Next Climate Change Battle: The Economy

February 13, 2007

The unveiling of the latest scientific report on climate change in Paris this month dealt another blow to the few remaining groups opposed to mandatory limits on carbon emissions. The report, the fourth by the Intergovernmental Panel on Climate Change, concludes with 90 percent certainty – the highest yet – that the observed increase in global surface temperature over the past five decades is caused by the accumulation of greenhouse gases in the atmosphere, primarily carbon dioxide produced from the burning of fossil fuels.

In addition, the report predicts that if such emissions are left unchecked, the average global temperature will rise from 1.1 to 6.4 degrees Celsius (2 to 12 degrees Fahrenheit) by the end of the 21st century, leading to dangerous increases in global sea levels and hurricane intensity and possibly other severe outcomes. The White House dispatched Energy Secretary Samuel W. Bodman to tepidly embrace the results. While stating that “human activity is contributing to changes in our Earth’s climate,” he concluded his remarks by disputing the need for mandatory emissions limits on the grounds that “the U.S. economy is not something that should be experimented with.”

With the scientific evidence now beyond a reasonable doubt, Mr. Bodman made it clear to those who reject mandatory measures that they have one option left: to claim that the costs of action exceed the costs of inaction. Evidence for this argument has eroded almost as completely as evidence against the science itself, but several myths persist.

The first might be called the “myth of uncertain consequences.” Although science tells us about the basic response of temperature and sea level, the implications of these changes on individual societies or economies, the argument goes, are beyond analysis, and talk of catastrophe is mere doomsday prophesizing. Often, this reasoning is masked as a call against the “alarmism” that proponents of this view like to identify with the popular media and with funding-hungry academic researchers. The problem is that one of the most comprehensive studies on the economics of climate change – the Stern Report, commissioned by the British government – makes it clear that the damage associated with warming under a “do-nothing” policy is likely to be 5 percent to 20 percent of global gross domestic product, an outcome to which the word “catastrophic” would seem to apply.

The second myth might be called the “myth of economic implosion.” Those in this camp like to suggest that it is simply too expensive to limit warming to 2 or 3 degrees C, because such a move would require immediate reductions in emissions and would seriously jeopardize economic growth. Such a move, they say, cannot be imposed until tested substitutes exist across the economy.

In fact, several low-carbon technologies exist in the electric sector; nuclear and “clean coal” are the cheapest, followed by renewables such as wind and solar. Also, the revenue generated through a carbon tax or auctioned permit system could be used to enhance research and development on low-carbon substitutes in other energy-intensive areas such as transport to ensure the required reductions in emissions would be equally affordable.

The final myth might be called the “myth of separability” – the idea that climate objectives must be pursued apart from other national priorities and therefore must compete with other issues for scarce fiscal resources. But a strong investment in climate is more likely than a weak investment to yield positive returns in other areas, and therefore pay for itself. For example, more ambitious policies will demand emissions reductions from the electric power and transport sectors, and will thus rein in both coal and oil use. Because limiting oil consumption will push down the global price of oil and limit the potency of petrolist regimes hostile to U.S. interests, an ambitious climate policy could yield significant national security dividends.

Ultimately, the economic argument against action is just as weak as the scientific one. Elected officials should be debating the relative merits of mechanisms to limit emissions – taxes, subsidies, caps and standards – not the merits of arguments from skeptics who are full of hot air.