Category — Climate economics

[Editor note: This post from economist Robert Murphy originally appeared on 2-10-10. It is reprinted given the growing opposition to pricing carbon within the Democratic Party.]

George Carlin once asked, “Is it really possible to have a civil war?” Readers of Joe Romm’s pronouncements on greenhouse gas legislation would answer in the negative. Romm has always been a caustic critic of the “anti-science disinformers” who do not toe the line on the alleged scientific consensus, but lately he has turned his fire on former allies who dare to question the legislative developments in Washington.

An illustration of this internal squabbling is Romm’s recent post on the “cap and dividend” proposal put forth by Senators Cantwell and Collins. Here’s Romm’s take (emphasis added):

Climate politics can be very strange indeed. Because cap-and-trade bills like Waxman-Markey are seen as having no chance of passing the Senate, some enviros appear to be shifting their support to bills that are politically even less attractive and environmentally even less adequate.

The latest misguided missile is the Carbon Limits and Energy for America’s Renewal (CLEAR) Act put forward by Maria Cantwell (D-WA) and Susan Collins (R-ME) — full text and info here. Supporters call it “Cap-and-Dividend,” but right now I think the best term for it is, “Cap-and-Divide,” since it has no chance whatsoever of becoming law but is serving to undercut the tripartisan effort by Graham, Kerry, and Lieberman to develop a bill that might get 60 votes…. [Read more →]

“[Robert] Mendelsohn’s position is rather similar to yours…. He believes the impacts are not negative at all for the US and most of the developed countries. Most impact studies seem to be showing this. It leads us to think that a little warming is not so bad. Glad I have kept my mouth shut on this issue of which I know so little.”

- Gerald North (Texas A&M) to Rob Bradley (Enron), November 12, 1999

“I agree that the case for 2C warming [for a doubling of manmade greenhouse gas forcing in equilibrium] is pretty strong.”

- Gerald R. North to Rob Bradley, email communication, August 13, 2007.

Yesterday, the Wall Street Journal published my letter-to-the-editor rebutting Kerry Emanuel’s letter, which, in turn, was critical of his fellow MIT climatologist Richard Lindzen’s op-ed, “Climate Science in Denial.”

My arguments opposing those of Professor Emanuel (see entire letter below) are fairly straightforward, but I end with this challenge:

“But when will many climate scientists, including Mr. Emanuel, face Climategate and the fact that the human influence on climate, on net, is as likely to be positive than negative?”

Is this challenge rash, or is it backed by the facts?  Well, let’s consider the views of an esteemed climate economist and an esteemed climate scientist. They are, respectively,

Robert O. Mendelsohn (Edwin Weyerhaeuser Davis Professor of Forest Policy; Professor of Economics; and Professor, School of Management)

Gerald R. North (Distinguished Professor, Physical Section, Department of Atmospheric Sciences and the
Department of Oceanography).

Dr. North’s long held sensitivity estimate of 2ºC for a doubling of atmospheric greenhouse concentrations is one-third below the “best guess” of the Intergovernmental Panel on Climate Change (or the IPCC’s best guess is one-half greater than that of Dr. North). That is a big difference, and if you believe Mendelsohn et al. that a 2ºC for 2x results in net positive benefits for the world, then voila!

Is it radical to believe that the human influence on climate, on net, has more positives than negatives for many decades out and even beyond a century or more?  After all, the CO2 fertilization effect is a strong positive, and warmer and wetter is going in the right direction for the biopshere…

Perhaps CO2 as the green greenhouse gas is ’closet’ mainstream, if North’s (private) views are considered. [Read more →]

Nobel laureate Paul Krugman wrote a lengthy article, “Building a Green Economy,” in last Sunday’s New York Times Magazine. Krugman is an able writer.  He laid out the textbook arguments on climate change from the problem-and-act perspective, and his fact-of-the-matter tone and apparent expertise no doubt misled many readers.

Although he technically said nothing demonstrably false, Krugman gives the impression that there is widespread consensus that drastic action is needed to avert catastrophic climate change. This is simply not true, and all we have to do is actually read the consensus reports to see that Krugman is misleading his readers.

Krugman’s Summary of the Climate Science

After giving a good summary of the standard issues in the economics of climate change, Krugman pauses to comment on what the natural scientists (as opposed to the economists) have to say on the subject:

This is an article on climate economics, not climate science. But before we get to the economics, it’s worth establishing three things about the state of the scientific debate.

The first is that the planet is indeed warming. [I]f you look at the evidence the right way ­— taking averages over periods long enough to smooth out the fluctuations — the upward trend is unmistakable: each successive decade since the 1970s has been warmer than the one before.

Second, climate models predicted this well in advance, even getting the magnitude of the temperature rise roughly right. While it’s relatively easy to cook up an analysis that matches known data, it is much harder to create a model that accurately forecasts the future. So the fact that climate modelers more than 20 years ago successfully predicted the subsequent global warming gives them enormous credibility. [Krugman page 3, emphasis added.]

Now Krugman’s summary above is either accurate or not, depending on how much error we will tolerate in the predictions. But fair enough, we’ll agree with Krugman that climate models 20 years ago predicted higher average global temperatures, and that’s indeed what we’ve experienced. [Read more →]

In a recent New York Times article, economist Robert H. Frank–“The Economic Naturalist”–argues that fighting global warming through government intervention entails a small cost and promises a large benefit. Yet to cast serious doubts on his claim, all we need do is quote from U.S. government and IPCC reports. We find that even in a textbook implementation, it’s not obvious that government mitigation efforts deliver net benefits.

Of course in the real world, if the politicians and/or EPA starts intervening in the energy sector, their actions will be far from the economist’s theoretical ideal. Then the case for such policy activism falls apart.

Frank’s Pros/Cons of Intervention

Frank’s opening paragraphs nicely summarize his views on climate policy:

FORECASTS involving climate change are highly uncertain, denialists assert — a point that climate researchers themselves readily concede. The denialists view the uncertainty as strengthening their case for inaction, yet a careful weighing of the relevant costs and benefits supports taking exactly the opposite course.

Organizers of the recent climate conference in Copenhagen sought, unsuccessfully, to forge agreements to limit global warming to 3.6 degrees Fahrenheit by the end of the century. But even an increase that small would cause deadly harm. And far greater damage is likely if we do nothing.

Frank goes on to quote a new MIT study, which paints an alarming scenario of damages from warming if world governments sit on their hands. In contrast, Frank argues that the cost to the economy of limiting greenhouse gases is not in the same ballpark. He sums up with, “In short, the cost of preventing catastrophic climate change is astonishingly small, and it involves just a few simple changes in behavior.”

So if the risks of inaction are potentially catastrophic, while the costs of preventive government measures are relatively trivial, then who but a fool or a stooge for Big Oil would question the need for immediate intervention? [Read more →]

Yesterday (Mar. 9), the Houston Chronicle published an op-ed by Shell Oil CEO Marvin Odum titled, Why Shell Oil Co. and I are staying in the U.S. Climate Action Partnership. It’s pretty thin on substance. Kinda reminds me of that ’80s film, ”The Unbearable Lightness of Rent-Seeking.”

Maybe Mr. Odum got his marching orders from The Hague (Netherlands), or maybe he really believes cap-and-trade is good for the oil (and natural gas) business. These are strange times. Confusion abounds in high places.

In this post, I provide a running commentary on Odum’s column.  Odum’s verbiage is indented; my comments follow in bold type. 

Today, Washington is having the wrong energy and climate debate, and the future of the U.S. economy may be the biggest casualty.

A rather amazing statement, considering that the party of cap-and-trade controls the White House and the leadership of both the House and Senate. Saint Barack, Czarina Browner, Lisa Endangerment-Finding Jackson, General Boxer, and Inquisitor Waxman occupy the commanding heights of energy and climate policy in the nation’s capital, yet ”Washington is having the wrong energy and climate debate.” How did they let that happen? Odum offers no explanation.

Rather than developing sensible legislation that creates a viable market for low-emission energy while developing more of our own oil and gas resources, Washington is engaged in a snowball fight over the science of global warming.

Yep, move along, nothing to see here. ”Snowball fight” indeed. Top IPCC-affiliated scientists conspired to bias the peer-reviewed literature they would assess, ignored research that did not fit into the “nice tidy story” they wanted to tell, and violated the UK freedom of information act to prevent independent researchers from checking their data and methods. These IPCC insiders repeatedly flouted U.S. Government standards of openness and transparency, rendering the IPCC reports  unsuitable as basis for policymaking, as Peabody Energy documents in its 240-page examination of the Climategate files. [Read more →]

[Editor note: This post by Kenneth P. Green and Aparna Mathur of the American Enterprise Institute, is a slightly revised version that originally appeared at The American, AEI's flagship monthly publication.]

In December 2009, economists Hector Pollitt and Chris Thoung of Cambridge Econometrics published a self-described “short” modeling exercise on an 80 percent greenhouse-gas emissions reduction by 2050 in the United Kingdom.[1] Pollitt and Thoung used the Energy-Environment-Economy Model of Europe (E3ME), which they observe has been “used for a variety of analyses including greenhouse-gas mitigation policies, incentives for industrial energy efficiency, and sustainable household consumption.”[2] The E3ME model covers 29 European countries and uses detailed data on 42 economic sectors, 41 categories of consumer goods, 12 types of fuel, and 14 emissions, including the six major greenhouse gases.

Surprisingly, the study estimates that prices for most goods would rise by less than 1 percent. The highest price increases would be found for carbon-intensive fuels, such as natural gas, gasoline, and electricity. But it would be affordable overall.

Proponents of (forced) energy transformation trumpeted the findings. In a news piece “Low-carbon future: we can afford to go green,” Jim Giles of New Scientist quoted a climate policy expert at the London School of Economics: “These results show that the global project to fight climate change is doable” and “it’s not such a big ask as people are making out.”[3]

The New Scientist piece adds that these results correspond well to studies in the United States, quoting Manik Roy of the Pew Center on Global Climate Change as predicting that “even cutting emissions by 80 per cent over four decades has a very small effect on consumers in most areas.” The Pew Center would no doubt like to see a lot of rationing of CO2 here in the U.S.

No Inexpensive ‘Green’ Lunch

We disagree. Our prior research into the costs of indirect energy—that is, the energy used to produce, package, and distribute consumer goods and services—suggests that the Cambridge Econometrics numbers are unrealistically low. In a series of papers and studies conducted by us and coauthored with colleagues, we show that even a $15 permit price (one-fortieth of what Pollitt and Thoung model) would cause prices of most goods to rise by 1 percent or higher.[4] So hold on to your wallets. [Read more →]

Last week, I appeared on the premier of John Stossel’s new show on Fox Business – a show titled (appropriately enough) Stossel.  The topic was global warming and, happily, I had an hour (well, actually only about 43 minutes once you subtract out the commercials) to discuss the issue with John and members of the studio audience.  If you missed the show, you can catch it here.

My arguments on Stossel tracked those offered here at MasterResource last month.  In short, I had no interest in engaging in a debate about the physical science of natural versus anthropogenic climate change.

I was entirely interested in the implications for public policy if we accept the most recent IPCC report at face value.  I think it’s quite interesting that even if one accepts the common definition of what constitutes “mainstream science” on this issue that one is still hard pressed to put forward a defensible mitigation scheme.

Alas, my inbox suggests that a number of people who watched the show thought I was too willing to accept the contention that there has been warming and that man likely has a lot to do with it.  Instead, a number of Fox viewers wanted me to launch World War III over the climate record. 

I didn’t for two reasons.  First, I am not a scientist and am more comfortable leaving that debate to those engaged fully in that field.  I know that this doesn’t stop a lot of people from holding forth regardless, but it stops me.  Second, one can be correct about the climate history being short of what Al Gore or Michael Mann make it out to be without being correct about the contention that anthropogenic greenhouse gas emissions has little to do with the warming at present.  For some reason, that’s an impossible point for many people to grasp. [Read more →]

Editor’s Note: Jim Manzi is a Senior Fellow at the Manhattan Institute, and blogs at both National Review’s The Corner and at The American Scene.

It is amusing to watch advocates of rapid, aggressive carbon dioxide emissions reduction, when confronted with the plain facts of the consensus scientific projections for climate change and its associated damages, move from “science says we must do this or die” to “well, actually, the science is pretty uncertain, so it’s possible that we might die,” and then proceed to some restatement of Pascal’s Wager.

Friedman’s Throw

Tom Friedman’s recent New York Times column is a perfect illustration of this logic.  I’ll quote him at length, before demonstrating that his emission-cuts-as-insurance analogy breaks down once you plug in actual numbers:

This is not complicated. We know that our planet is enveloped in a blanket of greenhouse gases that keep the Earth at a comfortable temperature. As we pump more carbon-dioxide and other greenhouse gases into that blanket from cars, buildings, agriculture, forests and industry, more heat gets trapped.

What we don’t know, because the climate system is so complex, is what other factors might over time compensate for that man-driven warming, or how rapidly temperatures might rise, melt more ice and raise sea levels. It’s all a game of odds. We’ve never been here before. We just know two things: one, the CO2 we put into the atmosphere stays there for many years, so it is “irreversible” in real-time (barring some feat of geo-engineering); and two, that CO2 buildup has the potential to unleash “catastrophic” warming.

When I see a problem that has even a 1 percent probability of occurring and is “irreversible” and potentially “catastrophic,” I buy insurance. That is what taking climate change seriously is all about.

Computing the Odds

The United Nations Intergovernmental Panel on Climate Change (IPCC) is the leading bookie for this game.  The current IPCC consensus forecast is that, under fairly reasonable assumptions for world population and economic growth, global temperatures will rise by about 3°C by the year 2100 (Table SPM.3). Also according to the IPCC, a 4°C increase in temperatures would cause total estimated economic losses of 1–5 percent of global GDP (page 17). By implication, if we were at 3°C of warming at the end of this century, we would be well into the 22^nd century before we reached a 4°C rise, with this associated level of cost. [Read more →]

But even if the IPCC’s iconic statement were correct, it still would not be cause for alarm….The potential (and only the potential) for alarm enters with the issue of climate sensitivity—which refers to the change that a doubling of CO2 will produce in [global mean temperatures]. –Richard Lindzen, Wall Street Journal, November 30, 2009

Defenders of the IPCC position on climate science have adopted different strategies in dealing with the scandal of the CRU emails and computer code.  Some authoritative voices, notably Judy Curry, have engaged in dialog with skeptics and have reassured PhD students that the “tribalism” revealed in the CRU emails has no place in science.

On the other hand, another very common reaction has been to mock the “deniers” for taking certain phrases out of context. This circle-the-wagons strategy tries to convince the public that the CRU episode has absolutely no bearing on the actual science, and that at worst it reveals petty personality flaws. This spin is epitomized in sarcastic pieces which take on the voice of the “deniers” and claim that the laws of physics are all a socialist hoax too.

These defenses are self-evidently absurd to anyone who has read the actual CRU emails in question. The public’s faith in the sacrosanct “peer-review process” will be understandably shaken when they read just how this “consensus” was enforced. Furthermore, the real debate was not between ultra-skeptics who say “global warming is a hoax” versus professional climate scientists who say “anthropogenic climate change is real.” [Read more →]

Last week I summarized the economics literature on the impact of climate change on human well-being.  Or more accurately, Richard Tol reviewed the economics literature for the Spring 2009 issue of The Journal of Economic Perspectives.  I simply told you about it and tossed in a few observations that I thought relevant.

In short, I reported that the peer-reviewed literature suggests that worries about some climate-induced Armageddon are probably misplaced.  We will likely gain or lose a year of economic growth sometime in the latter half of this century from forecasted changes in the world’s physical climate.  More than that cannot be said with much confidence.

Then, by coincidence, a study crosses my desk from the Institute for Policy Integrity at the NYU Law School.  The study, titled “Economists and Climate Change; Consensus and Open Questions,” reports the findings of a survey of 289 of those economists the institute considers to be “the world’s top economists with expertise in climate change.”  144 of those individuals returned their questionnaire.    Michael Livermore, the executive director of the institute, characterized the findings this way:

The finding that’s gotten the most attention is we asked the economists whether according to mainstream scientific views climate change posed a significant risk to the U.S. and global economies.  And 84 percent of our respondents either agreed or strongly agreed with that statement, so that’s a fairly strong consensus viewpoint that climate change poses economic risks.  That’s probably the single most attention grabbing one.  We also polled on some of the specifics of legislation or policy.  So for example, [Read more →]