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Reiterating the Need for Limits

Lisi Krall

Stan Cox recently published several articles making the unpopular argument that confronting the problem of climate change with any commitment to energy justice, social justice, and any reasonable expectation for retaining necessary ecological balances, cycles and integrity will require that we think about limits when it comes to energy production and consumption [1].  He and his son Paul rightly point out that discussions embraced by the leaders of the climate movement promise “a cornucopian future free of greenhouse emissions” without any question of limits and without any question about the role of markets to orchestrate such a radical change [2]. There is no question the climate movement has its hands full confronting the dark age of Trump/neoliberal climate denial without opening this bag of worms.

The reality is that by not confronting the issue of limits and the notion that markets are the best option to successfully orchestrate this transition, the progressive climate movement leaves itself vulnerable to the likes of Stephen Moore and Kathleen Hartnett White in their neoliberal rant on energy entitled Fueling Freedom [3]. Moore and Harnett White make many inaccurate and spurious claims in this book, too many to take up here. It is clearly a book clouded by neoliberal ideology.  Unfortunately, there are a few things they might have right.  They claim “We should be honest and up-front about the scale and enormity of the challenge implied by decarbonization.”  They are right.  A second thing they may have gotten partially right is that green energy policies assume more centralized control of the economy.  Now I am sure these authors and I would disagree on the definition of “centralized control of the economy.”  For example, I think carbon taxes might qualify in their lexicon. My response to this concern is to say loud and clear that if we are to be successful in making this transition our present economic arrangements must be brought into question.  

The progressive climate movement needs to be honest and forthright on these accounts. Instead it hedges on the question of limits and the problem of economic order.  In fact, a “100% renewables for a 100% high-energy future” recipe to be carried out through cap and trade or carbon taxes  simply sidesteps these important issues. Our real problem is that the progressive climate movement, as well as those concerned about our ecological crisis, should be tackling the ideological triumvirate of our times: that there are no limits to economic (or energy) expansion; that there are always technological solutions to limits; and that markets (with a little help from taxes) capture our ingenuity and allow us to override limits. This ideology is folly, and the quicker we acknowledge this the more clearly we can envision a way forward that might offer us the outcome we want: energy and economic justice, meaningful carbon reduction, and a commitment to the rights of the other-than-human world.       

Just about everyone who is optimistic about renewables refers to the famous Jacobson and Delucchi study as the first word on the promise of 100% renewables [4]. Even Naomi Klein, who clearly understands that economic order needs to be confronted in the fight against climate change, refers to this study in support of renewables and says in its defense: “ ... the road map is one of several credible studies that have come out in recent years that show how wealthy countries and regions can shift all, or almost all, of their energy infrastructure to renewables within a twenty-to-forty-year time frame.” [5] Stan Cox  has nicely reviewed the emerging literature that questions the possibility of 100% renewables to “meet 100% of unrestrained future energy demand” but also points out that even those who are skeptical of the possibility of 100% renewables for 100% of energy demand “agree on the ultimate goal: a permanent high-energy economy”[6]. Cox dares to bring up the question of limits, something those of us concerned about social justice and the fate of the earth ignore at great peril.  

Most of the studies of future energy demand base their conclusions on overestimation of efficiency and don’t actually consider that the status quo shouldn’t be the baseline for energy demand since there are so many people without access to sufficient energy.  Yet Cox is clear and correct when he points out that “The problem with inequality is not just that too many people are poor: it’s also that too many are rich.” [7] Let me use India as an illustration to highlight the complexity of this issue of limits.  In India the top 1% of the population has 60% of the wealth of the country, and a rising middle class comprises some 500 million people. This implies a tremendous increase in energy demand as the Indian middle class has aspirations for a standard of living that is not that different from ours, while leaving some 750 million Indians in poverty, most with inadequate access to energy. We might ask what the real possibilities are, given this landscape of increased demand and inequality—and we haven’t even considered the energy consumption per capita in the US compared to India [8].

Now let me turn to the question of the belief in markets and more specifically the belief that markets can effectively carry us through this transition (with a little tweaking). There isn’t any question markets can be commandeered to force the hand of efficiency.  People of all political persuasions believe this.  If we place a meaningful cap on carbon and then leave markets (through pricing) to distribute, we will likely get more efficiency in the use of fossil fuel (of course that doesn’t mean our consumption of fossil fuel will go down). The same will hold for a tax on carbon, which will raise the price of fossil fuel causing substitution and redistribution. (Moore and Harnett would consider this a move toward centralized control of the economy but in reality these are simply standard neoclassical market failure corrections).  Yet in a world of economic inequality, this will mean that we will also get a highly undesirable outcome: the haves will get most of what’s left and the have-nots will get less. Most people recognize this as well, and that’s why many who advocate a carbon tax also advocate some redistribution to counteract the regressive effect it will have on the poor [9].

But as the limits of technological efficiency are reached without any substantial changes in economic organization (i.e. profit, private property, problematic distribution of economic benefits), there will be more and more pressure to rethink the cap or eliminate the tax as the case might be.  Given the formidable distributional problems of the economy, the well-off will argue that advocating for lifting the cap (or lowering the tax) is one and the same as advocating for the poor and the middle classes.  The poor and middle class will also advocate for the same thing if history is any indication. 

The problem with the “cap and let the market work” and carbon-tax strategies is that they rely on an implicit ideology that has already gotten us into a lot of trouble: the belief that the market captures human ingenuity (inventiveness) and runs with it for the betterment of humankind.  This ingenuity is usually first subsidized with government research money and then captured primarily to make money and not for the betterment of humankind.  If the latter occurs, it is by accident.  This economic ideology allows us to skirt the challenge of limits and the problem of inequality, and it also allows us to avoid embracing the realities of technological limitations.  In essence it gives us the sense that the problem of climate change is a technological problem when it’s actually a problem of economic order, a problem of human supremacy, and a problem that can only be confronted with limits to energy production and consumption as part of the discussion. 

To make matters worse, the energy/climate change domain is fraught with ambiguities that allow us to fudge the cap in the first place. (We’ve lost sight of the limitations of the Paris Accord, which were meant to be a starting point, not a goal.) The ambiguity arises because the clear connection between ppm CO2e and temperature is not exact and because it isn’t technologically clear how much renewable energy we need or can access to power an ever expanding economy.  The combination of ideology and ambiguity make for a formidable team blocking our attempt to call for limits. While it is clear that human ingenuity can be captured for profit in a market system, there is a big question as to whether this will result in the betterment of humanity, the ecological stability of the planet, or staving off the 6th great mass extinction.  I have no doubt a cap will result in more energy efficiency in the use of fossil fuels and some transition to renewables, but the rest is unclear to me. 

From a practical perspective, if we were to wholeheartedly pursue the “cap and let the market work” path, this is what I foresee.  Let’s be optimistic and assume that a hard and fast cap on carbon holds initially—chaos will be the order of the day if the cap is meaningful, especially since we have an inadequate renewable-energy infrastructure and are now dependent on fossil fuel for over 80% of our energy needs.  This is true both in the US and globally.  Clive Hamilton has pointed ou—t that in developed countries we should be reducing our carbon emissions 6% per year beginning in 2020 if we actually want to make headway to stay under a 2 degree Celsius change in temperature.  There is no precedent for this except in Russia during the early 1990s when they were in deep economic decline [10]. The ability of ‘the market’ to provide energy through substitution (renewables) and efficiency in fossil fuel use will be tested in such a way that the impact on day-to-day lives---mostly of the non-rich--- will be chaotic at best. 

The more likely outcome is that the cap on fossil fuels will not hold, or will not be meaningful to begin with. The pressure from a chaotic and expansive market system that has been put in charge of the transition will be to lift the cap; the rich will argue this needs to be done to help the poor.  Stephen Moore and Kathleen Hartnett White argue just that in their book Fueling Freedom. In their minds fossil fuel has lifted people out of poverty (of course this depends on how one accounts for poverty). In the meantime, the price of fossil fuels will drop and in a market economy, they might actually be the cheaper option for energy in spite of any reduced costs of renewables.  The rich and privileged will surely use this as a lever to decrease the cap and play with the ambiguities offered by the science of climate change.

So where does this leave us?  I’m not sure but one thing is certain.  A discussion of climate change policy has to include a critique of the market economy and the use of markets to make the transition.   Otherwise we end up with inadequate policy and worse still the mindless deployment of renewables without a sense and respect for the energy of wild space, without protection of endangered species, without protection of people against the whirring of wind turbines and massive power-lines in their back yards, and without a sense for broader ecological limits to economic expansion. 

Right now there is little discussion of the question of economic order, and the machinations to try to include private enterprise in this massive project of orchestrating the transition to renewable energy are quite astounding (precisely because private enterprise isn’t a good fit for a massive energy transition).  Let me provide you with two examples.  One is the Buffalo Billions, where the state of New York has built a SolarCity production facility in Buffalo, New York.  The state of New York will own the facility, which it has spent some 750 million tax payer dollars to build, and billionaire Elon Musk will rent it for a $1 per year and will pay no property taxes. (I think there may be some renegotiation on this after 10 years) [11].  I assume Mr. Musk and the stock owners of SolarCity will keep the profits.  I’m left to ask the following question: is the technology of SolarCity-produced panels so mysterious and complex that the state of New York couldn’t simply manage the job without Elon and thereby avoid the necessity for middlemen of profit altogether? 

Let me provide a second example of forcing the use of private enterprise and markets when we would be better off without them.  The Federal government is now selling offshore wind leases along the Atlantic Seaboard.  To meet its renewable energy goals (50% electricity to come from renewable energy by 2030), New York will require the use of offshore wind.  One of the firms that has purchased one of the biggest leases is Statoil---Norway’s 67%-nationalized oil company. As I’m sure you’re aware, Norway had the sense to nationalize energy in the late 60s.  It seems somewhat convoluted that New York finds itself paying Statoil to develop New York wind energy.  Oh and it’s the New York’s Green Bank (aka Wall Street Money) that is set up to provide loans for the development of renewables (although I don’t think they’re funding Statoil because Statoil likely has enough money to fund itself in this venture). 

These examples point to something important---New York’s energy transition is not primarily about halting climate change through the dissemination of renewable energy.  It is about creating economic opportunity mostly on the profit side of the ledger.  It is also clear that despite all of this New York doesn’t have the necessary infrastructure to accommodate the large scale deployment of renewables.  There are, for example, grid problems in New York just as there are grid problems throughout the US. So it seems all in all a half-baked plan.

The problem is that few are asking questions about these arrangements----everyone is simply sitting in the bandstand naively cheering for renewables, human ingenuity, and the sanctity of markets to capture it.  The question of economic order keeps me up at night.  I wish it kept more of those involved in the climate movement up.  If we were endowed with an ecologically enlightened population, lacking the baggage of human supremacy, respecting the virtues of ignorance, having compassion for the poor, a sensibility for Earth, and a basic critical understanding of economic order, our best option might be to orchestrate a planned transition.  Again let me quote Stan Cox who clearly gets it when he says: “The conversion has to happen over years rather than decades and will have to be heavily subsidized, with the money coming from taxation of higher incomes and slashing of military appropriations and other wasteful spending. And it will have to be regulated so that it provides plenty of employment but no profiteering.” [12] This would move us collectively in the direction we need to move.  Instead we are merely carving the new domain of private enterprise in renewable energy and moving in the wrong direction.  

Simply putting a cap or tax on carbon and letting the market work is not going to resolve our fundamental problem, which is quite simply neither knowing our place on Earth nor clearly understanding the limitations of markets and a market economy with 7.4 billion people and tremendous inequality that is now running up against limits.

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Lisi Krall is a Professor of Economics at the State University of New York, Cortland. Her numerous essays and articles appear in diverse journals from the Cambridge Journal of Economics to Behavioral and Brain Sciences. Her book Proving Up: Domesticating Land in U.S. History (2010, SUNY Press), explores the interconnections of economy, culture, and land in U.S. history.




[3] Moore, Stephen and Hartnett White, Kathleen (2016). Fueling Freedom: Exposing the Mad War on Energy, Washington DC: Regnery Publishing.

[4] Jacobson, Mark Z and Delucchi  Mark A.(2009). A Path to Sustainaible Energy by 2030.  Scientific American, November 2009. 58-65., Jacobson, Mark Z and Delucchi  Mark A.(2011) Providing all global energy with wind, water, an solar power, Part I: Technologies, energy resources, quantities and areas of infrastructure, and materials.  Energy Policy, 39:1154-1169, Jacobson, Mark Z and Delucchi  Mark A. (2011). Providing all global energy with wind, water, and solar power, Part II: Reliability, system and transmission costs, and policies. Energy Policy 39: 1170-1190.

[5] Klein, Naomi (2014). This Changes Everything. New York: Simon and Schuster.




[9] Harris, Jonathan M. and Roach, Brian. (2018) Environmental and Natural Resource Economics: A Contemporary Approach, 4th edition. New York and London: Routledge. 

[10] Hamilton, Clive. Utopias in the Anthropocene. Plenary session of the American Sociological Association, Denver, 17, August 2012.

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