Huhne is no loss

By Christopher Monckton of Brenchley

Today’s resignation of Chris Huhne, the UK Minister for Climate Change, offers the prospect of a belated return to sanity at the former Ministry of Agriculture in Whitehall. Huhne now faces prosecution for an alleged attempt to pervert the course of justice by asking his then wife to say that she was driving at the time when one of Britain’s thousands of speed cameras caught him going faster than the law allows.

Under Huhne, the Climate Change Department has been indistinguishable from a lunatic asylum. I first came across him – or, rather, didn’t come across him – when he and I were due to debate the climate at the annual jamboree of a massive hedge-fund in Spain three years ago. Huhne only found out that I was to be his opponent when he reached Heathrow Airport. He turned straight around and went back to London.

When I visited the House of Lords’ minister, Lord Marland, at the Climate Change Department a couple of years ago, I asked him and the Department’s chief number-cruncher, Professor David Mackay (neither a climate scientist nor an economist, of course) to show me the Department’s calculations detailing just how much “global warming” that might otherwise occur this century would be prevented by the $30 billion per year that the Department was committed to spend between 2011 and 2050 – $1.2 trillion in all.

There was a horrified silence. The birds stopped singing. The Minister adjusted his tie. The Permanent Secretary looked at his watch. Professor Mackay looked as though he wished the plush sofa into which he was disappearing would swallow him up entirely.

Eventually, in a very small voice, the Professor said, “Er, ah, mphm, that is, oof, arghh, we’ve never done any such calculation.” The biggest tax increase in human history had been based not upon a mature scientific assessment followed by a careful economic appraisal, but solely upon blind faith. I said as much. “Well,” said the Professor, “maybe we’ll get around to doing the calculations next October.”

They still haven’t done the calculations – or, rather, I suspect they have done them but have kept the results very quiet indeed. Here’s why.

The UK accounts for 1.5% of global business-as-usual CO2 emissions. At an officially-estimated cost of $1.2 trillion by 2050, or $834 billion after inter-temporal discounting at the minimum market rate of 5%, the Climate Change Act aims to eradicate 80% of these emissions. So just 1.2% of global emissions would be abated even if the policy were to succeed in full.

Business-as-usual CO2 concentration, as the average of all six IPCC emission scenarios, would be 514 ppmv in 2050. A full and successful reduction of UK emissions by 80% over that period would reduce that concentration to – wait for it – 512.5 ppmv. This dizzying reduction of 1.5 ppmv over 40 years would have the effect of abating 0.008 K of the 1.05 K of warming that the IPCC would otherwise have expected to see by 2050.

The UK policy’s mitigation cost-effectiveness – the cost of abating just 1 Kelvin of warming if every nation pursued the UK’s policy with the same cost-ineffectiveness – works out at $108 trillion per Kelvin abated.

The policy’s global abatement cost – the cost of abating all of the 1.05 K warming that would otherwise occur over the policy’s 40-year lifetime – would be $113 trillion, or $16,000 per head of the global population, or almost 7% of global GDP over the period.

To determine how much better it would be to do nothing than to try to abate that warming, it is necessary to agree on how much damage the warming might abate. The Stern Report on the economics of climate change produces some of the most extreme and exaggerated cost estimates, so we shall use it for the sake of being as fair as possible.

Stern agrees with most sources that if there is 3 K warming this century (which the IPCC predicted at the time), it will cost 0-3% of global 21^st-century GDP (actually, he says “now and forever”, but that is one exaggeration too many). However, the IPCC’s current central estimate is that the CO2 we emit between 2000 and 2100 will cause little more than 1.5 K of warming. So let us assume that this 1.5 K of CO2-driven warming will cost us 1.5% of global 21^st-century GDP.

Yes, I know that anything less than 2 K will probably be beneficial, but we have to bear in mind the already-committed warming of 0.6 K that the IPCC says is already in the pipeline on account of our past sins of emission, and the warming from the non-CO2 greenhouse gases that is not addressed in the UK’s CO2-reduction policy.

However, Stern’s calculations are all based on an inter-temporal discount rate of just 1.4%, which is far lower than the minimum rate of return on capital, which is 5%. Correcting the Stern-based 1.5%-of-GDP cost of taking no action to allow for the minimum market discount rate brings that cost down to 0.3% of GDP.

Accordingly, the 6.85%-of-GDP cost of taking action to mitigate the warming would give an impressive action/inaction ratio of 22.8. Bottom line: it is almost 23 times more expensive to pursue the policies outlined in the Climate Change Act than to sit back, do nothing, enjoy the sunshine, and adapt in a focused way to the consequences of what little warming the IPCC predicts may occur.

Just one problem with this entire calculation. It depends upon the assumption that the $1.2 billion spent by Mr. Huhne’s former department  to 2050 would actually achieve an 80% reduction in Britain’s CO2 emissions. And that may not be a justifiable assumption. Real-world climate-mitigation policies are proving far more costly than government estimates.

The United Kingdom is no longer a democracy. We still have all the trappings, but in reality it no longer matters who we vote for. Five-sixths of our laws, including overall policies on environmental matters, are set by the unelected, unaccountable, unsackable Kommissars (that’s the official German name for our new and hated masters) of the failed European Union. For the seventeenth year in a row, the EU’s own court of auditors has declined to sign off the Kommissars’ annual accounts as a true and fair record of how they have squandered the $3 million an hour we pay them. It is these Kommissars who dictate that we must have carbon trading.

So let us compare the pie-in-the-sky cost estimates in the Climate Change Act with the actual, real-world cost of the EU’s four-times-collapsed carbon trading scam – er, scheme. The calculation is similar to that which we did for the UK alone.

Over the ten-year timeframe of the EU’s scheme, CO2 concentration will have risen to 413 ppmv, or 412.4 ppmv if the scheme is fully successful, abating 0.004 K of “global warming”. The cost of the scheme, according to Bjorn Lomborg, is 2.5 times the cost of the trades actually executed: call it $230 billion a year, or $2.1 trillion after 5% discounting over the ten years.

The mitigation cost-effectiveness of the EU scheme is $535 trillion per Kelvin abated; its global abatement cost over the period 2010-2020 is $117 trillion, or $17,000 per head of global population, or 22% of global GDP over the ten-year period. And that is 72 times more costly than the 0.3%-of-GDP cost of the climate-related damage that the policy is intended to forestall.

This, too, understates the true cost-ineffectiveness of trying to tax, trade, regulate, reduce or replace CO2. For the predicted rate of warming is not occurring. By many methods, the climate literature demonstrates that the models are over-predicting CO2-driven warming at least threefold. If so, then the true cost of the EU’s mad policy, of which Mr. Huhne and his party are such enthusiastic supporters, could be at least 200 times greater than the cost of climate-related damage from doing nothing at all.

Will Mr. Huhne’s successor get the sums done and scrap the Climate Change Act? Will the EU come to its senses? Don’t count on it. Gradually, though, reality is breaking through. Desubsidization of solar and even of fashionable wind energy has now begun in the UK, Denmark, Germany and Spain.

The sheer cost of these pointless, environment-wrecking “alternative” energy sources is so crippling that European governments, already near-bankrupted by their incompetent management of the mickey-mouse Euro, cannot any longer afford these self-indulgent indulgences. The removal of Mr. Huhne from the scene will at least take Britain one step nearer to sanity, scientific reality and economic common sense about climate change.