Energy
A balanced approach shows climate change has been good for us: Alex Epstein
The most heretical idea in the world
My talk at Hereticon about the moral case for fossil fuels.
Last week I gave a talk at the second annual Hereticon conference, hosted by Mike Solana and the Founder’s Fund team. (Founder’s Fund is led by Peter Thiel, the famous entrepreneur and investor. See two of my past discussions with Peter here and here.)
Here’s the full transcript and Q&A. (Audience member questions are paraphrased to protect anonymity.) I’m hoping the video will be available soon.
Alex Epstein:
All right, so I’m going to start out by taking a poll of where the audience is. Here’s the question: What is the current state of our relationship with climate?
I’m going to give you four options. Are we experiencing: a climate catastrophe, climate problem, climate non-problem, or climate renaissance? Raise your hand when you hear the one that you think best reflects the current state of our relationship with climate.
- Climate catastrophe — in most audiences, this would be much less of a minority view.
- Climate problem — probably about half the room.
- Climate non-problem — a bunch of people.
- Climate renaissance — okay, that’s the record.
So here’s what’s interesting about this issue, what I would call the “designated expert” view. The view of the people we’re told to give us guidance on these issues is that we’re obviously in a climate catastrophe that’s becoming an apocalypse; maybe some will say a climate problem on the verge of catastrophe.
And yet empirically, if you look at how livable our climate is from a human-flourishing perspective, it’s undeniable that it’s never been better.
This is a chart of what’s happened in the atmosphere. We’ve put in more CO2, and that indeed has caused some warming and has other climate effects. But at the same time, the death rate from climate disasters—so storms and floods, extreme temperatures, et cetera—has gone way down. It’s gone down actually 98% in the last century.
This means that a typical person has 1/50 the chance of dying from a climate disaster compared to what somebody used to have. And if you look at things like damages, we’re not actually more threatened by climate. If you adjust for GDP, we’re safer from climate still.
The reason I raise this is: we have this situation where the supposed experts on something say that we have a catastrophe, and yet in reality, it’s never been better from a human-flourishing perspective. And this is independent of the future. So you could say, “Well, I think it’s going to get worse in the future.” But their view is about the present; they describe us as in a climate crisis or climate emergency now.
So what’s going on here? What’s going on here is very important because it shows that the mainstream “expert” view of fossil fuels and climate is not just based on facts and science, it’s based on a certain moral perspective on facts and science—because from a human flourishing perspective, we’re in a climate renaissance. What’s going on is what I call their moral standard or standard of evaluation.
The way they evaluate the world in a particular climate is not in terms of advancing human flourishing on Earth, but of eliminating human impact on Earth. And this is the dominant idea, this is the way we’re taught to think about climate: that a better climate, a better world, is one that we impact less and a worse one is one that we impact more.
I think this is the most evil idea. I think human beings survive and flourish by impacting nature. This idea that we should aspire to eliminate our impact is an anti-human idea. And I think that if we look at this issue from a pro-human perspective—from the perspective that a better world is one with more flourishing, not less human impact—that totally changes how you think about fossil fuels.
I’m going to give you a bunch of facts—but these are not right-wing facts or something. These are all either primary source facts or they are just mainstream climate science. What I’m doing differently is I’m looking at the facts and science from a consistently human flourishing perspective, and that’s something that unfortunately almost nobody else does.
But what’s good is I think if most people realize that they’re not thinking about it in a pro-human way, they’ll want to think about it in a pro-human way, and then we can really change energy thinking for the better.
If we’re going to apply this idea of advancing human flourishing as our standard, if we’re going to do it consistently, there’s basically one rule we need to follow, which is we need to be even-handed. By even-handed, I mean we need to carefully weigh the benefits and side effects of our alternatives, just as you would do if you were deciding to take an antibiotic: what are the benefits and side effects of this? How does that compare to the alternatives?
When it comes to fossil fuels and climate—and I want to focus on climate because there are other side effects of fossil fuels like air pollution and water pollution, but those aren’t really the reason people hate fossil fuels. Those have gone way down in the past few decades, and hatred for fossil fuels has gone way up. So it’s really about the climate issue.
When we’re thinking about fossil fuels and climate, there are four things we need to look at to be even-handed. And feel free to challenge this in the question period, but literally nobody has ever been able to challenge this, and I’ve debated every single person that was willing to debate.
So one is you need to look at what I call the general benefits of fossil fuels. Then you need to look at what I call the climate mastery benefits of fossil fuels. You need to look at the positive climate side effects of fossil fuels. And then of course, you need to look at the negative climate side effects of fossil fuels.
My contention is when you do this from a human flourishing perspective, it’s just completely obvious that we need to use more fossil fuels, and that this idea of getting rid of fossil fuels by 2050 is the most destructive idea, even though it’s literally the most popular political idea in the world today. Getting rid of fossil fuels is advocated by leading financial institutions, leading corporations, almost every government in the world has agreed to it. So it’s literally the most heretical thing you could say to say that we should use more fossil fuels, and yet I’m going to argue that it’s obvious and the mainstream view is just insane.
Let’s look at the general benefits of fossil fuels. What are the benefits we’re going to get if we’re free to use fossil fuels going forward that we’ll lose to the extent that we are not? And the mainstream view, epitomized by this guy Michael Mann, who’s one of our leading designated experts, is there really no benefits. He has a whole book on fossil fuels and climate, pictured here, and he says essentially nothing about the benefits of fossil fuels—and this is pretty conventional.
Now, I’m going to argue that the benefit of fossil fuels is literally that 8 billion people have enough energy to survive and flourish. And they are basically three points I think we need to get to get this. One is that fossil fuels are uniquely cost-effective. What somebody like Michael Mann and others have been saying for years, though it’s going out of favor, is that fossil fuels don’t really have any benefits because we can rapidly replace them with intermittent solar and wind.
And again, fortunately this is going out of favor now, but it never really made any sense. What we see if we look at the facts is fossil fuels have had 100 plus years of aggressive competition. They have had enormous political hostility for the last 20 years, and yet they’re still growing despite this. So there’s something special about them.
And then to further confirm this, the places that care most about cost-effective energy are committed to using more fossil fuels. So China has 300 plus new coal plants in the pipeline. And then of course, the AI data center world is doubling and tripling down on natural gas because that’s the most cost-effective thing.
By cost-effective, I mean four things. Affordability—how much can a typical person afford? Reliability—is it available when needed in the exact quantity needed? Versatility—can it power every type of machine, including things like airplanes and cargo ships that are hard to do with anything besides oil until we get a really good nuclear solution? And then scalability—is this available to billions of people in thousands of places?
I think the evidence is really clear, there’s nothing that can compare to fossil fuels in terms of making energy available to billions of people that’s affordable, reliable, and scalable.
And so what that means is to the extent we restrict fossil fuels, people have less energy, which brings me the second point about the benefits of fossil fuels, which is that it is the worst thing imaginable to deprive people of energy because energy determines how much we can flourish on Earth. By flourish, I mean live to our highest potential, so with lives that are long, healthy, and filled with opportunity. You can see, for example, in the cases of China and India, there’s a very strong correlation between energy use, which has dramatically gone up largely thanks to fossil fuels, and GDP and life expectancy.
And the basic reason is simple but profound. The more cost-effective energy is, the more we can use machines to be productive and prosperous. With machines, this naturally impoverished and dangerous world becomes an abundant and safe world. Without machines, life is terrible. Only fossil fuels can provide this for the vast majority of people.
So this is really an existential issue—and it becomes even stronger when you realize one final fact about the general benefits of fossil fuels, which is that the vast majority of the world is energy poor.
We have 6 billion people who use an amount of energy that we would all here consider totally unacceptable, and we have 3 billion people who use less electricity than a typical American refrigerator does.
So think about what this means—and maybe the most powerful area for me is to think about having a child.
My wife and I had our first child a little over four months ago. And if you’ve had a child, I’m sure you’ve had this exact experience where this tiny little fragile thing is born and you just think, “This is the greatest thing ever.” And then maybe soon after you have the thought, “The worst thing ever would be if something happened to him.”
And then you think about energy. Around the world, there are so many babies—particularly premature babies or any babies with any kind of challenges—where because they lack reliable electricity, they don’t have things like incubators, and millions of babies die. Millions of parents suffer the worst possible tragedy because they don’t have enough energy.
And yet we have a global movement saying, “You should not use the most cost-effective form of energy, which is fossil fuels.”
So this is really just the most important issue, and I think it’s supremely immoral that we’re trying to restrict the thing that billions of people need to survive and flourish.
Those are the general benefits of fossil fuels, which are just enormous, but that’s not even the only thing that our establishment ignores. There’s also very strong climate-related benefits, so what I call climate mastery benefits. How significantly does fossil fuel use, which is, again, a source of uniquely cost-effective energy, how much does that increase our ability to neutralize climate danger?
And this is really important because the more mastery you have over climate, the less any climate change, even a negative one, can be a problem. So for example, even for something like a drought—a drought can wipe out millions of people, but if you can do irrigation and crop transport, you can neutralize the drought.
And in fact, the more climate mastery you have, the more negatives don’t even become negatives. A thunderstorm that could wipe out a bunch of houses a few hundred years ago, that can become a romantic setting for a date now.
Mastery is that important. And yet our designated experts tell us there’s nothing to see here. The IPCC, which is the Intergovernmental Panel on Climate Change, the leading authority on how to think about this issue has thousands of pages of reports, and yet not once do they mention climate mastery benefits of fossil fuels.
And yet, as I pointed out, we’ve had a 98% decline in climate-related disaster deaths as we’ve used more fossil fuels. And this is not just a coincidental correlation. There’s a very strong causal relationship because fossil fuels have powered heating and air conditioning, storm warning systems, building sturdy buildings. And then as I mentioned, drought: we’ve reduced the drought-related death through irrigation and crop transport by over 99%.
So fossil fuels haven’t taken a safe climate and made it dangerous; they’ve taken a dangerous climate and made it safe. And if we have such enormous climate mastery abilities, that should make us a lot less afraid of any kind of future. Now, we need to look at another category to be even-handed.
People wonder about the negative climate side effects—we’ll talk about those—but also what about the positive climate side effects?
People have this idea—I think because they have this idea that our impact is just this bad thing—that there’s no such thing as a good climate side-effect. And we have this idea of, “Oh, us impacting the climate just means a world on fire.”
But actually one of the major effects of putting a lot more CO2 in the atmosphere is you have a much greener world. There are very strong arguments that we have trillions of dollars in benefits in terms of increased crop growth that we need to take account of in our calculation.
And then warming. People think of warming as, “Oh, warming is terrible, it means the Earth is on fire.” But the fact is that far more people die of cold than of heat. And warming for the foreseeable future is expected to save more lives than it takes, particularly because—most people don’t know this, but it’s a mainstream climate science—warming occurs more in colder regions and less in hot regions. It’s not like the whole world’s going to become scorching if the world becomes more tropical at a fairly slow pace.
So then what about these negative side-effects? Well, if you factor in the climate mastery benefits, there’s really nothing that should scare us.
There are certainly negative side-effects, for example, increase of heat waves. That for sure will happen and continue to happen, and faster sea level rise than we would otherwise have. But there’s nothing that should remotely scare us.
If you look at mainstream climate science, which has a lot of biases, if you factor in our climate mastery abilities, there are no overwhelming impacts that they project.
For example, sea level rise is the most plausible problem, and yet extreme projections by the UN, the most remotely plausible extreme projections are 3 feet in 100 years. That’s something we can deal with pretty readily. We already have 100 million people living below high tide sea level.
So I return to my basic point. If we’re pro-human, including even-handed—and we really look at this issue of fossil fuels from a pro-human perspective—the world is going to be a much better place if we use more fossil fuels, and it’s going to be a horrifically bad place if we rapidly eliminate fossil fuels. And I say a corollary of this is that policy-wise, the obvious policy is energy freedom.
We need the freedom to produce and use all forms of energy, including nuclear and including solar and wind, if and when they can really provide reliable electricity. We need as much cost-effective energy as we can get, and that’s going to make the world a much better place.
So hopefully I’ve persuaded some of you of this in this direction. But I think the next logical question, particularly this room, is, “Well, what do we actually do about this?” Because it’s one thing to talk about this, but I’m really not interested in just talking about this and selling books and whatever. I’m interested in: how do we actually change energy policy for the better, which is going to require changing energy thinking for the better?
And I want to share with you my approach because it is an approach that’s working really well. And my motivation for coming here is mainly I want to get a bunch of talented people excited about this approach.
Some of you can maybe be hired by us, some of you can join us in different ways. So let me give you my basic approach—and it’s simple: make it really easy to be an ally of the truth.
Often when people have a view that’s controversial but true, they kind of like being controversial. I mean, look, we’re at Hereticon, we’re sort of celebrating being heretical. But I personally don’t really like being heretical. If I think I’m right and the world depends on it, I want the world to become conventional with the truth. And so what I’ve done for the last 17 years on this issue is I’ve thought as much as I can about, “How do I create resources that make it as easy as possible for people to understand the truth and communicate the truth to others?”
And there are basically four things that we’ve been working on for the past few years that I want make you aware of.
So what is this book, Fossil Future? This is designed to be a completely systematic guide to how to think about energy and climate from a pro-human perspective that gives you totally how to think about it and addresses every single factual issue you could ever want to address. So if you want to, you can just become totally bulletproof and clear by reading this book
The second thing is called Energy Talking Points. This has really been my biggest breakthrough in persuasion, because the idea here is let’s make it super easy. We break down every single issue imaginable into tweet-length talking points. So if you want to know anything about energy, environment, or climate from a pro-human, pro-freedom perspective, you can just go to energytalkingpoints.com.
Browse hundreds of Energy Talking Points
And now we have Alex AI. So if you go to alexepstein.ai, you can ask that thing anything, and it is really, really good at answering questions as me.
Agriculture
Restoring balance between renewable energy, agricultural land and Alberta’s iconic viewscapes
Alberta is known around the world for many things – some of the most breathtaking and iconic scenery on earth, a world-class agricultural industry that puts high-quality food on tables across the globe and a rich history of responsible energy development. Alberta is a destination of choice for millions of visitors, newcomers and investors each year.
To ensure Alberta’s continued prosperity, it is imperative that future energy development is balanced with environmental stewardship, protecting Albertans’ ability to use and enjoy their property, and safeguarding agriculture for continued food security.
Alberta’s renewable energy sector has grown rapidly over the past decade, yet the rules to ensure responsible development have not kept up. As a result, municipalities, agricultural producers and landowners across the province raised concerns. Alberta’s government is fulfilling its duty to put Albertans first and restore the balance needed for long-term success by setting a clear path forward for responsible renewable energy development.
“We are doing the hard work necessary to ensure future generations can continue to enjoy the same Alberta that we know and love. By conserving our environment, agricultural lands and beautiful viewscapes, our government is protecting and balancing Alberta’s long-term economic prosperity. Our government will not apologize for putting Albertans ahead of corporate interests.”
Amendments to the Activities Designation Regulation and Conservation and Reclamation Regulation provide clarity for renewable energy developers on new and existing environmental protections.
These changes will create consistent reclamation requirements across all forms of renewable energy operations, including a mandatory reclamation security requirement. Albertans expect renewable power generation projects to be responsibly decommissioned and reclaimed for future generations. Alberta’s government stands firm in its commitment to protect landowners and taxpayers from being burdened with reclamation costs.
“We want to protect landowners, municipalities and taxpayers from unfairly having to cover the costs of renewable energy reclamations in the future. These changes will help make sure that all renewable energy projects provide reasonable security up front and that land will be reclaimed for future generations.”
Alberta’s government committed to an ‘agriculture first’ approach for future development, safeguarding the province’s native grasslands, irrigable and productive lands. The protection of agricultural land is not only essential to food production, but to environmental stewardship and local wildlife protection.
The Electric Energy Land Use and Visual Assessment Regulation follows this ‘agriculture first’ approach and enhances protections for municipalities’ most productive lands, establishing the need to consider potential irrigability and whether projects can co-exist with agricultural operations. These changes are critical to minimizing the impacts of energy development on agricultural lands, protecting local ecosystems and global food security. With these new rules, Alberta’s farmers and ranchers can continue to produce the high-quality products that they are renowned for.
“Our province accounts for nearly 50 per cent of Canada’s cattle, produces the most potatoes in the country, and is the sugar beet capital of Canada. None of this would be possible without the valuable, productive farmland that these new rules protect. Understanding the need for an ‘agriculture first’ approach for energy development is as simple as no farms, no food.”
The new Electric Energy Land Use and Visual Assessment Regulation also establishes specific guidelines to prevent projects from impacting pristine viewscapes. By establishing buffer zones and visual impact assessment zones, Alberta’s government is ensuring that industrial power projects the size of the Calgary Tower cannot be built in front of UNESCO World Heritage sites and other specified viewscapes, which will support the continued growth and success of Alberta’s tourism sector.
As Alberta’s population and economy grows, it is critical that the province has the additional power generation needed to meet increasing demand. Power generation must be developed in a balanced and responsible manner that promotes environmental stewardship, ensures the continued enjoyment of Alberta’s beautiful landscapes, and safeguards food security by protecting Alberta’s valuable agricultural lands. By encouraging the responsible development of additional power generation with these new regulations, Alberta’s government is listening to Albertans and ensuring the electricity grid is affordable, reliable and sustainable for generations to come.
Summary of Policy Changes
Following the policy direction established on February 28, 2024, Alberta’s government is now implementing the following policy and regulatory changes for renewable power development:
Agricultural lands
The new Electric Energy Land Use and Visual Assessment Regulation takes an “agriculture first” approach.
• Renewable energy developments will no longer be permitted on Land Suitability Rating System (LSRS) Class 1 and 2 lands unless the proponent can demonstrate the ability for both crops and/or livestock to coexist with the renewable generation project,
• In municipalities without Class 1 or 2 lands, Class 3 lands will be treated as Class 1 and 2.
• An irrigability assessment must be conducted by proponents and considered by the AUC.
Reclamation security
Amendments to the Activities Designation Regulation and Conservation and Reclamation Regulation create consistent reclamation requirements across all forms of renewable energy operations, including a mandatory reclamation security requirement. There will be a mandatory security requirement for projects located on private lands.
• Developers will be responsible for reclamation costs via a mandatory security or bond.
• The reclamation security will either be provided directly to the province or may be negotiated with landowners if sufficient evidence is provided to the AUC.
Viewscapes
The Electric Energy Land Use and Visual Assessment Regulation ensures pristine viewscapes are conserved through the establishment of buffer zones and visual impact assessment zones as designated by the province.
• New wind projects will no longer be permitted within specified buffer zones.
o Other proposed electricity developments located within the buffer zones will be required to submit a
visual impact assessment before approval.
• All proposed electricity developments located within visual impact assessment zones will be required to submit a visual impact assessment before approval.
Municipalities
The AUC is implementing rule changes to:
• Automatically grant municipalities the right to participate in AUC hearings.
• Enable municipalities to be eligible to request cost recovery for participation and review.
• Allow municipalities to review rules related to municipal submission requirements while clarifying consultation requirements.
Business
Government Subsidies and the Oil and Gas Industry
A look at Strathcona Resources Ltd.
Does the Canadian government subsidize companies operating in our oil and gas sector? According to research by science and technology journalist Emily Chung, between $4.5 billion and $81 billion of public funds are spent each year for assistance to the industry. But Chung notes how ambiguous definitions (what exactly is a subsidy?) mean that those numbers come with serious caveats.
I thought I’d make this discussion a bit more manageable by focusing on just one industry player: Strathcona Resources Ltd.
Strathcona is big. They produce around 185,000 barrels of oil equivalent each day and the company is currently ranked 98th among publicly traded companies in Canada in terms of market cap ($5 billion) and 88th for operating margin (21.59%).
The Audit does this work in part because paid subscribers share the load. Why not join, too?
What Is a Subsidy?
In the context of their report on the fossil fuel industry, the Department of Finance Canada asserts that “subsidies” can include:
- tax expenditures,
- grants and contributions,
- government loans or loan guarantees at favourable rates,
- resources sold by government at below-market rates
- research and development funding
- government intervention in markets to lower prices
The report defines tax expenditures as:
A type of tax measure, such as a preferential tax rate, exemption, deduction, deferral, or credit, with which the government aims to achieve public policy objectives through the tax system.
In the specific context of Strathcona, I could find no evidence that they’d received any direct public funding or “bailouts”. The government did recently announce a billion dollar partnership with the Canada Growth Fund (CGF) to build carbon capture and sequestration infrastructure, but that’s clearly an investment and not a subsidy. CGF is a Canadian arm’s-length crown corporation whose investments are managed by the Public Sector Pension Investment Board.
Strathcona’s 2023 Annual Report includes a reference to only one loan liability, but that had already been paid off and, in any case, wasn’t guaranteed by any level of government.
What Tax Benefits Does Strathcona Receive?
Many. The company’s annual report discusses its $6.1 billion “tax pool”. The pool is made up of deductions and credits that it can’t use this year, but that can be deferred for use in future years. Here’s how those break down:
The “Other Tax Deductions” item includes the Scientific Research and Experimental Development (SRED) deduction. That represents amounts spent on SRED-eligible research that companies can deduct from their payable taxes.
What Grant Funding Does Strathcona Receive?
Open Government data reports that only two federal grants were awarded to Strathcona, both in 2023. The first, worth $3.2 million, came from Natural Resources Canada as part of their Energy Innovation Program. Its purpose was development of Lindbergh Semi-Closed Cycle Flue Gas Recirculation and Carbon Capture.
The second grant was worth $12.5 million. It involved Environment and Climate Change Canada looking for an Orion Organic Rankine Cycle Waste Heat Recovery and Power Generation Project.
What Benefits Do Governments Receive From Strathcona?
Government subsidies don’t exist in a vacuum. As a rule, it’s assumed that subsidies to the private sector work as an investment whose primary payback is in profitable economic activity. Governments can also enjoy direct benefits.
In 2023, for example, Strathcona paid more than $405 million in crown royalties to provincial governments. They also spent $2.4 billion as operating expenses that included labor, energy costs, transportation, processing, and facility maintenance. Most of that money was spent in Canada.
A very rough estimate would suggest that total annual personal income taxes generated by people employed by Strathcona would be somewhere around $14 million. Vendors might pay another $13 million in corporate taxes.
There are also indirect benefits. For instance, those with jobs around the oil patch are, obviously, not unemployed and receiving EI benefits.
We could also take into account the larger impact Strathcona has on the general economy. Think about the food, shelter, clothing, and entertainment spending done by the families of Strathcona (and their vendors’) employees. That money, too, performs important social and economic service.
So does Strathcona receive more from government subsidies than the money they feed back into government accounts? Well, the $405 million in crown royalties are likely annual payments, as are the $27 million paid as income taxes. That’s what governments get. On the other side of the balance sheet, there is the $6.1 billion in deferred taxes and $16 million in grants. Those will probably be amortized over multiple years.
But does the word “subsidy” really describe tax benefits in any useful way? After all, there’s no company in all Canada – my own company included – that doesn’t deduct legitimate business expenses. And each and every Canadian receives similar benefits whenever they file their T1. For illustration, a Canadian whose total income happened to match the national average ($55,600) pays around $5,600 less in taxes each year due to various deductions and credits – including the basic personal amount.
Does that mean we’re all receiving government subsidies? There’s nothing wrong with thinking about it that way, but it does kind of strip the word of any real meaning.
Now you could reasonably argue that $6 billion is an awful lot of deferred tax, especially for a company with a 22% operating margin. And you could look to the tax code’s complexity for answers as to how this could have happened. But that’s not a subsidy in any coherent sense.
Think the tax code should be reformed? The line forms right behind me. However, the problem with playing around with the tax code is that changes apply to everyone, not just Strathcona or some other preferred target. Successfully anticipating how that might play out in dark and unanticipated ways isn’t the kind of thing for which governments are famous.
The Audit does this work in part because paid subscribers share the load. Why not join, too?
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