Global Warming Insurance Requires Reasonable Premiums

Global warming advocates are increasingly claiming carbon dioxide restrictions are a prudent and conservative insurance policy against severe global warming. Insurance policies, however, are only prudent and conservative when the price of the premiums is reasonable considering the likelihood and severity of the risk. Global warming insurance policies based on affordable natural gas, nuclear, and hydro power might make reasonable investments, but insurance policies based on unreliable and prohibitively expensive wind and solar power do not. If global warming advocates hope to forge a broad consensus for American policymakers to purchase insurance, they need to stop jacking up the premiums through expensive wind and solar power.

A mountain of scientific evidence, with some noteworthy examples found here, here, here, and here, strongly indicates (1) we are unlikely to experience rapid warming in the foreseeable future and (2) the consequences of any future warming are likely to be only modestly harmful, at worst. Many scientists, including highly credentialed scientists and policy experts at the CO2 Coalition, make a strong argument that the net impacts of our moderately warming planet are beneficial rather than harmful. Even so, the unlikely but plausible possibility that very harmful future warming will occur might justify reasonably priced global warming insurance.

Energy is the lifeblood of our economy. The price of energy directly impacts how much money people have left over for food, clothing, housing, health care, education, and consumer goods after paying electricity and fuel bills. The price of energy also factors into every good and service that is purchased and traded in our economy. When energy prices go up, it is like a tax increase – with the exception that people theoretically get something of value in return when they pay higher taxes to government. When energy prices go down, it is like a tax cut giving people more money to spread throughout the economy and improve the quality of their lives.

money coins pixabay 1Carbon dioxide reductions can come in many forms. Some of the most prominent environmental activists insist on wind and solar power to achieve those reductions. However, nuclear and hydro power are also zero-emissions power sources. Nuclear and hydro power are much more dependable than variable wind and solar power, making them even more effective and reliable at reducing carbon dioxide emissions. Also, natural gas cuts carbon dioxide emissions in half versus coal power.

These multiple options to reduce carbon dioxide emissions give us multiple means of purchasing global warming insurance. When purchasing life, home, health, or auto insurance, a prudent investor engages in comparison shopping to avoid overpaying. Policymakers considering purchasing global warming insurance must do the same thing.

Wind and solar power clearly impose expensive insurance premiums. A study by the left-of-center Brookings Institution found replacing conventional power with wind power increases electricity prices by 50 percent. The same study found replacing conventional power with solar power triples electricity prices. Even these price premiums don’t tell the full story, as the variable nature of wind and solar power poses additional costs and strains on electrical generation and distribution.

Fortunately for people seeking carbon dioxide reductions, natural gas, nuclear, and hydro power offer more affordable alternatives. Natural gas and hydro power are cost-competitive with coal. Nuclear power is somewhat more expensive, but still more affordable and reliable than wind and solar. Conservatives are wary of taking too much money out of consumers’ household budgets as “insurance” against unlikely global warming harms, but conservatives may well sign on to global warming insurance that entails adding more affordable energy sources to our power mix.

This leaves global warming advocates with a choice: continue insisting on expensive wind and solar power that lack public support and will slowly get implemented if at all, or immediately assure substantial reductions in carbon dioxide emissions by supporting natural gas, nuclear, and hydro power.

This article first appeared at Forbes.com.

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