by Judith Curry

Because   there   is   no   good, cheap   green   energy,   the   almost   universal  political  choices   have   been   expensive   policies   that   do   very   little. There   is   much   greater   scope   for   climate   policies to   make   the   total   climate   cost   greater   through  the   21st   century. – Bjorn Lomborg

Yesterday the U.S. Senate Committee on Environment and Public Works Subcommittee on Clean Air and Nuclear Safety convened a Hearing on Examining the Threats Posed by Climate Change.  The Hearing website is [here].

There is no majority or minority statements or opening remarks on the web page.  Six individuals presented testimony, five of whom I am unfamiliar with.  I’ve read all the testimonies.  They’re all interesting, but I think Lomborg’s testimony is important.  I had the priviledge of testifying with Lomborg previously this year at this Hearing.

Lomborg’s testimony can be found [here].  From the Summary:

Global warming is real, but a problem, not the end of the world. Claims of “catastrophic” costs are ill founded. Inaction has costs, but so does action. It is likely that climate action will lead   to higher total costs in this century.   Climate action through increased energy costs will likely harm the poor the   most, both in rich and poor countries.

• The cumulative cost of inaction towards the end of the century is about 1.8% of GDP
• While this is not trivial, it by no means supports the often apocalyptic conversation on climate change.
• The cost of inaction by the end of the century is equivalent to losing one year’s growth, or a moderate, one year recession.
• The cost of inaction by the end of the century is equivalent to an annual loss of GDP growth on the order of 0.02%.
• However, policy action as opposed to inaction, also has costs, and will still incur a significant part of the climate damage. Thus, with extremely unrealistically optimistic assumptions, it is possible that the total cost of climate action will be reduced slightly to 1.5% of GDP by the end of the century.
• It is more likely that the cost of climate action will end up costing upwards of twice as much as climate inaction in this century – a reasonable estimate could be 2.8% of GDP towards the end of the century.
• Climate action will harm mostly the poor. Examples from Germany and the UK are given.
• To   tackle   global   warming,   it   is   much   more   important   to   dramatically  increase   funding   for   R&D   of   green   energy   to   make   future   green   energy  much   cheaper.   This   will   make   everyone   switch   when   green   is   cheap  enough,   instead   of   focusing   on   inefficient   subsidies   and   second best  policies   that   easily   end   up   costing   much   more.  

The part of Lomborg’s testimony that I found particularly compelling was the text related to energy poverty.  Excerpts:

The   first   realization   needs   to   be   that   the   current,   old fashioned   approach   to     tackling   global   warming   has   failed.   The   current   approach,   which   has   been   attempted   for   almost   20   years   since   the   1992   Earth   Summit   in   Rio,   is   to   agree   on     large   carbon   cuts   in   the   immediate   future.   Only   one   real   agreement,   the   Kyoto   Protocol,   has   resulted   from   20   years   of   attempts,   with   the   2009   Copenhagen   meeting   turning   into   a   spectacular   failure.  

The   Kyoto     approach     is     not     working   for   three   reasons.   First, cutting   CO2   is   costly.     Second, the   approach   won’t     solve     the     problem.   Even   if   everyone   had   implemented   Kyoto, temperatures   would   have   dropped   by   the   end   of   the   century   by   a   miniscule  0.004C     or     0.007F.     Third, green     energy     is     not     ready   to   take   over   from   fossil   fuels.

Current   global   warming   policies make   energy   much   more   costly.   This   negative   impact   is   often   much   larger, harms   the   world’s   poor   much   more,   and   is   much   more   immediate.  

Solar   and   wind   power   was   subsidized   by   $60   billion   in   2012,   despite   their     paltry   climate   benefit   of   $1.4   billion.   Essentially,   $58.6   billion   were   wasted.   Depending   on   political   viewpoint,   that   money   could   have   been   used   to   get   better   health   care,   more   teachers,   better   roads,   or   lower   taxes.   Moreover, forcing   everyone   to   buy   more   expensive,   less   reliable   energy   pushes   higher   costs   throughout   the   economy,   leaving   less   for   welfare.

The   burdens   from   these   climate   policies   fall   overwhelmingly   on   the   world’s   poor.   This   is   because   rich   people   can   easily   afford   to   pay   more   for   their   energy,   whereas   the   poor   will   be   struggling.   It   is   surprising   to   hear   that   well meaning   and   economically   comfortable   greens   often   suggest   that   gasoline   prices   should   be   doubled   or   electricity   exclusively   sourced    from   high cost   green   sources.  

Take   Pakistan   and   South   Africa.   With   too   little   generating   power   both   nations   experience   recurrent   blackouts   that   cost   jobs   and   wreck   the   economy.   Muhammad   Ashraf, who   worked   30   years   at   a   textile   plant   in   central   Pakistan,   was   laid   off   last   year   because   of   these   energy   shortages.   Being   too   old   to   get   another   job,   he   has   returned   to   his   village   to   eke   out   a   living   growing   wheat   on   a   tiny   plot   of   land.   Instead   of   $120   a   month,   he   now    makes   just   $25. Yet, the   funding   of   new   coal   fired   power   plants   in   both   Pakistan   and   South   Africa   has   been   widely   opposed   by   well meaning   Westerners   and   climate concerned   Western   governments.   They   instead   urge   these   countries   to   get   more   energy   from   renewables.  

But   this   is   cruelly   hypocritical.   The   rich   world   generates   just   0.76%   of   its   energy   from   solar   and   wind,   far   from   meeting  even   minimal   demand.   In   fact, Germany   will   build   ten   new    coal fired   power   plants   over   the   next   two   years   to   keep   its   own   lights   on.   

A   recent   analysis   from   the   Center   for   Global   Development   shows   that   $10   billion   invested   in   renewables   will   help   lift   20   million   people   in   Africa   out   of   poverty.   But   the   same   $10   billion   spent   on   gas  electrification   will   lift   90   million   people   out   of   poverty.    $10   billion   can   help   just   20   million   people.   Using   renewables,   we   deliberately   end   up   choosing   to   leave   more   than   70   million   people   –   more   than   3  out   of   4   –   in   darkness   and   poverty.  

The other thing that struck me in particular was the following text:

The   only   way   to    move   towards   a   long term   reduction   in   emissions   is   if   green   energy   becomes    much   cheaper.   If   green   energy   was   cheaper   than   fossil   fuels,   everyone   would   switch. This   requires   breakthroughs   in   the   current   green   technologies,   which   means   focusing   much   more   on   innovating   smarter,   cheaper,   more   effective   green   energy.  

The   metaphor   here   is   the   computer   in   the   1950s.   We   did   not   obtain   better   computers   by   mass producing   them   to   get   cheaper   vacuum   tubes.   We   did   not   provide   heavy   subsidies   so   that   every   Westerner   could   have   one   in   their   home   in   1960.   Nor   did   we   tax   alternatives   like   typewriters.   The   breakthroughs   were   achieved   by   a   dramatic   ramping   up   of   R&D,   leading   to   multiple   innovations,   which   enabled   companies   like   IBM   and   Apple   to   eventually   produce   computers   that   consumers   wanted   to   buy.  

This   is   what   the   US   has   done   with   fracking.   The   US   has   spent   about   $10bn   in   subsidies   over   the   past   three   decades   to   get   fracking   innovation,    which   has   opened   up   large   new   resources   of   previously   inaccessible   shale   gas.   Despite some   legitimate   concerns   about   safety, it   is   hard   to   overstate   the   overwhelming   benefits.   Fracking   has   caused   gas   prices   to   drop   dramatically   and   changed   the   US   electricity   generation   from   50%   coal   and   20%   gas   to   about   40%   coal   and   30%   gas.  

This   means   that   the   US   has   reduced   its   annual   CO₂ emissions   by   about   300Mt   CO₂   in   2012.   This   is   about   twice   the   total reduction   over   the   past   twenty   years   of   the   Kyoto   Protocol   from   the   rest   of   the   world,   including   the   European   Union.   At   the   same   time,   the   EU   climate   policy   will   cost   about   $280   billion   per   year,   whereas   the   US   fracking   is   estimated   to   increase US   GDP   by   $283   billion   per   year.    

 JC reflections

Read the entire testimony, well worth reading and pondering.

I take such economic projections with a grain of salt (where are the uncertainty estimates?),  but Lomborg’s point that the cure is likely worse than the disease is compelling.

Of particular concern is the impact of these energy policies on the poor. Lomborg makes this argument extremely effectively, and I can’t believe that more people don’t get this.  Last April I gave a climate change presentation to a group of Georgia Tech alumni.  Someone in the audience asked:  “What did you do for Earth day?”  I said Nothing.  I think turning out the lights sends the wrong message.  I want to see the lights go on in Africa.

We clearly need clean green energy, if not now then in the future.  Lomborg argues that our current strategies may be be slowing down the development of these technologies.

I have to say, after reading Lomborg’s testimony, current climate/energy policies have never made less sense.