Moral Cover and Business Opportunities

Green Bootleggers and Baptists
By Bjørn Lomborg

In May, the United Nations’ International Panel on Climate Change made media waves with a new report on renewable energy. As in the past, the IPCC first issued a short summary; only later would it reveal all of the data. So it was left up to the IPCC’s spin-doctors to present the take-home message for journalists.

The first line of the IPCC’s press release declared, “Close to 80% of the world‘s energy supply could be met by renewables by mid-century if backed by the right enabling public policies.” That story was repeated by media organizations worldwide.

Last month, the IPCC released the full report, together with the data behind this startlingly optimistic claim. Only then did it emerge that it was based solely on the most optimistic of 164 modeling scenarios that researchers investigated. And this single scenario stemmed from a single study that was traced back to a report by the environmental organization Greenpeace. The author of that report – a Greenpeace staff member – was one of the IPCC’s lead authors.

The claim rested on the assumption of a large reduction in global energy use. Given the number of people climbing out of poverty in China and India, that is a deeply implausible scenario.

When the IPCC first made the claim, global-warming activists and renewable-energy companies cheered. “The report clearly demonstrates that renewable technologies could supply the world with more energy than it would ever need,” boasted Steve Sawyer, Secretary-General of the Global Wind Energy Council.

This sort of behavior – with activists and big energy companies uniting to applaud anything that suggests a need for increased subsidies to alternative energy – was famously captured by the so-called “bootleggers and Baptists” theory of politics.

The theory grew out of the experience of the southern United States, where many jurisdictions required stores to close on Sunday, thus preventing the sale of alcohol. The regulation was supported by religious groups for moral reasons, but also by bootleggers, because they had the market to themselves on Sundays. Politicians would adopt the Baptists’ pious rhetoric, while quietly taking campaign contributions from the criminals.

Of course, today’s climate-change “bootleggers” are not engaged in any illegal behavior. But the self-interest of energy companies, biofuel producers, insurance firms, lobbyists, and others in supporting “green” policies is a point that is often missed.

Indeed, the “bootleggers and Baptists” theory helps to account for other developments in global warming policy over the past decade or so. For example, the Kyoto Protocol would have cost trillions of dollars, but would have achieved a practically indiscernible difference in stemming the rise in global temperature. Yet activists claimed that there was a moral obligation to cut carbon-dioxide emissions, and were cheered on by businesses that stood to gain.

During the ill-fated Copenhagen climate summit in December 2009, Denmark’s capital city was plastered with slick ads urging the delegates to make a strong deal –paid for by Vestas, the world’s largest windmill producer.

Oil tycoon T. Boone Pickens, a famous convert to environmentalism, drafted a “plan” (which he named after himself) to increase America’s reliance on renewables. Of course, he would also have been one of the major investors in the wind-power and natural-gas companies that would benefit from government subsidies.

Traditional energy giants like BP and Shell have championed their “green” credentials, while standing to profit from selling oil or gas instead of environmentally “unfriendly” coal. Even US electricity giant Duke Energy, a major coal consumer, won green kudos for promoting a US cap-and-trade scheme. But the firm ended up opposing the draft legislation to create such a scheme, because it did not provide sufficient free carbon-emission permits for coal companies.

Dubious claims by faithful activists gave rise to the biofuels industry (with supporting lobbyists). Biofuel production likely increases atmospheric carbon, owing to the massive deforestation that it requires, while crop diversion increases food prices and contributes to global hunger. While environmentalists have started to acknowledge this, the industry received a lot of activist support when it began – and neither agribusiness nor green-energy producers have any interest in changing course now.

Obviously, private firms are motivated by self-interest, and that is not necessarily a bad thing. But, too often, we hear commentators suggest that when Greenpeace and Big Business agree on something, it must be a sensible option. Business support for expensive policies such as the Kyoto Protocol – which would have done very little for climate change – indicate otherwise.

The climate-change “Baptists” provide the moral cover that politicians can use to sell regulation, along with scary stories that the media can use to attract readers or viewers. Businesses see opportunities for taxpayer-funded subsidies, and to pass on inevitable cost growth to consumers.

Unfortunately, this convergence of interests can push us to focus on ineffective, expensive responses to climate change. Whenever opposite political forces attract, as activists and big business have in the case of global warming, there is a high risk that the public interest will be caught in the middle.