It’s hard to believe New York Times bestselling author Alex Epstein founded the Center for Industrial Progress (CIP) over a decade ago.
As president of the CIP, he launched an impressive career dispelling modern myths and false prophesies related to fossil fuels and the environment and regularly delivers lectures around the world. I am sure I am not the only new hire arriving for the first day of work at a North American Oil and Gas company to find management had given me a personal copy of his first book “The Moral Case for Fossil Fuels” (written in 2014). Alex Epstein’s subsequent essays, podcasts, videos and substack articles opened my eyes to the incredible benefits the fossil fuel industry provides, which Epstein compares in the graph below with the term- “human flourishing hockey sticks”.
The graphs show the astonishing growth in human prosperity in the last 200-300 years due to the use of hydrocarbon energy (coal, then oil and eventually natural gas) replaced wood and other biomass as the essential production input during the industrial revolution. (As a Canadian I was secretly delighted with the characterization of unprecedented growth of prosperity as a hockey stick.) The ways in which hydrocarbons have created human flourishing are well documented in Epstein’s latest book– “Fossil Future: Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas–Not Less” which was published earlier this year.
Ironically, 2022 is a year when Epstein’s predictions and assertions are being played out in real-time as policies that seek to end fossil fuel production crash into the realities of affordability, reliability, technological limitations, energy densities and geopolitical realities.
A decade ago, Alex Epstein pointed out that the negative impacts of fossil fuel use on climate would be outweighed by fossil fuel benefits. After a decade of investigation, dialogue, research and public action, Epstein has developed profound messaging that many supporters of the Canadian energy industry should hear. He suggests many ideas that may save our natural resource industries in Canada and help steer a way to productive energy policy across provinces.
PRO-HUMAN ENERGY AGENDA
It’s interesting to track Epstein’s journey – after studying philosophy and graduating from Duke University, he became a writer and fellow at the Ayn Rand Institute which led to his founding of the Center for Industrial Progress (CIP) in 2011. Epstein sees a clear line from his days studying philosophy to his work in energy.
“The main thread throughout all of it is that I think of philosophy as a very practical subject. We’re taught to think of it as an impractical subject. But I believe that the more you study the fundamental ideas beneath our thinking and our action, the more insight you have as to how we can think and act better. With energy, once I even learned about the benefits of fossil fuels, it was clear to me that society at large, including most of our so-called experts, was making a huge error in ignoring their benefits. They were just focusing on negative side effects. And whenever I see a really big error in thought on an important issue, I become very motivated to see if I can correct that error.”
Epstein says the genesis of the idea for founding the CIP was that there was a need for a positive, pro-human alternative to the Green movement. He describes the Green movement as opposing human growth- as against human impact or industrial progress.
He asserts the Green movement ignores the positive impact of human activity. In the case of industrialization, economist and professor Don Boudreaux states that over the last 200-300 years, human activity has increased human life expectancy from just 30 years to almost 80 years and improved the survival rates for children as 200-300 years ago, one in every 5 children died and that number has reduced to now 1 in 200. He too characterizes those improvements as “human flourishing hockey sticks”.
Epstein says he observed that many people talking about issues raised by the Green movement were just reacting and not acting. If the Greens would propose a detrimental or poorly conceived piece of legislation, the reaction would be to state the legislation is bad for a particular reason or reasons and shut it down. The pro-human side wasn’t advancing its own positive agenda.
“I thought it was very important to have a positive enthusiasm and state what you’re for, not just a negative enthusiasm for what you’re against.” says Epstein. “Ideas needed to be positive and pro-human. So, I thought of a pro-industry organization – the CIP. The other insight was that I thought the CIP could be a for-profit organization. The basic concept was that if you look at the most successful, influential people and the ideas they generate- they can be profitable. They can make money through writing books and giving speeches and these days through subscriptions with substack.com. I thought operating as a for-profit organization would make my ideas more appealing to a wider audience versus a narrow group of donors.”
MORAL BIASES CAUSE BAD INVESTMENTS
One of Epstein’s subjects in his latest book, Fossil Future is how moral biases cause bad investments. He explains moral bias in reference to a commonly held group of misconceptions he calls an anti-impact framework.
“There are a number of things I include under moral biases. The biggest moral bias has to do with how you view the Earth. I think that most people are taught to view the Earth in an anti-human way, where our goal should be to impact it as little as possible. I think that our impact is fundamentally a good thing and that our goal should be to make the earth as hospitable to human life as possible. People think of the Earth as something that we shouldn’t impact. If you have this idea that it’s wrong to impact the Earth and that includes the thought that if you do something wrong, the earth is going to punish you. I describe this as the ‘delicate nurturer view of the Earth’ where the earth exists in a delicate, nurturing balance and then human impact ruins it. This anti-human view of the Earth and the expectation that the earth is going to punish us for our impact leads people to undervalue the benefits of high-impact industries, including fossil fuels. It also leads to what I call catastrophizing – the anticipation that there’s going to be a catastrophe. But the catastrophes don’t occur because in general, our positive impacts on earth far outweigh our negative impacts from a human perspective.”
The moral bias described above impacts consumer pressure for the divestment of fossil fuels. It can lead to a misapplication of the concept of socially responsible investing.
Epstein thinks “socially responsible” investing is a deliberately vague term to gloss over what is essentially anti-capitalist investing. When discussing socially responsible investing, the implication is that regular, for-profit investing is socially irresponsible, and who wants to be socially irresponsible? He says what is really being promoted is investing that is not focused on creating value for shareholders or even for customers, but rather serves certain political causes and serves certain political preferences. Epstein thinks it is inevitable that if you have a vague idea of socially responsible investing, it’s going to be co-opted by popular political causes, and unfortunately, fossil fuel elimination has been over-promoted as a popular political cause. In recent years, under the banner of socially responsible investing, fossil fuel elimination has become a “cause celebre”, a rallying cry so to speak. Epstein advocates for long-term value creation -investing that’s based on creating value and including benefiting shareholders and is not focused on the political causes of the people who happen to be managing the company or in the case of BlackRock, the causes of owners of mutual index funds.
ESG AND FOSSIL FUEL ELIMINATION
Epstein also talks about understanding the ESG threat which involves energy & food insecurity, inflation, high cost of living and economic slowdown. He identifies the core of the ESG threat as being the belief that ESG in the context of energy means primarily fossil fuel elimination which he says is a completely disastrous policy. “Where ESG is particularly insidious is that ESG policy has not done particularly well at the ballot box with voters. It’s done considerably better in terms of advocacy by corporations. So what ESG is doing is it’s in the investment world and therefore the corporate world as well. It’s telling companies to commit to net zero policies, but also to commit resources to political advocacy. It’s highly unlikely that any of these net zero goals are going to be reached. But insofar as companies try, it’ll make them less productive. Or if they’re misrepresenting ESG reports, it’ll just make them more corrupt. However, support for ESG will also definitely prompt them to support very bad anti-fossil fuel policies. You see this happening in the US where company after company now just rubber stamps the Biden anti-fossil fuel agenda. Because if they don’t, then people can claim they are violating the ESG commitments that they made. Fortunately, ESG is getting some scrutiny now and it really needs to be rejected, particularly the fossil fuel elimination interpretation of ESG. No productive company in the world is net zero in a meaningful sense. In terms of doing something scalable- that isn’t zero -that currently doesn’t exist in the world.”
Epstein’s view of the future of human flourishing also involves nuclear power and he makes a strong case for chemicals as well as fossil fuels. When asked his opinion on how to handle past negative events in these industries which are demonized by environmentalists due to occurrences, Epstein had a perspective on the need for a rigorous review of the safety of technology used.
“I think two things have to happen. One is that you have to look closely at “disasters”. You may find as with Nuclear, in particular, it actually has evidence of how safe it is. Nuclear incidents in the civilized world didn’t kill any people, whereas every other form of energy routinely kills people with its accidents. The one nuclear exception is Chernobyl. And in that case, what you have to do is differentiate the Soviet government that was using flawed, risky technologies that the West would never consider using. That’s an argument against communism, not an argument against nuclear energy, which is actually the safest form of energy”
As for electricity, Epstein’s latest article which came out last week talks about The Inflation Reduction Act asserting it coerces grids and consumers into using costly, unreliable solar/wind electricity that they wouldn’t otherwise choose because it’s too expensive. It’s boldly titled “The Inflation Reduction Act is a 4-step recipe for destroying American energy.”
Epstein states the basic issue with the Act’s promotion of electricity is that it has two contradictory components that will lead to breakdowns. One is the pressure to use more unreliable solar and wind electricity via various coercive measures, especially by extending subsidies he calls “very destructive” because they lead to the defunding of reliable power plants and declining reliable capacity.
The second is it decreases the availability of electricity and yet it calls for increased electricity use in the form of EVs, as well as other coercive measures to make people use more electricity, thus decreasing the supply of reliable electricity while increasing demand. As a result, places like California are experiencing shortages.
“Part of the problem is people were not familiar with actual physics and technology and economics of these so-called alternatives. They were led to believe that alternatives would be essentially free and infinite and they didn’t think about shortages. But those of us who knew the actual physics and technology and economics knew that alternatives could not possibly replace reliable power plants, and therefore there would be shortages. Many of the leaders didn’t care about shortages, or in fact, wanted there to be shortages because they think consumers use too much energy and have too much impact. What we’re seeing is the anti-fossil fuels movement is clearly not going to make us richer. And it is going to make us less free by ruining these centralized systems. I think people are waking up and saying, “hey, wait a second… California says “ Only use electric cars”, but then five days later says “don’t charge because we don’t have enough electricity.”
You can find more of Alex Epstein’s Energy discussion on his blog- https://energytalkingpoints.com/ or https://alexepstein.substack.com/
Maureen McCall is an energy professional who writes on issues affecting the energy industry.
