US Climate Policy Will ‘Hit the Wall’ Causing Catastrophic Harm to Economy

by | Mar 6, 2022 |

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People who participate in endurance sports like road racing and long-distance running sometimes experience the feeling of hitting the wall.” By this, they mean they have sudden fatigue or loss of energy that prevents them from continuing at the same rate. In a business environment, others may use the metaphor to refer to what happens when one reaches the limits of ones resources and support and must discontinue a project or undertaking. 

Governments too can hit the wall when some event occurs that so undermines the premises upon which policy is based that the public forces decision-makers to change. When might the US climate policy hit the wall”? What will be the impact of Russia’s invasion of Ukraine? Will the US continue to rely on Opec and Russia for oil when the US probably has more than both?

Defining the nature and timing of hitting the wall is largely a matter of speculation. The effects of absurd attempts to decarbonize or go to net-zero that, might force policy changes. 

What Complete Decarbonization Means

What does decarbonization mean? It would be the complete elimination of the use of oil, natural gas, and coal in the US economy. What would that mean for life in the US? History offers some insights.

The world before 1800 was mainly decarbonized. The invention of the steam engine allowed coal to be used to power industrial plants, trains, and ships. The discovery of large oilfields and of ways to produce from them in the late 19th century, followed by the invention of the internal combustion engine to power cars and trucks in the early part of the 20th century, revolutionized the way people and goods moved.

The invention around the same time of electricity and of ways to transport and apply electricity for lighting and heating allowed the application of energy to hundreds of new uses. Energy made work easier and allowed a massive increase in economic activity (investment, employment, and trade) that improved living standards and expanded people’s choices of what to do and how to spend their time.

Today, about 84% of the energy used in the world comes from fossil fuels.1 The rest comes from a variety of sources, the most important of which are nuclear energy, hydroelectricity, and traditional biomass (wood and dried animal dung). New renewables, like wind and solar energy, account for about two percent.  

Oil and natural gas are also extremely important feedstock sources (i.e., building materials) for petroleum and petrochemical products. Without them, we would not have access to hundreds of products that most people consider either essential or highly valuable for modern life. The examples are almost endless, but allow us to cite a few that young people might miss if they were gone – televisions, cell phones, computers, most clothes and footwear, refrigerators, air conditioners, hand lotion and cosmetics, antiseptics, deodorant, purses, pantyhose, eyeglasses, luggage, and credit cards. There would be no plastic products to supply a huge range of things varying from water pipes to ice cube trays. Life as we know it would have much less variety.

What would ending oil consumption mean? The largest energy-consuming sector is transportation, where oil-fueled vehicles and other modes of transport constitute about 96% of consumption. People like to hope that electric cars will catch on, but up to now, they constitute only 3% of new car sales, even with government subsidies of up to $15,000 per vehicle.

Would we really be able to eliminate all internal combustion light-duty vehicles regardless of cost? 

Would people be glad to go everywhere by foot, bicycle, or (if you were lucky) by bus at all times and in all weather conditions? The fastest-growing source of transportation emissions is commercial trucks. Electric-powered trucks are barely on the horizon. How would we move products around the country if we eliminated the trucks? The most emissions-intensive mode of transportation is aviation. How would the US react if they could no longer fly, but had to take trains or buses to move across the country (noting that both trains and buses run on oil products, too)?

Consider Other Consequences of Decarbonization

It would be necessary to replace most of the world’s existing industrial and transportation infrastructure that now depends on fossil fuels; the costs of this would be in the many trillions of dollars.

It would require the electrification of all parts of the global economy. Currently, electricity supplies only about 20% of the world’s energy needs.2

The technological constraints are enormous. To take one example, electricity supply must be reliable, and wind and solar energy are intermittent (i.e., they produce only when the wind blows or the sun shines, not when electricity is needed). Bulk electricity storage is extraordinarily expensive. Recent estimates for utility-scale storage show that combined renewables/storage costs to completely electrify Canada are over $83 trillion.3 Imagine how much that would cost the US, whose population is ten times bigger.

Globally, farmers would not be able to obtain the supplies, fertilizers, or pesticides they need to plant their crops, and it is questionable whether they would have modern farm machinery. Food production would drop sharply in all parts of the world, as agricultural practices went back to what they were at the end of the 19th century. Billions of people would starve. Seriously.

Without natural gas and coal, there would be a shortage of electricity generation capacity and fuel for residential and commercial heating. Almost all parts of the world would experience blackouts and brownouts. This would make modern manufacturing possible in only some countries, like China, and that would have enormous strategic and security implications. Air-conditioning would become a luxury enjoyed by only those with higher incomes.

Because of the shortages of so many things, prices would rise significantly, even as incomes declined. People would not be able to get most of the goods and services on which they now depend. Older people would be most vulnerable. Hospitals would not be able to get many of the medications that they need or be able to conduct operations with the anesthetics now available. Many people would die as a result.

The net-zero target is itself the product of the misreading of the analysis by the Intergovernmental Panel on Climate Change. (4) In fact, the economics literature does not support that target.4

In other words, the claim that the world can and will reduce carbon dioxide emissions to completely decarbonize by 2050 is the product of politics and theatre, not serious analysis and understanding of the global energy system.

The question, therefore, is how far in the movement towards this untenable future would the world, and the US, travel before its unacceptability overwhelms the public consciousness?

Public Awareness

Public opinion polls and the occasional public consultations offer sometimes puzzling indications of what people in OECD countries think about current climate policies. In Europe and North America, the public is, by now, so indoctrinated” by the educational system, the mainstream media, and the statements of political leaders, that it accepts with little question the theses that climate change is occurring, that it is caused by human greenhouse gas emissions, and that the consequences may be very bad unless emissions are sharply reduced. It is less clear whether the average person ever considers the question as to how the US, can make any difference or whether international agreements will succeed in reducing emissions (which they have spectacularly failed to do up to now). Ironically, polls asking how much people would be prepared to pay to solve” the climate problem typically indicate they would pay about $10 per month, far less than current policy costs in the US.

In these circumstances, It is possible that a series of revelations that run contrary to the science” storyline might have an impact on the publics support for emissions reduction measures, but this seems doubtful. By now, hundreds of peer-reviewed studies have been published showing that the actual increases in global temperatures are less than half those projected by the Intergovernmental Panel on Climate Change (IPCC),5 that so-called extreme weather events are mostly unchanged from long-term historic patterns,6 that the media exaggerates the results of IPCC scientific reports to create a crisis atmosphere,7 and that the majority of scientists do not believe that a climate catastrophe” is in prospect.8 Such findings, however well documented, seem to have little effect on the public consciousness.

It is thus unlikely that a single event or group of related events will provoke a major change in public perceptions. It appears more likely, in our view, that public attitudes may change as a consequence of costly climate policy measures that have large impacts on consumers and workers in the US. It is possible that the government storyline, which claims it will be technically feasible and economically affordable to eliminate all hydrocarbons use by 2050, will be exposed by events as a remarkably costly sham, but that will take time. 

Our prediction is that American views will ultimately be turned by so-called pocketbook” issues. In other words, higher costs of energy services (i.e., heat, light, transportation, and process energy) will make the US industry clearly uncompetitive, resulting in a large, noticeable outflow of investment and employment, with the consequent reduction in government revenues and US’s standard of living. The main victims would be firms in the emissions-intensive and trade-exposed industries (oil and gas, mining, petrochemicals, steel, cement, metal fabrication, plastics, etc.).

A recent study by the Fraser Institute9 projected that by 2030 the effects of carbon dioxide taxes in Canada alone would reduce their GDP by 1.8% and cause the loss of over 180,000 jobs.

It is only a matter of time before US energy-intensive resource and manufacturing industries move their operations and investments elsewhere. Will it happen in a slow trickle or a thundering herd?

When will the US climate policy hit the wall?


1 British Petroleum Statistical Review of World Energy 2021
2 Our World in Data, 2019
4 Robert Murphy and Ross McKitrick. Off Target. Fraser Institute, 2021
5 Ross McKitrick and J. Christy, Pervasive Warming Bias in CHOP6 Tropospheric Layers, Earth and Space Science, July 15, 2020
8 Richard Lindzen, Global Warming: The Origin and Nature of the Alleged Scientific Consensus. CATO Review of Business and Government. Spring 1992
9 Ross McKitrick and Elmira Aliakbari. Estimated Impacts of a $170 Carbon Tax in Canada. Fraser Institute, 2021


Robert Lyman is an economist who spent 38 years working for the Canadian government.

Dr. Jay Lehr is a Senior Policy Analyst with the International Climate Science Coalition and former Science Director of The Heartland Institute.

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Bob Campbell
Bob Campbell
2 months ago

you’re an idiot.. bend over and smell your butt.. that should kill you and your dumb comment..

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