Published on March 2nd, 2012 | by Zachary Shahan
Clean Energy Is Needed Now (Climate Scientists & Climate Economists Agree)
March 2nd, 2012 by Zachary Shahan
Climate action is trillions of dollars cheaper than climate inaction.
Investing in a clean energy economy is not cheap. It is actually projected to cost trillions of dollars. However, sticking with a dirty energy economy will cost society much more, many trillions of dollars more.
For responses to other anti-cleantech myths, see: Anti-Cleantech Myths Debunked (Your #1 Resource).
I recently posted David Roberts’ piece on a new climate and energy study by former Microsoft executive Nathan Myhrvold and climate scientist Ken Caldeira. I’ve run across more good quotes and a good graphic on the matter since then, and I just wrote about these over on Planetsave. Additionally, I wrote a related story over there on the difference in cost between taking strong climate action now versus continued climate inaction. Skipping most of what was already posted on here (see the link above for that), here’s a bit more on the Myhrvold–Caldeira study, “Greenhouse gases, climate change and the transition from coal to low-carbon electricity,” followed by a repost on some climate-action–climate-inaction studies:
Which Technologies to Use (to Stop Considerable, Considerable Global Warming)
From Caldeira and Myhrvold:
Despite the lengthy time lags involved, delaying rollouts of low-carbon-emission energy technologies risks even greater environmental harm in the second half of this century and beyond. This underscores the urgency in developing realistic plans for the rapid deployment of the lowest-GHG-emission electricity generation technologies. Technologies that offer only modest reductions in emissions, such as natural gas and — if the highest estimates from the life-cycle analyses are correct — carbon capture and storage, cannot yield substantial temperature reductions this century. Achieving substantial reductions in temperatures relative to the coal-based system will take the better part of a century, and will depend on rapid and massive deployment of some mix of conservation, wind, solar, and nuclear, and possibly carbon capture and storage.
Reiterated by the Institute of Physics news release:
… technologies that offer only modest reductions in greenhouse gases, such as the use of natural gas and perhaps carbon capture and storage, cannot substantially reduce climate risk in the next 100 years.
Delaying the rollout of the technologies is not an option however; the risks of environmental harm will be much greater in the second half of the century and beyond if we continue to rely on coal-based technologies.
Dr Joe Romm of Climate Progress has more on the significance of this study (one of the most interesting things to note is who one of the authors is, and what his previous stance on the matter was):
These results are not entirely news to people who follow the recent climate and energy literature, which I’ve written about at length — see “NCAR Study: Switching From Coal to Gas Increases Warming for Decades, Has Minimal Benefit Even in 2100.” The fact that natural gas is a bridge fuel to nowhere was first shown by the International Energy Agency in its big June report on gas — see IEA’s “Golden Age of Gas Scenario” Leads to More Than 6°F Warming and Out-of-Control Climate Change.
But what’s new is the first peer-reviewed analysis that “has predicted the climate effects of energy system transitions” with “a quantitative model … that includes life-cycle emissions and the central physics of greenhouse warming.”
What’s also remarkable about this study is the lead author, Nathan Myhrvold. You may recall Myhrvold, the former CTO of Microsoft, from his anti-clean-energy and pro-geoengineering quotes in”Error-riddled book Superfreakonomics,” which I and many, many others debunked at length in 2009.
Myhrvold was quoted back then about the “carbon debt” of the clean energy build-out: “Eventually, we have a great carbon-free energy infrastructure but only after making emissions and global warming worse every year until we’re done building out the solar plants, which could take 30 to 50 years.”
Of course, not noted in all of this is energy efficiency and the economy’s role in the matter. The study assumes constantly rising energy demand. We’ll see about that. Also, we’d be wise to invest a LOT more money in energy efficiency — it’s also critical to a clean energy transition.
Costs of Climate Action vs Costs of Climate Inaction
The rest of this post is a repost of a great piece by Skeptical Science on this matter, which is partially a debunking of a recent piece in the Wall Street Journal that misrepresents a prominent Yale economist, William Nordhaus:
Yale’s William Nordhaus is one of the foremost experts on climate economics. His research has frequently been misrepresented by climate “skeptics” to argue that CO2 limits will harm the economy. For example, Christopher Monckton cited a climate economics review by Richard Tol (which in turn heavily cited work by Nordhaus) in claiming:
“…the overwhelming majority of economic studies on the subject (which are summarized in my paper) find the cost of climate action greatly exceeds the cost of inaction…”
As we demonstrated in our response, Monckton completely misrepresented the work of Tol (and Nordhaus, by extension), and thus his claim is 100% wrong. The reality is that the overwhelming majority of economic studies on climate find the cost of climate inaction greatly exceeds the cost of action (Figure 1). That’s why there is a consensus amongst economists with climate expertise that we should reduce greenhouse gas emissions (Figure 2).
Figure 1: Approximate costs of climate action (green) and inaction (red) in 2100 and 2200. Sources: German Institute for Economic Research and Watkiss et al. 2005
Figure 2: New York University survey results of economists with climate expertise when asked under what circumstances the USA should reduce its emissions
Similarly, a recent letter published by the Wall Street Journal, signed by 16 climate “skeptics” (few of which have any climate or economics expertise, and many of which have received fossil fuel funding) misrepresented Nordhaus’ research as supporting climate inaction from an economic standpoint. When Nordhaus objected to this misrepresentation of his work, Patrick Michaels doubled-down on the misrepresentation, claiming Nordhaus didn’t understand his own research.
However, as discussed by Alex C on Skeptical Science, the “skeptics” had indeed misrepresented Nordhaus’ work. They focused on the cost-to-benefit ratio of various climate mitigation options, whereas it is the difference (benefit minus cost, as opposed to benefit divided by cost) which tells us how much money is saved, and thus is the most important factor in determining which option is most economically beneficial.
In a recent article, Nordhaus sought to set the record straight that the climate economics literature clearly indicates that CO2 limits will save money. Nordhaus confirmed that the SkS approach is the correct one:
“The authors cite the “benefit-to-cost ratio” to support their argument. Elementary cost-benefit and business economics teach that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits (that is, the difference between, and not the ratio of, benefits and costs).
This point can be seen in a simple example, which would apply in the case of investments to slow climate change. Suppose we were thinking about two policies. Policy A has a small investment in abatement of 2 emissions. It costs relatively little (say $1 billion) but has substantial benefits (say $10 billion), for a net benefit of $9 billion. Now compare this with a very effective and larger investment, Policy B. This second investment costs more (say $10 billion) but has substantial benefits (say $50 billion), for a net benefit of $40 billion. B is preferable because it has higher net benefits ($40 billion for B as compared with $9 for A), but A has a higher benefit-cost ratio (a ratio of 10 for A as compared with 5 for B). This example shows why we should, in designing the most effective policies, look at benefits minus costs, not benefits divided by costs.”
Nordhaus went on to further dispel the myth that CO2 limits will hurt the economy. In fact, the opposite is true:
“My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years. A look at Table 5-1 in my study A Question of Balance (2008) shows that the cost of waiting fifty years to begin reducing2 emissions is $2.3 trillion in 2005 prices. If we bring that number to today’s economy and prices, the loss from waiting is $4.1 trillion. Wars have been started over smaller sums.
My study is just one of many economic studies showing that economic efficiency would point to the need to reduce 2 and other greenhouse gas emissions right now, and not to wait for a half-century. Waiting is not only economically costly, but will also make the transition much more costly when it eventually takes place. Current economic studies also suggest that the most efficient policy is to raise the cost of 2 emissions substantially, either through cap-and-trade or carbon taxes, to provide appropriate incentives for businesses and households to move to low-carbon activities.”
“The claim that cap-and-trade legislation or carbon taxes would be ruinous or disastrous to our societies does not stand up to serious economic analysis. We need to approach the issues with a cool head and a warm heart. And with respect for sound logic and good science.”
Despite the economic reality that CO2 limits will save money, the myth that they will harm the economy is a pervasive one. However, this myth is based on nothing more than a misunderstanding of climate science and economics, and misrepresentation of the climate science and economics body of research.
Note: this information has been incorporated into the rebuttal to the myth “CO2 limits will harm the economy”
Tags:clean energy costs, climate change costs, cost of clean energy, cost of climate action, cost of climate inaction, cost of global warming, cost of global warming action, global warming costs
About the Author
Zachary Shahan Zach is tryin' to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.
The threat of climate change is an increasingly important environmental issue for the globe. Because the economic questions involved have received relatively little attention, I have been writing a nontechnical book for people who would like to see how market-based approaches could be used to formulate policy on climate change. When I showed an early draft to colleagues, their response was that I had left out the arguments of skeptics about climate change, and I accordingly addressed this at length.
But one of the difficulties I found in examining the views of climate skeptics is that they are scattered widely in blogs, talks, and pamphlets. Then, I saw an opinion piece in The Wall Street Journal of January 27, 2012, by a group of sixteen scientists, entitled “No Need to Panic About Global Warming.” This is useful because it contains many of the standard criticisms in a succinct statement. The basic message of the article is that the globe is not warming, that dissident voices are being suppressed, and that delaying policies to slow climate change for fifty years will have no serious economic or environment consequences.
My response is primarily designed to correct their misleading description of my own research; but it also is directed more broadly at their attempt to discredit scientists and scientific research on climate change.1 I have identified six key issues that are raised in the article, and I provide commentary about their substance and accuracy. They are:
• Is the planet in fact warming?
• Are human influences an important contributor to warming?
• Is carbon dioxide a pollutant?
• Are we seeing a regime of fear for skeptical climate scientists?
• Are the views of mainstream climate scientists driven primarily by the desire for financial gain?
• Is it true that more carbon dioxide and additional warming will be beneficial?
As I will indicate below, on each of these questions, the sixteen scientists provide incorrect or misleading answers. At a time when we need to clarify public confusions about the science and economics of climate change, they have muddied the waters. I will describe their mistakes and explain the findings of current climate science and economics.
The first claim is that the planet is not warming. More precisely, “Perhaps the most inconvenient fact is the lack of global warming for well over 10 years now.”
It is easy to get lost in the tiniest details here. Most people will benefit from stepping back and looking at the record of actual temperature measurements. The figure below shows data from 1880 to 2011 on global mean temperature averaged from three different sources.2 We do not need any complicated statistical analysis to see that temperatures are rising, and furthermore that they are higher in the last decade than they were in earlier decades.3
One of the reasons that drawing conclusions on temperature trends is tricky is that the historical temperature series is highly volatile, as can be seen in the figure. The presence of short-term volatility requires looking at long-term trends. A useful analogy is the stock market. Suppose an analyst says that because real stock prices have declined over the last decade (which is true), it follows that there is no upward trend. Here again, an examination of the long-term data would quickly show this to be incorrect. The last decade of temperature and stock market data is not representative of the longer-term trends.
The finding that global temperatures are rising over the last century-plus is one of the most robust findings of climate science and statistics.
A second argument is that warming is smaller than predicted by the models:
The lack of warming for more than a decade—indeed, the smaller-than-predicted warming over the 22 years since the UN’s Intergovernmental Panel on Climate Change (IPCC) began issuing projections—suggests that computer models have greatly exaggerated how much warming additional CO2 can cause.
What is the evidence on the performance of climate models? Do they predict the historical trend accurately? Statisticians routinely address this kind of question. The standard approach is to perform an experiment in which (case 1) modelers put the changes in CO2 concentrations and other climate influences in a climate model and estimate the resulting temperature path, and then (case 2) modelers calculate what would happen in the counterfactual situation where the only changes were due to natural sources, for example, the sun and volcanoes, with no human-induced changes. They then compare the actual temperature increases of the model predictions for all sources (case 1) with the predictions for natural sources alone (case 2).
This experiment has been performed many times using climate models. A good example is the analysis described in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (for the actual figure, see the accompanying online material4). Several modelers ran both cases 1 and 2 described above—one including human-induced changes and one with only natural sources. This experiment showed that the projections of climate models are consistent with recorded temperature trends over recent decades only if human impacts are included. The divergent trend is especially pronounced after 1980. By 2005, calculations using natural sources alone underpredict the actual temperature increases by about 0.7 degrees Centigrade, while the calculations including human sources track the actual temperature trend very closely.
In reviewing the results, the IPCC report concluded: “No climate model using natural forcings [i.e., natural warming factors] alone has reproduced the observed global warming trend in the second half of the twentieth century.”5
The sixteen scientists next attack the idea of CO2 as a pollutant. They write: “The fact is that CO2 is not a pollutant.” By this they presumably mean that CO2 is not by itself toxic to humans or other organisms within the range of concentrations that we are likely to encounter, and indeed higher CO2 concentrations may be beneficial.
However, this is not the meaning of pollution under US law or in standard economics. The US Clean Air Act defined an air pollutant as “any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive…substance or matter which is emitted into or otherwise enters the ambient air.” In a 2007 decision on this question, the Supreme Court ruled clearly on the question: “Carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons are without a doubt ‘physical [and] chemical…substance[s] which [are] emitted into…the ambient air.’ …Greenhouse gases fit well within the Clean Air Act’s capacious definition of ‘air pollutant.’”6
In economics, a pollutant is a form of negative externality—that is, a byproduct of economic activity that causes damages to innocent bystanders. The question here is whether emissions of CO2 and other greenhouse gases will cause net damages, now and in the future. This question has been studied extensively. The most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade.7 Major areas of concern are sea-level rise, more intense hurricanes, losses of species and ecosystems, acidification of the oceans, as well as threats to the natural and cultural heritage of the planet.
In short, the contention that CO2 is not a pollutant is a rhetorical device and is not supported by US law or by economic theory or studies.
The fourth contention by the sixteen scientists is that skeptical climate scientists are living under a reign of terror about their professional and personal livelihoods. They write:
Although the number of publicly dissenting scientists is growing, many young scientists furtively say that while they also have serious doubts about the global-warming message, they are afraid to speak up for fear of not being promoted—or worse….
This is not the way science is supposed to work, but we have seen it before—for example, in the frightening period when Trofim Lysenko hijacked biology in the Soviet Union. Soviet biologists who revealed that they believed in genes, which Lysenko maintained were a bourgeois fiction, were fired from their jobs. Many were sent to the gulag and some were condemned to death.
While we must always be attentive to a herd instinct, this lurid tale is misleading in the extreme. Some background on Lysenko will be useful. He was the leader of a group that rejected standard genetics and held that the acquired characteristics of an organism could be inherited by that organism’s descendants. He exploited the Soviet ideology about heredity, the need for agricultural production, and the favor of a powerful dictator—Stalin—to attract adherents to his theories. Under his influence, genetics was officially condemned as unscientific. Once he gained control of Russian biology, genetics research was prohibited, and thousands of geneticists were fired. Many leading geneticists were exiled to labor camps in Siberia, poisoned, or shot. His influence began to wane after Stalin’s death, but it took many years for Soviet biology to overcome the disastrous consequences of the Lysenko affair.8
The idea that skeptical climate scientists are being treated like Soviet geneticists in the Stalinist period has no basis in fact. There are no political or scientific dictators in the US. No climate scientist has been expelled from the US National Academy of Sciences. No skeptics have been arrested or banished to gulags or the modern equivalents of Siberia. Indeed, the dissenting authors are at the world’s greatest universities, including Princeton, MIT, Rockefeller, the University of Cambridge, and the University of Paris.
I can speak personally for the lively debate about climate change policy. There are controversies about many details of climate science and economics. While some claim that skeptics cannot get their papers published, working papers and the Internet are open to all. I believe the opposite of what the sixteen claim to be true: dissident voices and new theories are encouraged because they are critical to sharpening our analysis. The idea that climate science and economics are being suppressed by a modern Lysenkoism is pure fiction.
A fifth argument is that mainstream climate scientists are benefiting from the clamor about climate change:
Why is there so much passion about global warming…? There are several reasons, but a good place to start is the old question “cui bono?” Or the modern update, “Follow the money.”
Alarmism over climate is of great benefit to many, providing government funding for academic research and a reason for government bureaucracies to grow. Alarmism also offers an excuse for governments to raise taxes, taxpayer-funded subsidies for businesses that understand how to work the political system, and a lure for big donations to charitable foundations promising to save the planet.
This argument is inaccurate as scientific history and unsupported by any evidence. There is a suggestion that standard theories about global warming have been put together by the scientific equivalent of Madison Avenue to raise funds from government agencies like the National Science Foundation (NSF). The fact is that the first precise calculations about the impact of increased CO2 concentrations on the earth’s surface temperature were made by Svante Arrhenius in 1896, more than five decades before the NSF was founded.
The skeptics’ account also misunderstands the incentives in academic research. IPCC authors are not paid. Scientists who serve on panels of the National Academy of Science do so without monetary compensation for their time and are subject to close scrutiny for conflicts of interest. Academic advancement occurs primarily from publication of original research and contributions to the advancement of knowledge, not from supporting “popular” views. Indeed, academics have often been subject to harsh political attacks when their views clashed with current political or religious teachings. This is the case in economics today, where Keynesian economists are attacked for their advocacy of “fiscal stimulus” to promote recovery from a deep recession; and in biology, where evolutionary biologists are attacked as atheists because they are steadfast in their findings that the earth is billions rather than thousands of years old.
In fact, the argument about the venality of the academy is largely a diversion. The big money in climate change involves firms, industries, and individuals who worry that their economic interests will be harmed by policies to slow climate change. The attacks on the science of global warming are reminiscent of the well-documented resistance by cigarette companies to scientific findings on the dangers of smoking. Beginning in 1953, the largest tobacco companies launched a public relations campaign to convince the public and the government that there was no sound scientific basis for the claim that cigarette smoking was dangerous. The most devious part of the campaign was the underwriting of researchers who would support the industry’s claim. The approach was aptly described by one tobacco company executive: “Doubt is our product since it is the best means of competing with the ‘body of fact’ that exists in the mind of the general public. It is also the means of establishing a controversy.”9
One of the worrisome features of the distortion of climate science is that the stakes are huge here—even larger than the economic stakes for keeping the cigarette industry alive. Tobacco sales in the United States today are under $100 billion. By contrast, expenditures on all energy goods and services are close to $1,000 billion. Restrictions on CO2 emissions large enough to bend downward the temperature curve from its current trajectory to a maximum of 2 or 3 degrees Centigrade would have large economic effects on many businesses. Scientists, citizens, and our leaders will need to be extremely vigilant to prevent pollution of the scientific process by the merchants of doubt.
A final point concerns economic analysis. The sixteen scientists argue, citing my research, that economics does not support policies to slow climate change in the next half-century:
A recent study of a wide variety of policy options by Yale economist William Nordhaus showed that nearly the highest benefit-to-cost ratio is achieved for a policy that allows 50 more years of economic growth unimpeded by greenhouse gas controls. This would be especially beneficial to the less-developed parts of the world that would like to share some of the same advantages of material well-being, health and life expectancy that the fully developed parts of the world enjoy now. Many other policy responses would have a negative return on investment. And it is likely that more CO2 and the modest warming that may come with it will be an overall benefit to the planet.
On this point, I do not need to reconstruct how climate scientists made their projections, or review the persecution of Soviet geneticists. I did the research and wrote the book on which they base their statement. The skeptics’ summary is based on poor analysis and on an incorrect reading of the results.
The first problem is an elementary mistake in economic analysis. The authors cite the “benefit-to-cost ratio” to support their argument. Elementary cost-benefit and business economics teach that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits (that is, the difference between, and not the ratio of, benefits and costs).
This point can be seen in a simple example, which would apply in the case of investments to slow climate change. Suppose we were thinking about two policies. Policy A has a small investment in abatement of CO2 emissions. It costs relatively little (say $1 billion) but has substantial benefits (say $10 billion), for a net benefit of $9 billion. Now compare this with a very effective and larger investment, Policy B. This second investment costs more (say $10 billion) but has substantial benefits (say $50 billion), for a net benefit of $40 billion. B is preferable because it has higher net benefits ($40 billion for B as compared with $9 for A), but A has a higher benefit-cost ratio (a ratio of 10 for A as compared with 5 for B). This example shows why we should, in designing the most effective policies, look at benefits minus costs, not benefits divided by costs.
This leads to the second point, which is that the authors summarize my results incorrectly. My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years. A look at Table 5-1 in my study A Question of Balance (2008) shows that the cost of waiting fifty years to begin reducing CO2 emissions is $2.3 trillion in 2005 prices. If we bring that number to today’s economy and prices, the loss from waiting is $4.1 trillion. Wars have been started over smaller sums.10
My study is just one of many economic studies showing that economic efficiency would point to the need to reduce CO2 and other greenhouse gas emissions right now, and not to wait for a half-century. Waiting is not only economically costly, but will also make the transition much more costly when it eventually takes place. Current economic studies also suggest that the most efficient policy is to raise the cost of CO2 emissions substantially, either through cap-and-trade or carbon taxes, to provide appropriate incentives for businesses and households to move to low-carbon activities.
One might argue that there are many uncertainties here, and we should wait until the uncertainties are resolved. Yes, there are many uncertainties. That does not imply that action should be delayed. Indeed, my experience in studying this subject for many years is that we have discovered more puzzles and greater uncertainties as researchers dig deeper into the field. There are continuing major questions about the future of the great ice sheets of Greenland and West Antarctica; the thawing of vast deposits of frozen methane; changes in the circulation patterns of the North Atlantic; the potential for runaway warming; and the impacts of ocean carbonization and acidification. Moreover, our economic models have great difficulties incorporating these major geophysical changes and their impacts in a reliable manner. Policies implemented today serve as a hedge against unsuspected future dangers that suddenly emerge to threaten our economies or environment. So, if anything, the uncertainties would point to a more rather than less forceful policy—and one starting sooner rather than later—to slow climate change.
The group of sixteen scientists argues that we should avoid alarm about climate change. I am equally concerned by those who allege that we will incur economic catastrophes if we take steps to slow climate change. The claim that cap-and-trade legislation or carbon taxes would be ruinous or disastrous to our societies does not stand up to serious economic analysis. We need to approach the issues with a cool head and a warm heart. And with respect for sound logic and good science.
—February 22, 2012