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Economy

A CNN report that hasn’t been published yet. Interview with Alex Epstein of Energy Talking Points

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24 minute read

A CNN reporter interviews me about my political work

A behind-the-scenes look at my work with candidates and elected officials

In mid-February, a CNN reporter who had been following Ron DeSantis’s primary campaign, and had heard the campaign refer positively to my work, reached out to me to learn more about the behind-the-scenes work I do with candidates and elected officials.

I thought readers of this newsletter would enjoy learning more about this work—which, as you will see, is non-partisan, non-exclusive, and principled: my team and I will advise any major politician or candidate who asks, and will only deliver messaging and policy ideas we believe are pro-freedom and pro-human.

(I am keeping the identity of the reporter anonymous, and I am further protecting the person by paraphrasing their questions in my own words so that no specific phrases are attributable to them. Note also that CNN has not yet published my comments.)


CNN Reporter

What kinds of opportunities do you think exist for a Republican president in terms of energy and environmental policy?

Alex Epstein

I do a lot of advising of people in politics, and it actually has no partisan affiliation. So I’ll advise anyone from any party and I never support any candidate. I’ve advised multiple of the presidential candidates and I would advise Biden if he asked me (he hasn’t asked me for any advice yet).

My interest is in pushing what I call energy freedom policies—which we could get into the details of—which I think would be very good for the country.

CNN Reporter

What are energy freedom policies, and how do you go about advising policymakers to put them into practice?

Alex Epstein

The basic idea of energy freedom is that the key to both energy abundance and everything that comes with it, including prosperity here and around the world—but also coming up with long term alternatives to fossil fuels—is ultimately to be free to produce and use every form of energy.

I believe there’s a near term imperative to have as much energy as possible. I don’t think we should be restricting fossil fuel use. But I also think there’s a lot of things we can do to get out of the way of alternative forms of energy. So I’m personally agnostic in terms of what form of energy wins; I just want the most cost-effective thing to win.

For example, in the realm of alternatives, what we really need are alternatives that can be globally cost-competitive, such that China, India, etc., will voluntarily adopt them, versus the current state of affairs where China has 300-plus new coal plants in the pipeline designed to last 40-plus years because that’s the cheapest thing.

So that’s the broad idea. I can send you some links on this, but I’ve broken it down into five key policy areas. And then there are a lot of detailed policies within that. But the broad frame—and again, I can send you documents—but “Liberate responsible domestic development” is one of them. And so, that basically means: allow America to build things quickly. Right now, China can build a subway station in nine hours. We can’t build a yoga studio in nine months. So basically, getting all of the anti-development stuff out of the way. And again, this is energy agnostic. It’s not just for fossil fuels, but a lot of the changes apply to fossil fuels.

Number two is: “End preferences for unreliable electricity.” I think there are a lot of bad policies that favor unreliable electricity, so solar and wind without really accompanying battery storage or other backup. And so I advocate a suite of policies that I think would allow all forms of energy to compete to provide reliable electricity.

The third one is: “Reforming environmental quality standards to incorporate cost-benefit analysis.” Most people don’t know this, but right now, EPA is literally not allowed to consider the cost of its policies. And I think that just violates basic rules, and it guarantees that we do things that are bad for our economy and for health, because wealth is health. And if you can’t consider the cost of your policies, and you can only consider the benefits, then you’re always going to tend toward more anti-industry stuff. So there’s a suite of reforms there.

Number four is: “Address CO2 emissions long term by liberating innovation not punishing America.” So I sort of indicated this before, but I don’t believe in short term restrictions on fossil fuels. I think basically anything we do to restrict ourselves just harms America, and doesn’t do anything to make low carbon alternatives cost-competitive. So I think all the action should be in things like liberating nuclear, liberating deep geothermal, and a lot of this is in the “Liberating responsible domestic development.” If you make that a lot easier, you make it easier to do these other things, these alternatives.

And then the fifth one is kind of a specification on the fourth, but it’s “Decriminalize nuclear,” because I think nuclear energy is the most persecuted form of energy. It has a really tragic history where it used to be cost-effective and now it’s not, because of irrational regulations that have made it 10 times more expensive and yet have added zero safety benefit. They’ve in fact harmed our safety in many ways by depriving us of clean, safe nuclear energy. And so I think there’s a whole suite of reforms necessary for that.

So those are the broad areas and then in each area, you know, my team and I are hard at work detailing, “Hey, what are the key reforms?” And one thing just to note is that I don’t hold any political office, I never will, I don’t lobby for anyone, I don’t endorse anyone, I set up everything so I’m quite independent.

So what I try to do is just say what I think is right, and then persuade people as much as possible. And fortunately a lot of people listen to me, but I have no power over anything officially—but that also allows me to just say what I think is right. So, I’m not under the illusion that everyone is going to do exactly what I think, but they do listen.

And then to your question about what’s happened: I’ve only been working with politicians since really 2020, and we’ve done it through a vehicle called Energy Talking Points—which, everyone can see the messaging at EnergyTalkingPoints.com—and we have only recently in the last 6 to 12 months started getting into policy advice.

We have some policy stuff in the works with a few different offices, and certainly we’ve advised multiple Presidential candidates on policy ideas, but I don’t think we’ve yet seen these energy freedom policies pursued, really put forward, to the extent we’ll see it in the next year or two. Whereas we have seen, I think, quite a bit of my messaging being used.

CNN Reporter

Why has the nuclear energy space become so toxic in recent years?

Alex Epstein

If you look at where nuclear was at its peak, it’s arguably in the late 60’s when you’re really getting cost-competitive with coal. But, you know, safer and cleaner than coal—and I’m a big advocate of coal. I mean, I’m a big advocate of anything that can produce additional cost-effective energy. But I think nuclear was in the realm of out-competing coal back then.

And it has a lot of inherent advantages. It’s very dense. The fuel supply is abundant, the fuel is cheap, safer to mine obviously, doesn’t emit anything harmful in the air. But it was demonized as a unique safety threat, whereas I think in reality—and I talked about this in my book Fossil Future and on EnergyTalkingPoints.com—I think it’s actually uniquely safe.

And we’re doing a lot of work on this in terms of our nuclear policies that we’re working on. But I think the green movement, which is very tied to the anti-fossil-fuel movement, really demonized it to the point where people equated nuclear power with nuclear bombs, thought of it as uniquely dangerous and then set up a whole regulatory infrastructure including the Nuclear Regulatory Commission, where the whole focus was on making nuclear infinitely safe beyond any fearmonger’s imagination, versus making it available.

And so they thought, in practice, the best way to make it safe was to make it non-existent. And that’s why since the NRC came into existence in 1975, we didn’t have one new nuclear plant go from conception to completion until last year. And those plants were many times over budget in Georgia.

So I think it’s a 50 year plus problem and when I talk to any politician, what I just tell them is, “You have to be willing to consider fundamental reforms of the NRC and perhaps replacing it with something else, because the status quo is so bad.” Often politicians just like saying that they like things, or kind of tinkering at the margins, saying, “Hey, we’ll give it some funding,” or you know, “We’ll invest in this research,” and I think you have to fundamentally stop treating nuclear as a uniquely dangerous form of energy.

There’s a whole bunch of things that need to be done, but I’m glad people are talking about it more positively. But the policy, we’re in a policy catastrophe with it. I don’t believe any significant progress will be made until we radically change the policy.

CNN Reporter

Have you spoken to DeSantis personally?

Alex Epstein

So, without going into much detail, since most of this stuff is confidential, I have spoken to him before, and I’ve spoken to his team before. And I would say that what you see publicly is reflected privately in the sense of: he and they are very detail-oriented, particularly in terms of implementation.

They’re very interested in: How do you actually get these things to work? And I think that’s something that is very good and it’s something that I try to become better at myself. I mean, there are plenty of things that I disagree with Ron DeSantis about, but I respect that detail-orientation, and I think it explains the ability to get things done in practice.

CNN Reporter

What candidates did you advise this cycle?

Alex Epstein

I won’t say specifically, but a lot of them I either talk to—I always tried to talk to the individual or the team, and that happened in many of the cases. I mean in general we, this project I call Energy Talking Points, we advise something like at this point over 200 major offices. Last year I probably advised 75-plus major politicians. So, I talk to a lot of people to various degrees, and again, I don’t do anything for them except offer them messaging and policy—but I think we do quite a good job with that and I think that’s why they listen. Or, sometimes they listen; definitely not always.

CNN Reporter

What have you learned since you’ve entered the space of politicians who shape policy?

Alex Epstein

From my perspective, as somebody who considers himself more pro-freedom than both major political parties, I’ve been surprised at how open people are to more radical ideas if those ideas are explained in detail and have accompanying persuasive arguments.

One thing I try to do when I advise people is give them solutions, not just vague advice. So if I’m giving policy, give very specific guidance, give guidance on how to talk about it. And this is also true about messaging.

For example, one thing you saw—this is not me revealing anything because it was public—both Ron DeSantis and Vivek Ramaswamy, I can send you an article I wrote about this, but they talked about, you know, the 98% decline in climate-related disaster deaths. So this was at least mentioned by DeSantis in his energy speech in Midland, and Vivek mentioned it many, many times, sometimes mentioning my name and my book, Fossil Future.

And I think this is a really important point for people to understand: that empirically, we’re safer than ever from climate disasters. And I think people should think about why that is and what the implications are for the future.

I was impressed that leading politicians are willing to talk about that. And my experience with people like that is they’ll ask for references. At least some of them. And I was happy to see that the media felt the need to respond.

So we saw—I’ll send you this article—but we saw Reuters responded to it, the New York Times responded to it, PolitiFact responded to it. And none of them could answer the basic fact—they tried to sort of explain their way around it—but none of them refuted the basic fact. And I just thought, okay, I like that people are willing to say and do more pro-freedom and more principled things if somebody really helps them with the details. That was my hope when I started getting into politics and I am seeing that bear out to a significant extent.

CNN Reporter

Have you changed your approach over the years as you’ve watched the public react to your talking points?

Alex Epstein

I’ve been working on these issues for 17 years, so a lot of this stuff, I test it out in different kinds of ways—which is not the same, I mean, I’m not running millions of dollars worth of polls and stuff. But I test it out in front of different audiences. I see how people respond on social media.

I think people are open to a lot, so my own interest is what’s right and do the best job you can of persuading people of it. And there’ll be plenty of people who try to compromise that and dampen it. I don’t need to be the one to do it. I just try to make sure for everything I say, I can make, I think, a case that would persuade a reasonable person who was inclined to disagree with me but wasn’t dead-set on disagreeing with me.

If I have trouble doing that and I think the thing is right, then I try to get better at arguing for it. I don’t just give up. And just as a personal policy, I don’t ever advocate anything I don’t agree with, and I will never help a politician with something I don’t agree with. So for example, as I said, I’m not partisan, but if Republicans want to pass an import carbon tax, I will definitely not help them with that and I’ll publicly argue against them.

CNN Reporter

I noticed Elon Musk receiving some pushback from surprised conservatives, when he posted that the best way to address climate change is with a carbon tax.

Alex Epstein

Well, that’s been his position for a long time. I don’t think it really makes any sense. But what’s interesting I think about him—and I don’t actually attribute this to him taking over Twitter—he has dramatically moderated his hostility toward fossil fuels and his belief in climate catastrophe.

So he has some hostility now, and to some extent, his very rosy claims about solar and batteries, although those have been moderated the least; maybe there are commercial reasons for that. But he’s kind of, you know, if you look at when the Powerwall came out, he’s just like—and this is almost a direct quote—“burning fossil fuels and putting stuff into the atmosphere is the worst idea ever” and “the planet is on fire.” That’s what it looks like.

And it’s just kind of—and then we have this Powerwall and a million things he said about the Powerwall that didn’t come remotely true and would obviously not come remotely true if one knew anything at the time. But now his position [on climate] is sort of, “Yeah, you know, it’s not going to be a problem for a while, but it may be a problem eventually.” And he loves to say, “If I could push a button and get rid of oil and gas, I wouldn’t push the button, and in fact, we need more oil and gas in the US, short-term.”

So he’s become more moderated.

But yeah, carbon tax, that’s a standard thing that a lot of people believe in, so anyone who’s surprised with that just hasn’t followed him at all. And he’s not actually—whatever one thinks of the change in his views—he’s not like a standard conservative. He never was a standard liberal or a standard conservative, I don’t think.

CNN Reporter

Thank you for your time.

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Alberta

Federal budget: It’s not easy being green

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From Resource Works

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Canada’s climate rethink signals shift from green idealism to pragmatic prosperity.

Bill Gates raised some eyebrows last week – and probably the blood pressure of climate activists – when he published a memo calling for a “strategic pivot” on climate change.

In his memo, the Microsoft founder, whose philanthropy and impact investments have focused heavily on fighting climate change, argues that, while global warming is still a long-term threat to humanity, it’s not the only one.

There are other, more urgent challenges, like poverty and disease, that also need attention, he argues, and that the solution to climate change is technology and innovation, not unaffordable and unachievable near-term net zero policies.

“Unfortunately, the doomsday outlook is causing much of the climate community to focus too much on near-term emissions goals, and it’s diverting resources from the most effective things we should be doing to improve life in a warming world,” he writes.

Gates’ memo is timely, given that world leaders are currently gathered in Brazil for the COP30 climate summit. Canada may not be the only country reconsidering things like energy policy and near-term net zero targets, if only because they are unrealistic and unaffordable.

It could give some cover for Canadian COP30 delegates, who will be at Brazil summit at a time when Prime Minister Mark Carney is renegotiating his predecessor’s platinum climate action plan for a silver one – a plan that contains fewer carbon taxes and more fossil fuels.

It is telling that Carney is not at COP30 this week, but rather holding a summit with Alberta Premier Danielle Smith.

The federal budget handed down last week contains kernels of the Carney government’s new Climate Competitiveness Strategy. It places greater emphasis on industrial strategy, investment, energy and resource development, including critical minerals mining and LNG.

Despite his Davos credentials, Carney is clearly alive to the fact it’s a different ballgame now. Canada cannot afford a hyper-focus on net zero and the green economy. It’s going to need some high octane fuel – oil, natural gas and mining – to prime Canada’s stuttering economic engine.

The prosperity promised from the green economy has not quite lived up to its billing, as a recent Fraser Institute study reveals.

Spending and tax incentives totaling $150 billion over a decade by Ottawa, B.C, Ontario, Alberta and Quebec created a meagre 68,000 jobs, the report found.

“It’s simply not big enough to make a huge difference to the overall performance of the economy,” said Jock Finlayson, chief economist for the Independent Contractors and Business Association and co-author of the report.

“If they want to turn around what I would describe as a moribund Canadian economy…they’re not going to be successful if they focus on these clean, green industries because they’re just not big enough.”

There are tentative moves in the federal budget and Climate Competitiveness Strategy to recalibrate Canada’s climate action policies, though the strategy is still very much in draft form.

Carney’s budget acknowledges that the world has changed, thanks to deglobalization and trade strife with the U.S.

“Industrial policy, once seen as secondary to market forces, is returning to the forefront,” the budget states.

Last week’s budget signals a shift from regulations towards more investment-based measures.

These measures aim to “catalyse” $500 billion in investment over five years through “strengthened industrial carbon pricing, a streamlined regulatory environment and aggressive tax incentives.”

There is, as-yet, no commitment to improve the investment landscape for Alberta’s oil industry with the three reforms that Alberta has called for: scrapping Bill C-69, a looming oil and gas emissions cap and a West Coast oil tanker moratorium, which is needed if Alberta is to get a new oil pipeline to the West Coast.

“I do think, if the Carney government is serious about Canada’s role, potentially, as an global energy superpower, and trying to increase our exports of all types of energy to offshore markets, they’re going to have to revisit those three policy files,” Finlayson said.

Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute, said she thinks the emissions cap at least will be scrapped.

“The markets don’t lie,” she said, pointing to a post-budget boost to major Canadian energy stocks. “The energy index got a boost. The markets liked it. I don’t think the markets think there is going to be an emissions cap.”

Some key measures in the budget for unlocking investments in energy, mining and decarbonization include:

  • incentives to leverage $1 trillion in investment over the next five years in nuclear and wind power, energy storage and grid infrastructure;
  • an expansion of critical minerals eligible for a 30% clean technology manufacturing investment tax credit;
  • $2 billion over five years to accelerate critical mineral production;
  • tax credits for turquoise hydrogen (i.e. hydrogen made from natural gas through methane pyrolysis); and
  • an extension of an investment tax credit for carbon capture utilization and storage through to 2035.

As for carbon taxes, the budget promises “strengthened industrial carbon pricing.”

This might suggest the government’s plan is to simply simply shift the burden for carbon pricing from the consumer entirely onto industry. If that’s the case, it could put Canadian resource industries at a disadvantage.

“How do we keep pushing up the carbon price — which means the price of energy — for these industries at a time when the United States has no carbon pricing at all?” Finlayson wonders.

Overall, Carney does seem to be moving in the right direction in terms of realigning Canada’s energy and climate policies.

“I think this version of a Liberal government is going to be more focused on investment and competitiveness and less focused around the virtue-signaling on climate change, even though Carney personally has a reputation as somebody who cares a lot about climate change,” Finlayson said.

“It’s an awkward dance for them. I think they are trying to set out a different direction relative to the Trudeau years, but they’re still trying to hold on to the Trudeau climate narrative.”

Pictured is Mark Carney at COP26 as UN Special Envoy on Climate Action and Finance. He is not at COP30 this week. UNRIC/Miranda Alexander-Webber

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Business

Carney government needs stronger ‘fiscal anchors’ and greater accountability

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From the Fraser Institute

By Tegan Hill and Grady Munro

Following the recent release of the Carney government’s first budget, Fitch Ratings (one of the big three global credit rating agencies) issued a warning that the “persistent fiscal expansion” outlined in the budget—characterized by high levels of spending, borrowing and debt accumulation—will erode the health of Canada’s finances and could lead to a downgrade in Canada’s credit rating.

Here’s why this matters. Canada’s credit rating impacts the federal government’s cost of borrowing money. If the government’s rating gets downgraded—meaning Canadian federal debt is viewed as an increasingly risky investment due to fiscal mismanagement—it will likely become more expensive for the government to borrow money, which ultimately costs taxpayers.

The cost of borrowing (i.e. the interest paid on government debt) is a significant part of the overall budget. This year, the federal government will spend a projected $55.6 billion on debt interest, which is more than one in every 10 dollars of federal revenue, and more than the government will spend on health-care transfers to the provinces. By 2029/30, interest costs will rise to a projected $76.1 billion or more than one in every eight dollars of revenue. That’s taxpayer money unavailable for programs and services.

Again, if Canada’s credit rating gets downgraded, these costs will grow even larger.

To maintain a good credit rating, the government must prevent the deterioration of its finances. To do this, governments establish and follow “fiscal anchors,” which are fiscal guardrails meant to guide decisions regarding spending, taxes and borrowing.

Effective fiscal anchors ensure governments manage their finances so the debt burden remains sustainable for future generations. Anchors should be easily understood and broadly applied so that government cannot get creative with its accounting to only technically abide by the rule, but still give the government the flexibility to respond to changing circumstances. For example, a commonly-used rule by many countries (including Canada in the past) is a ceiling/target for debt as a share of the economy.

The Carney government’s budget establishes two new fiscal anchors: balancing the federal operating budget (which includes spending on day-to-day operations such as government employee compensation) by 2028/29, and maintaining a declining deficit-to-GDP ratio over the years to come, which means gradually reducing the size of the deficit relative to the economy. Unfortunately, these anchors will fail to keep federal finances from deteriorating.

For instance, the government’s plan to balance the “operating budget” is an example of creative accounting that won’t stop the government from borrowing money each year. Simply put, the government plans to split spending into two categories: “operating spending” and “capital investment” —which includes any spending or tax expenditures (e.g. credits and deductions) that relates to the production of an asset (e.g. machinery and equipment)—and will only balance operating spending against revenues. As a result, when the government balances its operating budget in 2028/29, it will still incur a projected deficit of $57.9 billion when spending on capital is included.

Similarly, the government’s plan to reduce the size of the annual deficit relative to the economy each year does little to prevent debt accumulation. This year’s deficit is expected to equal 2.5 per cent of the overall economy—which, since 2000, is the largest deficit (as a share of the economy) outside of those run during the 2008/09 financial crisis and the pandemic. By measuring its progress off of this inflated baseline, the government will technically abide by its anchor even as it runs relatively large deficits each and every year.

Moreover, according to the budget, total federal debt will grow faster than the economy, rising from a projected 73.9 per cent of GDP in 2025/26 to 79.0 per cent by 2029/30, reaching a staggering $2.9 trillion that year. Simply put, even the government’s own fiscal plan shows that its fiscal anchors are unable to prevent an unsustainable rise in government debt. And that’s assuming the government can even stick to these anchors—which, according to a new report by the Parliamentary Budget Officer, is highly unlikely.

Unfortunately, a federal government that can’t stick to its own fiscal anchors is nothing new. The Trudeau government made a habit of abandoning its fiscal anchors whenever the going got tough. Indeed, Fitch Ratings highlighted this poor track record as yet another reason to expect federal finances to continue deteriorating, and why a credit downgrade may be on the horizon. Again, should that happen, Canadian taxpayers will pay the price.

Much is riding on the Carney government’s ability to restore Canada’s credibility as a responsible fiscal manager. To do this, it must implement stronger fiscal rules than those presented in the budget, and remain accountable to those rules even when it’s challenging.

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