Second in a series of posts on climate policy. Find Part 1 here.
According to scientists, climate damages are deeply uncertain but could be ominously large (see the previous post). Alternatively, according to the best-known economic calculation, lifetime damages caused by emissions in 2020 will be worth $51 per metric ton of carbon dioxide, in 2018 prices.
These two views can’t both be right. This post explains where the $51 estimate comes from, why it’s not reliable, and the meaning for climate policy of the deep uncertainty about the value of damages.
A tale of three models
The “social cost of carbon” (SCC) is the value of present and future climate damages caused by a ton of carbon dioxide emissions. The Obama administration assembled an Interagency Working Group to estimate the SCC. In its final (August 2016) revision of the numbers, the most widely used variant of the SCC was $42 per metric ton of carbon dioxide emitted in 2020, expressed in 2007 dollars – equivalent to $51 in 2018 dollars. Numbers like this were used in Obama-era cost-benefit analyses of new regulations, placing a dollar value on the reduction in carbon emissions from …
The damages expected from climate change seem to get worse with each new study. Reports from the IPCC and the U.S. Global Change Research Project, and a multi-author review article in Science, all published in late 2018, are among the recent bearers of bad news. Even more continues to arrive in a swarm of research articles, too numerous to list here. And most of these reports are talking about not-so-long-term damages. Dramatic climate disruption and massive economic losses are coming in just a few decades, not centuries, if we continue along our present path of inaction. It’s almost enough to make you support an emergency program to reduce emissions and switch to a path of rapid decarbonization.
But wait: isn’t there something about economics we need to figure out first? Would drastic emission reductions pass a cost-benefit test? How …
There must be a global template for business complaints about regulation, located on some secret right-wing server. Just type in the industry and the name of the regulation: Billions of dollars are at stake, companies will be driven out of the industry and consumers will lose access to low-priced products, if the government dares to impose an ordinary, common-sense rule. Such as, making drug companies responsible for the safety of their products?
Aren’t pharmaceutical companies already responsible for warning their customers of known adverse effects? If you answered “yes, of course,” then you missed the Supreme Court’s 2011 ruling in Pliva v. Mensing. Currently, generic drug companies are required by the Food and Drug Administration (FDA) to use exactly the same labels and warnings as the corresponding brand-name drugs. Therefore, the Court ruled in Mensing, the producer of a generic drug cannot be held responsible …
Richard Tol’s 2013 article, “Targets for global climate policy: An overview,” has been taken by some as a definitive summary of what economics has to say about climate change.1 It became a central building block of Chapter 10 of the recent IPCC Working Group 2 report (Fifth Assessment Report, 2014), with some of its numbers appearing in the Working Group 2 Summary for Policymakers.2
After extensive analysis of multiple results from a number of authors, Tol reaches strong and surprising conclusions:
Frank Ackerman is the coauthor, with Joseph Daniel, of (Mis)understanding Climate Policy: The role of economic modeling, prepared for Friends of the Earth (England, Wales & Northern Ireland) and WWF-UK.
Under the Climate Change Act 2008, the UK government sets “legally binding” carbon budgets, which cap the country’s total emissions for five-year periods.
The size of the fourth carbon budget, covering 2023-2027, is topic of debate. The budget was set by Government back in 2011 but Chancellor George Obsorne secured a commitment to review it in 2014 and discussions are currently taking place in government regarding its new level. One important aspect of that debate is estimating the economic cost of reducing carbon emissions in the middle of the next decade.
The approach taken by the UK government to estimate the effects of the carbon budgets on economic growth uses the HMRC CGE (“computable general …
Rhode Island has recently learned that its renewable energy standards could be ruinously expensive. But they’re in good company: more than a dozen states have “learned” the same thing, from reports from the same economists at the Beacon Hill Institute (BHI).
Housed at Boston’s Suffolk University, BHI turns out study after study for right-wing, anti-government groups. Funding for BHI’s relentless efforts has come from Charles and David Koch (leading tea party funders) and others on the same wavelength. For the Rhode Island study, BHI teamed up with the Rhode Island Center for Freedom & Prosperity, a member of the Koch’s State Policy Network.
While BHI’s name and location place it close to the Massachusetts state government, it is philosophically a different beacon on a different hill. Last year BHI requested a grant from the Searle Freedom Trust, aimed at undermining the Regional …
It sounds like a rare piece of good news about climate change: emissions of carbon dioxide, the principal cause of global warming, grew at a slower rate after 2000 in the United States, and have actually dropped since 2007. In Europe the story sounds even better, as overall emissions dropped from 1990 to 2008, often roughly matching, or in some cases exceeding, the reductions promised under the Kyoto Protocol.
Yet the apparent progress on emission reductions in rich countries has occurred at a time of widespread outsourcing of manufacturing to China and other developing countries. In the process, we have effectively outsourced our carbon emissions as well. If consumers are responsible for the emissions from making the consumer goods they buy, then we have not solved the problem. We have just made it harder to see - and much harder to measure.
Here's the problem: if a …
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 CO2 in 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 …
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 …
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 …