One day in May, climate change got a lot more expensive. The price tag on emissions – the value of the damages done by one more ton of CO2in the air – used to be a mere $25 or so, in today’s dollars, according to an anonymous government task force that met in secret in 2009-2010. Now it’s $40, according to an anonymous government task force that met in secret in early 2013.
Anyone who cares about combating climate change would have to applaud the result: a higher carbon price means that cost-benefit analyses will place a greater value on policies that reduce emissions.
And anyone who cares about democracy should be appalled at the process: are we entering an era in which major regulatory decisions are made anonymously, in secret, with no opportunity for review?
The work of the anonymous task force is a mixture of sophisticated analysis and really bad, arbitrary choices. Three climate-economic models were each applied to five scenarios (derived from other models), and the 15 results were averaged. No persuasive arguments were presented for the controversial choices of models or scenarios; that’s just how the anonymous task force wanted to do it.
Lots of people had comments and criticisms after the first round – and in response, the anonymous task force redux changed nothing whatsoever in its methodology. The increase in the estimated cost of emissions is entirely due to revisions in the three chosen models. Most of this year’s increase in the U.S. government’s social cost of carbon comes from decisions by one modeler, who recently made particularly large changes in his model.
Three years later, it was time for a new episode. Back in 2010, Congress listened to some climate-denial rants, counted votes, and decided to do absolutely nothing about climate change; this year on Capitol Hill, the magic continues.
Also in 2010, the Obama administration released an estimate of “the social cost of carbon”` (SCC) – that is, the value of the damages done by emission of one more ton of carbon dioxide. Calculated by an anonymous task force that held no public hearings and had no office, website, or named participants, the SCC was released without fanfare as, literally, Appendix 15A to a Department of Energy regulation on energy efficiency standards for small motors.
This year, the Obama administration updated the SCC calculation. The update was done by an anonymous task force that held no public hearings, and had no office, website, or named participants. It first appeared as – yes! – Appendix 16A to a Department of Energy regulation on energy efficiency standards for microwave ovens.
Something has to change in a sequel (unless it’s in Congress); this year’s SCC number is bigger. For a ton of CO2 emitted this year, the estimated damages were bumped up from $25 in the 2010 calculation to about $40 in the revised version (all in today’s dollars). Since the SCC is used in the administration’s cost-benefit evaluations of new regulations, a bigger number means stronger arguments for energy efficiency and conservation standards. That’s the good news.Full text
Cross-posted from Triple Crisis.
Renewable energy is clean, sustainable, non-polluting, reduces our dependence on fossil fuels, improves the health of communities surrounding power plants, and protects the natural environment. Who could be against it?
Answer: The American Legislative Exchange Council (ALEC), a lobbying group that is active in drafting and advocating controversial state legislation. They’re not just interested in energy: in recent years ALEC has supported Arizona’s restrictive immigration legislation, the “Stand Your Ground” gun laws associated with the shooting death of Trayvon Martin, and voter identification laws proposed in many states. ALEC’s priorities for 2013 include making it harder to bring product liability suits against manufacturers of defective products, ending traditional pension plans for public employees, promoting the diversion of public education funds into private schools and on-line education schemes, and supporting resistance to “Obamacare” health policies.
When it comes to energy, ALEC wants to speed up the permitting process for mines, oil and gas wells, and power plants – and to eliminate all state requirements for the use of renewable energy. The latter goal is packaged as the “Electricity Freedom Act.” In numerous states, ALEC has used studies by Suffolk University’s Beacon Hill Institute (BHI) to claim that the “Electricity Freedom Act” will free ratepayers from the allegedly immense costs and job losses of renewable energy standards.
In a recent study for the Civil Society Institute, my colleagues and I at Synapse Energy Economics analyzed the ALEC studies of the costs of renewable energy. Our report found fundamental flaws in both the energy data and the economic modeling used by BHI.Full text
Cross-posted from Triple Crisis.
Climate science paints an ever-more-detailed picture: irreversible, catastrophic events are becoming increasingly likely as greenhouse gas emissions continue to rise. Climate economics, particularly in its policy applications, lags behind: leading models and analyses frequently ignore the extreme risks and the intergenerational aspect of the problem – and rely on simplistic and dated interpretations of the underlying science. Yet the state of the art has progressed rapidly, in the research literature on climate economics as well as science.
To address this problem, Liz Stanton and I wrote Climate Economics: The State of the Art, which has just been published by Routledge. Our book grew out of a request from the World Wildlife Fund for an update on climate economics since the Stern Review. In that 2006 review, commissioned by the British government, Nicholas Stern argued persuasively for a new approach to the economics of climate change, emphasizing arguments for a very low discount rate and a focus on catastrophic risks.
As we explain, both science and economics have continued to advance since Stern’s path-breaking work. After a review of “climate science for economists,” we examine three major areas: the treatment of climate damages in economics; new developments in economic theory; and the economics of mitigation and adaptation. Here are a few highlights from our book:
Recent studies suggest that peak temperatures, once reached, will persist for centuries, if not millenia. Mitigation scenarios have often assumed that the world can “overshoot” a target such as 2°C of warming and then come back to it through later emission reductions; since this option is not available, much more stringent reductions are needed for climate stabilization.Full text
Cross-posted from Triple Crisis.
Can we protect the earth’s climate without talking about it – by pursuing more popular policy goals such as cheap, clean energy, which also happen to reduce carbon emissions? It doesn’t make sense for the long run, and won’t carry us through the necessary decades of technological change and redirected investment. But in the current context of climate policy fatigue, it may be the least-bad short-run strategy available.
You may have lost interest in climate change, but the climate hasn’t lost interest in you. Once-extraordinary heat waves are becoming the new normal. Recent research demonstrates that by now someone “old enough to remember the climate of 1951–1980 should recognize the existence of climate change, especially in summer.”
Despite evidence of a worsening climate, the repeated failure of climate negotiations is sadly predictable. Real climate solutions require international cooperation, but inaction can be guaranteed by one country acting alone: No one else will accept significant costs for emission reduction unless the United States does. The world waited breathlessly for the first post-Bush climate meeting at Copenhagen in 2009; removing W. from the White House was necessary, but not, alas, sufficient for progress. Another breathless moment occurred as environmental advocates went all-out to pass a climate bill in Congress in 2010, accepted a series of dreadful compromises, and still failed miserably.Full text
Cross-posted from Real Climate Economics.
Economic analysis has become increasingly central to the climate policy debate, but the models and assumptions of climate economics often lag far behind the latest developments in this fast-moving field. That’s why Elizabeth Stanton and I have written Climate Economics: The State of the Art, an in-depth review of new developments in climate economics and science since the Stern Review (2006) and the Intergovernmental Panel on Climate Change’s Fourth Assessment Report (2007), with more than 500 citations to the recent research literature.
We begin with a survey of climate science that is potentially relevant to economic analysis, including uncertainties in climate dynamics, the role of black carbon, temperature thresholds for irreversible losses, a new understanding of climate impacts on agriculture, and projections that temperatures could remain near their historical peak for centuries or millennia after greenhouse gas concentrations start declining.
We then focus on innovations in the economic theory and analysis of climate change, including new approaches to uncertainty that build on Weitzman’s “dismal theorem,” which shows the marginal benefit of emission reduction can be infinite. We also cover new developments in the longstanding debate about discount rates and intergenerational economic analysis, and the problems of international equity, which are central to climate negotiations but barely visible in the economics literature.Full text
Cross-posted from ThinkProgress Green.
Rep. Ralph Hall (R-TX) has asked the Energy Information Administration to evaluate an unrealistically harsh and unsophisticated clean energy standard, designed to represent the Republicans’ worst nightmare: every electricity retailer in the country (some of them quite small) must meet a relatively high and rising standard for low-carbon energy, starting very soon, with no trading between companies, banking of excess credits, or other flexibility mechanisms that would soften the blow.
Even the Republican nightmare doesn’t look as bad as one might have suspected: according to the EIA analysis, it achieves a rapid reduction in carbon dioxide emissions, while causing electricity prices to rise by less than one percent per year, and lowering GDP per capita in 2035, the end of the study period, all the way from (watch closely or you’ll miss this) $65,848 to $65,658 – a reduction of less than 0.3 percent, in a national income nearly twice as high as today’s. Employment is slightly higher, as a result of this standard, from the mid-2020’s onward.
In the light of day, no one would allow this nightmare version of a clean energy standard to be adopted. Trading of clean energy credits between companies would almost certainly be included in any real standard. The goal, after all, is to reduce nationwide emissions as cheaply as possible, not to impose burdens on each and every company regardless of size or situation. The large reduction in costs that can result from trading is well established in economic theory, and confirmed by the experience of sulfur emissions trading under the Clean Air Act, among other cases. If some companies can reduce emissions more inexpensively than others, it makes perfect sense to let them sell credits to others; the same amount of emission reduction occurs, but at much lower cost than under the rigid plan that troubles Ralph Hall. This, by the way, is perfectly orthodox free market economics, of a sort that Republicans, once upon a time, used to swear by.Full text
Your house might not burn down next year. So you could probably save money by cancelling your fire insurance.
That’s a “bargain” that few homeowners would accept.
But it’s the same deal that politicians have accepted for us, when it comes to insurance against climate change. They have rejected sensible investments in efficiency and clean energy, which would reduce carbon emissions, create green jobs, and jumpstart new technologies – because they are too expensive.
While your house might not burn down, your planet is starting to smolder. Extreme weather events are becoming more common, and more expensive: in the first half of 2011, Mississippi River floods cost us between $2 and $4 billion, while the ongoing Texas drought has cost us between $1.5 and $3 billion, according to the National Climatic Data Center. And there’s much worse to come: climate-related extremes are already forcing millions of people from their homes worldwide; ice sheets and glaciers are melting much faster than expected; the latest research shows we are rapidly heading for summer temperatures at which crop yields in America will start to plummet.Full text
Cross-posted from Triple Crisis.
Climate legislation, even in its most modest and repeatedly compromised variety, failed last year. And there won’t be a second chance with anything like the current Congress. What caused this momentous failure?
Broadly speaking, there are two rival stories. It could be due to the strength of opposing or inertial forces: well-funded lobbying by fossil fuel industries, biased coverage by increasingly right-wing media, the growth of the “Tea Party” subculture and its rejection of science, dysfunctional institutions such as the U.S. Senate with its filibuster rules, and the low priority given to climate legislation by the Obama administration.
Or it could be because environmentalists screwed up and shot themselves in the foot.
If you had to guess, which of these stories sounds to you like it would get more media attention? You’re right, that’s what everyone else thought, too. Gridlock in U.S. politics, and its effects on the fate of the earth, is such boring old news; the notion that misguided liberals have only themselves to blame sounds so clever and different.
This ecological niche has not gone unfilled. The Breakthrough Institute, whose motto could be “clever and different since 2005,” has repeatedly informed us that the death of environmentalism is the fault of environmentalists. Now “Climate Shift,” by American University political scientist Matthew Nisbet, claims that there was no media bias on climate issues in the last few years, and that advocates of climate legislation outspent their opponents, but still lost.Full text
Cross-posted from Real Climate Economics.
True or false: Risks of a climate catastrophe can be ignored, even as temperatures rise? The economic impact of climate change is no greater than the increased cost of air conditioning in a warmer future? The ideal temperature for agriculture could be 17 degrees C above historical levels?
All true, according to the increasingly popular FUND model of climate economics. It is one of three models used by the federal government’s Interagency Working Group to estimate the “social cost of carbon” – that is, the monetary value of the long-term damages done by greenhouse gas emissions. According to FUND, as used by the Working Group, the social cost of carbon is a mere $6 per ton of CO2. That translates into $0.06 per gallon of gasoline. Do you believe that a tax of $0.06 per gallon at the gas pump (and equivalent taxes on other fossil fuels) would solve the climate problem and pay for all future climate damages?
I didn’t believe it, either. But the FUND model is growing in acceptance as a standard for evaluation of climate economics. To explain the model’s apparent dismissal of potential harm, I undertook a study of the inner workings of FUND (with the help of an expert in the relevant software language) for E3 Network. Having looked under the hood, I’d say the model needs to be towed back to the shop for a major overhaul.Full text