Above, from December 2013, a segment from Jim Byrne’s San Francisco interview with Lord Nicholas Stern of the London School of Economics, on the cost of mitigating climate change.
We’re going to be spending money on energy in coming years. Question is, will we keep spending it on the polluting technologies of the 19th century, or begin, belatedly, deploying the technologies of the new energy revolution?
The latest Working Group report of the Intergovernmental Panel on Climate Change is out, with a surprisingly affordable sticker price on climate protection.
The U.N. Intergovernmental Panel on Climate Change (IPCC) has just issued its third of four planned reports. This one is on “mitigation” — “human intervention to reduce the sources or enhance the sinks of greenhouse gases.”
.. The first report warned that continued inaction would lead to 9°F warming (or higher) for most of the U.S. and Northern Hemisphere landmass, resulting in faster sea level rise, more extreme weather, and collapse of the permafrost sink, which would further accelerate warming. The second report warned that this in turn would lead to a “breakdown of food systems,” more violent conflicts, and ultimately threaten to make some currently habited and arable land virtually unlivable for parts of the year.
Now you might think it would be a no-brainer that humanity would be willing to pay a very high cost to avoid such catastrophes and achieve the low emission “2°C” (3.6°F) pathway in the left figure above (RCP2.6 — which is a total greenhouse gas level in 2100 equivalent to roughly 450 parts per million of CO2). But the third report finds that the “cost” of doing so is to reduce the median annual growth of consumption over this century by a mere 0.06%.
You read that right, the annual growth loss to preserve a livable climate is 0.06% — and that’s “relative to annualized consumption growth in the baseline that is between 1.6% and 3% per year.” So we’re talking annual growth of, say 2.24% rather than 2.30% to save billions and billions of people from needless suffering for decades if not centuries. As always, every word of the report was signed off on by every major government in the world.
Still, amid all the imminent-disaster talk there is some room for guarded optimism. It’s still technically possible to avert catastrophe but in order to do that low-carbon energy has to triple or quadruple by 2050. That implies “an energy revolution ending centuries of dominance by fossil fuels and which will require major political and commercial change,” notes the Guardian. It sounds daunting but making the switch is more affordable than many seem to think. Making a major switch to renewable energy would decrease expected annual economic growth rates by a mere 0.06 percent. And that estimate does not calculate the economic benefit of cutting emissions, which could very well be higher than the costs. In fact, societies would likely be 5 percent poorer if nothing is done to protect the climate, notes the Times.
“Climate policy isn’t a free lunch but could be lunch [that’s] worthwhile to buy,” said Ottmar Edenhofer, one of three co-chairs of the Intergovernmental Panel on Climate Change working group, according to the Wall Street Journal. And it’s a lunch that is also becoming cheaper to buy. One of the most optimistic parts of the report notes that the costs of renewable energy have been on a steep decline in recent years, making its widespread deployment much more affordable than in the past.
The IPCC turning to economists for the answer reminds me of this:
LOL Great clip from one of my favorite movies. Being an old Marine, one of my favorite bits is the part where they are dropping on the planet in their landing craft in a ball of fire and one of the Space Marines is SLEEPING. Anyone who has ever served will get the humor there. I knew Marines who were pretty good at sleeping while standing up—-only fell over and “got caught” on rare occasions
And I will remind all that it did turn out well in the end for some of them (if you can consider the collateral destruction of a whole planet too be a good thing).
At least he wasn’t suffering from a phenomenon called “positivity delusion”, a very interesting corollary to cognitive dissonance.
Seems a task akin to the installation of sewage systems in the 19th century, not sure if economists had to make a business case back then quoting the present values and future values, but it saved a lot of disease, misery and problems. 1% GDP is not a big deal to develop clean energy into the primary supply.
redskylite, that’s a really interesting comparison. I can’t imagine anyone at the time could have fully predicted the economic benefits of basic sanitation and plumbing either! (cf. Krugman / Gordon on the importance of plumbing relative to other things…)
there is a discrepancy in the Message…some people are saying the costs are low, others are saying this is “civlisation’s greatest journey”.
http://www.theguardian.com/environment/damian-carrington-blog/2014/apr/13/ipcc-climate-report-a-route-map-for-civilisations-greatest-jour
this risks adding to the confusion – it is hard to imagine a greatest journey that costs little.
maurizio here displays his remarkable inability to walk and chew gum at the same time.
how many of your greatest journeys were done on the cheap?
I hitched across the US and back with zero funds when I was nineteen. It was truly a great adventure.
some time ago the problem in the Message was that it was just too big for ordinary people to feel they could make any difference – so big in fact, to be an existential issue
http://climatecrocks.com/2013/05/07/climate-change-not-environmental-existential/
how is it possible to avoid an existential problem within a low-cost framework? something will have to give, and most likely there will be low-impact low-cost solutions that will make little or no difference.
I came late to this thread and already feel the need for several WHAT? comments. I will ask only this—-how does a “solution” make little or no difference?—and WHAT the heck is the meaning of “how is it possible to avoid an existential problem within a low-cost framework?”
In your feverish scramble to say something, nay, anything negative, you missed the part about how we are ALREADY spending trillions on fossil fuels. All we need to do is REDIRECT those moneys into renewable infrastructure and problems solved.
Therefore, the low-cost framework means low additional costs which will make an existential difference. Try reading for comprehension instead of reading for something to cherry-pick.
Oh dear, we need economists to explain us something?
Alex
My reply above was directed to Omnorhea not DOG.
maurizio seeks to be known as the Lord of Confusion. It is not evident that he is anything other than merely very confused.
Low ADDITIONAL cost, uh?
The confusion is worse than we thought.
Get’em out by Friday!
We all knew that, but it’s good that you said it for Omno’s sake. Woof!
“As always, every word of the report was signed off on by every major government in the world”
damned conformists, you lot!
I don’t know what the calculations were made for GDP percentage, but I am glad to see this report on costs. THIS is what the conversation should be about, not another digression to address what the denialist crowd wants to talk about – FUD.
Twenty five years now of debating AGW. And who can tell us what a 100% renewable energy system will cost us?? We know how much power we will need. We have some idea of what renewables cost, what a new smart grid will cost. Why are we not talking about the best logistical strategy and how to get from where we are to where we need to be? It’s simply unbelievable this is not a topic which gets any participation.
What is the least expensive way to go forward? Is it with a fully public system, a mixed system, or a private sector system?
In the time frame we have left to address this issue as cost-effectively as possible, should we even pin our hopes on the private sector at all? Their record is atrocious. They are fighting progress. They have been fighting progress for twenty five years. They have funding a disinformation campaign against progress for most of that period. Is it not time for the adults in the family to take over?
If we want the private energy sector to stop impeding the general welfare, I would suggest the most effective thing we could be doing politically would be to start a concerted and long-lasting campaign to nationalize the industry. Nothing scares them then more than that word: “Nationalize”. Nothing else will force conciliation from them.
Or, we can simply ignore the private energy sector, and get moving on a public energy system. As more and more carbon-based utilities and energy providers see their income disappearing, their business plans becoming increasingly irrelevant, they will come to government and plead to be nationalized, plead for a public takeover.
The first step is figuring out how much this will cost, and comparing that cost with our current spending on carbon fuels. The U.S. spent $1.2 trillion on carbon fuels in 2011. That figure is no doubt lower than what we spending in 2014.
I put it to you that $1.2 trillion is a titanic amount of money if spent wisely on a public non profit project where materials can be purchased at wholesale prices (or lower if we spend public monies on new manufacturing plants). Think what ten years worth of spending could buy.
Are you insane? any practical discourse will bring discord among the troops. Much better to cry “deniers!” and rally the believers. Tsk tsk.
ps public projects attract renters and parasites. If you want an energy revolution like the Internet revolution of 20y ago let the people free to do it.
A carbon tax would encounter less political resistance than nationalization. 1% of GDP works out to about $30 per ton of CO2 in the US.
If my math is right, that’s 1-1/2 cents per pound and 30 cents on a gallon of gas. Sounds good to me.
It’s a pittance compared to what the financial industry lavishly spends on parasitic activities like high frequency trading.
If it were this easy, we’d have already done it. I think humans are a bunch of monkeys with delusions of grandeur, but we’re not THAT dumb.
0.06% of the U.S. yearly GDP is $9.4 billion. We spend 73 times that amount on just our military every year. $9.4 billion is slightly more than the cost to build just one 1,100 MW nuclear plant:
http://www.synapse-energy.com/Downloads/SynapsePaper.2008-07.0.Nuclear-Plant-Construction-Costs.A0022.pdf
We’re really supposed to be able to swap out all existing coal, natural gas, and oil electricity generation, manage all growth with clean energy sources (at a 3% growth rate, the U.S. GDP should be 3.74 times the size it is now by 2100), swap out an entire and aging electrical grid with a smart grid, swap out every car and truck on the road with either EVs or hydrogen, do the same but with potentially biofuels for air transport, build all the infrastructure needed to support those systems, figure out how to produce steel and cement without releasing GHGs (as well as other emitting industries) and implement those technologies, retool our entire industrial model of agriculture to work on clean sources and produce zero emissions, and R&D and then implement carbon sequestration on a grand scale for pennies on the dollar (or, less than 1/10th of one penny for every dollar)?
Economics is not science, and all too often its methodology is the opposite of the scientific method, as when it takes a preferred or pre-determined outcome and then finds the data to support it, ignoring or calculating out any mitigating factors.
There are two great dangers with this report by the IPCC. One, it will send the message that little extra effort is needed to completely solve AGW, and two, if it’s wrong, it will cause many to question if the IPCC is wrong in other ways, too.
Granted, $9.4 billion/year is more than we’re currently requesting (look under the Science and Energy section):
http://energy.gov/sites/prod/files/2014/04/f14/15Highlights%20%281%29.pdf
But it’s not much more. Would just a little more than the current pace we’re on really solve AGW? I’m not saying a heftier price tag should scare us in the slightest, we should do it whatever the cost – I’m saying that sugar-coating the problem to facilitate a business-as-usual approach with just a slight amplification in efforts is more likely to produce a ‘Game over!’ situation by 2100 than a storybook ending.
–>”In fact, societies would likely be 5 percent poorer if nothing is done to protect the climate, notes the Times.”<–
Really? So, why worry at all? GDP is predicted by these same economists to be 3-4x what it is now. 5% off that is absolutely nothing at all, so there's no problem. What's more, it'll just take us a tiny amount of our total GDP per year to mitigate just that 5%, so easy peasy, grab a margarita and chillax. And this is from the IPCC. Yeesh.
Haven’t read the report. But it seems to me they are not talking about spending $9 billion a year. It would take us more than a thousand years to complete the project at that rate.
They are, I believe talking about using the monies we already spend, and the monies we are projected to spend on carbon, and redirect it to renewables. And then add 0.06% of GDP to that figure.
I think they are being conservative. The best available evidence says that the cost of adaptation is going to be $1240 trillion by 2100 if we continue BAU. A small percentage of that figure will buy us the new tech we need. Talk about ROI.
As I said, we spent $1.2 trillion on carbon fuels in 2011. What part of that went to infrastructure? I’m guessing hardly any – it mostly went to buying *fuel*.
With renewables, these ain’t no *fuel* cost. Once we put up the infrastructure, all we have to do is pay off that debt. And the rest of the story is almost pure profit. If the infrastructure last a long time, that is a long time to amortize the investment. (PV panels look like they may last 80 years, not 20, for example).
Which means we could easily afford to offer our new renewable-generated electricity for next to nothing. Goodbye oil furnace, goodbye natural gas boiler. Hello electric heating strips. Hello electric cars, trucks, tractors. You want to avoid $1240 trillion in adaptation costs? Offer huge government rebates on electric heating strips, electric cars, electric blast furnaces.
You seem worried that to”swap out all existing coal, natural gas, and oil electricity generation” is going to be difficult. I think it could happen overnight – IF the correct stimulus was offered. All we have to do is make renewable electricity much cheaper than expensive carbon. But that is inherent in the very nature of renewables.