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Global Warming: The UN’s Plan Ignores Real Costs of Implementation

Last week, the United Nations' Intergovernmental Panel on Climate Change (IPCC) released a sizable new report titled "Global Warming of 1.5°C." The basic premise of the report is that if the governments of the world do what the UN tells them to do, then global temperature rise will be limited to 1.5°C. The report comes ...

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Last week, the United Nations' Intergovernmental Panel on Climate Change (IPCC) released a sizable new report titled "Global Warming of 1.5°C."

The basic premise of the report is that if the governments of the world do what the UN tells them to do, then global temperature rise will be limited to 1.5°C.

The report comes out of the Paris Agreement which backed a long-term goal to limit global temperature rise to "'well below 2C' and to 'pursue efforts towards 1.5C'."

Since then, the focus of UN policymakers and personnel has been to focus on putting together a policy agenda centered around the idea of using government mandates, taxes, regulations, and subsidies to limit global temperature rise to the selected value of 1.5°C. Previous plans had centered around limiting warming to 2°C, so the new plan represents a ratcheting up of goals to push through sizable taxes on carbon emissions, subsidies for "renewable" energy, and more.

To claim the necessity of all of this, the report is almost entirely devoted to painting a picture of what will happen if temperatures rise by 2°C, and comparing that to a rise of a "mere" 1.5°C. In either, case, the report asserts, things will get much worse than they are now. But an increase of 1.5°C won't be quite as bad.

The response in the media has been sizable — and certainly uncritical. The New York Times concludes the "landmark report … paints a far more dire picture of the immediate consequences of climate change than previously thought and says that avoiding the damage requires transforming the world economy at a speed and scale that has 'no documented historic precedent.'"

The UK's The Guardian features the headline: "We have 12 years to limit climate change catastrophe, warns UN."

The Guardian also ran an editorial asserting "The IPCC report is clear that we may not be able to limit warming to 1.5C without the need later in the century to remove carbon dioxide from the atmosphere. Although we can do this by expanding forests and other vegetation, we must also explore other options, including the development of carbon capture and storage."

This is just a small sampling of the media's highly favorable response to the report. Essentially, the report was very successful at what it set out to do: the focus was entirely on the climate models and predictions, and largely ignored any details of how the world's governments might set about actually executing and funding these regulatory changes.

Almost completely absent from the debate is any discussion about how the "solutions" might be paid for, and what the true costs are.

Certainly, some numbers were offered. As the report notes: "Total annual average energy related mitigation investment for the period 2015 to 2050 in pathways limiting warming to 1.5°C is estimated to be around 900 billion USD2015."

That's just a moderate estimate. The range of estimated costs goes much higher to over $3 trillion. And $900 billion (i.e., nearly one trillion) is a sizable number given that global GDP in 2016 was 75 trillion.

But even these numbers are part of an extremely limited estimate, and they fail to cover a myriad of other costs. The report itself admits "The literature on total mitigation costs of 1.5°C mitigation pathways is limited and was not assessed in this report. Knowledge gaps remain in the integrated assessment of the economy wide costs and benefits of mitigation in line with pathways limiting warming to 1.5°C."

Any Serious Analysis of UN Plans Must Consider All Costs

The "literature" however, involves a variety of estimates. And many of them suggest that the 1.5°C plan will cost much more in lost wealth than in benefits from global-warming disasters averted.

Notably, some of this literature devoted to pointing out the true costs of climate policy comes from William Nordhaus, who last week won the Nobel Prize in economics to much fanfare from global warming activists.

As Robert Murphy notes, Nordhaus has been lauded as a champion of climate policies of the type pushed by the IPCC. But those who are singing the praises of Nordhaus as an advocate for climate control miss that Nordhaus thinks the 1.5°C goal is a bad idea, and totally unrealistic.

Murphy writes :

For starters ... [Nordaus's model back in 2007 showed] the climate goal of limiting global warming to 1.5°C was a horrible policy, which would make humanity $14 trillion (in present-value terms, in 2005 US$) poorer than doing nothing at all. (See Table 4 of my article to see the details.)

Now it’s true that the numbers have changed since 2007, and Nordhaus’ model would no longer give such a pessimistic assessment. However, back in 2013 Nordhaus argued in his then-new book on climate change that the optimal policy (depending on assumptions regarding participation among the world’s governments, etc.) would limit global warming from 2.3°C up to nearly 4°C, as Paul Krugman admits in his review of the book.

Please re-read my last sentence: As of 2013, William Nordhaus—who just won the Nobel Prize for his work on the economics of climate change—was saying the optimal path of global warming would allow for temperature increases of at least 2.3°C and possibly close to 4°C. Yet the IPCC’s media people are telling the world that we should really shoot for 1.5°C of warming to avoid catastrophe, and that the difference between 1.5°C versus 2.0°C is huge.

Nordhaus, mind you, favors a carbon tax. But, unlike most of the people writing up media articles on how the world will soon end in a global climate catastrophe, Nordhaus recognizes that policies like taxes, subsidies, and regulations come with costs.

Totally ignoring these costs, however, has long been the bread and butter of climate change advocacy groups which steadfastly avoid any discussion of real-world costs and benefits of climate-change policy.

Anyone who disputes their policy plans is denounced as a climate denier, but as I've noted in the past, this is a deliberate attempt to avoid admitting that the topic of climate change itself is separate from what ought to be done about it. Instead, the strategy is something like this:

All too often, the response to questions such as these are angry diatribes about how we must act now. But of course, such a position is similar to that of a person who, upon seeing that winter is approaching demands that everyone build the winter shelter his way immediately. “Can’t you people see it’s getting colder?” he says. “If we don’t build the shelter my way, we’ll all freeze.” When faced with questions of whether or not his shelter plan is really the best way to proceed, or if a different type of shelter might be more cost effective, or if others would rather build their own shelter, he angrily declares “you winter deniers don’t care if we all die.”

Meanwhile, in the real world, any attempt at addressing the issue of dealing with climate change — assuming the magnitude of it as described in UN reports is accurate — requires acknowledgement of the costs and benefits of policies.

Indeed, some climate change activists are so steadfast in refusing to even admit the role of cost assessment that some more reasonable activists have felt compelled to coax their colleagues into the light of honest debate by pointing out that many people are actually more amenable to discussing climate change if the true costs are admitted.

But many activists refuse to talk about costs because they know that if the costs of mitigation (i.e., carbon taxes, etc.) is too high, then people are likely to rely on the other climate-change policy strategy, which is "adaptation":

Both approaches [adaptation and mitigation] may sound essential, but some environmentalists worry that drawing attention to the need to adjust to a changing climate will undercut public support to boost spending on efforts to slow the pace of global warming.

In other words, some activists continue to just pretend that they shouldn't even have to talk about costs of their big plans for global climate control. They don't want to talk about adaptation because they know that may actually be more attractive to many, many people. Moreover, mitigation efforts present a risk because of large amounts of resources are sunk into mitigation strategies — and they don't work — then the opportunity cost will be extremely high, and there will be far fewer resources left for adaptation strategies. But, given that adaptation strategies are less likely to require global governance, centrally planned energy policies, or even carbon taxes, this would present a big risk to a political agenda founded on establishing an enormous global climate bureaucracy.

The strategy of many activists, therefore, is to continue to rely on media and politicians to just demand that something be done, or human civilization will collapse. This is the "hysteria" strategy, and it is often effective. But it basically pretends that scarcity doesn't exist when it comes to central planning and regulating the global economy in pursuit of global-warming mitigation.

Can the Real Costs Even be Known?

And then, of course, there is the problem of whether or not it's even possible to really calculate the costs of mitigation. The costs put forward by groups like the IPCC tend to focus only on the apparent costs of tax policies, subsidies and other mitigation strategies. It is impossible to truly calculate, however, the regulatory over time, lost opportunities foregone from outlawing certain technologies, and the effects of higher taxes and energy costs on startups and entrepreneurs. Its at this foundational, entrepreneurial, and household level where the real costs will mount, and this is impossible to slap a number on and proceed with a meaningful cost-benefit analysis. It's impossible to predict future innovations and opportunities foregone as the world adopts what is essentially central planning for purposes of manipulating the atmosphere. Advocates of government imposed mitigation, however, speak as if mitigation is all just upside, and that failure to act now brings total destruction. It's the usual "do what we say or die!" strategy that is the mark of a plan lacking in solid information. The unwillingness to discuss specifics tells us a lot.

But, as Nordhaus's research has shown, even if we accept all the climate observations, the cost estimates, and the mainline narrative on global warming, we still find an alarmingly sparse amount of attention to how much it all really costs.

Ryan McMaken
Ryan W. McMaken is the editor of Mises Daily and The Austrian. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014.

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