Chapter 8 - Costing Climate Change (con.t)
Just as economic assessments place a relatively low cost of quantifiable damage from climate change, most studies also place a low cost on emission reduction measures. Confidence in such outcomes is clearly not shared by the developing countries which rejected as draconian the measures proposed at Copenhagen in 2009. Nor is the continued resistance of developed countries (with the possible exception of the EU) to take actions involving carbon taxes an indication that there is widespread belief in the low costs promised.
The bottom line is that if global warming is taking place, even the IPCC is forced to acknowledge that it will not be very harmful. According to their own cited studies, the costs are less than a year’s annual growth in global GDP. Attempts to suppress emissions of greenhouse gases, even if politically feasible in a multilateral world of nations with different interests, would, on IPCC estimates, cost more than any damage the emissions may be causing. And the costs of such radical action would appear to be grossly understated by the IPCC.
Moreover, the political feasibility of near unanimity of action— without which the abatement assumptions unravel—were shown to be impossible at Copenhagen in 2009 where the increasingly powerful Sino-Indian bloc refused to be persuaded by the threats and blandishments of the EU and its allies. Stand-outs of any significant producer against imposing de facto energy taxes on its businesses would mean that energy-intensive industries will migrate to the lower taxed venue and negate the emission reductions.
Assertions that dire consequences will befall us decades or even centuries into the future make rattling good stories, but when they are unaccompanied by any supporting evidence they have to be treated with caution if they entail high present day costs.
Long range forecasts are fraught with uncertainties and the costs of taking action to obviate a risk must be considered alongside the costs of the risks themselves and the possibilities of taking such action in a world of sovereign states with different interests. And in the case of climate change, the costs as measured are said to be modest.
Even the threefold increase in the costs of energy requires highly optimistic assumptions about low cost replacements for current energy sources. Energy is the most basic of economic resources behind wealth and living standards even though it represents only 5 per cent of GDP (much of which is its distribution costs).
Shifting to the envisaged lower productivity power plants —wind, carbon capture and storage, and solar— means a major reduction in capital productivity, which alongside innovation is the key driver of overall productivity increases.
Finally, the complacency of the IPCC and some other official reports in advocating a near abandonment of current fossil fuels rests on long term forecasts. In addressing the pitfalls of these, one only has to look back to the momentous year of 1914.
A hundred years ago, who would have forecast the fall of the European empires, the rise and fall of communism , the rise of China and India, widespread international air travel, the internet and so on? Back then the few who would have forecast dramatic climate change a century hence would have been proved wrong.
Climate Change The Facts 2014