Businesses Should Avoid Global Warming Politics

Kinder-Morgan, the nation’s largest midstream energy company, just announced a multi-billion-dollar pipeline project to move two billion cubic feet of natural gas each day from West Texas to Gulf Coast consumers. At the same time, on the other side of the country, a federal judge threw out a climate-related lawsuit against some of the largest oil and gas companies in world.

All this brings to mind two non-binding shareholder resolutions instructing Kinder-Morgan to issue an environmental sustainability report and to assess the risk of climate change policy on its operations.

Amid a booming wellhead-to-burner-tip fossil-fuel market, and with clear judicial protection, should energy companies like Kinder-Morgan wade into the climate issue?

No, free market adherents argue. To economist Milton Friedman, profit-maximization best serves consumers and investors so long as the firm engages in “open and free competition without deception or fraud,” while respecting ethical norms.

In Just Business: Business Ethics in Action, Elaine Sternberg warned business to steer clear of shifting, subjective, emotional issues. A firm is not political debating society, much less a government, charity, church, or club. A firm creates long-term value for its owners, which then can use their wealth for philanthropic ends (such as Richard Kinder’s greening Houston initiative.)

So, Friedman/Sternberg would say: do not be distracted by stakeholder politics—and refrain from issuing specialized reports on social issues, such as global warming politics.

What about the basic ethics of its operations? Here, Kinder-Morgan can defer to the existing literature about the efficacy of the midstream energy business. Pipelines are a safer alternative than truck or rail transportation. Storage related to transportation (another major Kinder-Morgan function) ensures the reliability of energy deliveries to countless consumers.

Say that an outside party were to write, gratis, an environmental sustainability report for Kinder-Morgan. What might it say?

At a minimum, opposing viewpoints would have to be summarized. Take the famous global warming Senate hearing that just turned thirty years old. As summarized by the New York Times, climate models then predicted a temperature increase between 3 and 9 degrees Fahrenheit by 2025–2050. Yet today, the recorded global increase is south of one degree. And temperatures have been relatively flat since the late 1990s (the much-discussed “pause” or “warming hiatus”).

Given global lukewarming, the benefits of carbon dioxide come into play, beginning with accelerated plant growth via the CO2 fertilization effect.

An environmental sustainability report should also highlight the utilitarian case for affordable, plentiful, reliable energy. As Alex Epstein argues in The Moral Case for Fossil Fuels, natural gas, coal, and oil have dramatically improved and protected life. “We don’t take a safe climate and make it dangerous,” he states. “We take a dangerous climate and make it safe.” Climate-related deaths, in fact, have dramatically declined in the last century, as much as 99 percent. The protective nature of mineral energy and the wealth creation thereof are causal in this regard.

Dense hydrocarbons, in fact, have environmental advantages relative to dilute, intermittent renewables. “The greenest fuels are the ones that contain the most energy per pound of material that must be mined, trucked, pumped, piped, and burnt,” noted Peter Huber in his book Hard Green. “Extracting comparable amounts of energy from the surface would entail truly monstrous environmental disruption.”

His conclusion? “The greenest possible strategy is to mine and to bury, to fly and to tunnel, to search high and low, where the life mostly isn’t, and so to leave the edge, the space in the middle, living and green.”

Kinder-Morgan, as other energy companies, should leave the sustainability and climate debates to scientists, public-policy wonks, and government bodies. Focus on serving consumers in the marketplace. And in this company’s and founder’s case, stay profitable so Houston can be greener too.

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