The fossil-fuel Third Way
When I first heard about "Third Way" economics, consisting of communistically worker-owned companies competing in a capitalist marketplace, I was highly dubious: "What do you mean, 'everyone can be capitalists?' That's ridiculous!" But now I'm a big supporter of the concept.
When it comes to fossil fuels, there's a similar middle ground between the future described in the 2009 article "Bound to Burn" (which I first mentioned here), in which we burn all of Earth's fossil fuel reserves over the next century or two, and the future favored by environmentalists, in which we leave all the remaining coal, oil, and natural gas in the ground. Oddly, the conservative author of "Bound to Burn" was largely arguing from the demand side, roughly summarized as "the developing world is demanding cheap electricity and transportation fuel, and clean alternatives can't compete." Last month, in his Rolling Stone article "Global Warming's Terrifying New Math," climate activist leader Bill McKibben made a similar argument from the supply side: "Yes, this coal and gas and oil is still technically in the soil. But it's already economically aboveground - it's figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. . . . If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn't pump out their reserves, the value of their companies would plummet."
So where's the middle ground? In the gap between the verbs "pump" and "burn." Everyone knows there are plenty of non-fuel-related uses for oil, particularly in making plastics, lubricants, and asphalt. Likewise, natural gas is used as raw material for a number of solid and liquid products, including plastics, fabric, paint, fertilizer, etc. Finding uses for coal that don't involve burning it is trickier, but perhaps American ingenuity would be up to the task if motivated by a high tax on releasing greenhouse gases. If we could find a combination of policies that leads to a substantial increase in demand for those non-fuel products to match the decrease in demand for fossil fuels to near zero, we could potentially solve the climate crisis without destroying the fossil-fuel companies or the economies of nations that rely on them.
Of course, the extraction processes for those "non-fuel fossil resources" would continue to do plenty of environmental damage, and environmentalists won’t be too happy about incentivizing more production of plastic, asphalt, and fertilizer (which tends to promote topsoil-destroying industrial agriculture). But maybe that's the price we have to pay for a politically feasible means of nearly halting greenhouse emissions. Needless to say, this is not my favorite idea, but I think it should at least be on the table. Speaking of agriculture, the current mega-drought and the trend it represents is a clear warning sign that we don't have much time left to find climate solutions that work.