Shift the house or shave the door?

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When the house settles and the door jams, it’s easier and cheaper to shave the door. Preventing the ground from moving just to make the door close is overdoing it.

That’s a realistic metaphor for man’s response to global warming. The alarmists would persuade us to interfere with the soil at ruinous expense to stop the house from moving, but simply shaving the door compensates perfectly well for small kinks in the house.

A new paper, Is CO2 mitigation cost-effective? from Lord Monckton of Brenchley is a startling analysis showing that governments around the world are overdoing their response to the “threat” of global warming and could help bring a much-needed sense of perspective to the debate.

Intense pressure from the United Nations, assisted by modern Luddites in Greenpeace, the WWF and others, doesn’t conceal the inconvenient truth that global warming is too small for concern and its mitigation too expensive to contemplate.

This is Christopher Monckton’s summary of his paper (in press) that presents the cost/benefit analysis that the United Nations and its agents ought to have presented two decades ago but never did because it would have shown the alarm they stirred up to be completely unfounded. It’ll be interesting to see how opponents try to refute his findings.

Christopher presented his paper to the International Seminars on Planetary Emergencies arranged by the World Federation of Scientists at Erice, Italy, in August, 2012. Although I’m entirely unfamiliar with the federation and the emergencies they study, I think the logic of Lord Monckton’s paper, which I’m keen to present, is a separate issue.

Monckton’s summary

This summary updates Monckton of Brenchley (2013), read at the World Federation of Scientists’ 2012 Seminars on Planetary Emergencies. The paper applied inter-temporal investment appraisal to mainstream IPCC climatology by comparing the cost of Australia’s 10-year CO2 tax (Parliament of Australia, 2011) with the benefit in the cost of warming-related damage the tax might avoid.

Fraction of world CO2 emissions abated: Over ten years, the tax, which its inventor, Professor Garnaut, said in 2013 had failed, cannot now abate more than 5% of predicted CO2 emissions. Australia emits 1.2% of world emissions (derived from Boden et al., 2010ab). The tax will thus abate 5% x 1.2% = 0.06% of world emissions.

CO2 concentration abated: Without the tax, CO2 concentration after ten years would be 410 μatm (IPCC, 2007), up by 20 μatm on the 390 μatm (Conway & Tans, 2011) at the outset. With the tax, after ten years CO2 concentration would be 410 μatm less 0.06% of the 20 μatm growth: i.e. 409.988 μatm.

CO2 forcing abated (IPCC, 2007; Myhre, 1998), would be 5.35 ln(410/409.988) = 0.00016 W m–2.

Ten-year climate sensitivity parameter: IPCC (2007, p. 803, Table 10.26) says CO2 will be 713 μatm in 2100 against 368 μatm in 2000. It predicts 2.8 Cº 21st-century warming, of which 0.6 Cº is pre-committed, leaving 2.2 Cº, of which 70%, or 1.54 Cº, is CO2-driven. IPCC’s implicit 100-year climate sensitivity parameter is then 1.54 Cº / 1, or 0.44 Cº W–1 m2, up by 0.13 Cº W–1 m2 on the instantaneous (Planck) parameter 0.31 Cº W–1 m2 (derived from IPCC, 2007, p. 631 fn). Since the temperature feedbacks that lift the sensitivity parameter grow with time, a fair ten-year parameter is 0.31 + 10% of 0.13, or 0.32 Cº W–1 m2.

Global warming abated by the tax – the ten-year parameter multiplied by the forcing abated – would be 0.33(0.00016) = 0.00005 Cº, or 1/20,000 Cº.

No performance indicator: Even if the tax succeeded, we could not detect that it had. 1/20,000 Cº, as a fraction of the 0.05 Cº measurement uncertainty in temperature datasets, is just 1/1000 of that uncertainty.

The cost of the tax: The tax, as enacted in Australia’s Clean Energy Act 2011, is costing $10.1 bn/year, plus $1.6 bn/year for administration (Wong, 2010, p. 5), plus $1.3 bn/year for renewables and other costs, a total of $13 bn/year, escalated under the Act at 2%/year, and by a further 2%/year to allow for economic growth. Conservatively, the total cost over the ten-year term will thus be $162.3 bn.

The mitigation cost-effectiveness of the tax, which is the cost of abating 1 Cº warming by global measures as cost-effective as the tax, is $162.3 bn / 0.00005 Cº = $3.2 quadrillion per Cº abated.

Projected anthropogenic warming over the ten-year term will be 0.17 Cº (IPCC 2007, p. 803, Table 10.26).

Discount rate: The minimum market discount rate is 5% (Murphy et al., 2008). The US Treasury’s standard rate is 7%. However, in line with Stern (2006), the discount rate assumed in the present appraisal is 0%.

The undiscounted cost of abating 0.17 Cº warming by global measures as cost-effective as the tax is 0.17 x $3.2 quadrillion, or $540 trillion in cash, which, divided by 7 bn global population, is $77,000 per head. Divided by 10 years’ global GDP of $670 trillion (World Bank, 2011), it equates to 80% of global GDP.

The undiscounted avoided-cost benefit of abating the 3 Cº 21st-century global warming the IPCC predicts is estimated by Stern (2006, p. vi) at 0-3% of 21st-century global GDP: central undiscounted estimate 1.5% of GDP.

Cost-benefit ratio: The cost of immediate mitigation divided by that of later adaptation is 80% / 1.5%, or 53. Therefore, it is at least 50 times more expensive and less cost-effective to mitigate CO2 emissions by typical measures such as Australia’s carbon tax than to take no action at all today and, instead, to meet the later and far lesser cost of climate-related damage that 3 Cº unabated 21st-century warming might cause.

Method

From the fraction of global CO2 emissions a mitigation scheme will abate over its term, establish the fall in CO2 concentration and hence in CO2 forcing the scheme will achieve at the end of the term. Multiply the abated CO2 forcing by a climate-sensitivity parameter suitable to the term to obtain the global warming the scheme will abate by the end of the term. Establish the cost of the scheme and divide it by the abated warming to obtain the scheme’s mitigation cost-effectiveness per degree of warming abated. Multiply the mitigation cost-effectiveness by projected global warming over the term to obtain the cost of abating that warming by worldwide measures whose cost-effectiveness is equivalent to that of the scheme. Compare this global abatement cost with the benefit in the cost of avoiding predicted global warming over the term.

Case studies

Lord Monckton cites eight interesting case studies of feel-good “environmental” projects which aim to save the earth. Their costs are gargantuan in relation to their benefits and make sobering reading.

Download his paper here.

  1. 35 ln(713/368) W m–2

24 Thoughts on “Shift the house or shave the door?

  1. Mike Jowsey on July 25, 2013 at 10:45 am said:

    A very interesting analysis – thanks RT. Any sane person would have to agree that a tax on CO2 is ludicrous. However, the warmists seem to think that saving the planet is priceless and therefore rational economic analysis is redundant. 80% of global GDP is a mere trifle when saving the planet for our grandchildren. The fact that this will make our grandchildren paupers is overlooked.

  2. saving the planet is priceless and therefore rational economic analysis is redundant

    Pithy, Mike! Still, they’re right, you know.

    Since we have just the one planet, I agree that saving it would be our top priority. The thing is, no threat to it has been identified beyond the occasional near miss by interplanetary projectiles and perhaps human nuclear misadventure. The warmists aren’t special: everyone wants to save the planet, just as they do; but the warmists see threats that don’t exist.

  3. Part of this “feel good” environmentalism seems to include industrialising our countrysides with wind turbines that have no economic or environmental benefit whatsoever.

    I just put in yet another submission against a proposed windfarm in Dumfries and Galloway, and area of Scotland that my parents lived in for 25 years.

    In 20 years time, Scotland will be littered with the rusting remains of abandoned turbines and the 1000 tons of concrete that go into every base

    As James Lovelock, father of the Gaia theory said, they are a “monument to a failed civilisation”

  4. There are some interesting parallels with the Christchurch rebuild.
    Our insurance company is intent on repairing our house. It proposes to do this by taking off all the cladding, lifting the timber frame off the ground by crane without breaking the roof, digging out the concrete base, replacing the base with a much thicker one that complies with the new building regs, and then putting all the house back together again, including refitting the old carpets and the old rusting doorframes etc

    This, apparently, is cheaper than knocking it over and building a new house.

    Three doors down, the same insurance company is building a new house, having demolished the old one that was similar to ours and with similar damage

    We have been dealing with this BS for 2.5 years now.

    My conclusion is that the entire world has gone collectively insane, bogged down in a catatonic bureaucratic nightmare of corporate stupidity and over-regulation.

    The “green agenda” is the least of it

  5. Richard C (NZ) on July 25, 2013 at 12:18 pm said:

    So now we have to contend with the doubly problematic assumptions of both climate effects and economic effects combined e.g. in addition to the Monckton cost/benefit analysis above, integrated assessment models. Latest Actic change study starts with the assumption:

    “Much of the cost will be borne by developing countries, which will face extreme weather, poorer health and lower agricultural production as Arctic warming affects climate.”

    From Nature article:

    ‘Climate science: Vast costs of Arctic change’

    Gail Whiteman, Chris Hope & Peter Wadhams

    http://www.nature.com/nature/journal/v499/n7459/full/499401a.html

    They get down to business:

    “Economic time bomb”

    “To quantify the effects of Arctic methane release on the global economy, we used PAGE09. This integrated assessment model calculates the impacts of climate change and the costs of mitigation and adaptation measures. An earlier version of the PAGE model was used in the UK government’s 2006 Stern Review on the Economics of Climate Change…….”

    “We ran the PAGE09 model 10,000 times to calculate confidence intervals and to assess the range of risks arising from climate change until the year 2200……”

    “The methane pulse will bring forward by 15–35 years the average date at which the global mean temperature rise exceeds 2°C above pre-industrial levels — to 2035 for the business-as-usual scenario and to 2040 for the low-emissions case (see ‘Arctic methane’). This will lead to an extra $60 trillion (net present value) of mean climate-change impacts for the scenario with no mitigation, or 15% of the mean total predicted cost of climate-change impacts (about $400 trillion). In the low-emissions case, the mean net present value of global climate-change impacts is $82 trillion without the methane release; with the pulse, an extra $37 trillion, or 45% is added…..”

    +++++++++++++++

    GIGO x 2

  6. “We ran the PAGE09 model 10,000 times”

    *facepalm*

  7. It’s kind of missing the point really.
    The aim of the CO2 mitigation strategies is not to mitigate CO2. It is to place the straightjacket of transnational socialism on all aspects of society, controlling every part of our lives.

    There is no problem to “solve”. If we solved the problem, then the raison d’etre of all the NGOs and other parties that are feeding off this would go away

  8. Mike Jowsey on July 25, 2013 at 1:58 pm said:

    My conclusion is that the entire world has gone collectively insane, bogged down in a catatonic bureaucratic nightmare of corporate stupidity and over-regulation.

    Correct!

  9. Mike Jowsey on July 25, 2013 at 2:03 pm said:

    Yeah, 10,000 garbage in equals 10,000 garbage out. Take an average and you still get garbage.

    They seem to obliquely admit the inadequacy of climate models by saying that they have not been falsified by the recent pause. Well, even if they have not been falsified, the climate models are not looking very useful at the moment, and climate model-derived values of climate sensitivity are seeming increasingly unconvincing.

    – Judith Curry

  10. Richard C (NZ) on July 25, 2013 at 4:24 pm said:

    The basis for the climate effect is:

    “IPCC’s implicit 100-year climate sensitivity parameter is then 1.54 Cº”

    But the 21st century climate sensitivity parameter is 0 Cº so far

    The basis for the economic effect is the climate effect above (1.54 Cº) taken as given irrespective of reality at present.

    The net present value NPV (discounted) economic effect is quantified by:

    “…the discount rate assumed in the present appraisal is 0%.” [Stern (2006)]

    But “The minimum market discount rate is 5% (Murphy et al., 2008). The US Treasury’s standard rate is 7%.”

    That’s just the start, then there’s all the in-built trickle-down economic assumptions in the PAGE economic model. Background here:

    “Integrated Assessment Modeling: 10 Things to Know”

    https://www.climateconversation.org.nz/open-threads/climate/economics/#comment-122270

    ‘A stern rebuttal to the Stern review’

    https://www.climateconversation.org.nz/open-threads/climate/economics/#comment-115187

    ‘The Social Cost of CO2 from the PAGE09 Model’

    https://www.climateconversation.org.nz/open-threads/climate/economics/#comment-123001

    All that uncertain, contrived and unconventional complexity to arrive at mitigation that according to Monckton’s cost/benefit is simply “at least 50 times more expensive and less cost-effective……than to take no action at all today and, instead, to meet the later and far lesser cost of [speculative man-made] climate-related damage [if any]”.

    I say “shave the door” if and when it might need it. The billions of dollars being siphoned for imaginary MMCC (an opportunity cost in economics terms) are needed in the here and now for the naturally occurring earthquakes, tsunamis, storm damage, droughts and floods etc i.e. real disaster stuff. Not to mention mundane items such as health (including say disease research and treatment), education, welfare or transportation infrastructure.

    It costs around $2500 for intraocular lenses in NZ but the Fred Hollows Foundation can restore eyesight for $25 in third world countries. A charity associated with RSE’s (seasonal workers taken on by my employer) from Vanuatu has made a huge difference to the dental hygiene of Vanuatuans just with education and provision of toothbrushes. These are the things that make a major difference to peoples lives at minimal cost. Climate change largesse is not one of those.

  11. Richard C (NZ) on July 27, 2013 at 1:06 pm said:

    Climate sensitivity issues covered in this article:

    ‘The IPCC AR5 Is in Real Trouble’

    By Paul C. “Chip” Knappenberger and Patrick J. Michaels

    http://www.cato.org/blog/ipcc-ar5-real-trouble

    “If the “most likely” value were to be 2.0°C, then the model average climate sensitivity would be some 70% too high.

    Because, as the IPCC admits, the change in many other climate variables “scales with the increase in global-mean surface temperature,” the climate impacts derived from the model projections (which essentially is what the IPCC is all about) are also (substantially) too high.

    The IPCC has three options:

    1. Round-file the entire AR5 as it now stands and start again.

    2. Release the current AR5 with a statement that indicates that all the climate change and impacts described within are likely overestimated by around 50%, or

    3. Do nothing and mislead policymakers and the rest of the world.

    We’re betting on door number 3.”

  12. Other_Andy on July 27, 2013 at 1:15 pm said:

    Would be nice to do the same calculation for New Zealand, if we could get the numbers.
    How much has the ETS cost us since 2008?
    NZ$ 2.500.000.000,00 or even more?
    Federated Farmers has calculated the Emissions Trading Scheme will directly cost New Zealand businesses and families $527 million in its first year and say indirect costs will add tens of millions more.
    Where are those calculations from Federated Farmers?
    Does the government have a cost-benefit analysis?

  13. SimonP on July 27, 2013 at 10:59 pm said:

    Taxes aren’t a net cost to the economy; they are a redistribution. Some individuals benefit to the detriment of others. Whether governments use taxation revenue effectively is the moot point, often they do not.
    The purpose of a carbon tax or an ETS is to change behaviour. If they do not do that, they are a waste of time and create new inefficiencies. Subsidies and protection from tax policies can create perverse incentives that can often drive the opposite effect of what is intended. Multi-nationals have the freedom to change country of operation so these sorts of policies have to be implemented unilaterally. This was the intention of the Kyoto Protocol but it has failed in that respect.
    Estimating the future cost is difficult as it is uncertain what the equilibrium temperature is at (say) 400 ppm let alone regional changes in weather patterns. There is a lot of methane under that melting permafrost 🙁 Carbon mitigation policies can probably only really affect the rate of change IMHO.
    The choice of discount rate is always contentious. It is really a social discount rate and I’d argue that it should be greater than 0% but less than 5%. Correction rather than mitigation might be more effective, but there are losers from such a choice. It probably won’t be the homo sapiens living in temperate countres who created the problem.

  14. Other_Andy on July 27, 2013 at 11:36 pm said:

    “Taxes aren’t a net cost to the economy; they are a redistribution.”

    They move money from the productive sector of the population to the unproductive sector of the population after the government has taken its share.
    So yes, there is a cost to the economy.

    “The purpose of a carbon tax or an ETS is to change behaviour. If they do not do that, they are a waste of time and create new inefficiencies.”

    No it isn’t. We are told it is to reduce CO2 to prevent CAGW-AGW-Climate weirding-Extreme weather (or whatever they call it now). As New Zealand’s share of Anthropogenic CO2 in the Earth’s atmosphere is about 0.00000005%, reducing CO2 will do exactly….nothing.
    And by the way, I don’t like people to tell me to jump through hoops just for the hell of it so they can feel morally superior by handing out my hard earned money.

    “Estimating the future cost is difficult as it is uncertain what the equilibrium temperature is at (say) 400 ppm let alone regional changes in weather patterns.”

    There is no cost to CO2 as it has (very) little effect on the climate and the weather.

    “There is a lot of methane under that melting permafrost . Carbon mitigation policies can probably only really affect the rate of change IMHO.”

    That chicken Little methane scenario has been debunked more than 5 years ago. Even your
    friend Gavin Schmidt says it is implausible. There have been several periods in the Holocene in the past that have been warmer than the current period and all that methane stayed in the ground.

  15. The main purpose of the ETS is gesture politics, a bargaining chip for our glorious leaders to play at climate change and overseas trade negotiations

  16. Mike Jowsey on July 28, 2013 at 10:54 am said:

    Carbon mitigation policies can probably only really affect the rate of change IMHO.

    The rate of temperature change for the last 16-plus years is zero, so all those mitigation policies must be working huh!

  17. Andy on July 29, 2013 at 9:49 am said:

    I think the main purpose of the NZ ETS is to transfer wealth from the general public to corporate and Iwi forestry owners.

    The only beneficiaries of the ETS are carbon sinks – defined as forests in NZ. There is no incentive, for example, for farmers to use more carbon efficient crops.

    The only behaviour modification is to use less, i.e make us poorer. If we had a genuine choice, this might be different. However, we are stuck with our petrol and diesel cars for now. Unless we live in a city with widespread public transport, then there aren’t any choices.

  18. Then again, wind farm subsidies, solar feed-in tarrifs etc offer a similar deal. Take money out of poor peoples pockets and line those of the wealthy

    This seems to be the standard across all “green” scams.

    What surprises me is that they are so popular with so-called left-wingers who in the old days used to stand up for the workers and the down-trodden.

  19. The technical term here is “regressive taxation”

  20. I agree. It is hard to fathom why parties supposedly championing the interests of the workers and poor are so uncritical in their enthusiasm for these policies. You would think there would be more dissenting voices from the left in view of the shambles with sustainable energy policies in eg Europe.
    At international level too – all those UN-inspired attempts in support of Kyoto, “Climate Justice” etc, with massive redistribution of wealth from developed to poor countries actually meant transfers from the poor in rich countries to the rich in poor countries (with the usual suspects creaming off a hefty slice in the process).

  21. SimonP on July 29, 2013 at 4:38 pm said:

    NZ signed up for the the committment period of Kyoto knowing full well that the forests planted during the 1990s planting boom would cover most of that liability. Taxpayers will pick up any difference. NZ has not signed up for the second period knowing full well that there were massive potential liabilities as these trees are harvested.
    The Government effectively nationalised those potential credits and imposed a deafforestation liability on pre-1990 forests. There was a small partial compensation for this, roughly about $39/ha. Post-1990 forest can join the ETS but any sale at today’s low prices necessitates purchasing credits at an unknown future price when harvest occurs.
    A farmer can plant anything and gain credits as long as it is a Kyoto-compliant forest. There is a minimum area and it has to be a tree species that grows to at least a ceratin height. NZ was unique in devolving the Kyoto obligations down to individual land-owners, this was probably not a good idea to the complexities of the legislation.
    The ETS has been watered down by successive governments so that it longer achieves any desirable outcomes. The forest industry has certainly not been a winner in this. The biggest beneficieries have been have been state-ownered power companies with sunk cost hydro-generation capability who can now ascribe higher values on their assets.

  22. Richard C (NZ) on July 29, 2013 at 6:26 pm said:

    >”The ETS has been watered down by successive governments so that it longer achieves any desirable outcomes”

    What desirable outcome was it ever achieving?

  23. Andy on July 29, 2013 at 7:13 pm said:

    The ETS was introduced into legislation by the current National government and agriculture was “delayed” entry in the second term of that government

    Furthermore, the 2 for 1 credits was extended.

    The carbon price has dropped significantly over this time, not, presumably, as a result of government intervention. Carbon prices have been dropping across all markets.

    I don’t really get all this “obligation” stuff. It sounds like Monopoly money to me

  24. Alexander K on August 8, 2013 at 6:39 pm said:

    I am a bit shy about bringing this up, but my parents suffered WW1, The Depression, (which they always referred to as ‘The Slump’), WW2, the Korean War, etc, which means that I was moulded by various massive national and international reactions against Naziism, Communism Socialism, etc and lost much-loved close family members during all of those reactions. I therefore find the dishonest, repressive and anti-science and anti-democratic actions of the UN and its Witchsniffers tribunal, the IPCC, repugnant in the extreme. Poor people need cheap energy to set them free of poverty, not the imposition of illogical, idiotic devices such as our ETS and any form of carbon tax.
    ‘Carbon trading’, embraced by Al Gore and invented by the disgraced leaders of the failed corporate entity Enron has been revealed as an utter sham, as evidenced by the current European prices of the nonsensical ‘carbon credits’.
    Why NZ politicians actually gave credence to such pathetic piffle is beyond me, but when our official Science Advisor to the Government makes statements that have more to do with climate shamanism than science, I guess anything goes!

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