Inter-temporal investment appraisal of the Sanders/Boxer carbon tax bill
by Christopher Monckton of Brenchley
Standard climatological and economic techniques, combined in an investment appraisal of the proposed Sanders/Boxer carbon dioxide tax (U.S. Senate, 2013), show that even at a zero inter-temporal discount rate the cost of the Bill’s proposed CO2 mitigation if applied worldwide over ten years is 15 times greater than the benefit in the cost of warming-related damage avoided by the intended cut in CO2 emissions, which is here assumed to be – but is in reality unlikely to be – achievable at the stated cost.
Fraction of global CO2 emissions abated: By 2023, on business as usual, U.S. CO2 emissions will be 5589 Tg CO2, 8.5% down (EIA, 2013) on the 6108 Tg CO2 (EPA, 2012) emitted in 2005. En route to Sanders/Boxer’s proposed 2025 cut of 20% compared with 2005, the cut in 2023 will be 18.5% against 2005, or an additional 10% or 611 Tg CO2, representing a cut of 10.9% in 2023 against business as usual. Since U.S. CO2 emissions represent 17% of world emissions (derived from Boden & Marland, 2010 and Boden, 2010), even if the tax succeeds as intended it will abate just 10.9% of 17%, or a mere 1.9%, of global CO2 emissions.
CO2 concentration abated: Without the carbon dioxide tax, CO2 concentration in 2023 would be 422 μatm (IPCC, 2007, Table 10.26) against 397 μatm in 2013 (updated from Conway & Tans, 2011). If the tax worked as intended, CO2 concentration in 2023 would be 422 minus 1.9% of (422 – 397), or 421.522 μatm.
CO2 forcing abated (IPCC, 2007; Myhre, 1998), would be 5.35 ln(422/421.522), or 0.006 W m–2.
A suitable climate sensitivity parameter is multiplied by the CO2 forcing to determine warming over the ten-year term. Garnaut (2008) is one of many who recommend keeping greenhouse-gas rises to 450 ppmv CO2-equivalent above the 280 ppmv prevalent in 1750, to hold 21st-century warming since then to below 2 K. So the implicit climate sensitivity parameter is 2 K / {5.35 ln[(280 + 450)/280] W m–2}, or 0.39 K W–1 m2.
Global warming abated by the tax from 2014-2023 would be 0.39(0.006) = 0.00237 K.
Projected warming over the term: CO2 forcing represents 70% of all manmade forcing (IPCC, 2001, 2007). Thus, warming officially projected for the ten-year term is 0.39[5.35 ln(422/397)] / 0.7 = 0.182 K.
The percentage of projected global warming abated over the ten-year term is 0.00237/0.182 = 1.3%.
The cost of abating global warming via the U.S. carbon tax over ten years is given as $1.2 trillion.
The mitigation cost-effectiveness of the tax, i.e. the cost of abating 1 K global warming by worldwide measures as cost-effective as the tax, is $1.2 trillion / 0.00237, or $507 trillion per Kelvin abated. The cost of abating the 3 K warming predicted by the IPCC to 2100 would exceed $1.5 quadrillion.
Global abatement cost: The cash cost of abating this projected 0.182 K warming over the term, again by measures as cost-effective as the tax, is 0.182 x $507 trillion, or $92 trillion, which, divided by the global population of 7 billion, is $13,200 per head, or, divided by $803 trillion global GDP over the ten-year term (from World Bank, 2011 assuming 3% annual GDP growth from $66 trillion in 2013), 11.5% of global GDP.
Benefit in averted warming-related damage cost: Stern (2006, p. vi), estimates that the cost of abating the 3 K 21st-century global warming expected by the IPCC will be 1.5[0, 3]% of 21st-century global GDP.
The cost-benefit ratio is 11.5/1.5 = 7.7. Accordingly, based on the optimistic assumption that $1.2 trillion will buy as much CO2 mitigation in the U.S. as Sanders/Boxer assume, and taking a zero discount rate, which maximally favors future generations, it is almost 8 times costlier to mitigate CO2 emissions by typical abatement measures such as the Sanders/Boxer carbon tax than to take no action at all and to endure the later cost of climate-related damage arising from the resultant warming.
The bottom line is that if global warming of 0.14 K/decade in the 22 years since 1990 (the least-squares trend on the monthly temperature anomalies in HadCRUt3gl, 2011) continues at half of the 3 Cº central estimate in IPCC (1990), so that only half the benefit in damage costs averted is achievable, CO2 mitigation today will be at least 15 times costlier than adaptation the day after tomorrow.
Conclusion: More complex analysis would be unlikely to change the outcome sufficiently to render the U.S. carbon tax, or any policy to mitigate CO2 emissions, at all cost-effective. Removal of some of the simplifying assumptions would tend to worsen the cost-benefit ratio still further, for most of them lead to understatement of it. Results from other case studies broadly confirm the outcome in the Sanders/Boxer case. Therefore, future adaptation where needed is sensible, but present-day mitigation is unjustifiable. Congress should reject the Bill, which would reduce the current $2 trillion U.S. annual deficit by only $30 billion, or just 1.5%.
References
Boden and Marland, 2010a. Global CO2 Emissions from Fossil-Fuel Burning, Cement Manufacture, and Gas Flaring, 1751-2007. Carbon Dioxide Information and Analysis Center, Oak Ridge, Tennessee, USA. Boden et al., 2010b. Ranking of the world's countries by 2007 total CO2 emissions from fossil-fuel burning, cement production, and gas flaring. Carbon Dioxide Information and Analysis Center, Oak Ridge, Tennessee, USA.
Conway, T., & P. Tans, 2011, Recent trends in globally-averaged CO2 concentration, NOAA/ESRL, http://www.esrl.noaa.gov/gmd/ccgg/trends/global.html#global.
Energy Information Administration (EIA), 2013, Annual Energy Outlook 2013, from Annual Energy Outlooks 2009-2013. Environment Protection Agency (EPA), 2012, Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2010 (Washington, DC, 2012 April).
Garnaut, 2008. The Garnaut Climate Change Review: Final Report. Cambridge University Press, Port Melbourne, Australia, 680 pp, ISBN 9780521744447.
HadCRUt3gl, 2011. Monthly global mean surface temperature anomalies, 1850-2011. http://www.cru.uea.ac.uk/cru/data/temperature/hadcrut3gl.txt.
IPCC, 2001. Climate Change 2001: The Scientific Basis: Contribution of Working Group I to the Third Assessment Report of the Intergovernmental Panel on Climate Change [Houghton, J.T., Y. Ding, D.J. Griggs, M. Noguer, P.J. van der Linden, X. Dai, K. Maskell and C.A. Johnson (eds.)]. Cambridge University Press, Cambridge, United Kingdom, and New York, NY, USA.
IPCC, 2007. Climate Change 2007: the Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007 [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Avery, M. Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom, and New York, NY, USA.
Murphy, 2008. Some Simple Economics of Climate Changes. Paper presented to the MPS General Meeting, Tokyo, September 8.
Myhre et al., 1998. New estimates of radiative forcing due to well mixed greenhouse gases. Geophysical Research Letters 25:14, 2715–2718, doi:10.1029/98GL01908.
Stern, N., 2006, The Economics of Climate Change: The Stern Review. Cambridge University Press, Cambridge, United Kingdom, and New York, NY, USA.
U.S. Senate, 2013, Sanders/Boxer Climate Legislation, www.sanders.senate.gov/imo/media/doc/021413-2pager.pdf.
World Bank, 2011. Gross Domestic Product 2009, World Development Indicators. http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf.
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That assumes the purpose of the Carbon Tax is to reduce global warmimg!
Brilliant. Using the IPCC’s own assumptions to destroy the meme of this money-and-power grab by politicians and governments.
Totally agree, Paul. This is not about reducing carbon dioxide, this is about establishing a new source of tax revenue, which will inevitably be diverted as the current Federal gas tax, social security and the other “lockboxes” which have looted to feed the ravenous maw of the general fund and the relentless expansion of the welfare state. These people are clever in their way, but not subject to reason, Lord Monckton.
Of course, the Boxers-Sanders (BS) bill has nothing to do with AGW, it is only about revenue and control.
I get outraged by titles like this one. Warming would be a GOOD thing if it were happening. The Earth is COLD, and temperatures closer to room temperature (22C) would benefit many more living things than would be harmed.
Paleoclimatology suggests that the Earth was warmer than present for 300 million years straight, beginning with the Cambrian, and that it would not rise above that level. If so, there are feedback on the Earth that make dangerous global warming impossible.
Neither CO2 nor other man-made greenhouse gases are capable bringing the globe UP to optimum levels, let alone beyond them.
There IS a threat of excess temperatures and of drought from actions of environmentalists. See the Sea of Azov in Iain Murray’s “The REALLY Inconvenient Truths: Seven Environmental Catastrophes Liberals Don’t Want You To Know About–Because They Helped Cause Them.
As to CO2, the dear Viscount needs to get up to speed on plant and animal physiology in addition to his many other talents. After all, the well-being of the biosphere is the real concern. Plenty of information on plants can be found on the CO2 science website.
Information on terrestrial vertebrates is harder to find. I could uncover no studies on longevity in any species, so I used my animal science background to look in another direction, searching for CO2 and growth. I eventually found 3 studies carbon dioxide and chicken embryos (eggs), which found that slightly higher carbon dioxide concentrations led to slightly faster hatching and development. In humans, I found out that the submarine CO2 limit is 100 times the atmosphere average, and that hospitals enrich preemie cribs with 7% carbon dioxide to help their lungs mature.
I believe we humans live longer with more carbon dioxide in the air. If the super-rich tax gluttons hoping to get more dollars (and pounds and euros) from a carbon tax can be made to understand that they are cutting their own health and their own lives short–we might get somewhere.
I’m with Paul Homewood. These taxes aren’t meant for mitigation, but for control of energy usage.
A tax that raises 1.2 trillion is not typically accounted for as pure destruction of wealth, as you’ve assumed here. It diverts wealth from one use to another. The US currently has a moderate structural deficit, which this would help reduce.
US industry is exceedingly skilled at avoiding taxes; in this particular case, the tax is structured so that tax avoidance achieves a desirable social purpose — unlike, say, corporate profit taxes, which have no direct social benefit.
I haven’t read the details yet on how it will avoid merely shifting production to lower-tax countries, which is the main worry with carbon taxes in general.
Madness! Mass hysteria! Tribal group think! There is no other explanation for public support of these purposeless, economic damaging, green scams.
The Sanders Boxer carbon tax will be 15 times costlier than letting warming happen, assuming warming happens as predicted by the IPCC.
The current observed temperature increase and the fact that there has been no increase in planetary temperature for 16 years, supports the assertion that the planet’s feedback response to warming is negative (planet resists the warming by an increase in clouds in the tropics) rather than positive (planet amplifies the warming). The IPCC general circulation models have positive feedback as the response to warming (amplification). If the planet’s feedback response is negative a doubling of atmospheric CO2 will result in roughly 1C warming with most of the warming occurring at high latitudes which will result in an expansion in the biosphere.
There is no extreme AGW crisis to solve. Science is not on the side of the climate extremists. (See summary and link below.)
The Sanders Boxer carbon tax will also not appreciably result in a reduction atmospheric CO2 as there is a planned 40% increase in coal fired electric generation in the world, with 77% of the expansion planned for China and India.
The Obama administration and the Democrat portion of congress need a basic education concerning both the facts of AGW (there is no extreme AGW problem to solve) and the facts concerning CO2 emission in the world. (Hint massive amounts manufacturing has moved to Asia. The Asians are purchasing televisions, computers, fridges, and air conditioning – industrializing, increasing their standard of life.)
Reality is reality. The carbon tax will be on green scams and bureaucracy to hand out the money. Green scams such as the conversion of fuel to biofuel or the wind farms do not significantly reduce carbon dioxide emission and will significantly increase cost of electric power and transportation fuel in the US, making US industry less completive.
http://joannenova.com.au/2013/02/who-actually-took-notice-of-the-kyoto-protocol-coal-fired-plants-going-up-everywhere/
77% of the total Nameplate Capacity of these new plants is just in China and India alone, and hey, I wonder how Rajendra Pachauri feels when he looks at this map.
See in the left bottom corner the total Nameplate Capacity comes in at 1,401,278MW.
This link shows the World’s current Nameplate Capacity total for traditional Thermal Power (scroll down and the number is at the bottom right, and this is for all coal fired power), and while this is for end of year 2010, you’ll notice it has been increasing by around 200,000MW a year, so a best guess total for now might be around 3,700,000MW, so the increase shown on this map comes in at an addition of almost 40% extra, on top of existing Capacity.
http://www.johnstonanalytics.com/yahoo_site_admin/assets/docs/LindzenChoi2011.235213033.pdf
On the Observational Determination of Climate Sensitivity and Its Implications
Richard S. Lindzen1 and Yong-Sang Choi2
We estimate climate sensitivity from observations, using the deseasonalized fluctuations in sea surface temperatures (SSTs) and the concurrent fluctuations in the top-of-atmosphere (TOA) outgoing radiation from the ERBE (1985-1999) and CERES (2000- 2008) satellite instruments. Distinct periods of warming and cooling in the SSTs were used to evaluate feedbacks. An earlier study (Lindzen and Choi, 2009) was subject to significant criticisms. The present paper is an expansion of the earlier paper where the various criticisms are taken into account. The present analysis accounts for the 72 day precession period for the ERBE satellite in a more appropriate manner than in the earlier paper. We develop a method to distinguish noise in the outgoing radiation as well as radiation … …we show that including all CERES data (not just from the tropics) leads to results similar to what are obtained for the tropics alone – though with more noise. We again find that the outgoing radiation resulting from SST fluctuations exceeds the zerofeedback response thus implying negative feedback. In contrast to this, the calculated TOA outgoing radiation fluxes from 11 atmospheric models forced by the observed SST are less than the zerofeedback response, consistent with the positive feedbacks that characterize these models. ….
…The heart of the global warming issue is so-called greenhouse warming. This refers to the fact that the earth balances the heat received from the sun (mostly in the visible spectrum) by radiating in the infrared portion of the spectrum back to space. … ….However, warming from a doubling of CO2 would only be about 1C (based on simple calculations where the radiation altitude and the Planck temperature depend on wavelength in accordance with the attenuation coefficients of well mixed CO2 molecules; a doubling of any concentration in ppmv produces the same warming because of the logarithmic dependence of CO2’s absorption on the amount of CO2) (IPCC, 2007). This modest warming is much less than current climate models suggest for a doubling of CO2. Models predict warming of from 1.5C to 5C and even more for a doubling of CO2. Model predictions depend on the ‘feedback’ within models from the more important greenhouse substances, water vapor and clouds. Within all current climate models, water vapor increases with increasing temperature so as to further inhibit infrared cooling.
http://joannenova.com.au/2012/10/man-made-global-warming-disproved/
Observations show major flaws
1. The missing heat is not in the ocean 8 – 14
2. Satellites show a warmer Earth is releasing extra energy to space 15 -17
3. The models get core assumptions wrong – the hot spot is missing 22 – 26, 28 – 31
4. Clouds cool the planet as it warms 38 – 56
5. The models are wrong on a local, regional, or continental scale. 63- 64
6. Eight different methods suggest a climate sensitivity of 0.4°C 66
7. Has CO2 warmed the planet at all in the last 50 years? It’s harder to tell than you think. 70
8. Even if we assume it’s warmed since 1979, and assume that it was all CO2, if so, feedbacks are zero — disaster averted. 71
9.It was as warm or warmer 1000 years ago. Models can’t explain that. It wasn’t CO2. (See also failures of hockey sticks) The models can’t predict past episodes of warming, so why would they predict future ones?
In actuality the flow that that much money will increase carbon usage. The money itself will not be sequestered. Even if only reintroduced as salaries it will cause significant consumer demand if not for goods originating in America, then manufactured overseas, thus adding to the carbon totality. These people are not economists. Boxer is a dimwit of the first water, Sanders is susceptible to every crackpot scheme imaginable.
“Petrossa says:
February 17, 2013 at 8:36 am
I’m with Paul Homewood. These taxes aren’t meant for mitigation, but for control of energy usage.”
Its even simpler, Petrossa! These taxes are for taxation only! The DREAM of politicians is to engineer it so that the public clamors for a tax, and then, with pride, graciously deliver it to them!
Check out:
http://www.colderside.com/Colderside/Temp_%26_CO2.html Notice that atmospheric warming has ceased. Try to get Putin and the Russians (50 degrees below zero in Moscow) to agree that cooling the planet is needed, and BTW, the Chinese are in the same (frozen) boat!!!
A very erudite posting (at 8:52AM), Mr. Astley!!!
Well said & Thank You!!!
I love the math ! I wonder if Sanders & Boxer understand cost-benefit analysis … or for that matter are even capable of following this fairly elementary , fact-based, math-based analysis presented here. Unfortunately, I fear the answer they wouldn’t understand any of this and all their decisions are emotion based.
The taxes are desired for two purposes – which are mutually contradictory.
The politicians desire a justification for taxes so that they can build up a large ‘government’ balance, which can then be spent on public largess to buy popularity at election time.
Unfortunately, each service provided to the electorate requires funding and staff to run it. Thus, as politicians offer the public more and more services to buy votes, they must tax at higher and higher levels. This is most obvious in parts of Europe, but the US is not so far behind. The politicians’ only hope is that the wealth-creating part of the economy will expand faster than the tax burden, if new technologies and increased productivity can be achieved.
The activists, on the other hand, desire taxes BECAUSE they threaten productivity. In their eyes, industrial advance is bad, and should be halted. They support CO2 taxes because practically every energy interchange generates CO2, and therefore suppressing CO2 output is an effective way to close down the industrial world we live in.
These two operate a precarious alliance, with claims that somehow suppressing CO2 and insulating will make us MORE industrially capable. It is often claimed that lowering CO2 output means that you are operating more efficiently, so you must be making more money…. But this is a confused and incorrect argument, and will surely collapse as the truth becomes apparent…
Don’t just take Monckton’s word for it. Uncle Sams also agrees with his assessment.
Middle column.
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=57cadd3c-afb0-4890-bae5-3d6a101db11f
Petrossa says:
February 17, 2013 at 8:36 am
I’m with Paul Homewood. These taxes aren’t meant for mitigation, but for control of energy usage.
>>>>>>>>>>>>>>>>>>>>>>
It is worse than many realize. It is not just about controlling energy usage but about driving the cost of energy so high that what few manufacturing plants are left in the USA will shut down and move overseas and along with them our real jobs, actual wealth creation and economic security.
Meanwhile electricity bills will skyrocket.
This means down the road Ohio will go from $160/month for power to $3570/month for power. Who in heck can afford that?
However Mayor Michael Bloomberg has the answer.
10ft by 13ft isn’t an apartment it is a broom closet! (A California King size bed is 6ft by 7ft or more than a quarter of the space.)
Meanwhile in California Planners want to herd millions into densely packed urban corridors… adopting plans that would require most new housing to be built at 20 or more to the acre, which is at least five times the traditional quarter acre per house. State and regional planners also seek to radically restructure urban areas, forcing much of the new hyperdensity development into narrowly confined corridors.
That is a plot of land of maximum size of 40ft X 50ft per house. (A builder’s acre is 200ft X 200ft)
As if that was not enough zoning regulations are now being used to “Clear Land” that is already occupied.
Now that would not be Antelope Valley would it…..
Welcome to Obama’s “Science Czar” John Holdren’s De-Development of the US
The Sanders-Boxer carbon tax will be 15 times costlier than letting warming happen.
Thank you Lord Monckton.
I can’t think of 2 dumber idiots as Sanders-Boxer – Playing with our lives like evil kids in a Sand-Box. Destroying the economy with their ill thought out tax scams. the America people must be dumbed down to the max to entertain this wealth destruction insanity.
One wonders how many complete absurdities a good quality troll can intertwine into a few sentences. Below we have a fine example. Let’s deconstruct it line by line.
numerobis says:
February 17, 2013 at 8:49 am
A tax that raises 1.2 trillion is not typically accounted for as pure destruction of wealth, as you’ve assumed here. It diverts wealth from one use to another.
What it does is force the use of an expensive commodity to replace an inexpensive commodity. The only diversion of wealth is from the pockets of the general public who must now pay a higher price for everything into the pockets of those who provide (at a profit to themselves) the higher priced commodity. This is called stealing from the poor and giving to the rich. Further, as such a tax raises the price of everything the only possible outcome is for a reduction in economic activity. Someone how can just barely afford a new car now can’t, and so on and so forth through the entire economy. The loss of taxation due to reduced economic activity is massive, far greater than the tax revenues you seem to think are simply free, That is of course without even counting the economic activity lost to other countries that simply use the lowest cost resource to produce the same goods.
The US currently has a moderate structural deficit, which this would help reduce.
If by “moderate” you mean technically bankrupt, sure. But the notion that increasing the cost of absolutely everything (which is the only possible consequence of replacing low cost energy sources with high cost energy sources) will have no negative impact on over all tax revenue is simply beyond naive.
US industry is exceedingly skilled at avoiding taxes; in this particular case, the tax is structured so that tax avoidance achieves a desirable social purpose —
Why is increasing the price of everything desirable? Particularly when the cost of doing nothing is a tiny fraction of that? Or do you consider making poor people even poorer, middle class people poor, and rich people richer a desirable social purpose?
unlike, say, corporate profit taxes, which have no direct social benefit.
No tax has a direct social benefit based on where it comes from. If you tax corporate profits and build a hospital, the social benefit is the hospital. If you tax personal income and build a hospital, the social benefit is a hospital. If you tax property and build a hospital, the social benefit is the hospital. If you tax low cost commodities to force the use of high cost commodities, there will be less corporate profits, personal income and property value to tax, and hence less hospitals. Or were you thinking that diverting money into the pockets of billionaires who own wind mill companies and solar companies and bio-fuel companies is a social benefit? Oh, yes, yes, I know, the employ thousands of people. The tens of thousands who lost their jobs due to the new economy in which the cost of everything is higher will be glad to know that.
I haven’t read the details yet on how it will avoid merely shifting production to lower-tax countries, which is the main worry with carbon taxes in general.
Haven’t read? How would you read the details of something that is impossible? Do you surmise that there is something that Boxer et al can do to raise the cost of everything and at the same time ensure that everyone simply keeps buying the same things from the same suppliers when foreign suppliers are less costly? Never mind haven’t read the details yet how about explaining how such a thing could possibly be accomplished by any means at all?
15 times,eh? And 14 times will go to Boxer-Sanders,their cronies,and the eco-cultists. The USSA is SO screwed.
In the above linked document the EPA states that US greenhouse gas reductions, using IPCC models, is going to have the effect to reducing earths temp.’s by about ..1C (1/10th of a degree C for those with bad eyesight!) and will stop the seas from rising by about 1 cm. This will occur because CO2 will be reduced by 3ppm! Some would say at least they are trying. The US creates about 20% of the world CO2 emissions. I suppose that we are to be the leader by example, so if the entire world acted like in the 2010 EPA regulation, world temp would by .5C less in 2100. Of course, a Nina or Nino could throw the world’s temperature much more than that in a matter of a few months.
Very big oops on my part! At this age I have trouble reading the screens myself. Above that is .01C NOT .1C, the effect of US reduction in greenhouse gas emissions. 1 100th of a degree C.
The person who controls the spending controls the people. You think it’s your taxpayer dollars at work but you’re only getting what you put in less admin expenses and less their “take.”
The cure is worse than the alleged disease. Bloodletting at its finest.
They know full well this tax has absolutely nothing to do with trying to control the climate.
The headline is somewhat misleading because we would end up with BOTH! The carbon tax will have no influence on global climate, it just won’t make enough of a difference to be noticed on a global scale. So we end up with the climate doing whatever the climate is going to do anyway PLUS a carbon tax. It’s just insane.
Christopher: Consider Forbes.com for a cross post of this.
When are you going to be on with Dennis Miller again? I’ll try to call in then!!
Unfortunately, Barbara Boxer is my Senator and she is one of the stupidest people in Congress, she is just carrying the flag for the unidentified ‘geniuses’ who thought this one up. So No, Jeff L. She is not capable of doing a crossword puzzle, much less anything else that requires thought.