Recently a group of businesses, including Ben & Jerry’s Ice Cream, called on insurance companies to stop supporting fossil fuels. Some state insurance commissioners are similarly pressuring the companies they regulate to cut ties. The immense consequences of ending fossil fuel use mean that this should require the unambiguous consent of the governed and not be imposed through some backdoor channel.
Insurance companies interact with energy in two ways. The first is through investments in oil, natural gas, and coal companies. The global insurance industry has $7 trillion in assets which they invest to help pay claims on insurance policies. Many financial firms face calls to divest from fossil fuels.
Energy companies also require insurance. Investors will not invest in drilling, mining, shipping, or refining fossil fuels unless operators are insured. A lack of coverage could halt the production of fossil fuels.
I believe in a voluntary society in which people enjoy freedom. People should be free to invest, including passing up lucrative opportunities they find objectionable. And we are free to can offer unsolicited advice to businesses, which they are free to ignore.
Freedom also means we can work for things not in our best interest. We should not have to justify our choices – in markets or the voting booth – to experts who overrule our choices if unimpressed with our rationale. People should be free to choose between values and financial self-interest.
The executives running Ben & Jerry’s can advocate for whatever they want. I suspect, however, that they have not realized that ending fossil fuel use would effectively end the ice cream business.
This might seem extreme as we could still have electricity for freezers from clean energy sources like wind and solar. Except that we could not. Producing wind turbines and solar panels uses lots of fossil fuels, as two reports from the Manhattan Institute detail.
Consider a 100-megawatt wind farm to replace a typical natural gas-powered generating plant. The wind farm uses 30,000 tons of iron ore, 50,000 tons of concrete, and 900 tons of plastics for the turbine blades. Plastics are made from oil, and fossil fuels enable the mining of iron ore and production of concrete. Solar panels use rare earth minerals mined using fossil fuels.
Wind and solar only produce electricity when the wind blows or the sun shines; they are not “dispatchable.” Yet on the electric grid power supplied must continually equal customer demands. We use fossil fuels as backup for wind and solar to keep our freezers full of ice cream running.
Wind farms must be located at favorable wind sites, often far from cities. Building transmission lines to get power from wind and solar farms to our grids also uses fossil fuels.
Theoretically, battery farms storing wind and solar power could eliminate fossil fuel backup generation. Companies like Tesla are currently innovating with such batteries. Yet producing batteries also requires fossil fuels; a battery capable of storing the energy in one barrel of oil requires 100 barrels of oil.
We will not have electricity powering freezers if we stop using fossil fuels entirely. With unreliable refrigeration, ice cream will melt between the dairy and our homes. The Green New Deal is either pointless or an enormous bait-and-switch. If the future resembles today with wind, solar, and batteries, we will still be generating greenhouse gas emissions and allegedly catastrophic global warming. Alternatively, clean energy is a mirage luring us into a dark future.
People made ice cream using natural ice before electric freezers, so we may still occasionally have homemade ice cream. In the 1800s, an extensive industry harvested from northern ponds for storage in ice houses and shipment to the south in the 1800s. Maybe we will revive the ice trade.
Life and prosperity require energy. Ending the use of fossil fuels will dramatically change every aspect of modern life. Ben & Jerry’s should carefully consider what they wish for.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.