Net-Zero and the Fall of Boris Johnson *UPDATED

The hot race to replace Boris Johnson as Prime Minister of Britain coincides with a record-breaking (though brief) heat wave that is summoning all of the usual clichés about climate change. But most Britons seem to be treating the heat with a shrug, understanding that heat waves sometimes come with what used to be known as “summer.”

Less recognized in the heat of the moment is the role extreme climate policy has played in the downfall of Johnson. The dominant narrative is that Johnson alienated his Tory colleagues in the cabinet and on the back benches with his hypocritical violation of Covid rules in his private parties, along with some scandal-ridden appointments, while the larger public soured on Johnson’s foolish embrace of draconian lockdown restrictions, along with a tax and fiscal policy one might have thought Johnson pinched from the Labour Party.

But the media, and even most Tory leaders, are reserving hushed tones for the role of Johnson’s fanatical embrace of “Net-Zero” energy policy (meaning a carbon-free energy supply by the year 2050). The energy policy of the Johnson government was indistinguishable from what Jeremy Corbyn’s Labourites would have imposed had they won the 2019 election.

Or maybe not, depending on the next election.

Possibly because Britain was on tap to host the U.N.’s annual climate shakedown (known as COP 26) in Glasgow in 2021, Johnson somehow thought he had to be a “climate leader,” pledging among other reckless things to close all of Britain’s coal-fired power plants by 2024. Coal plants scheduled for closure this fall are now going to be kept online, even as the International Energy Agency in Paris recommended this week that Europe as a whole burn more coal on account of the soaring price and scarcity of natural gas—a scarcity that is entirely the political creation of western European nations that thought Russia was an honest and reliable partner that would supply the right amount of natural gas while Europe persisted in its fanciful green dreams of running their economies on windmills.

Needless to say, the price of coal has risen more than the price of oil and natural gas in recent months. And how is Britain getting through the current heat wave? They’ve brought on 5 gigawatts of additional natural gas power because wind and solar power can’t be ramped up. Natural gas is currently supplying between 50 and 60 percent of Britain’s total electricity—a source that would fall to zero if “Net-Zero” was really implemented.

Despite the breathless hand-wringing about the heat wave and the first-ever “Extreme Red Notice” issued by the government, Britons know that the death toll from winter cold is much larger than casualties from a brief summer spell of unaccustomed warmth. There are credible forecasts that utility rates may spike so sharply this winter that many households won’t be able to afford them, and there is talk of the government having to open “warming shelters” to keep people from freezing to death this winter.

Blighty: warm and lovin' it.

Which brings us back to the contest to succeed Boris, who has so far made no acknowledgement that his climate policy was misguided. His aspiring successors are ever so slightly putting some distance between themselves and Johnson on this issue. The New York Times is dismayed that “climate change does not appear to be a priority” in the race for party leadership, and indeed the leading candidates are treading gingerly on the topic, with most affirming their general commitment to Net-Zero, while indicating that they intend to back off somehow.

All four remaining candidates after the first rounds of winnowing said they would at least impose a moratorium on new “green levies” to subsidize more renewable energy. All seemed to recognize that the public does not support the extreme greenery Johnson suicidally embraced, and indeed a recent poll of Tory voters by the Times of London found that only 4 percent thought "climate change" should be one of the top three priorities for the next government. Front-runners Rishi Sunak -- the former Chancellor of the Exchequer whose recent resignation was the proximate cause of Boris' downfall --  and Penny Mourdant, the trade minister, both say that energy policy “shouldn’t hurt people,” which means they are at least paying attention to the rising cost of green ambitions to ordinary rate-paying citizens.

(L-R) Penny Mordaunt, Liz Truss, Kemi Badenoch, Rishi Sunak,

Two candidates have been more bold in breaking with climate orthodoxy. Foreign secretary Liz Truss, the foreign secretary, has said she’d lift the ban on fracking for natural gas, but Kemi Badenoch  -- now out of the running -- was the only person in the field who has said she might be open to scraping Net-Zero entirely if it threatens to bankrupt Britain (which it does). Badenoch, a conservative daughter of Nigerian immigrants, distinguished herself for being resolutely anti-woke in her stint as “minster for equalities,” directly attacking critical race theory and issuing an official report that denied Britain is “institutionally racist,” which infuriated the cultural left. A Badenoch government would have offered the virtue of supremely annoying the two most vocal segments of leftist opinion—environmentalists and race-mongers. She also supported Brexit.

It is notable that the final four candidates at the beginning of the week included three women. With Badenoch out, by later today the race will be down to two, one of whom will obviously be female unless the Biden administration’s gender classifications somehow take hold in Britain. Nice to see that regardless of gender, the next British government appears to be backing away from Net-Zero nonsense.

UPDATE: Liz Truss will face off against Sunak. The winner, and thus new Tory party leader and prime minister, will be announced on Sept. 5.

There's No Escape from 'Climate Change'

Sometimes random events conspire to drive home unpleasant realities. "Climate change," as this website argues daily, is a fundamentally political mantra used by the globalists to usurp world economies, and direct vast amounts of economic activity toward socialist ends, including The Great Reset. It is a plot. It is a coordinated effort, to destroy vibrant capitalism, which has created the highest standard of living for the most people in history. This is true even during unpleasantly hot summers or cold winters. 

When an idea is based on a lie, it is hard to imagine it winning an essential, worldwide political debate. But in the past few weeks I’ve had three encounters with businesses that have brought home the raw power of the "climate change" lobby, raising harsh questions about whether it can be defeated.

Over July 4th weekend I went to a big chain movie theater in ex-urban Connecticut, to see Top Gun: Maverick, a fundamentally conservative movie about flying planes very fast, which uses up a lot of fuel, not that that’s the point. The audience was older and, presumably, mostly Republican. After the endless coming attractions, a pretty clever commercial played. A CGI dinosaur spoke to a U.N.-like body about climate change. He pointed out that it was killing our planet. And yet we subsidize fossil fuels, which, the velociraptor noted, is like him subsidizing an asteroid. This was brought to us by United Nations Development Program, and voiced by actor Jack Black. 

Commercial American movies have not heretofore included such blatant political propaganda pieces. It was presented no differently than the usual ads for Coke and popcorn, which is horrifying. It was well done enough to have an impact on a younger, or apolitical, audience. Is this suasion a condition of post-pandemic entertainment?

A few weeks earlier I attended an event at which, among other speakers, a Korean-American man described his business of consulting with urban political leaders to create “smart cities.” Urban planning has its place, though it rarely works as intended. It is, theoretically, practical. Though most recent planned cities are a little barren and inhuman. They certainly are not interesting in the manner of old cities that grew up over long time periods.

But with "smart cities," the question is, "what kind of people’s lives are they planning for?" Rational traffic patterns are a fine thing. Decent housing – though you usually get those monstrous blocks of flats—is usually an improvement over slums. But these days the planning is to do without cars, for carbon reasons. And high-rise apartment blocks predominate, in order to squeeze the most people into the smallest space, obviating the need for greater land use, and denying anyone the sort of freedom that is a byproduct of privacy or urban anonymity. One pictures Wuhan, 2020, with the population locked into their apartments by the government, to starve or die if they caught Covid.

Toward the end of his talk he noted that he had just met with the mayor of New York. He shared his disappointment that that New York isn’t interested in "smart" city planning. There was a faint sigh of relief in the room. But it's worth knowing that a very smart Wharton classmate of Elon Musk does this full time, around the world. Clients include Hanoi, Lviv, and various Latin American cities. A great many countries are eager to plan brave new limits for human behavior. This is not climate change driven, per se. But it goes hand in glove.

We've got it all figured out.

Just last week I was invited to attend a Zoom call by a major American media-marketing firm that is working with a European artificial intelligence (AI) firm. The meeting was titled "Is Artificial Intelligence the Solution For Our Most Crucial Climate Challenges?" The presentation fully presumed universal acceptance of the Paris Climate Agreement projections for rising seas and carbon pollution—and the Paris goals for mitigating these "problems."

Reporters were told that AI can measure extraordinary amounts of remote carbon, even micro level footprints of individual products, while gathering data. It is especially helpful in mitigation efforts, including reducing emissions and removing already present carbon in the environment. When it comes to "Adaptation and Resilience," AI is good for "hazard forecasting," for which it can create excellent regional modeling of rising sea levels, or fires. That’s needed to build warning systems. AI also can help determine vulnerabilities, including monitoring for epidemics and strengthening infrastructure. And, of course, AI is excellent for climate research and modeling of needed economic and social transitions. This description includes every "climate-change" buzzword that young businessmen have in their bags.

The young people who work for this firm were earnest and gung ho. They’re smart. They’re applying their skills and formulas to a problem, and they will solve it. Even if it isn’t real. Now multiply this very professional presentation by hundreds of tech firms angling for contracts, which some will win, then tell me how you stop this great march forward. Because it’s not clear. Truth needs stronger defenders.

Fiduciary Responsibility, Charity, and Other People's Money

Mark Carney leaves his job as Governor of the Bank of England in March, stepping easily into several new positions: notably, U.N. Special Envoy for Climate Action and Finance and special advisor to the British Prime Minister for the Glasgow COP26 conference on climate change in November. More broadly, Carney is moving from the world of central banking and high finance into that of international political activism on climate at the highest U.N. level.

That’s also a move from a world in which he had sustained success and a high reputation—with one significant misstep to which I’ll return—to one in which he wields less expert knowledge and yet is taking on a much more controversial task. And he clearly relishes this more adventurous role in which he seeks to use his experience as a banker to get the international financial system, both central banks and private financial markets, to become engines of climate policy.

In fact he’s been auditioning for this role since his early days in the Bank of England. In 2015 he established an industry-led task force on the disclosure of climate-related financial risks under Michael Bloomberg (a useful ally) under a mandate from G20 ministers. His particular concern has been to seek to persuade, “nudge,” even compel banks, corporations, and other economic actors to integrate climate risks into our understanding of fiduciary duty; managers must incorporate these risks into their prudent management of their clients’ money. Carney himself has warned several times that managers may in future be held to account for energy investments that turn out badly for their clients because they underestimate the market failures of fossil fuels. And he has used his banking leadership to encourage banks and others to write down the values of fossil fuels in their portfolios.

Now, this is a sophisticated version of an argument that has been going the rounds for about fifty years. That argument begins as a claim that managers and markets should take a wider range of factors than profitability and shareholder value into account when making investment and other decisions. What makes Carney’s argument more sophisticated than my crude version here is that he disguises an essentially ethical argument as long-term prudent investment advice (plus warnings that managers who ignore him may face shareholder suits for losing money.)

Milton Friedman was an early critic of this kind of thing when he attacked the highly respectable concept of corporate charitable giving. He was misinterpreted, of course, by those who believed (or pretended to believe) that he was advocating a capitalism red in tooth and claw that was contemptuous of compassion and idealism. One critic at the time dismissed his argument as “romantic brutalism.”

In fact Milton was a kind and beneficent man, but a realist first. His target was what we now call “virtue-signaling” or, to be even more romantically brutalist, virtue-signaling at the expense of other people. If corporate managers wanted to give money to poor villagers in the Third World, or local symphony orchestras, or National Public Radio, they should write cheques to those causes on their own accounts. Their wives could then legitimately boast about these donations at the Annual Planned Parenthood ball.

What they were not entitled to do was to give money belonging to their shareholders to causes of their own choosing. Friedman was not dissing compassion here. Their shareholders might be feeling generous too, conceivably more generous, but towards causes like Wounded Warriors, Mother Teresa’s missions, or Adoption Services. They would have less to give to their favored causes if the corpocrats had siphoned money from their dividends into the Philanthropy Department. (Please switch donations between corporate managers and shareholders if it makes you feel happier with the outcome and with my argument.) And, after all, the money belonged to them.

Managers in corporations, like managers of pension funds vis a vis pensioners, have a fiduciary duty to act in the interests of their shareholders. That obligation is a key restraint which prevents managers looting the funds entrusted to them. It is clear and has legal force. Corporate executives find it irksome, however, because it restricts their freedoms to allocate funds as they might wish. Hence their attraction towards the idea that vaguer responsibilities to several classes of “stakeholders” should replace this clear fiduciary duty to shareholders. With one bound they would be free.

Such notions rest on highly dubious ethical foundations. The Victorians, who invented the Joint Stock Corporation, saw this very clearly. Half of their popular melodrama depict a villainous guardian who seeks to marry a well-endowed ward (no sniggering at the back) in order to get control of her fortune, conceal the fact that he has embezzled half of it, and benefit from the rule that a wife cannot give evidence  against her husband. A Victorian audience would hardly have been soothed if, after his exposure, the villain had stepped forward to explain that he had merely redistributed her fortune on charitable grounds that left her comfortably off and lifted scores of the poor out of dire poverty. We can’t justify spending other people’s money on our favored causes because we think the causes are virtuous.

Carney would object here that in expanding the notion of fiduciary duty, he’s not favoring a cause but giving prudent advice that will save investors from foreseeable losses. For that to be true, he would need to have some ability to see the future better than the market. Does he possess that faculty?

That question brings me to my earlier reference of a misstep in Carney’s career. He has been seriously mistaken twice in his forecasts of how the UK economy would perform following Brexit. The first occasion was when he predicted prior to the 2016 referendum that the economy would be badly damaged merely by a No vote in the referendum. In fact, the economy improved and has performed better than its EU neighbors since the vote.

The second occasion was in 2018 when the Bank of England issued predictions on how Brexit itself might damage the UK economy. Paul Krugman, a strong opponent of Brexit, expressed some considerable skepticism about what struck him as exaggerated forecasts in successive tweets. I quote from Krugman's tweetstorm:

  1. As best I can tell, the big results depend on assumed relations between trade/FDI flows and productivity. It’s really important to understand that this channel does not follow from basic trade theory and comparative advantage; it’s a black-box story. And:
  2. What we have are correlations between trade and investment flows and productivity that don’t really follow from standard models. Are these causal? There is surely room for skepticism . . . So I’m worried. And:
  3. Again, I’m anti-Brexit, and have no doubt that it will make Britain poorer. And the BoE could be right about the magnitude. But they’ve really gone pretty far out on a limb here.

These judgments were a win for Krugman over Carney. The Bank’s forecasts were adjusted heavily to make them less Brexit-phobic a short time later.

If Carney lacks a general infallibility, then we need to look at the plausibility of his particular forecasts. He makes two sets of forecasts in this debate. He forecasts that the rise in temperatures is proceeding at a very rapid rate and that the markets for fossil fuels will fall: As the Guardian reported:

Carney said [Greta] Thunberg was right to point out that climate science showed that the world had only eight years of emitting carbon at its current rate if there is to be a 67% chance of limiting the increase in global temperature to 1.5 degrees. “That’s a legitimate point to make,” he said. “There have been many positive contributions from Greta Thunberg.”

That forecast seems to be considerably more precise than most official forecasts of carbon emissions and temperature increases -- a field already distorted by activist scholarship and political alarmism in the direction of exaggeration. UN forecasts themselves offer a range of possible outcomes which indicates uncertainty on the part of forecasters. To assign these kind of numbers -- eight years of continuing carbon emissions leading to a 67 % chance of holding temperature increases to 1.5 degrees -- all this about a process fed by innumerable factors reminds one of the difference between getting something roughly right versus precisely wrong. Such calculations are taking place, moreover, in a public atmosphere in which the speeches of a young adolescent woman are accorded undue weight by policy-makers. As in earlier controversies, such as Lysenkoism in the Soviet Union, we should subject them to firm skepticism.

Yet if these climate forecasts are either exaggerated or simply uncertain, what is the test which would tell us with some reliability that the market demand for fossil fuels is likely to fall along with the value of companies that extract them. It cannot be the additional stress tests or capital requirements that regulators may want the banks to impose on energy companies, for then the regulators would be using their own interventions as the justification for intervening. As yet, however, non-official market participants can’t seem to see spontaneous causes for this threat to the energy sector.

Recently, I wrote an article on Greta and the rise of the Crankocracy here. It concluded:  "Could you have a better illustration of the coming crankocracy than the assembled leaders of the world nodding solemnly and applauding timidly as a 17-year-old adolescent condemns them angrily for not halting the medieval plague about to descend on them unless they replace their business suits with sackcloth and ashes?"

I would be distressed to see Mr. Carney join their flagellant ranks. If he does, though, don't ask him for fiduciary advice.