By Roger Caiazza
On January 12, 2021 Resources for the Future (RFF) announced the release of their Working Paper: “The Climate Decade: Changing Attitudes on Three Continents”. The survey by “an international team of experts finds that the decade between 2009 and 2019 has seen increases in support for climate action in China and the United States, with support remaining high in Sweden.” The report includes willingness to pay estimates and what caught my eye was that those numbers were in dollars per ton of emissions reductions. If presented in more relatable terms I believe the costs are too much to expect any willingness to pay.
The announcement for the report summarizes the findings. The abstract states that:
“Using identical surveys a decade apart, we examine how attitudes and willingness to pay (WTP) for climate policies have changed in the United States, China, and Sweden. All three countries exhibit an increased willingness to pay for climate mitigation. Ten years ago, Sweden had a larger fraction of believers in anthropogenic climate change and a higher WTP for mitigation, but today the national averages are more similar. Although we find convergence in public support for climate policy across countries, there is considerable divergence in both WTP and climate attitudes within countries. Political polarization explains part of this divergence.”
For the United States the key findings of the report noted:
- Opinion in the United States has shifted toward a more positive attitude toward climate policies; however, these views are increasingly polarized.
- Belief in human-caused global temperature increases has increased in the United States by 10 percentage points since 2009.
- In 2019, 60% of US respondents are willing to prioritize the environment, even at the expense of jobs—significantly more than in 2009 (40%).
- 78% of US respondents think the US should reduce emissions, even if other countries do not—up from 68% in 2009. This view increased primarily among Democrats.
- Willingness to pay for emissions reductions has increased in the United States across Democratic, Republican, and Independent voters. However, there has been an increasing political polarization between Republicans and Democrats when it comes to the group of voters who are not willing to pay anything.
Of particular interest to me were the conclusions for the Willingness to Pay:
“Swedish citizens are willing to pay the most to reduce emissions relative to their country’s carbon footprint: They’re willing to pay $129 per ton of emissions reductions, far more than people in China ($44 per ton) and in the United States ($31 per ton). In the 2019 survey, Chinese citizens were willing to pay a greater share of their income—as much as 0.9% for an 30% reduction in emissions, compared to 0.8% in Sweden and 0.6% in the United States. The average value all three countries place on reducing a ton of CO2 increased from 2009.”
I believe that this report will be used as bait and frequently referenced as proof that the pubic believes that there is a climate change problem and is willing to pay to fix it.
Willingness to Pay
There is plenty of material in this report and the methodology to critique. I cynically believe that the format and questions included in a survey can be tailored to provide any answer desired. In this survey there was the obligatory survey summation of the climate change problem that suggests that we are all doomed and that GHG emissions are the control knob for climate. For example, the summary states that if there is only a 60% reduction in emissions the global temperature increase will be 30F and “most coral reefs die”. After presenting this information, the survey included “a set of attitudinal questions about how the respondent’s own country should decrease CO2 emissions and whether it should reduce these emissions even if other countries do not.” The willingness to pay questions asked respondents how much their household would be willing to pay for a three reduction levels (30%, 60% and 85%) compared with no reduction at all and the other reduction levels. For these questions,” total monthly and yearly costs were shown to the respondents to make sure that they understood the consequence of their answers.”
In my opinion framing the willingness to pay as total monthly or annual costs does not relate well to my willingness to pay. I want to know how much the price increase affects the price of transportation fuel, residential natural gas, or electricity. The RFF results claim people in the United States are willing to pay $31 per ton and that they are willing to pay 0.6% of their income. I translated the $31 per ton of CO2 reduction into different cost metrics for transportation and residential use below.
The Environmental Protection Agency has a summary of emission factors for carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) that can be used to convert the dollars per ton rates to cost per gallon of gasoline or diesel fuels. I converted the emission factors from Table 2 in that summary to metric tons and multiplied by five different social cost of carbon estimates including the three willingness to pay levels quoted in the report the Integrated Working Group 2021 value and New York’s Climate Leadership and Community Protection Act 2021 value for CO2. For diesel fuel the cost per gallon ranges from $0.32 and $1.32 and for motor gasoline ranges from $0.35 to $1.13.
I used a similar approach to estimate the effects of residential use of natural gas and electricity. I only considered natural gas and not all the other fuels used for residential use. Table 1 in EPA’s emission factor report provides the emission factor for natural gas. There is an American Gas Association report that lists national residential gas use (71.2 MMBtu per year). For the range of the social cost of carbon values used previously, the monthly natural gas bill would increase between $9.76 and $40.61. I used Table 6 from EPA’s emission factor report to calculate electric impacts. The EPA table incorporates fuel types used for electric generation to come up with emission factors for the country and for 26 eGrid sub-domains. It is also necessary to include an estimate of fuel use. According to the U.S. Energy Information Administration, the average U.S. residential customer uses approximately 909 kWh per month of energy. For the range of the social cost of carbon values used previously, the monthly electric bill would increase between $12.11 and $50.38. Remember that many people use both electricity and natural gas so their bills would equal the sum or a monthly utility bill increase between $21.87 and $90.99.
The Resources for the Future study will undoubtedly be used as proof people are willing to pay to reduce GHG emissions. However, after taking that bait the public will be switched into these commodity price increases that I believe are non-starters for most people at all but the lower values. Given that energy use is inelastic these costs will certainly put more people into energy poverty impacting those least able to pay dis-proportionately.
Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York. This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.