its own. Moreover, science cannot answer questions that are at heart economic or political, such as whether the Kyoto Protocol is worthwhile. 

Predictions of a global warming catastrophe are based on models that rely on economics as much as on science. If the science of the greenhouse theory is right, then we can assess its consequences only by estimating future production of greenhouse gases from estimates of economic activity. This policy brief addresses questions regarding global warming as a political and economic, as well as scientific, issue.