Wednesday, December 14, 2016

ELC Essay #9: Energy Policy: No Place for Zero-Sum Thinking

By Inara Scott

The popular notion of a zero-sum game is a scenario in which, for one party to gain value, another party must lose it. We can imagine a pie cut into six pieces, with six people standing beside it. For any one individual to get two pieces means someone else must go hungry. One of the key assumptions here, of course, is that the number of slices of pie is fixed. We can’t add to the pie.

Any simplistic metaphor is certain to break down under scrutiny, but in the energy context, this image is particularly inapt. In December 2005, natural gas was trading around $15.39/MMBtu. Today, the price is closer to $2.90. The reason for this precipitous drop? New techniques in fracking and horizontal drilling in shale rock, which allowed developers to shake loose massive stores of natural gas that had previously been inaccessible. The pie suddenly got a whole lot bigger.

Improvements in materials and efficiency have also drastically lowered the cost of renewable energy generation—so much so that current cost projections for 2020 are half what they were about a decade ago. The cost of wind energy alone fell almost 60% from 2009-2015. If we think of the pie as the amount of renewable energy we can generate per dollar, there can be no doubt it continues to grow.

Unfortunately, in the energy context the pie can also shrink. The same shale gas that grew the natural gas pie could, in the near future, dry up, for regulatory or safety reasons. Fracking has been associated with an increase in earthquake activity. The controversial technique also uses significant amounts of groundwater (a touchy subject in drought-stricken areas, including California) and can contaminate groundwater with its dangerous mixture of chemicals. While some seek to close loopholes and regulate fracking at the federal level, states like New York have banned the practice entirely, citing significant health and safety concerns.

Rather than use a metaphor like the zero-sum game, some prefer shorthand like “winners and losers” to emphasize that, in the environmental context, choices inevitably have both positive and negative consequences. For example, in fragile desert ecosystems, massive solar towers that concentrate heat and produce clean energy have also resulted in bird deaths and converted habitat for giant tortoises. So for the solar tower to be the winner, we’ve presumably got to accept that the tortoise will be the loser. In coal country, the story goes, the coal miner is “loser” and the environment is the “winner,” never mind that it was largely the low cost of natural gas and renewables, not environmental regulation, that put the miner out of a job and created record levels of unemployment and poverty in his community. 

In a winner-loser or zero-sum formulation, the roles are simple and straightforward: for the environment to win, the coal miner must lose. But what actually happens when the environment “wins” at the expense of the miner? Sorry to report: everyone loses.  

--The coal miner loses first because he has no job. But then he loses again because this broad-brush approach labels him as someone who is opposed to environmental protection. Rather than someone who simply wants to be able to provide for his family and make a decent living, the coal miner becomes the bad guy who hates the environment. And in that way, his community loses too; it loses jobs and faces a future of environmental antagonism, as coal communities now believe that for them to win, the environment must lose.

--Sadly, the environmentalist doesn’t really win either. By advocating for a policy that is seen as putting coal miners out of work, the environmentalist must contend with significant political pressure on federal, state, and local governments to overrule or amend environmental legislation or tie-up regulation through costly court battles. Moreover, once the environmentalist and the coal miner are seen as enemies, both lose the opportunity to work together for solutions to simultaneously advance their interests, as could be the case with economically beneficial carbon legislation.

Importantly, just like a zero-sum characterization, this winner-loser scenario breaks down under scrutiny. The coal miner is a loser only if his interest is construed narrowly: i.e., to work at a coal mine. If his interests are defined more broadly as desiring a job and a way to support his family, the coal mine could close and he could still be a winner. An analysis by Adele Morris of the Brookings Institution shows that a carbon tax could provide ample revenues to support job retraining and retirement benefits for displaced coal workers, as well as fund mine reclamation, all with positive economic outcomes. The coal miner is a “loser” if we narrowly confine our analysis of the situation to one issue (coal mine closure), instead of looking broadly for policies that could reduce carbon and build communities at the same time.

Winner-and-loser thinking implies that the winner is not just passively benefiting from a scenario, but is actively fighting against the loser. By talking about the environmentalists and coal miners as winners and losers, the coal miner reasonably believes the environmentalist is working against him and benefiting at his expense. In fact, coal use is declining in large part because of the economic competitiveness of natural gas and renewables, which in turn was fueled by the growth in the “pie” of natural gas supplies due to fracking and technological advances in renewable energy generation. Zero-sum and winner-and-loser thinking obscures the real history here, and impedes environmental progress.

These are not the days for zero-sum thinking. The stunning turn of the 2016 presidential election highlighted the dangers of winner-and-loser thinking: this time, it was the environmentalists who were the “losers” and the coal miners the “winners.” But this is precisely why it is time to rethink our approach to environmental politics. As long as we narrowly look at environmental issues without considering economic justice and the health of communities, we will keep creating lose-lose situations. The environment doesn’t benefit when a generation of people think it is their enemy, and the environmentalists will never win as long as they see coal miners as their adversaries.

I believe to continue our progress in addressing climate change and environmental protection we’ve got to think bigger—think holistically to avoid the winner-loser dichotomy. Environmental actions must be paired with social and economic justice programs, ensuring that efforts to create a “win” for the environment don’t create a “loss” for vulnerable populations, economically disadvantaged communities, and people of color. We can’t think narrowly about closing the coal mine—we’ve got to think broadly about how to restore communities. We can’t “fix” the environment and then, as an afterthought, worry about the impacts of environmental policies on people.

Energy policy is enormously complex, with technology constantly changing the economics of sources and options available to meet future energy needs. While there are most certainly positive and negative consequences to resource options, our ability to mitigate negative consequences may change at a bewildering pace, even as the industrial and technological landscape evolves and changes. Now is the time to set aside shallow characterizations and go deeper and look more creatively at our long-term objectives and policy choices. Policies impacting energy and the environment must be analyzed together for their impacts on communities and individuals. Narrowing our gaze creates winners and losers. Effective energy policy requires the optimism to consider how to grow the size of the pie, the humility to know that the future is uncertain, and the foresight to challenge our assumptions and look for ways to work together to reach common goals.

http://lawprofessors.typepad.com/environmental_law/2016/12/elc-essay-9-y-inara-scott-energy-policy-no-place-for-zero-sum-thinking.html

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Comments

Yes of course policy decisions are not purely zero-sum. However with any policy choice there are winners and losers, because we are people with values and we live in a world of scarcity. It isn't narrowing our gaze to notice this fact. While we can "expand the pie," for some, it will always--no really, always--be the case that our decisions will create relative winners and losers, which is to say, we must find a balance among our values.

So, for example, if we value having a country where workers have the right to unionize, we must accept that some industries will struggle to be profitable and treat their employees well (e.g. coal, perhaps) and will be losers to the extent we insist on living consistent our values insofar as we value workers' rights. If we value having breathable air that is relatively free of mercury and particulate matter, we must accept that some industries will struggle to be profitable (e.g. coal, perhaps) and will struggle to be profitable to the extent we insist on living consistent with our values, insofar as we value our own health. If we value having a livable climate, we must accept that some fossil fuels (if I have my facts correct, a majority fraction of proven fossil reserves, including vast amounts of coal) must stay in the ground, and so the extent we allow them to be burned, we are making losers of our children and grandchildren.

So whose interest is served when we pretend that there are no values at stake?

One can imagine Hannibal Lector reading your article, and commenting as follows:

"I quite agree. The moment we allow discussion of 'winners and losers' some of us--I'm thinking of myself, and certain components of the fossil fuel industry--are going to be unfairly pitted against the health and well-being of our fellows. For example, because the coal industry has an appetite that involves removing mountaintops, polluting streams, emitting mercury and particulate matter, and pumping carbon dioxide into the atmosphere, there are those who would say there is an unavoidable winner/loser dynamic, and who might seek to make coal the loser. Likewise for my own appetites... by all means, let us avoid talk of winners and losers, and focus on expanding the pie."

That's a hyperbolic example, but perhaps now you take my point about what is missing from your article. Our energy policy choices are among the most important choices we make for what kind of future we leave to next generations, and whatever kind of pie we bake, there will be some amount of unpleasantness "baked in." We have already, undoubtedly, ended up accepting some compromises in the area of worker safety, and some will argue we under-sentenced Don Blankenship (e.g. perhaps the families of those 29 miners might say something like that). We have already, undoubtedly, made some compromises in the area of breathable air, and some might point to the touted thousands of lives reportedly saved thanks to Britain's phasing out coal and ask, why didn't they phase it out sooner? We have already, undoubtedly, made some compromises in the area of baking in some dangerously planet-altering climate change, and some will argue that ours is already a policy of playing Russian Roulette with our species' future.

Some will, of course, argue from the other side on some or all of these questions. Not least, Don Blankenship, who I hope I can be forgiven for supposing probably feels his sentence was more than necessary. You'll note that I haven't told you anything about my own view, but I will say that my undergraduate degree was in economics and one of my values is in having high-functioning markets determine prices where not inconsistent with my other values--I'm hardly a knee-jerk environmentalist. However, because I do have other values as well, I tend to write long tetchy comments when supposedly respectable professors write articles urging us not to pay attention to any "winners" and "losers."

Posted by: Kelley Meck | Jan 18, 2017 1:59:50 PM

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