Debates over climate policy often get bogged down in different judgments about future technological progress and costs. What will our energy mix look like in the distant future? What will be the eventual price of going Net Zero? Some predictions may prove correct; many will not. Arguing hypotheticals rarely bears fruit. However sceptical you may be, you cannot prove that someone’s vision of the future is wrong until you get there.

But you can show that Net Zero is a flawed and irrational policy, regardless of future developments, because proponents make a number of epistemic errors.

First, they justify Net Zero with pathways that supposedly show it is achievable and affordable. These pathways are composed of large numbers of assumptions, each of which is uncertain. The product is almost complete uncertainty. No matter how many of these pathways you deploy, you cannot demonstrate that Net Zero is feasible by ignoring the uncertainty in each of them.

Second, they set narrow system boundaries to limit the factors that they must attempt to estimate. For example, their assessment of employment effects looks only at jobs created and destroyed in the energy sector and in other Net Zero activities. But Net Zero will have impacts well beyond these sectors. They may be positive or negative, but being unacknowledged, they are another element of (in this case, total) uncertainty. Ce qu’on voit et ce qu’on ne voit pas.

Third, their dirigiste approach limits innovation, ignoring the aspects of human nature that are most responsible for our prosperity.

Ironically, the endemic uncertainty makes it all the more important to harness human nature rather than constrain it. As Hayek explained, there are two types of order: human-imposed (taxis) and emergent (cosmos). Taxis is applicable where all the significant variables are known and controlled by a central planner. Where complexity and uncertainty prevent this, a cosmos is more suitable. But a decentralised, emergent system cannot be controlled to deliver pre-judged outcomes. In a cosmos, we discover rather than direct the optimal outcome.

Net Zero dirigisme is a form of taxis. It will not work for this degree of uncertainty and complexity. But if we “internalise the externality” (i.e. polluter pays) we can incorporate the risk of climate change into the considerations of all the actors in the cosmos that is our economy and society.

The resulting order may not be perfect, nor what central planners believe is right. But it will produce better outcomes than the ones the planners (with unjustified confidence in what they think they know) would have directed. And it will be a better world to live in, where people can focus on the utility of their ideas rather than on their compliance with the central plan.

The Tony Blair Institute for Global Change is a strong advocate of Net Zero dirigisme. But if we look at the 2003 Energy White Paper, introduced by Tony Blair, we can find numerous instances where our energy systems have turned out quite differently to what the government’s experts thought they could predict for 2020. The same could be said for any other major energy policy of the past 30 years.

Governments always believe that their expertise will be foolproof this time, despite the evidence of the past. But the rest of us should not fall for governments’ delusions of adequacy. Policy should not be set on that basis.

 

This is an abridged version of an article published by the Center for Competitive Sustainability