Answers to student questions about fossil fuel growth, fossil fuel subsidies, and extinct species
My answers to questions about Fossil Future from graduate students at Marquette University
I was recently invited to field questions from graduate students at Marquette University, who had been assigned to read chapters 1-3 of my book, Fossil Future. The students were engaged and asked some thoughtful questions, so I wanted to share it with my audience.
Here’s an anonymized transcript of the Q&A, edited only for clarity (including avoided repetition):
Questioner 1:
You talk about the benefits of fossil fuels and how they can lift billions out of poverty and help the developing world flourish. But if those benefits are so great and fossil fuels have been around for over a century, then why haven’t they already reached many countries? You talked about a third of the world burning wood and dung. So what exactly is going to change now? Why should we believe that the same global powers, often the same ones who exploited those regions for centuries in the first place, would suddenly start sharing energy accessibility?
Alex Epstein:
Yeah. Really important questions there. So one thing I would point to is if you look at these data on China and India, I think this is a good thing to note, is that in the last 50 years, most of the growth of fossil fuels is coming from the once-undeveloped or barely-developed world, and they have proliferated there.
I wasn’t alive then, and I know the students here weren’t alive then. But in 1970, I could have made this same basic presentation about, “fossil fuels have all these benefits,” and you’d say, “Well, if they have all these benefits, then why haven’t they come to China and India?” And one of the things is that the industry needs to scale. It takes time to scale these things. But the other thing, and this is something I stress a lot in Chapter 10 of my book—I encourage you guys, I’ll send it for free, but take advantage of that.
What you need in countries is you need the right political infrastructure. So you had a lot of reforms in China and India, which are by no means perfect, particularly China, but you at least had a situation there where you had enough property rights, where people could come in and invest and have some sort of assurance of a return.
Now, if you look at what’s happened in some of the African nations, it’s been tragic in many different ways, because there’s been all sorts of exploitation in all kinds of different directions. But I think the most obvious kind of thing is you’ll have a company—and this has happened, although it’s definitely not always happening—but you’ll have a company come in and they’ll negotiate something with some leader, and the leader doesn’t really care that much about the people. And the leader gets enriched maybe, and the company gets enriched, and then the people are left in not a good situation and they may even have real pollution.
That’s a real thing that happens, and that’s a really bad thing. The other thing that happens, that’s the worst long term, is just if you don’t have stable property rights and economic arrangements, again elaborated in Chapter 10 of my book, then people aren’t going to go in and be able to make those investments, and they’re not going to be able to pay off. And eventually everyone will industrialize, but it’s just going to take a lot longer.
One of my friends in Kenya is a guy named Jusper Machogu. You should check him out on Twitter. He’s a really interesting guy. He’s leading this thing called Fossil Fuels for Africa, and he’s very focused on getting rid of all of the impediments to fossil fuels that often, by the way, are encouraged these days by the wealthier world. So there’s that element.
And there’s somebody else I like a lot named Magatte Wade from Senegal, and she’s more focused on the political reforms. How do you do that? What’s certainly true, what we’ve seen in every case—and there’s no reason to believe there’s any exception—is when you get sufficient political reform, then you can get the infrastructure where people will invest in the country and then fossil fuels can scale and do the work.
There’s no reason to think that just as we’ve seen with different parts of Asia to some extent Latin America, the same thing can’t happen over time in African nations and other poorer parts of the world. So that’s my answer to that.
Questioner 2:
Technology is changing so rapidly with solar, wind and primarily battery storage. As batteries become more efficient and effective, do you think this could shift your views on the viability of solar and wind, especially, for example, in a regulated monopoly like Wisconsin?
Alex Epstein:
Well, yeah. So this is a really important issue to raise, because I’m talking about being even-handed about the benefits, but you’re never dealing with a fixed situation when you’re dealing with technology and economics, because you can have economic evolution. And so I'll go into some specifics about my current views. But yeah, for sure, insofar as there's a major economic evolution, my view of the relative benefits of fossil fuels would change. And even my view is that if we had not had terrible nuclear policy for 50 years, I think the relative benefits of fossil fuels would be considerably less than they are now.
And I would just say I’m hopeful that we have a breakthrough with solar and wind. In a sense, how could you not want cheaper energy? It wouldn’t affect me. I would just talk about that, so it’d be a great story to talk about. I don’t think we’re very close to that.
Questioner 2:
You make a strong case for expanding affordable fossil energy in the developing world, but I also know that there’s been a tremendous improvement in air quality nationwide, because of pollution controls. And we also study in this course the levelized cost of energy. How do you think pollution control requirements—like those for VOCs, NOx, mercury, and particulates—should factor into the cost-benefit analysis, especially in Third World countries where such controls may be lacking?
Alex Epstein:
Great question. I just want to ask a follow up. I would love to comment on levelized cost of energy (LCOE), but what’s the relationship between LCOE and that question?
Questioner 2:
Well, pollution control requirements. For instance, wind energy is our utility in this area—
Alex Epstein:
Are you saying that should be factored into levelized cost of energy?
Questioner 2:
Yes. Well yeah. The cost-efficient issue of coal and hydrocarbons versus—
Alex Epstein:
Yeah. I got you. Well, let me say something about levelized cost of energy (LCOE). I think this has been one of the most damaging terms that’s used. I think Lazard, who’s the biggest popularizer of it, has somewhat recanted. By the way, we have a website energytalkingpoints.com, which if you search LCOE, you can see a lot of detail on this.
But if you look at the LCOE literature, Lazard themselves admit that LCOE excludes reliability-related considerations. This is the fallacy of conflating something that’s unreliable or non-dispatchable with something that’s reliable and dispatchable. And that has led to all sorts of insane confusions about people thinking, “Oh. Solar is cheaper,” but they’re not factoring the system costs needed for reliability. So I think that’s been a huge fallacy and it’s been very damaging. And again, reference Chapter 10 of my book, and somewhat I talk about this in Chapter 4.
So the question is how do you decide on these issues of pollution control, particularly at the early stages of using energy? And I think the idea you need to have is that, what is considered pollution that requires a legal remedy is very specific to economic context.
And I’ll give you the simplest example, which is fire. When the caveman discovered fire, if you took the approach that we take today—I mean, not us here, but that many people take—of, just looking at negative side effects and not benefits, you’d say, “You cannot harness that fire. Think about all the smoke that you’re going to inhale. You’re subjecting your children to it, how could you possibly do this?” But then they would say, “Well, this is allowing us to have food. We can cook our food. This is helping us with agriculture. This is allowing us to avoid freezing to death. And those are the most urgent things.”
So of course they didn’t have real laws back then, but you would imagine what they would do, is they would have procedures where you try to eliminate the worst side-effects of it, but you know that even a significant amount of smoke inhalation is going to be inherent in life then. Versus now, it would make no sense to say that because it’s not necessary.
There’s a key concept I talk about in Fossil Future, and I think it’s applicable in the law, which is, what is a reasonably preventable level of emissions? It’s very important that one thinks about that. And you always have to think about this at every stage of evolution, because there’s always going to be some kind of side-effect that has some kind of risk or harm. You need to be able to think about, how do I weigh that in comparison to the benefit? And it’s going to depend on the state of the technology.
For example, take the poor nations right now. You mentioned all the things they could inhale, but guess what? They’re inhaling these things through wood and animal dung much more than they would be through coal, let alone something like LPG. So you don’t want to say, “Well, we’re going to have a really aggressive standard for these LPG stoves,” so then they have wood and animal dung.
What you need to have ultimately has to be decided by the people in the country. There’s no one-size-fits-all thing. But it needs to be decided with a real consideration for individual rights, which have been a real problem in China, because it’s not a regime in many ways that values individual rights.
So you’ve seen situations there where some people’s health gets totally sacrificed for the alleged benefit of the economy. And I’m against that. But they need to set standards that are going to be evolving, but are initially going to be considerably lower than our standards until and unless there is an equivalent technology that’s cheaper.
So in some cases, the cleaner-burning fossil fuel stuff is cheaper. In some cases natural gas might be the cheapest and that’s already pretty clean burning. Or in some cases limitation can be cost-effective if you have ways of... Like with oil, we made it more cost-effective by figuring out how to use the entire barrel. But sometimes pollution control does cost money, and when it costs money, then you have to weigh what’s the benefit you’re going to get from spending that money versus what’s the benefit you’re going to lose from spending that money?
And every society has to make that decision at every time. And there are hazards both ways. If you set the standard too stringent, you die. People die and suffer from lack of production and opportunity. And if you set the standard too loosely, people suffer and die from emissions.
So that’s the framework. That’s why I’m sympathetic to China and India. I’m not sympathetic to exactly how they’ve done it, but I’m sympathetic to them and many of the people there accepting higher levels of pollution, because sometimes it’s superior to what they had with the biomass. And sometimes even if it isn’t, if they lived in the country or something and it was relatively cleaner, living in the city with more pollution, they judge is better for their lives than not, and they know it evolves.
Questioner 3:
When you do the cost comparison between fossil fuels and renewables, do you account for the subsidies that fossil fuels get? I’m from India, and I can tell you that there are nine times more subsidies given to fossil fuels as compared to renewable energy. The International Monetary Fund, they talk about seven trillion per year subsidies for fossil fuels.
Alex Epstein:
There’s a piece I wrote on exactly this, which is called something like The Myth of Fossil Fuel Subsidies. I’ll outline it quickly, but—let me step back for a second. If the IMF thing were really true—and they raise it all the time, they started at three trillion. That wasn’t enough, so then it immediately becomes five trillion and then seven trillion. If that were really true, then there would be no problem. Why is the world just spending trillions of dollars? That’s 7% of global GDP. Why are we spending all of this money to favor something that’s already cheaper? So I think there’s some smell test that there’s something off with this. And I’ll go into why it’s off.
But a lot of this is based on climate-related negative externality calculations, which I do not think are supported. Maybe I’ll go into the climate stuff in a minute. So that’s a huge, huge portion of it. They also blame fossil fuels for things. It goes into the absurd, if you break this down, which I do. They’ll blame fossil fuels for auto accidents, or they’ll blame it for everything related to energy, even though that would be just as true as some other form of energy.
And then a lot of the subsidies, and probably the ones you’re referring to, are countries that are giving consumer subsidies because consumers want energy. Let’s take an example I know better. Like Saudi Arabia or Arab countries, they’re giving subsidies for oil or oil-related products, because the people would want to afford more of them. They’re not doing that to prop up the industry to avoid solar and wind. They’re losing money doing it, but they’re doing it for this reason.
So what they’re saying is, basically, the citizens can have the energy they want from any form of energy, but they’re going to make it cheaper by taking the cheapest form of energy, fossil fuels, and then subsidizing that to make it even cheaper for people to buy. But that’s not evidence that it’s not actually cheaper.
In general, the world is not in a conspiracy to use more fossil fuels. If anything, it’s the opposite. And the subsidies are far, far greater in the other direction if you ignore all the fallacies and you do it proportional. So that’s broken down very carefully, so you can see that analysis and see what you think.
Questioner 4:
You define human flourishing in your book as the ultimate moral standard for evaluating energy policy. But how can that be justified when human-driven environmental destruction is not only harming non-human life, but also creating negative feedback loops that undermine long-term human wellbeing? Fossil fuel plants increase respiratory diseases. Climate change is accelerating mass extinctions, including the extinction of species that help regulate ecosystems we rely on, and the destruction of cornerstone species that threatens biodiversity and ecological balance. Why do you dismiss these concerns as anti-human, rather than recognizing that human flourishing is inherently tied to the health of the planet you depend on? I think it is both ethically and scientifically irresponsible to ignore the broader ecological consequences of our fossil fuel expansion.
Alex Epstein:
Gotcha. I’m happy to answer that. I’m just curious, what policy do you support? Do you support net zero by 2050? Or, what do you think should be done?
Questioner 4:
I’m not sure about that. I just support the best policy that would benefit the planet as a whole.
Alex Epstein:
Gotcha. So I appreciate you getting the book. I do think I address basically all these issues in the book, but let me address it in a certain way.
So one question is this issue of human flourishing and how does that relate to other species? And the quick version is that, I think human flourishing means when I’m looking at the world, I want the world that’s best for humans. Now, that’s not hostile to the rest of nature, but nor is it saying the rest of nature is all something that should be preserved.
I think of it as we want a pro-human relationship with the rest of nature. So some parts of nature we want to eradicate, at least from our local surroundings, like malarial mosquitoes. That was a really good thing that a lot of the civilized countries have done, that has made us a lot better. And in most of the places with malaria, we’d love to be able to get rid of their malaria mosquitoes.
Then there are things like polar bears where you want them, they’re beautiful. But you don’t want them near you, so you have to take various actions with them.
And there are things that you actually want to give an artificially strong chance of life, like I do with my dog. I spend inordinate resources on him that could be spent on other humans, honestly, but we choose to spend it on him. So I think that’s the way I think about all of these things.
We should definitely be aware of different kinds of ecological things and how they impact humans. I think one needs to be very objective about them. Now, you said fossil fuels can’t bring back an endangered species. They’re now trying to bring back the dire wolf and the mammoth. That’s been in the news lately, they’re trying to do de-extinction. Though yes, I think, in general we can’t do that exactly.
But what you can do, the wealthier you are—and that involves a lot of fossil fuels—is you can deliberately preserve a lot more things because you are wealthier. I think all those numbers about 50% are just wrong in terms of you’re not losing 50% of the species, that absolutely not happening. Again, I have some stuff on that in the book and on the website. But insofar as you do have these real species issues, they’re mostly in poor places where they have to live off the land and where they’re in conflict with the local people. So the solution to that is be wealthy, have a lot of energy, and in particular I have energy that’s not taking up a lot of space on the land.
So number one, biomass. But also solar and wind have challenges with these things as well. But mainly get off biomass. Get off ground-level biomass. Get rich. And yeah, the richer you are, the less footprint your energy takes. The more you can be ecologically very savvy and manipulate nature, the more you preserve more of the things you want to preserve,
Most of the species ever have gone extinct. If you want to preserve species, you have to deal with things like invasive species, which is the number one cause of extinction. It has nothing to do with fossil fuels. It’s like, species brought from one place to another. So you have to do a lot of engineering to preserve things, and you should, in order to make the Earth a better place overall, including the balance of species. But that’s going to require a lot of energy.
There’s this idea that by the world warming one degree Celsius over a century, so two degrees Fahrenheit, that that’s changed the climate so much that all these species are dropping like flies and there’s nothing we can do. That is just a false narrative. The extinctions are exaggerated to the extent they’re happening. It’s mostly from poverty and the way to deal with that in a pro-human way is wealth. So I guess that took the rest of our time, but I think it is a really important category of concern. So I hope that was interesting.
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Thank you, Alex.
Pretty good questions considering most students are being brainwashed about climate and fossil fuel negativity, never taught the extreme value fossil fuels bring us. Keep up the excellent work Alex.