Lord Stern: Models ‘grossly underestimate’ costs of global warming
Submitted by Eric Worrall
Lord Stern, the British Academic who prepared the “Stern Review” on global warming for Prime Minister Tony Blair, has just claimed a carbon price of up to $260 / ton is required to prevent dangerous global warming.
“The risks are in fact likely to be so large that a globally coordinated carbon price of $US32-$US103 ($34-$110) per tonne of emissions is needed as soon as 2015 to prevent the temperature increase from exceeding 2 degrees of pre-industrial age levels, said Lord Stern and co-author Simon Dietz, from the UK’s Grantham Research Institute.
Within two decades, the carbon price will need to almost triple in real terms to $US82-$US260 a tonne, the two researchers say in their paper to be published in The Economic Journal.”
Lord Stern’s “Stern Review”, prepared in 2006, has been heavily criticised since its release, for making some unjustifiable assumptions.
For example, according to “The Economist”, Lord Stern used a near zero discount rate when calculating the impact of future harm.
http://www.economist.com/node/14994731
The effect of using such a low discount rate is to make problems which occur in the distant future as important in terms of the calculation as problems which occur today – for example, if your report predicts mass starvation in 100 years, a near zero discount rate could be used to justify creating global hunger today, to ward off the predicted future risk, if the future casualty rate was greater.
Non-discount of future risks is wrong for all sorts of reasons, not least because we have no idea of what advances 100 years of technological progress will deliver.
Economic forecasts of the past, such as the Great Horse Manure Crisis of 1894, are often a source of hilarity in modern times, due to their rather outdated assumptions.
http://bytesdaily.blogspot.com.au/2011/07/great-horse-manure-crisis-of-1894.html
“Could someone do the math and translate this into $/litre of gas?”
$0.0001c.
But nobody will be able to afford it . . . . . . . .
Science aside, no economic analysis is ever done with zero discount when considering whether to invest or not (ie invest in carbon reduction for a future temperature ). This clearly shows they are trying to make the tax as high as possible for political reasons or , equally as likely, they have absolutely no idea what they are doing , in terms of economic analysis
But , if we do inject some science & even assume their science is right, most of the temp rise is > 100 years out (based on their equilibrium climate sensitivity). If you have done any economic analysis, you would know that the present value of anything at nearly any discount rate 100 years out is basically zero.
Do they think we wouldn’t do the math? Did they think no one had any economic analysis skills?
Who, exactly, gets the loot, and what do they do to earn it?
The object here is to impoverish and enslave the population. The State has always wanted to increase its power in any manner possible.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” ~ H. L. Mencken
How does $260 compare to today? And what would $260 do to a gallon of gas?
Lord Stern, the world renowned economist and CLIMATE SCIENTIST, has in the past accused "vested interests" of delaying action to tackle ‘climate change’. But what are Lord Sterns’ vested interests? But first, he backtracks to tell us it’s worse than he ever imagined.
So here are Lord Stern’s VESTED INTERESTS in ALTERNATIVE ENERGY SCHEMES – with interest. He is an economist afterall. LOL.
Can you trust an economist with money invested in alternative energy schemes for advice on the science of CAGW? You decide.
$260 / ton is required to prevent dangerous global warming.
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so the scheme is to price fossil fuel out of the reach of everyone.
Lord Stern is a “Member, International Advisory Board, Abengoa SA” (Spain). What is Abengoa SA? Abengoa SA (Spain) is engaged in concentrated solar power, 2nd generation biofuels, biomass and wave energy.
Profile of Lord Stern at Abengoa SA (Spain)
http://www.abengoa.com/web/en/accionistas_y_gobierno_corporativo/estructura_organos_gobierno/estructura_organos_gobierno/curriculums/consejo/cv_nicholas_stern.html
http://www.abengoa.com/web/en/index3.html
Lord Stern has all his fingers in the carbon pie. No wonder he keeps telling us it’s worse than he thought. He is about to lose MONEY. LOL. Don’t trust him, HE HAS VESTED INTEREST AND INTERESTS.
Finally, here are Lord Sterns full disclosure of interests as he is a member of the UK parliament (House of Lords). All I see is carbon this, climate change that. Follow the money after declaring a state of global emergency. Is that how it works? What a joker. He thinks he is smart and everyone else is dumberer than dumbs. Didums.
http://www.parliament.uk/biographies/lords/lord-stern-of-brentford/3846
Col Mosby says:
June 16, 2014 at 2:17 pm
I mean, does any sane person not believe that electric cars will take over once a practical cost-effective battery is at hand?
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You presume a “cost-effective battery” is feasible.
In spite of your “no true Scotsman” fallacy, I would agree that someday electric cars might be prolific. But that someday, if ever, is generations off. Hence, electric cars have no relevance today. None. What may happen a hundred years from now means nothing.
I’m already paying $433 per ton. So for an extra 60% on top of that, Stern will be satisfied with his cut? Or is this just the tax that gets us warmed up for the next tax?
Isn’t the lesson here that a $260 per horse manure tax could have more easily and expeditiously solved the manure problem?
And too bad there wasn’t a Lord Stern in 1900?
Had the automobile technology had not been practical, or it had been too expensive to mass produce the horse manure problem would have worsened for a while.
However, today as alternative energy technology is not yet practical (because it is too expensive requiring tax subsidies for people to buy it) there is no such manure problem to worsen.
Worrying warmers (in demanding alternative energy) have invented a false urgency with AGW.
They see a modern day manure crisis in CO2 emissions where none exists.
So an apt twist to the old saying may be,
“Necessity may well be the mother of invention but inventing the necessity is not a prudent way to run a nation much less a business.”
Alarmists, by inventing a necessity, demanding their remedy and concocting a false Cost/Benefit analysis are in effect producing a new Great Manure Crisis where none existed.
given IEA claims $53 trillion in investment is required to “allow the world to keep climate change below the critical 2 degree threshold” –
http://www.desmogblog.com/2014/06/13/over-40-trillion-investment-needed-keep-energy-demand-2035-iea-report-concludes
why haven’t these banks invested this $29 trillion in CAGW-associated markets? LOL. (read the comments):
16 June: ZeroHedge: “Cluster Of Central Banks” Have Secretly Invested $29 Trillion In The Market
Submitted by Tyler Durden
Another conspiracy “theory” becomes conspiracy “fact” as The FT reports “a cluster of central banking investors has become major players on world equity markets.” The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which “could potentially contribute to overheated asset prices.” China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world’s banks try to diversify themselves and “counters the monopoly power of the dollar.” Which leaves us wondering where are the central bank 13Fs?…
However, as The FT reports, what we have speculated as fact for many years now (given the death cross of irrationality, plunging volumes, lack of engagement, and of course dwindling credibility of central planners)… is now fact…
The report, seen by the Financial Times, identifies $29.1tn in market investments, including gold, held by 400 public sector institutions in 162 countries…
To summarize, the global equity market is now one massive Ponzi scheme in which the dumb money are central banks themselves, the same banks who inject the liquidity to begin with.
That would explain this (SEE GRAPH)…
That said, good luck with “exiting” the unconventional monetary policy. You’ll need it.
http://www.zerohedge.com/news/2014-06-15/cluster-central-banks-have-secretly-invested-29-trillion-market
if the MSM did their job properly, the public would have stopped this CAGW insanity in its tracks long ago:
16 June: Missoulian: Obama energy price increases are avoidable
Guest column by ED WALKER
Electricity prices are on the rise, and your wallet will soon know it. Frustratingly, the reason those prices are going up has nothing to do with normal economics…
The U.S. Department of Energy expects coal plants with the output capacity to supply 30 million homes to shut down by 2020. That supply will be replaced by more expensive energy sources. The DOE expects prices to increase 13 percent by 2020, and that doesn’t even take into account additional EPA regulations on the horizon…
Advocates of anti-coal policies point to alternative energy as the answer to fill the gap left by closing coal plants. Their claims ignore the data – even with rapid growth in renewables over the past several years, they can still supply only a small fraction of our coal output. And with the expiration of the renewable energy production tax credit at the end of 2013, the true cost of renewable energy sources will soon become apparent…
And what do we gain by shutting down American coal plants, killing American jobs, and sticking every American with more-expensive energy bills? From a carbon emissions standpoint, the gains are virtually nonexistent. The world is using increasing amounts of coal and other fossil fuels, and necessarily so – 1.2 billion people in the world still don’t have access to electricity…
(Sen. Ed Walker, R-Billings, represents Senate District 29 in the Montana Legislature. Walker currently serves as a member on the Senate Energy and Telecommunications Committee and as vice chair of the Senate Finance and Claims Committee.)
http://missoulian.com/news/opinion/columnists/obama-energy-price-increases-are-avoidable/article_4c1bdd42-f566-11e3-8afe-0019bb2963f4.html
““Could someone do the math and translate this into $/litre of gas?”
$0.0001c.
But nobody will be able to afford it . . . . . . . .”
Australia introduced a price on carbon of $24 a tonne. This translates into an energy cost increase of between 15-19%.
Of course, Lord Stern is suggesting a tax that is more than 10 times higher. The point of a carbon tax is to discourage carbon use. If the tax did not effectively cost anything, it would serve no purpose.
http://www.energyaction.com.au/australian-energy-market/carbon-price/69.html
I wouldn’t be surprised to learn that his paymasters are still hopeful of persuading the Chinese that it would be profitable for them to join in. [It obviously being dead-in-the-water without Chinese support]
But why anyone might think the Chinese would pay any attention to Stern is beyond my powers of imagination.
Has Lord Stern stopped taking his medication?
The real cost of a $260/ton carbon tax would need to include all the feedbacks. Such things as the cost of transporting fuel to your local gas station, the cost of transporting cars and parts to the local dealership, the cost of harvesting and transporting food and keeping it fresh, and the cost of manufacturing and transporting all other goods need to be factored into the total cost. Of course, the black markets that always spring up in response to artificial price increases, as well as the costs of going after and prosecuting such black markets, will also complicate the calculation.
I like to re-state numbers in per-capita format. The cost of $260 per ton translates to $790 per person in the US, but only $260 per person in the UK. The cost increases would be included in electric rates and the cost of all goods and services, of course, but in my case would exceed my current cost of power, or roughly equivalent to a doubling of my electric bills. That seems significant to me.
The UK apparently imports most of it’s coal these days, so there are indeed profits in shipping coal to Newcastle (in the UK, not Oz). I didn’t know that.
The questions that come to mind are, who would get the tax collected (the shipping country or the receiving country), and what would all that money be spent on? In the US, the talk was of wealth redistribution, the holy grail of socialism and a major driver of CAGW.
I see both Stern and Dietz are economists; I don’t see a science degree (other than honoraries). When do they expect the mythical 2 C?
Why is there not a disclaimer stating the conflict of interest and ‘Big Green’ Industry connection with GMO(Grantham Mayo van Otterloo asset management) financial each and every time Grantham Research Institute is cited? Grantham Reseach Intitute should be trusted on climate as much as a Philip Morris owned & operated research group on tobacco related heath issues.
Worry not….tax carbon, and a veritable waterfall of wealth shall follow. The consultants say so. http://www.remi.com/carbon-tax-study
Only the adherents to the faith would inhale this crap.
I loved the analogy of the Great Horse Manure Crisis of 1894. Excellent!
Whenever the adherents tell us we need to leave the coal in the ground…I think of the same being said about flint in the stone age. ‘We need to leave it for our children’…!
Tim Worstall claims the MSM is doing the usual beat-up:
16 June: Forbes: Tim Worstall: Lord Stern’s New Climate Change Economics Paper Finds The Carbon Tax Should Be Lower
There’s breathless reporting over in the Independent about the new paper on the economics of climate change from Nicholas, Lord Stern. Apparently the new calculations change everything and tell us that we really must pull our fingers out and get on with imposing really strict restrictions on how much CO2 anyone is allowed to omit.
The real point about this paper though is that it doesn’t in fact uncover anything new at all, despite the quite heroic attempts it makes to big up the size of the problem. The final answers are around and about the same as we get either from the original Stern Review or from William Nordhaus’ original DICE model. And that is, as I say, after the quite excessive attempts to make sure that the problem is going to be very bad indeed.
Here’s how the propaganda offensive starts out in the newspaper: …BLAHBLAH…
Yet when we actually go to read the paper itself (this is the freely available working version) that’s not actually the result we end up with at all. What we do end up with is that a carbon tax to avoid all of this nastiness should (dependent upon the specific model we use) be maybe $30 a tonne CO2-e today, rising to $250 a tonne in a few decades, or in the other version it should be $75 a tonne as a flat rate now and into the future. And the thing about these numbers are that that first low and rising tax is exactly what the original Nordhaus model recommends and that higher flat one is exactly what the Stern Review recommended. So despite their bigging up the problems they’ve ended up with exactly the same answers that we’ve all been accepting for most of the past decade. Depending upon how important you think working with the capital cycle is we should either have a low carbon tax now and make sure it rises into the future or we should have a medium level one right now…
http://www.forbes.com/sites/timworstall/2014/06/16/lord-sterns-new-climate-change-economics-paper-finds-the-carbon-tax-should-be-lower/
If Lord Stern is an expert in Economics, (a fact which I sincerely doubt after reading some of his report – The Stern Review-), he should also be able to outline, (by using knowlege and the understanding of the level any second year economics student), the effect that such a carbon price will have on the economy – first of all the UK and secondly the world.
Not many will choose poverty for the sake of some unreliable predictions of slightly warmer weather.at some unspecified time in the future as well as having to believe that its caused by the friendlt gas CO2.
Cheers
Roger
http://www.rogerfromnewzealand.wordpress.com