Friday, October 24, 2014
14

Global Warming’s Upside-Down Narrative

NEW YORK – When politicians around the world tell the story of global warming, they cast it as humanity’s greatest challenge. But they also promise that it is a challenge that they can meet at low cost, while improving the world in countless other ways. We now know that is nonsense.

Political heavyweights from US Secretary of State John Kerry to UN Secretary General Ban Ki-moon call climate change “the greatest challenge of our generation.” If we fail to address it, Kerry says, the costs will be “catastrophic.” Indeed, this has been the standard assertion of politicians since the so-called Stern Review commissioned by the British government in 2006.

That report famously valued the damage caused by global warming at 5-20% of GDP – a major disruption “on a scale similar to those associated with the great wars and the economic depression of the first half of the twentieth century.”

Tackling climate change, we are told, would carry a much lower cost. The president of the European Commission promised that while the European Union’s climate policies are “not cost-free,” they would amount to just 0.5% of GDP. Indeed, politicians of all stripes have reiterated the Stern Review’s finding that global warming can be curtailed by policies costing just 1% of world GDP.

Climate policies, moreover, are said to help in many other ways. US President Barack Obama promised that policies to combat global warming would create five million new green jobs. The EU claimed that green energy would help “improve the EU’s security of energy supply.”

With the completion of the latest report by the United Nations Intergovernmental Panel on Climate Change (IPCC), we can now see that this narrative is mostly wrong. The first installment of the IPCC report showed that there is indeed a climate problem – emissions of greenhouse gases, especially CO₂, lead to higher temperatures, which will eventually become a net problem for the world. This result was highly publicized.

But the report also showed that global warming has dramatically slowed or entirely stopped in the last decade and a half. Almost all climate models are running far too hot, meaning that the real challenge of global warming has been exaggerated. Germany and other governments called for the reference to the slowdown to be deleted.

The second IPCC installment showed that the temperature rise that we are expected to see sometime around 2055-2080 will create a net cost of 0.2-2% of GDP – the equivalent of less than one year of recession. So, while the IPCC clearly establishes that global warming is a problem, the cost is obviously much less than that of the twentieth century’s two world wars and the Great Depression.

Again, not surprisingly, politicians tried to have this finding deleted. British officials found the peer-reviewed estimate “completely meaningless,” and, along with Belgium, Norway, Japan, and the US, wanted it rewritten or stricken. One academic speculated that governments possibly felt “a little embarrassed” that their previous exaggerated claims would be undercut by the UN.

The third installment of the IPCC report showed that strong climate policies would be more expensive than claimed as well – costing upwards of 4% of GDP in 2030, 6% in 2050, and 11% by 2100. And the real cost will likely be much higher, because these numbers assume smart policies, instantly enacted, with key technologies magically available.

Again, politicians tried to delete or change references to these high costs. British officials explained that they wanted such cost estimates cut because they “would give a boost to those who doubt action is needed.”

Green jobs have been created only with heavy subsidies, costing a similar number of jobs elsewhere. Indeed, each extra job created cost more than $11 million in the US. And facile claims that renewable sources can boost energy security look a lot less convincing after the crisis in Ukraine; Europe now understands that only large and stable energy supplies matter.

Climate change has been portrayed as a huge catastrophe costing as much as 20% of world GDP, though brave politicians could counter it at a cost of just 1% of GDP. The reality is just the opposite: We now know that the damage cost will be perhaps 2% of world GDP, whereas climate policies can end up costing more than 11% of GDP.

What makes this story all the more amazing is that experts have known almost all of these facts for a long time. The Stern Review was produced by bureaucrats and never subjected to peer review. Economists knew that the damage costs had been extensively massaged, and that the estimates were outliers compared to the academic literature. The unfathomably low projections for policy costs were artifacts of ignoring most liabilities, again contradicting the academic literature.

The media, eager for breathless headlines, share the blame with politicians for this state of affairs. Following the release of the Stern Review, one British newspaper reportedly wrote: “Act now or the world we know will be lost forever.” Being accurate is less sexy, but much more informative.

We live in a world where one in six deaths are caused by easily curable infectious diseases; one in eight deaths stem from air pollution, mostly from cooking indoors with dung and twigs; and billions of people live in abject poverty, with no electricity and little food. We ought never to have entertained the notion that the world’s greatest challenge could be to reduce temperature rises in our generation by a fraction of a degree.

The solution is to stop applauding politicians who warn of catastrophe and promote poor policies. Instead of subsidizing inefficient solar and wind power with little benefit, we need to invest in long-term green innovation. And we need to give more attention to all of the other problems. This is perhaps less entertaining, but it will do much more good.

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  1. CommentedThomas Beyer

    Well stated and put into perspective ! Any problem solved comes with a cost, and when the cost execceds the problem by a wide margin, say factor five or ten, perhaps the problem ought to be left as is.

    Your movie "cool it" shows some of these more practical solutions. Are they summarized somewhere in writing ?

  2. CommentedClaudia Carmen de Sierra Lepori

    I have read always your comments but I can not believe your arguments, really how can you said global warming is slow down when the greeland is falling apart everyday more and more, so the sea level would rise and the concentration of salt and sweet water will be upside down so the currents will be alterated and all the climate too, have you seen all the flows and huracane and tornados all around the world and in places where it is a strange fenomeno, really I can not believe your arguments, it is like trying to hide the sun with your hand. I beleive in the green energy and we must take a better care of the earth, but to deny global warming and all the changes we see everyday I dont know why and how you can do it, sorry but I am shock of your analisis, :((((

  3. CommentedDavid Donovan

    Nice work, Daniel. Finally its revealed that the climate change crisis was way overstated as many suspected.

  4. CommentedBenjamin Funar

    @Bjorn

    I've been following this line of reasoning from you for over a decade and I'm amazed how dogmatically you pursue it and how easily you use misdirection to hide how little support there is for your position.

    To claim there is little or no warming in the past 10 years is very disingenuous. You are well versed enough to know that 95% of the extra heat is going into the oceans, ice and land and a small amount is in the lower atmosphere (the only measured system showing a slower rate of warming) all the others show continued or faster warming than predicted. To claim it there's evidence the risk has gone down grossly misrepresents the science or the IPCC's own conclusions.

    I generally like your arguments for a incluside perspective on disease, poverty, sanitation, adn climate. Those all deserve attention and have huge ROI. The reality those is we have real programs in place with good & increasing funding for many of those programs (AIDs, TB, sanitation). Humanity has done heroic work the past 15 years to bring billions out of poverty, to reduce the load from sickness & poor sanitation in Africa and to expand economic prosperity. We've done nothing substantial about CO2 levels and we have a massively funded opposition movement that is fighting just like the tobacco, lead, arsenic and gun lobby to prevent any action on that issue. The reason the volume is going up is BOTH because the science warrants alarm and because the opposition has been so successful in sewing uncertainty.

    The accuracy of GDP claims is misdirection from you. CO2 is on path to 500-800ppm. All the science says that's an unprecedented, extremely rapid change in one of the major forcing variables in our climate and the effects will be somewhere between bad and catastrophic - and we're doing nothing about it.

    Finally claiming we should cut subsidies for renewables when we subsidized tobacco and oil for decades and still do on some arbitrary principal of market fairness is rubbish. It's about policy and values, not about some bull$hit notion of market equity. If we want some new technology or behavior, we invest in it because we value it.

      CommentedGrant Hillemeyer

      There is no evidence that the excess heat is taken up by the oceans, it is merely conjecture by those seeking to explain the hiatus. If the oceans were taking up the heat during the hiatus, sea level rise would be increasing but it has decreased over the last several years. http://wattsupwiththat.com/2012/09/13/sea-level-acceleration-not-so-fast-recently/http://wattsupwiththat.com/2012/09/13/sea-level-acceleration-not-so-fast-recently/
      There has been no increase in either hurricanes or tornados . http://www.co2science.org/articles/V12/N10/C3.php
      Reading articles that attribute weather events to global warming without any evidence supporting their claims is an attempt to frighten you, not educate you.

      Portrait of Bjørn Lomborg

      CommentedBjørn Lomborg

      Dear Benjamin.

      Thanks for your post. I'm not trying to be dogmatic. But let me just briefly assess your points. You claim that we clearly know the heat has disappeared into the oceans, although the UN clearly says it doesn't really know why (with "low" and "medium" confidence that the reduction could be caused by reduced radiative force and internal variability, http://www.climatechange2013.org/images/report/WG1AR5_SPM_FINAL.pdf, p13).

      Nevertheless, even if the explanation is that the heat is going into the ocean, this still question the basic climate sensitivity. If the models have missed that heat goes into the oceans (and don't warm the atmosphere) it seems reasonable that there was a similar transfer from oceans to atmosphere from 1975-1998. (see e.g. www.pnas.org/cgi/doi/10.1073/pnas.1212471110) Both argue for a lower climate sensitivity. This is important, and to not want to discuss this seems -- sorry -- dogmatic... :)

      I'm glad you agree with my emphasis on the many other issues like disease and poverty -- but again, my point is simply that a dollar spent here will help so much more. I'm continuously surprised that well-educated people would say spending hundreds of dollars cutting a ton of CO₂ is a better way to help than to distribute these hundreds of dollars on vaccinations, drugs and food.

      Your final argument on subsidies is a bit baffling. I agree that it is terrible to subsidize tobacco and fossil fuels. But bad subsidies in one area don't justify other bad subsidies. (And remember, fossil fuels are almost exclusively subsidized in third world countries where they are used to pacify the electorate -- it has little to do with climate policies, see e.g. http://online.wsj.com/news/articles/SB10001424127887324432404579051123500813210). We should get rid of all subsidies.

      My point is simply that spending a dollar on solar subsidies typically do less than a cent worth of climate good. That is simply wasting money. When we know investing a dollar in green R&D does about $11 worth of good, we can do more than a thousand times better if we spend money here.

      Hope this makes my points a bit clearer.

  5. CommentedFernando Ferreira

    Creation of more green jobs has been prevented by huge hidden subsidization of fossil fuel energy

      CommentedThomas Beyer

      There is almost no subsidies anymore. The vast majority of oil or gas exploration is private industry paying huge tax dollars to governments. Even under Obama US oil production has gone up over 20% because it is good for the economy. Alberta, Canada's oil province, also has the countries largest wind farms. Not because of subsidies, like Ontario, but because it makes sense in certain windy places with few humans around, like the Eastern Rockies in Southern Alberta.

      Why don't we do more nuclear. That is quite green and low emission !

  6. CommentedMatthew McCarthy

    @stillerman - I'm not sure what your point is. You claim to object to premises: GDP is a good measure of human well-being and that GDP is fixed. Neither of these is a premise of the article. The article assumes that %GDP can be used as a measure of cost, not human well-being, which is not discussed. The idea that GDP is fixed is not assumed either, and not even relevant to the discussion. The point is that there are costs associated with mitigation and costs associated with not mitigating global warming and you would like to compare them in the same units - make up any unit you like and use it consistently. If you do so you will find that costs of mitigation have been deliberately underestimated and costs associated with not mitigating have been deliberately overestimated so the relative costs were completely incorrect.

    Your examples of making poor decisions based on GDP effects are coherent and I think true - I just don't see the relevance to this particular problem. I see it clearly connected to silly policy decisions about subsidizing banks risky behavior because policy makers aren't remembering what the numbers mean, but not really about this global warming issue.

    The follow on for the second point I think is weak. We have already seen the failure of "multiplier effect" arguments in too many areas to ignore. Assumptions about capital not being "fully employed" are exactly the arguments that lead to high risk activities at banks. And there are costs associated with mobilizing labor. These two factors are what made the Spanish experiment in "green jobs" a complete failure - where the resources distracted from other purposes cost more jobs than were created via the subsidized programs. The reason why the bank you describe is "strange" is because it is based on magical thinking that doesn't work.

  7. CommentedMatt Stillerman

    In my view, the entire premise of this article is wrong. It takes, as an assumption that GDP is a good measure of human well-being. And furthermore, that there is a fixed amount of it -- that if we "spend" a certain amount of GDP to mitigate global warming, then we will be that much poorer. Both of these are so completely wrong that it is a wonder that Mr Lomborg can write this stuff without embarrassment.

    We have known for a long, long time that GDP and similar economic measures are a very poor basis for public decisions. E.F. Schumacher wrote eloquently about this in the early '70s. (Small Is Beautiful, 1973). In example after example he showed that economics gives you the wrong answer. But we don't need Schumacher to understand this. Consider: When some idiotic banker leverages his bank to the max, and then drives it over a cliff into bankruptcy, all of those bad investments are *positive* contributions to GDP. When the Federal government then bails out that bank, that is a further *positive* contribution to GDP. Those contributions will be numerically huge compared with ordinary folks producing real goods and services for one another -- every time. So, a policy maker who is trying to maximize GDP will ALWAYS favor those idiotic but huge contributions over real people doing real stuff. Let me summarize: GDP maximization gives you the wrong answer -- every time.

    As to the second point, consider our current situation: almost every nation in the world is currently below full employment. Nor is capital "fully employed" in these countries. This means that each of those national economies has idle capacity that could produce more goods and services. Let's suppose that we "spend" 5% of GDP to produce new green energy products. That means that GDP just grew by 5%. The labor and capital that went into those new products was otherwise idle. So, there is no "crowding out". But wait, there is more! Almost everyone (i.e., even those dinosaurs at the IMF) now recognize that in our current situation the economic multiplier is much greater than one -- probably closer to 1.5. That means that our 5% investment in green products actually increases GDP by 7 or 8%. My point with the GDP arithmetic is really simple: all of this talk about "spending" some percent of GDP is just nonsense, because as you make such investments the underlying base from which the % is computed can be *caused* to shift dramatically -- by amounts that are sometimes larger than the investment.

    To make an analogy, suppose you had a bank account containing $1000. And suppose that you must decide whether to withdraw $100 for some purpose. However, this is a strange bank. After withdrawing $100, your balance is now $1150. With regard to green energy investment, we are in an analogous situation.

    And, by the way, notice that my analysis does not depend on the fact that the investment is in green energy. Even really stupid societal investments (in our current situation) will have a multiplier greater than one.

      CommentedGrant Hillemeyer

      In your second point, if you spend 5% of GDP on 'green energy' products you will increase GDP and increase employment, but everyone who buys energy, or buys products that require energy pay more. It will reduce their standard of living or they will have to cut down on the amount of energy they use. Bjorn's point is that, just as the IPCC over estimates warming in every instance, they underestimate the cost of 'green energy ' solutions as well.

      Portrait of Bjørn Lomborg

      CommentedBjørn Lomborg

      Dear Matt.

      Thanks for your comment. On your two points. GDP is definitely somewhat arbitrary, but the crucial point is that it really does seem to capture something important and something that most other measures can't do better. GPD/cap correlates very strongly to life satisfaction (https://www.facebook.com/photo.php?fbid=10151483654013968), and this is also true on an individual level (within individual countries, https://www.facebook.com/photo.php?fbid=10151508970683968). Moreover, it correlates better with people's self-reported well-being and much better than most other indices, like Index of Social Progress (http://rogerpielkejr.blogspot.hk/2012/08/does-more-income-mean-more-well-being.html).

      On the second point of underutilized production capabilities, I am very enthusiastic to hear that you know how to reduce this under-utilization (although I'm sure you'll allow a bit of skepticism, since nobody else have been able to do so :). But even if we allow that we could magically increase utilization 5%, we could presumably use those 5% on anything, not just wind turbines. So, the point still holds -- we still have to trade off wind turbines with using the 5% increase on hospitals, roads, schools or kindergartens.

  8. CommentedJim Dwyer

    Nice work, Daniel. Finally its revealed that the climate change crisis was way overstated as many suspected. What do you think long term green innovation would include? Nuclear energy would have to be included presumably.

      CommentedThomas Beyer

      You bet. Nuclear is very "green" except the waste. Unclear to me why Germany decided to cut them off the grid by 2022, when across the Rhine River in France, less than 10 km away, the French will export cheap power back to Germany.

      Solar and wind make sense in sunny or windy places. Hydro too in places with large lakes in mountainous regions.

      Taxing gasoline consumption at the consumer level makes sense too. Many cheap policies can be put in place to stimulate less "fossil" fuels.

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