The Recursive Cost Of Carbon

Guest Post by Willis Eschenbach

I see that Andrew Revkin continues to try to keep the climate pot bubbling. In this case, he’s issued dire warnings about reducing the so-called “Social Cost of Carbon” (SCC). He starts by defining the SCC

This value is the government’s best estimate of how much society gains over the long haul by cutting each ton of the heat-trapping carbon-dioxide emissions scientists have linked to global warming. 

Currently set at $36 per ton of carbon dioxide, the metric is produced using a complex, and contentious, set of models estimating a host of future costs to society related to rising temperatures and seas, then using a longstanding economic tool, a discount rate, to gauge how much it is worth today to limit those harms generations hence. (For context, the United States emitted about 5.1 billion tons of CO2 in 2015, out of a global total of 36 billion.)

Now that makes it all sound very scientific, but let’s be clear about these claimed “harms generations hence”.

The Social Cost of Carbon (SCC) is a GUESS about the unknown future economic effects that might or might not result from unknown future temperature changes that might or might not result from unknown future CO2 emissions changes that might or might not happen over the next century.

Now, why is this important? Again, Revkin discusses that:

The contention arises because the social cost of carbon underpins justifications for policies dealing with everything from power plants to car mileage to refrigerator efficiency. The carbon valuation has already helped shape 79 regulations.

The strongest sign of a coming challenge to the social cost calculation came in a post-election memorandum from Thomas Pyle, who was then president of the industry-funded American Energy Alliance and Institute for Energy Research and who now leads the Trump transition team for the Department of Energy. In the memo, he predicted policies resulting in “ending the use of the social cost of carbon in federal rule makings.”

I completely agree with Thomas Pyle. The SCC is a fatally flawed measure which has little resemblance to a traditional cost/benefit analysis. I certainly hope its use is ended completely. It is a chimera, a scientific mirage.

Now, as Revkin points out:

Outright elimination of such a calculation is highly unlikely, according to interviews with a range of experts. The practice of estimating the economic costs and benefits of most government regulations began under an executive order of President Ronald Reagan in 1981. It has continued ever since. Climate-related regulations are no different. Several court rulings have affirmed the process.

However, I think that makes it easier to get rid of. The fix seems easy, and fortunately, Revkin has revealed the way it can be done. Live by the pen and phone, die by the pen and phone … it was created by an Executive Order, and could disappear the same way.

Revkin continues:

But the Trump administration’s aim of lowering the operative “number,” possibly by a lot, is almost assured. In 2013, an economist from Pyle’s energy institute testified in a Senate hearing that under a proper calculation, the social cost of carbon “would probably be close to zero, or possibly even negative.”

In fact, for reasons I discuss below, almost any number could be justified as being the “true” SCC, because the uncertainties are enormous. Revkin goes on:

A deep cut would be both dangerous and unjustified, given the basics of both climate science and economics, said Gernot Wagner, a Harvard economist focused on climate risk and policy. In a phone interview on Tuesday, he said the interagency working group assembled by the White House in 2009 to create the social cost measurement was “a damn impressive exercise at assembling a lot of firepower and done in a way that was about as apolitical as things can go in Washington.”

I love this quote. A person who thinks the SCC is needed and who (coincidentally I’m sure) makes his living studying the SCC says yep, we sure need the SCC, it’s damn impressive …

It brings to mind another of my rules of thumb, which states:

Never ask your barber if you need a haircut.

Revkin goes on to favorably discuss a new paper from the National Academies of Sciences entitled Valuing Climate Changes: Updating Estimation of the Social Cost of Carbon Dioxide (2017) As you might imagine, it’s a plea to keep the imaginary cost of carbon as high as possible.

So … just what is wrong with the “Social Cost of Carbon” (SCC)? Let me renew my long-standing objections to this unscientific construct. Here are my reasons:

•  As the title “Social Cost of Carbon” implies, it is assumed from the onset that the costs exceed the benefits. I have seen no evidence that this is known or even knowable. As an example of this bias, the term “cost” appears about seventy times in the document … the term “benefit” only seven times. Thumb on the scales much?

•  Once you start “monetizing” non-monetary costs and benefits there is no firm scientific guidance as to what you include, how you value it, who is considered as a stakeholder, whether various stakeholders receive preference, and a host of other choices. This means any result you might come up with will have very large uncertainties.

•  It is even worse when, as in this instance, we are doing a cost-benefit analysis that compares both present and future costs and benefits. This introduces a whole new host of uncertainties—how and when and even whether things will change on the input side (emissions), how and when and even whether things will change on the output side (temperatures), what discount rate we will use, whether that discount rate varies over time, and how these possible imagined future physical changes will affect both the real and the monetized future costs and benefits. At this point our uncertainties are what Steve McIntyre used to call “floor to ceiling”. The uncertainties swamp the data.

•  It is much, much worse when, as in this case, the imaginary future changes are based on an unproven scientific theorem which to date has produced nothing but an unending string of failed forecasts. Where are the coral atolls supposedly sunk in defiance of Charles Darwin? Where are the 50 million climate refugees we were supposed to have by 2010? Where is the massive threatening acceleration in sea level rise we’ve been promised for thirty years now? Given how wrong the climate models are to date, by the year 2050 they will be off the charts. This pushes the previous “floor-to-ceiling” SCC uncertainties to the level of “surface to tropopause” uncertainties. The signal to noise ratio is ludicrous. Richard Tol surveyed the field and found values from negative (net benefit) through zero to $1500/ per tonne of carbon … on my planet that is not science, that’s throwing darts.

•  To date we can show real, observable, measurable BENEFITS of increasing CO2. For example, we can see and measure clear benefits of CO2 through satellite-measured “greening” of the planet. In addition we can show that this has reduced atmospheric transpiration of water by plants, extending the yield of irrigation water. (And as an aside … how much is that worth? You see the problem with “monetizing”?).

But on the other side of the ledger, we have no real, observable, measurable COSTS of increasing CO2 even if we make the unlikely assumption that CO2 roolz temperature.

Where, for example, are the demonstrated climate costs of the ~ 2°C rise in land temperatures (Berkeley Earth data) over the last 200 years? Where are the climate tragedies? Where is the crop loss from that warming? Where are the deaths and the climate catastrophes? Heck, even Richard Tol puts that past temperature rise in the net benefit column. As a result, we are comparing real, known, measured present benefits to imaginary, calculated, unknown future costs based on an unproven theory.

•  Nowhere in any of this accounting do I find one of the largest and most important costs. This is how much it has cost us to date to fight CO2. There have been untold billions and billions of dollars wasted on Solyndras and useless studies and “Social Cost of Carbon” government boondoggles and all the rest of the money and human resources wasted. I say wasted because to date I don’t see any benefits from any of this. Green energy has not taken off, it has been a constant money drain. None of the expensive climate models have been able to do better than Phil the Groundhog at predicting the future evolution of the climate. Where are the costs of the endless IPCC quackathons? Where do those billions and billions and billions of wasted dollars go in this cockamamie “Social Cost of Carbon”? To date, fighting the fantasized evils of carbon has been all costs and no measurable benefits … can we get an accounting of that?

For all of these reasons and more, I find this entire “Social Cost of Carbon” enterprise to be a wholly unscientific effort to pretend that we can accurately monetize unknown results of an unknown misty future.

I implore Andrew Revkin and everyone involved in this scientific monstrosity to stop and consider what you are doing. The uncertainties are immense, as mentioned they go from surface to tropopause. The SCC is a transparent effort to justify throwing more taxpayer money down a rathole. And regardless of what value you think the SCC has or should have, you are adding the prestige of your name and reputation to a pseudo-scientific attempt to support and justify the imposition of new laws, restrictions, subsidies, cap-and-trade, carbon taxes, renewable mandates, and other ways to increase the cost of energy.

And increasing the cost of energy, no matter how it is done, shafts the poor more than anyone. Increasing the cost of energy is one of the most regressive taxes imaginable, and there is no opt-out at the bottom of the economic ladder. Rising energy prices hit the poorest of the poor harder than anyone.

Perhaps some folks are willing to support that “Social Cost of Carbon” BS as part of the ongoing effort to screw poor people in the name of a possible distant imaginary idyllic green future in fifty years or so.

Me … not so much …

I invite you to read my previous posts on this subject. The first is from three years ago

Monetizing the Effects of Carbon  2013-01-11

A few months ago [2012] in the New York Times Green Blog they talked about “monetizing” the “social cost” of carbon. The article said:…

The other two are more recent:

The Bogus Cost Of Carbon 2016-12-15

[See update at the end] From the New York Times a while back: In 2010, 12 government agencies working in conjunction with economists, lawyers and scientists, agreed to work out what they considered a coherent standard for establishing the social cost of carbon. The idea was that, in calculating the costs and benefits of pending…

and

Monetizing Apples And Oranges  2016-12-25

Let me start by thanking Richard Tol, Marcel Crok, and everyone involved in the ongoing discussion at the post called “The Bogus Cost of Carbon”. In particular, Richard Tol has explained and defended his point of view, giving us an excellent example of science at work. In that post I discussed the “SCC”, the so-called “Social Cost of Carbon”. There…

In short, the SCC is not science. It compares imaginary future values up to a century out based on an unvalidated theory on the one hand, with measured observed actual present benefits on the other hand. This is scientific and accounting nonsense.

I say get rid of it. Nobody has ever shown one dollar’s worth of actual measurable damage from increases in atmospheric CO2. Given that we cannot point to current damages, we are lightyears away from being able to put any realistic number on the possible future damage from this unproven theory. That’s a sick joke.

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Meanwhile, here on the northern California coast, we sit underneath the “Pineapple Express”, over ten inches (250 mm) in the last three days. This is the rain we were supposed to never see again, because “climate change”.

There’s a big tree down on the road I live on, and it brought down the power pole, so we’re running on the RV generator plus a bunch of extension cables. Hey, life is good … we’re not sitting in the dark, and although the gorgeous ex-fiancee had to walk a quarter mile (half a km) home after work today in the rain because the tree is still blocking the road, she’s here and we’re happy.

Best to all,

w.

PLEASE, if you disagree with someone QUOTE THE EXACT WORDS YOU DISAGREE WITH, so we can all understand your subject.