Tag: social cost of carbon

How Does One Justify One of the Most Expensive Regulations in American History?

In an effort to justify its massive global warming regulations, the Obama Administration had to estimate how much global warming would cost, and therefore how much money their plans would “save.” This is called the “social cost of carbon” (SCC). Calculating the SCC requires knowledge of how much it will warm as well as the net effects of that warming. Needless to say, the more it warms, the more it costs, justifying the greatest regulations. 

Obviously this is a gargantuan task requiring expertise a large number of agencies and cabinet departments. Consequently, the Administration cobbled a large “Interagency Working Group” (IWG) that ran three combination climate and economic models. A reliable cost estimate requires a confident understanding of both future climate and economic conditions. The Obama Administration decided it could calculate this to the year 2300, a complete fantasy when it comes to the way the world produces and consumes energy. It’s an easy demonstration that we have a hard enough time getting the next 15 years right, let alone the next 300.

Consider the case of domestic natural gas. In 2001, everyone knew that we were running out. A person who opined that we actually would soon be able to exploit hundreds of years’ worth, simply by smashing rocks underlying vast areas of the country, would have been laughed out of polite company. But the previous Administration thought it could tell us the energy technology of 2300. As a thought experiment, could anyone in 1717 foresee cars (maybe), nuclear fission (nope), or the internet (never)? 

On the climate side alone, there’s obviously some range of expected warming, often expressed as the probabilities surrounding some “equilibrium climate sensitivity” (ECS), or the mean amount of warming ultimately predicted for a doubling of atmospheric carbon dioxide. In the UN’s last (2013) climate compendium, their 100+ computer runs calculated an average of 3.2°C (5.8°F). A rough rule of thumb would be that this is also an estimate of the total temperature change predicted from the late 20th century to the year 2100.

You Ought to Have a Look: Panic Among Alarmists

You Ought to Have a Look is a regular feature from the Center for the Study of Science. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

As the time towards Trump’s inauguration closes, panic mounts in the climate change-agenda community as evinced by their hyperventilation about what a Trump Administration might unleash on President Obama’s Climate Action Plan. This includes ventilation about blocking access to climate data, data manipulation, investigating climate scientists, squashing dissent, selective science, end runs around Congressional intent, etc…sort of like a catalog of what they have been doing since climate change went prime time in 1988.

Many of these bloviations are completely unfounded—for example, a particular favorite of the press during recent weeks has been that “Scientists [are] Rac[ing] To Preserve Climate Change Data Before Trump Takes Office.” This is nonsense—despite the hand-wringing and (faux) concern raised by some folks. And while we, like everyone else should be, are opposed to deleting government datasets (paid for with our tax dollars), there is simply no evidence that such an action is in the works or even being contemplated.

Many of the other fears are overblown as well, but there are, in fact, some things that should bother climate campaigners (and no one else). These include efforts to retract the Clean Power Plan, to eliminate the use of the social cost of carbon as currently constituted in federal cost/benefit analyses, and acknowledgement the current generation of climate models has no utility with regard to policy.

You Ought to Have a Look: Climate Fretting and Why It’s Unjustified

You Ought to Have a Look is a regular feature from the Center for the Study of Science. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

While “climate fretting” has become a pastime for some—even more so now with President-elect Trump’s plans to disassemble much of President Obama’s “I’ve Got a Pen and I’ve Got a Phone”-based Climate Action Plan—climate reality tells a much different story.

For example, a new analysis by Manhattan Institute’s (and YOTHAL favorite) Oren Cass looks into the comparative costs of climate changevs. climate action. His report, “Climate Costs in Context” is concise and to-the-point, and finds that while climate change will impart an economic cost, it is manageable and small in comparison to the price of actively trying to mitigate it. Here’s Oren’s abstract:

There is a consensus among climate scientists that human activity is contributing to climate change. However, claims that rising temperatures pose an existential threat to the human race or modern civilization are not well supported by climate science or economics; to the contrary, they are every bit as far from the mainstream as claims that climate change is not occurring or that it will be beneficial. Analyses consistently show that the costs of climate change are real but manageable. For instance, the prosperity that the world might achieve in 2100 without climate change may instead be delayed until 2102. [emphasis added]

In other words, the economic impacts of climate change aren’t something worth fretting over.

You Ought to Have a Look: The Hows and Whys of the Social Cost of Carbon

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

There are several notable pieces this week that relate to the social cost of carbon (SCC)—the government’s powerful tool to aid in justifying all manner of rules and regulations. The SCC is supposed to represent the negative externalities (i.e., projected economic damages in a projected society resulting from projected climate change) that are associated with the emissions of each ton of carbon dioxide. It was developed as a way to translate carbon dioxide emission reductions into dollars savings and to make the “benefits” of proposed climate actions hit closer to home for more people.

But as you may guess from the number of “projected”s in the above parenthetical, the SCC is so highly malleable that you can pretty much game it to produce any value desired—the perfect characteristic for an all-purpose economic cost/benefit tool wielded by an opportunistic and activist government.

The situation is well-described by American Enterprise Institute’s Benjamin Zycher in his recent post for The HillThe magic of the EPA’s benefit/cost analysis.”

Welcome to the fascinating world of EPA benefit/cost analysis… the administration conducted an “analysis” of the “social cost of carbon” (SCC), in order to generate an estimate of the marginal externality cost of greenhouse gas emissions (GHG). The problems with that analysis are legion, but the central ones are the use of global (rather than national) benefits to drive the benefit/cost comparison; the failure to apply a 7 percent discount rate to the streams of benefits and costs, despite clear direction from the Office of Management and Budget; and — most important — the use of ozone and particulate reductions as “co-benefits” of climate policies. The administration’s estimate is about $36 per ton in 2015 ($31 per ton in 2010).

And that is how a regulation yielding future changes in temperatures and sea levels approaching zero can be claimed to yield net benefits “exceeding $100 billion, making this a highly beneficial rule.” In the EPA’s benefit/cost framework, the actual effects of the policies literally are irrelevant; just compute the assumed reduction in GHG emissions, multiply by $36, and voila!

Zycher takes us through the absurdities of just how small the impact of Obama’s “climate” actions is on the actual climate and how the actions are enormously magnified they become when they are run through the social cost of carbon. He concludes:

It is the delegation of legislative powers to the regulatory agencies that has allowed such game-playing in pursuit of an ideological agenda. The only means with which to restore political accountability to the regulatory process is a requirement that all regulations be approved by Congress.

You can check out his entire article, here.

You Ought to Have a Look: Use and Abuse of the Social Cost of Carbon, Taking Down the Precautionary Principle, and the Rebound Effect from Energy Efficiency

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

Here we highlight a couple of things that we’ve been paying attention to as the new year unfolds.

First is an on-the-ground example of the extensive and invasive power of the federal government’s social cost of carbon. David Roberts, writing for Vox, describes the ongoing situation in a Colorado coal mining region which pits local, near-term coal mining interests (i.e., economic activity) against the federal government’s desire to mitigate potential damages that may result from climate change sometime in the future some place on the globe. So far, the present inhabitants of Colorado are losing out to the yet unborn future inhabitants of some faraway Pacific Island—a loss happily facilitated by the federal government.

Specifically, a federal judge has told the U.S. forest Service (USFS) that it did not adequately consider climate change when granting a special exception for coal mining activities on a protected tract of federal forest around Paonia, Colorado. The judge cited the National Environmental Policy Act (NEPA) as grounds for his decision.  When the USFS came back with its new analysis, it reported a huge, negative net impact of coal mining in the region.

How so? Because under the new federal guidelines for interpreting NEPA, the USFS had to consider not only the local environmental impacts of mining activities when compiling its Environmental Impact Statement, but also the impact that burning the mined coal to produce electricity would engender via the carbon dioxide emitted in the process.

If this sounds absolutely ludicrous, it is. And as you might imagine the locals are a bit flummoxed. “Who would have thought that they would have had to analyze the burning of coal in a power plant somewhere?” says Kathy Welt, a mineworker potentially impacted by the decision.

You Ought to Have a Look: Highlights from the House Hearing on Social Cost of Carbon

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

In case you missed it the House Natural Resources Committee, this week, held a hearing examining the Administration’s determination of the social cost of carbon—that is, how much future damage (out to the year 2300) the Administration deems is caused by the climate change that results from each emitted (metric) ton of carbon dioxide.

As you may imagine from this description, determining a value of the social cost of carbon is an extremely contentious issue, made more so by the fact that the Obama Administration requires that the social cost of carbon, or SCC, be included in the cost/benefit analysis of all federal actions (under National environmental Protection Act, NEPA) and proposed regulations.

Years ago, we warned about how powerful a tool the SCC was in the Administrations hands and have worked to raise the level of public awareness. To summarize our concerns:

The administration’s SCC is a devious tool designed to justify more and more expensive rules and regulations impacting virtually every aspects of our lives, and it is developed by violating federal guidelines and ignoring the best science.

The more people know about this the better.

Our participation in the Natural Resources Committee hearing helped further our goal.

That the hearing was informative, contentious, and well-attended by both the committee members and the general public is a testament to the fact that we have been at least partly successful elevating the SCC from an esoteric “wonky” subject to one that is, thankfully, starting getting the attention it deserves.

In this edition of You Ought to Have a Look, we highlight excerpts from the hearing witnesses, which along with our Dr. Patrick Michaels, included Dr. Kevin Dayaratna (from The Heritage Foundation), Scott Segal (from the Policy Resolution Group) and Dr. Michael Dorsey (from US Climate Plan).  The full written submissions by the witness are available here.

When “Conservative” Means “Alarmist”

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”


There is a new study out that purports to make a “conservative” estimate of the social cost of carbon and in doing so arrives at a figure nearly four times larger than the central estimate currently used by the U.S. government—the latter a figure which we and others have voluminously argued is itself several times too high. Perhaps the authors of the new report ought to look up the definition of the word “conservative.”

Recall that the social cost of carbon is supposed to represent the total value of future damages from climate change resulting from the current emission of a ton of carbon dioxide. As you may imagine, coming up with the SCC involves more imagination than actual science.

The primary “tools” used for determining the SCC are “integrated assessment models,” or IAMs, which incorporate a very simple climate model into an economics model. Writing in the journal Nature Climate Change, Jeroen van den Bergh and Wouter Botzen review elements (economic and climatic) that are poorly incorporated or missing entirely from the IAMs.

A prominent characteristic of the IAMs is that they are notoriously malleable and able produce virtually any value for the SCC that the modeler or end-user desires.

Judging from the introductory sentence of their paper

Climate change has been called “the biggest market failure the world has seen” and “the mother of all externalities.”

you can pretty much guess what kind of SCC value van den Bergh and Botzen prefer.

To support their apparent preference for a high SCC, they spend the bulk of their paper imagining bad climate outcomes—with high monetary damages—and are generally dismissive of positive climate impacts. For example:

Nevertheless, our summary of the main effects provides a clear insight, namely that unquantified negative effects of climate change tend to domi­nate unquantified positive effects. The negative effects comprise large biodiversity losses, political instability, violent conflicts, large-scale migration, extreme weather events, natural disasters and the effect on long-term economic growth. Accounting for the latter is likely to increase the SCC because large impacts of cli­mate change are expected to reduce the rate of GDP growth, partly because of negative effects on labour and capital productivity.

Unsurprisingly, when you include a lot of negative impacts along with a low discount rate, the IAMs produce very high estimates of the SCC.

In fact, van den Bergh and Botzen arrive at a “conservative” SCC value of $125. For comparison, value used by the Obama Administration for cost/benefit analyses of new regulations is $36.

Interestingly, in their “conservative” analysis, they never once mention the growing body of new and prominent scientific literature that produce updated estimates of the earth’s climate sensitivity—a measure of how much climate change we expect from carbon dioxide emissions—that are much lower and much more tightly constrained than the ones used in all of the studies reviewed by van den Bergh and Botzen.

The lower climate sensitivity estimates not only reduce the overall impacts from expected climate changes, but they do so primarily by reducing the chances of unexpected and catastrophic changes—the biggest drivers of the high SCC values in the IAMs. It has been repeatedly shown (see here, here, and here for example) that incorporating the new, lower climate sensitivity estimates reduce the IAMs’ SCC determinations by some 40 percent.

And there are lots of other things, which, if better incorporated in the IAM’s, would lead to lower SCC values.

If the positive benefits from carbon dioxide emissions on the planet’s crop production were better included in the IAM’s, the SCC value drops further.  And if arguments for the use of a higher discount rate, rather than the very low one espoused by van den Bergh and Botzen win the day, the SCC drops further still.

Add to the mix a more reasoned view of future climate extremes, and before you know it, it is an easy argument to make that the SCC value should fall significantly below the Administration’s $36 rather than some three to four times higher.

It is bad enough that van den Bergh and Botzen present a rather one-sided view of the science of climate change/climate extremes and the economics concerning the choice of discount rate, but for them to term their analysis “conservative” is really taking things too far. “Alarmist” would be a more apt description.

Our hope would have been that the reviewers for Nature Climate Change would have caught the glaring oversight of the current climate sensitivity literature (with one of the most persuasive articles appearing in the sister journal Nature Geosciences), but that didn’t happen. We’ll withhold speculation as to why that was the case.

Reference:

Van den Bergh, J.C.J.M., and W.J.W. Botzen, 2014. A lower bound to the social cost of CO2 emissions. Nature Climate Change, 4, 253-258, doi:10.1038/NCLIMATE2135.