An Incredibly Expensive Folly: Why Failure in Copenhagen Would Be a Success
Politicians have wasted nearly 20 years without making significant progress in our well-meaning but fanciful quest of cutting carbon emissions. We have no more time to waste on a critically flawed response to global warming.
"Global warming is real and it is caused by humanity. But it is just as obvious that we have failed to embrace the policies that would best deal with this challenge."
The worst fears of many delegates to the Copenhagen climate negotiations have already come true: It has become clear that the official attempt to replace the Kyoto Protocol will fail to produce a concrete plan to reduce carbon emissions.
A successful outcome could still be salvaged from this meeting's failure, but only if decisionmakers acknowledge the reasons why agreement on drastic, short-term carbon cuts has proven elusive, and start to consider smarter options.
Over the past decade, a fierce argument has been waged between those who deny global warming's existence, and those who are deeply alarmed about its onset. The rhetoric from both sides has, at times, been overblown. Global warming is real and it is caused by humanity. That much has long been clear. But it is just as obvious that we have failed to embrace the policies that would best deal with this challenge.
It is often claimed that we could easily stop warming through carbon emission reductions, if only politicians had the willpower. In fact, political willpower is the least of our worries. This policy approach -- which we have followed for nearly 20 years -- is critically flawed. It is flawed economically, because short-term carbon taxes will cost a fortune and do little. It is flawed politically, because negotiations to reduce CO2 emissions will become ever more fraught and divisive for the actors in Europe, America and Asia. And it is flawed technologically, because it will not ensure that alternative energy is ready to end our reliance on carbon.
The first of these challenges is clear when we examine the plan by major industrialized nations -- the G-8 -- to use carbon emission cuts to limit global warming to no more than 2 degrees Celsius above pre-industrial levels. This would be the most costly public policy ever enacted. In a paper for the Copenhagen Consensus Center, prominent climate economist Professor Richard Tol -- who has been a contributing, lead, principal and convening author for the Intergovernmental Panel on Climate Change's working groups -- showed that achieving the target would require a high, global CO2 tax starting at around 45 per ton.
CO2 Emissions Cuts Will Cost More than Climate Change Itself
Based on conventional estimates, this ambitious program would avert much of the damage of global warming, expected to be worth somewhere around 2 trillion a year by 2100. However, Tol concludes that a tax at this level could reduce world GDP by a staggering 12.9% in 2100 -- the equivalent of 27 trillion a year.
Tol's figures are based on projections from all of the major economic models of the Stanford Energy Modeling Forum. Around half of the models actually found it impossible to achieve the target of keeping temperature rises lower than 2 degrees Celsius with carbon cuts; the 27 trillion price-tag comes from those models that could do so.
It is, in fact, an optimistic cost estimate. It assumes that politicians everywhere in the world would, at all times, make the most effective, efficient choices possible to reduce carbon emissions, wasting no money whatsoever. Dump that far-fetched assumption, and the cost could easily be 10 or 100 times higher.
To put this in the starkest of terms: Drastic carbon cuts would hurt much more than climate change itself. Cutting carbon is extremely expensive, especially in the short-term, because the alternatives to fossil fuels are few and costly. Without feasible alternatives to carbon use, we will just hurt growth.
Secondly, we can also see that the approach is politically flawed, because of the simple fact that different countries have very different goals and all nations will find it hard to cut emissions at great cost domestically, to help the rest of the world a little in a hundred years.
This is particularly obvious for countries like China and India which have been dependent on carbon to drive growth that is lifting millions of people out of poverty.
The gulf between developed nations and developing countries over this issue forms the political roadblock to negotiating a successful replacement to the Kyoto Protocol. China and India will be the main greenhouse gas emitters of the 21st century, but were exempt from the Kyoto Protocol because they emitted so little during the West's industrialization period.
There are few arguments for China and India to commit to carbon caps -- and compelling reasons for them to resist pressure to do so.
Some in Europe have suggested that rich countries pay off developing nations to ensure their participation in a carbon reduction agreement. Putting aside the point that this money could be much better spent, it is not clear that taxpayers in most developed countries are willing to transfer tens or even hundreds of billions of euros to the developing world, to projects of limited good.
Thirdly, the current approach is technologically flawed. We lack adequate replacements for the carbon that we burn today. Use of fossil fuels -- although much maligned -- remains absolutely vital for our development, prosperity and survival. Trying to tax carbon emissions without developing alternative energy replacements will simply leave the planet worse-off.
- Part 1: Why Failure in Copenhagen Would Be a Success
- Part 2: Fanciful Promises With Little or No Chance of Being Fulfilled
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