Economics

This page is for discussion of economic aspects of global warming.


154 Thoughts on “Economics

  1. Richard C (NZ) on October 6, 2012 at 6:57 pm said:

    Integrated Assessment Modeling

    10 Things to Know

    1. What is Integrated Assessment (IA)?
    2. What are Integrated Assessment Models (IAMs)?
    3. How do IAMs and GCMs differ?
    […]

    How do IAMs and GCMs differ?

    Integrated assessment models generally include both physical and social science models that consider demographic, political, and economic variables that affect greenhouse gas emission scenarios in addition to the physical climate system. General Circulation Models (GCMs), however, focus on the physical climate system alone. Many IAMs do include some form of climate modeling scheme in their routines, such as zero-dimensional or 2-dimensional energy balance models, but due to computing time limitations it is currently infeasible to integrate a full 3-dimensional GCM with a human dimensions model to create an IAM. Until computers become fast enough to significantly reduce computation times, IAMs will not be able to configure a full GCM into their model structure, and must rely on simpler forms of climate models to forecast changes in climate based on future scenarios of greenhouse gas emissions and other significant variables. For more information, see the Guide to General Circulation Models.

    [Heads-up for AR5]

  2. Richard C (NZ) on October 10, 2012 at 9:10 pm said:

    Example of integrated assessment model (IAM) output:-

    ‘The Social Cost of CO2 from the PAGE09 Model’

    Chris Hope, 2011
    Cambridge Judge Business School, University of Cambridge

    http://www.jbs.cam.ac.uk/research/working_papers/2011/wp1105.pdf

    See Bishop Hill for PAGE09 input issues:-

    ‘Climate sensitivity and the Stern report’

    http://www.bishop-hill.net/blog/2012/10/1/climate-sensitivity-and-the-stern-report.html

    H/t Andy.

  3. Rob Taylor on October 10, 2012 at 9:17 pm said:

    Excuse me, RC, but I think you’re talking to yourself… why don’t you fix yourself a nice hot milk and go to bed – your imaginary audience will still be here in the morning.

  4. Richard C (NZ) on November 13, 2012 at 8:17 am said:

    EU suspends aircraft emissions trading rules

    The European Union has agreed to suspend its rules that require airlines flying to and from airports in the EU to pay for their carbon emissions.

    The rules had been unpopular with countries outside Europe such as the US, China and India.

    Climate commissioner Connie Hedegaard said she had proposed “stopping the clock for one year”.

    She said the suspension was due to progress being made in negotiations on a global emissions deal.

    But she added that if the International Civil Aviation Organization (ICAO) did not make progress towards a global deal by this time next year the European tax would be reintroduced.

    >>>>>>>>>

    http://www.bbc.co.uk/news/business-20299388

  5. Richard C (NZ) on December 1, 2012 at 8:27 pm said:

    Obama shields U.S. airlines from EU carbon fees

    (Reuters) – President Barack Obama signed a bill on Tuesday shielding U.S. airlines from paying for each ton of carbon their planes emit flying into and out of Europe, despite a recent move by Europe to suspend its proposed measure for one year.

    >>>>>>>

    http://www.reuters.com/article/2012/11/27/us-usa-airlines-emissions-idUSBRE8AQ1AR20121127?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943

  6. Richard C (NZ) on April 18, 2013 at 9:29 pm said:

    from BH – ‘Climate, ethics and democracy’

    The MIT Technology Review has a very interesting article about ethics and climate change and the knotty problem of discounting future costs:

    [quote re “Broome”] “But his larger point is, more simply, that even such quantitative economic evaluations need to fully incorporate moral principles.”

    You can see where this is leading. Market discount rates – the ones that people choose of their own volition – are wrong. The answer is not that the public should be persuaded to adopt a different approach to discounting the future but that a different discount rate must be imposed by unelected “experts”.

    http://www.bishop-hill.net/blog/2013/4/18/climate-ethics-and-democracy.html

    I’m so glad there are unelected “experts” ready to override my free choice and dictate my “moral principles”.

  7. Richard C (NZ) on July 2, 2013 at 6:17 pm said:

    ‘The Social Cost of Carbon’

    [US Environmental Protection Agency (EPA)]

    Estimating the Benefits of Reducing Greenhouse Gas Emissions

    EPA and other federal agencies use the social cost of carbon (SCC) to estimate the climate benefits of rulemakings. The SCC is an estimate of the economic damages associated with a small increase in carbon dioxide (CO2) emissions, conventionally one metric ton, in a given year. This dollar figure also represents the value of damages avoided for a small emission reduction (i.e. the benefit of a CO2 reduction).

    The SCC is meant to be a comprehensive estimate of climate change damages and includes changes in net agricultural productivity, human health, and property damages from increased flood risk. However, it does not include all important damages and, as noted by the IPCC Fourth Assessment Report [link], it is “very likely that [SCC] underestimates” the damages. The models used to develop SCC estimates, known as integrated assessment models, do not assign value to all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature because of a lack of precise information on the nature of damages and because the science incorporated into these models lags behind the most recent research. Nonetheless, the SCC is a useful measure to assess the benefits of CO2 reductions. […]

    One of the most important factors influencing SCC estimates is the discount rate. [think Stern]

    […] The interagency group selected four SCC values for use in regulatory analyses. The first three values are based on the average SCC from the three integrated assessment models, at discount rates of 5, 3, and 2.5 percent. SCCs at several discount rates are included because the literature shows that the SCC is highly sensitive to discount rate and because no consensus exists on the appropriate rate to use for analyses spanning multiple generations. The fourth value is the 95th percentile of the SCC from all three models at a 3 percent discount rate, intended to show the potential for higher-than-average damages. The table below summarizes the four SCC estimates in certain years:

    Social Cost of CO2, 2015-2050 a (in 2007 Dollars)

    Discount Rate and Statistic
    Year 5% Average 3% Average 2.5% Average 3% 95th percentile
    2015 $6 $24 $38 $73 [revised $12, $38, $58, and $109, see below]
    2020 $7 $26 $42 $81
    2025 $8 $30 $46 $90
    2030 $10 $33 $50 $100
    2035 $11 $36 $54 $110
    2040 $13 $39 $58 $119
    2045 $14 $42 $62 $128
    2050 $16 $45 $65 $136

    [see the (radically revised) 2015 update from Climate Law Blog next article]

    >>>>>>>

    http://www.epa.gov/climatechange/EPAactivities/economics/scc.html

    ‘The ‘Social Cost of Carbon’ Gambit’ [WSJ]

    President Obama unveiled his vast new anticarbon-energy agenda this week, which he
    plans to impose by executive fiat. Crucial to pulling off this exercise is a decision the federal
    bureaucracy made last month to change the way it accounts for carbon emissions—a
    decision that received almost no media attention.

    In late May the Administration slipped this mickey into a new rule about efficiency
    standards for microwaves, significantly raising what it calls the “social cost of carbon.”
    Team Obama made no public notice and invited no comment on this change that will
    further tilt rule-making against products and industries that use carbon energy.

    Federal law requires the government to calculate the costs and benefits of its rules and
    projects. The regulatory agencies are expert at rigging these calculations, but even they
    haven’t been able to hide the enormous costs of President Obama’s regulations under
    traditional economic measurement. The Administration’s solution? Simply redefine the
    economic and social “benefits” of reducing carbon.

    And sure enough, in 2010 an interagency working group conjured a new way to goose the
    benefits of regulation. Every metric ton of carbon that was reduced by regulation would suddenly count for $21 in “social benefits.” This figure was derived by guesses about how more carbon in the atmosphere may harm everything from agricultural productivity to human health to flood risks. The government’s previous official estimate? $0.

    The Administration has now gone further as part of its microwave rule and raised its
    estimated benefit from carbon reduction to about $36 a metric ton. The Department of
    Energy explained that this “update” was the result of new assumptions based on “the best
    available science,” which means whatever science the feds decide to favor. The practical
    effect is to further inflate the supposed benefit of new rules, thereby offsetting the
    enormous economic costs.

    >>>>>>>

    http://heartland.org/sites/default/files/review_outlook_the_social_cost_of_carbon_gambit_-_wsj.com_.pdf

    ‘Implications of a Revised, Higher Estimate of the Social Cost of Carbon’

    [Climate Law Blog, Columbia Law School, Centre For Climate Change Law]

    By Ifeoma Anunkor, Summer Legal Intern

    […] The updated estimates for the SCC in 2015 (based on 2007 dollars) are $12, $38, $58, and $109 per metric ton of carbon dioxide, depending on the stringency of the discount rate applied. Those estimates represent over a 60% increase from last year’s, which were $5.70, $23.80, $38.40, and $72.80, respectively. The new estimates are based on the updated versions of the three assessment models the U.S. government uses to estimate the SCC. Changes to the models reflect an updated, more complex carbon cycle, a more explicit representation of global sea level rise, updated damage functions for sea level rise impacts, agricultural impacts and changes in temperature caused by GHG concentrations, and updated adaptation assumptions and potential abrupt damages.

    >>>>>>>>

    http://blogs.law.columbia.edu/climatechange/2013/06/27/implications-of-a-revised-higher-estimate-of-the-social-cost-of-carbon/

    See Southeastern Legal Foundation (SLF) et al’s Petition for a writ of certiorari to the US Supreme Court that includes a purely science argument developed to show that EPA’s CO2 Endangerment Finding (EF) should be vacated in the USA thread:

    http://www.climateconversation.wordshine.co.nz/open-threads/climate/regions/usa/#comment-213937

  8. Richard C (NZ) on July 2, 2013 at 10:19 pm said:

    Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866

    Interagency Working Group on Social Cost of Carbon, United States Government

    With participation by

    �Council of Economic Advisers
    �Council on Environmental Quality
    �Department of Agriculture
    �Department of Commerce
    �Department of Energy
    �Department of Transportation
    �Environmental Protection Agency
    �National Economic Council
    �Office of Energy and Climate Change
    �Office of Management and Budget
    �Office of Science and Technology Policy
    �Department of the Treasury

    February 2010

    I. Monetizing Carbon Dioxide Emissions
    II. Social Cost of Carbon Values Used in Past Regulatory Analyses
    III. Approach and Key Assumptions

    A. Integrated Assessment Models
    The DICE Model
    The PAGE Model
    The FUND Model

    B. Global versus Domestic Measures of SCC
    Damage Functions
    Global SCC
    Domestic SCC

    C. Valuing Non-CO2 Emissions

    D. Equilibrium Climate Sensitivity
    Table 1: Summary Statistics for Four Calibrated Climate Sensitivity Distributions
    Figure 2: Estimates of the Probability Density Function for Equilibrium Climate Sensitivity (°C)

    E. Socio-Economic and Emissions Trajectories

    F. Discount Rate
    The Discount Rates Selected for Estimating SCC

    IV. Revised SCC Estimates
    Table 3: Disaggregated Social Cost of CO2 Values by Model, Socio-Economic Trajectory, and Discount Rate for 2010 (in 2007 dollars)
    Table 4: Social Cost of CO2, 2010 – 2050 (in 2007 dollars)

    V. Limitations of the Analysis

    V. A Further Discussion of Catastrophic Impacts and Damage Functions
    Table 6: Probabilities of Various Tipping Points from Expert Elicitation

    VI. Conclusion

    http://www.epa.gov/otaq/climate/regulations/scc-tsd.pdf

  9. Richard C (NZ) on July 5, 2013 at 7:17 pm said:

    ‘AN EVIDENCE-BASED APPROACH TO PRICING CO2 EMISSIONS’

    Ross McKitrick

    I propose ……… that the best way to proceed would be to put a small tax on CO2
    emissions, and tie its subsequent evolution to a suitable measure of atmospheric
    temperatures. If temperatures go up, so does the tax. If they do not, the tax does
    not change. In this way everybody will expect to get the policy they think best, and
    whoever turns out to be right deserves to be so. Sceptics who do not believe in global
    warming will not expect the tax to go up, and might even expect it to go down. Those
    convinced we are in for rapid warming will expect the tax to rise quickly in the years
    ahead. Companies managing factories and power plants will have to figure out who is
    more likely to be right, because billions of dollars of potential tax liabilities will depend
    on what is going to happen. Nobody will benefit from using false or exaggerated
    science: instead the market will identify those who can prove they understand the
    climate well enough to make accurate forecasts. And policy-makers will be guaranteed
    that, whatever the tax does in the future, the policy will turn out to have been the right
    one.

    http://www.thegwpf.org/content/uploads/2013/07/McKitrick-Carbon-Tax-10.pdf

  10. Richard C (NZ) on July 11, 2013 at 11:22 am said:

    Roger Pielke Jr. ‏@RogerPielkeJr 11h

    Here is the @LloydsofLondon 2013 Risk Index–> http://www.lloyds.com/news-and-insight/risk-insight/lloyds-risk-index … On the index climate change at number 32, natural hazards in the 40s

    https://twitter.com/RogerPielkeJr/status/354925939798450176

    2013 RISKS (page 33)
    1 High taxation
    2 Loss of customers/cancelled orders
    3 Cyber risk
    4 Price of material inputs
    5 Excessively strict regulation
    6 Changing legislation
    7 Inflation
    8 Cost and availability of credit
    9 Rapid technological changes
    10 Currency fluctuation
    11 Interest rate change
    12 Talent and skills shortage
    13 Reputational risk
    14 Corporate liability
    15 Major asset price volatility
    16 Poor/incomplete regulation
    17 Government spending cuts
    18 Fraud and corruption
    19 Theft of assets/Intellectual Property
    20 Failed investment
    21 Corporate governance and internal
    oversight failure
    22 Critical infrastructure failure
    23 Supply chain failure
    24 Increased protectionism
    25 Insolvency risk
    26 Energy security
    27 Demographic shift
    28 Industrial/workplace accident
    29 Pollution and environmental liability
    30 Sovereign debt
    31 Piracy
    32 Climate change <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
    33 Water scarcity
    34 Strikes and industrial action
    35 Population growth
    36 Expropriation of assets
    37 Urbanisation
    38 Food security
    39 Harmful effects of new technology
    40 Pandemic
    41 Abrupt regime change
    42 Terrorism
    43 Riots and civil commotion
    44 Flooding
    45 Windstorm
    46 Drought
    47 Threats to biodiversity and conservation
    affecting our operations
    48 Earthquake
    49 Impact of space weather
    50 Volcanic eruption

    http://www.lloyds.com/~/media/Files/News%20and%20Insight/Risk%20Insight/Risk%20Index%202013/Report/Lloyds%20Risk%20Index%202013report100713.pdf

  11. Interesting that earthquake is number 48. I suspect this list will be somewhat different for NZ.

    I have recently heard a few tales of retailers shutting up shop because they cannot afford the new insurance premiums and earthquake building codes.

  12. Richard C (NZ) on July 11, 2013 at 11:40 am said:

    Obama’s Climate Action Plan: How it miscalculates the social cost of carbon. – Slate Magazine

    ‘Wrong Number’
    Obama’s new climate plan is based on a dubious calculation and falls woefully short.

    By Eric Posner

    […] Where does the SCC come from? In 2010, the White House convened a group of officials from across the government to calculate this number. The group used three computer models that estimate the economic impacts of climate change, the most famous of which was created by Yale economist William Nordhaus. In May, the group updated its analysis, yielding the $38 figure above. (There are other figures based on other assumptions, but $38 will most likely be the one the EPA and other agencies use.)

    Nordhaus’ model starts with the historic growth rate of the global economy and then estimates the amount that climate-related damage will reduce it. The problem, which Nordhaus candidly acknowledges, is that no one has any idea what the economic impact of climate change will be (other than that it will be very bad). So he waves his hands and makes a guess based on his reading of various climate studies. The key claim is that if mean global temperatures increase by 2.5 degrees, global GDP will decline 1.8 percent. If global temperatures rise more, the decline will increase quickly. But in no realistic scenario does the model predict that the harm from climate change will completely wipe out economic growth—global GDP never levels out and declines. […]

    As noted in an insightful new paper by my University of Chicago colleague David Weisbach and several co-authors called Climate Impacts on Economic Growth as Drivers of Uncertainty in the Social Cost of Carbon (unfortunately not yet online), the government’s assumptions lead to some bizarre conclusions. Because global GDP can only increase, and because 300 years is a very long time for the economy to grow, even at a low rate, people will be vastly wealthier in 2300 than they are now, according to the Nordhaus model, even if the government does nothing about climate change. In one scenario, temperatures rise 6 degrees (a level that some scientists believe would be cataclysmic), yet per capita income would be 30 times higher than what it is today—that is, $1.5 million per household in the United States rather than $50,000. Why should we incur costly regulation today to help remote descendants who will dine on caviar and travel by jetpack?

    The answer, according to Weisbach and his co-authors, is that they won’t. The problem lies with the models that assume that GDP won’t fall. But if climate change hurts productivity rather than just overall output, GDP could fall. And if it falls year by year, even by only a little bit, then 300 years from now people will eat grubs and live in caves.

    >>>>>>>>>>

    http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/07/obama_s_climate_action_plan_how_it_miscalculates_the_social_cost_of_carbon.single.html

  13. Richard C (NZ) on July 11, 2013 at 11:46 am said:

    [Posner] – “The bottom line is this: The current SCC calculation embodies the worst of both worlds: too low from the standpoint of global well-being, too high from the standpoint of law. When power companies challenge the new climate regulations in court—we won’t have to wait long—they will argue that the rules fail a cost-benefit analysis. Courts don’t always demand cost-benefit analyses, but they sometimes do, and even if they don’t here, the arbitrary assumptions underlying the government’s number will bother them, as they should.”

  14. Richard C (NZ) on July 11, 2013 at 1:37 pm said:

    I looked for NZ but we just get lumped into Asia-Pacific. There’s Chart 7 on page 23:

    ‘Natural hazards – priority and preparedness by region’

    And APPENDIX 2 Chart 8, page 34:

    ‘Top 50 priority risk scores in 2013 – Asia-Pacific’

    The earthquake ranking is up 3 from the global average to 45 in Asia-Pacific and the “preparedness” is much better than South Africa for example (natch). The climate change ranking is different for each region too e.g. varying 43 Europe to 30 Latin America (32 Asia-Pacific).

    The free mag ‘Tauranga & Rotorua Property investor’ May edition devoted 3 articles over 5 pages to seismic strengthening, The third one is:

    ‘Seismic strengthening – a disaster in its own right’ – “As more becomes known about the cost of seismic strengthening, some owners face losing all their equity”

    The risk for these people from retroactive earthquake mitigation is substantial and already realized, The risk from an actual earthquake is still in the future. A fellow I knew from my school days has a block in downtown Tauranga and was featured in the BOP Times saying he was just going to demolish and rebuild. That will displace the existing business tenents of course. Having been to San Francisco and seen the demolish-and-rebuild there even of historic buildings (replicas), I have to say I’m in favour of that. I don’t know why people are bothering trying to preserve the ChCh cathedral for example – just demolish and rebuild an earthquake-proof replica from photos, but it doesn’t have to be EXACTLY the same (think Napier too).

    In short, the Asia-Pacific (let alone NZ) climate change vs earthquake risk ranking (32 vs 45) is ludicrous. Even reversing it (32 earthquake, 45 climate change) is still unrealistic I think. Earthquake should be in the top half in a 1 – 50 NZ scale (along with volcanic eruption – at 50 by Lloyds in Asia-Pacific), and climate change at 50.

  15. Richard C (NZ) on July 19, 2013 at 11:17 am said:

    Surprising testimony of Robert Murphy at the U.S. Senate Hearing “Climate Change: It’s Happening Now”:

    “The American public and policymakers alike have been led to believe that the social cost of carbon is an objective scientific concept akin to the mass of the moon or the radius of the sun. However, although there are inputs from the physical sciences into the calculation, estimates of the social cost of carbon are heavily dependent on modeling assumptions. In particular, if the White House Working Group had followed OMB guidance on either the choice of discount rate or reporting from a domestic perspective, then the official estimates of the current SCC would probably be close to zero, or possibly even negative—a situation meaning that (within this context) the federal government should be subsidizing coal-fired power plants because their activities confer external benefits on humanity.”

    http://judithcurry.com/2013/07/18/u-s-senate-hearing-climate-change-its-happening-now/#more-12235

  16. Richard C (NZ) on August 1, 2013 at 4:37 pm said:

    ‘A Closer Look at the Government’s Determination of the Social Costs of Carbon’

    By Patrick J. Michaels and Paul C. “Chip” Knappenberger

    “…..the government’s determination and use of the social cost of carbon is simply a bad idea. The extreme sensitivity to its input parameters means that the final answer is easily molded to be whatever the user desires it to be. And since the current government user desires a limit on carbon dioxide emissions, the SCC is positive and has gotten larger just in time for the new round of proposed regulations and executive actions—ignoring new climate science in the process.”

    http://www.cato.org/blog/closer-look-epas-determination-social-costs-carbon

  17. Richard C (NZ) on August 1, 2013 at 5:20 pm said:

    Michaels and Knappenberger:

    “The SCC is about 5 times greater using a 2.5 percent rate than a 5 percent rate. Murphy argues that by federal guidelines (OMB Circular A-4), the Interagency Working Group should also have considered the SCC under a 7 percent discount rate. And had they done so, they very likely would have found the SCC to be negative (i.e., that carbon emissions conferred a net benefit to society). But that would have been an inconvenient result, so the Interagency Working Group ignored that federal guideline.”

    “They also dismissed the directive to report the costs and benefits from a domestic perspective, where costs are only considered to be a fraction of the total global costs (according to the Interagency Working Group, between 7 percent and 23 percent). Considering a 7 percent discount rate and the new science indicating a lower climate sensitivity and almost assuredly, the domestic costs would approach zero (if not, in fact, be negative).”

    “We think the blunders the Obama administration has committed in setting their “price” of carbon dioxide and methane (as opposed to the silly “carbon”) may be actionable, action we’d be happy to contribute to.”

  18. Richard C (NZ) on August 2, 2013 at 12:28 pm said:

    ‘Lawmakers vote to thwart EPA move on ‘social cost of carbon’ ‘

    By Ben Geman and Pete Kasperowicz

    The House voted Thursday to block the Environmental Protection Agency from weighing the benefits of curbing carbon emissions when crafting major energy-related regulations.

    Lawmakers voted 234-178 for Rep. Tim Murphy’s (R-Pa.) amendment to prevent EPA from factoring the “social cost of carbon” into rules unless a federal law is enacted that allows its consideration.

    Fifteen Democrats voted with almost all Republicans for the amendment, while three Republicans opposed it.

    The amendment was tacked onto GOP legislation that allows the Energy Department to veto EPA rules with $1 billion or more in costs if the department determines they would harm the economy.

    […]

    The underlying bill is slated to clear the House Thursday afternoon but faces dim prospects in the Democrat-led Senate.

    Read more: http://thehill.com/blogs/e2-wire/e2-wire/315091-house-votes-to-thwart-epa-on-social-cost-of-carbon#ixzz2albN594i

  19. Richard C (NZ) on August 4, 2013 at 4:46 pm said:

    ‘IER’s Robert Murphy on the Social Cost of Carbon’

    by Marlo Lewis

    […]

    Murphy challenges the intellectual bona fides of the Obama administration’s May 2013 Technical Support Document (TSD) on the social cost of carbon (SCC). Climate activists increasingly invoke SCC estimates to justify the imposition of carbon taxes, fuel economy mandates, Soviet-style production quota for wind farms, fracking bans, and other interventions to rig the marketplace against reliable, affordable, fossil energy. They speak as if SCC estimates disclose an objective reality like the boiling point of water or the specific gravity of iron. In fact, SCC estimates are assumption-driven hocus-pocus or, as my colleague Myron Ebell prefers to say, “hogwash.”

    […]

    The only point I would add to Murphy’s trenchant analysis is that even if (a) the climatological, meteorological, and technological forecasts underpinning SCC estimates were accurate, (b) agencies use appropriate discount rates, and (c) agencies use U.S. domestic SCC estimates in cost-benefit analysis, SCC analyses would still be one-sided and misleading.

    Even if scrupulously based on the best science and economics, SCC analyses would still ignore the social benefits — the positive externalities — of affordable, reliable, carbon-based energy. Consequently, such analyses turn a blind eye to the social costs — the adverse effects on public health and welfare – of the economic losses imposed by carbon mitigation schemes.

    Unless paired with a rigorous and thorough analysis of climate policy risk, SCC analyses are functionally biased and partisan. Will we ever get a fair and balanced assessment from SCC analysts? Fat chance.

    >>>>>>>>>

    http://www.globalwarming.org/2013/07/24/iers-robert-murphy-on-the-social-cost-of-carbon/

  20. Richard C (NZ) on August 14, 2013 at 2:31 pm said:

    ‘Scathing MIT Paper Blasts Obama’s Climate Models’

    Author:Robert Murphy

    […]

    Current Crop of Computer Models “Close to Useless”

    It is this second class of models, the economic/climate hybrids called Integrated Assessment Models, that Pindyck discusses. Pindyck’s paper is titled, “Climate Change Policy: What Do the Models Tell Us?” Here is his shocking answer, contained in the abstract:

    Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models’ descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading. [Bold added.]

    For those unfamiliar with academic prose, such inflammatory language is almost unheard-of, particularly for a politically sensitive topic such as climate change economics. Pindyck is here reaching the exact same conclusion that I gave in my recent testimony before Senator Barbara Boxer and other members of the Senate Environmental and Public Works Committee: The computer models used by the Obama Administration’s Working Group to estimate the so-called “social cost of carbon” should not be the basis of federal policy.

    After my prepared remarks during the hearing, Boxer and others dismissed my testimony as the product of willful ignorance of “the science,” yet I pointed out that it was she and her colleagues who were misinformed. The professional economists who specialize in climate change would know that every point of my testimony was accurate; indeed I was merely explaining to Senator Boxer et al. what the Obama’s Administration’s own Working Group was saying in their official report.

    >>>>>>>>

    http://www.instituteforenergyresearch.org/2013/08/12/scathing-mit-paper-blasts-obamas-climate-models/

  21. Richard C (NZ) on August 24, 2013 at 10:59 am said:

    Robert Murphy’s follow-up IER post:

    ‘MIT Economist on Bogus Climate Damage Functions’

    In my previous post, I summarized Robert S. Pindyck’s scathing paper on the computer models used by the Obama Administration for its estimates of the “social cost of carbon.” Pindyck’s critique is all the more compelling because he is a professor of economics and finance at MIT, with several decades’ experience publishing articles and books dealing with energy, and he is actually a proponent of a carbon tax. In the present article, I will explore a particular aspect of Pindyck’s critique that I skipped in the original post. Believe it or not, Pindyck explains that the allegedly state-of-the-art computer models that are now determining federal policy have damage functions that are literally made up. As I have been telling my economist colleagues for years, if they actually understood how these computer models were designed, they would have far less confidence in the “optimal carbon tax” numbers shooting out of the other end.

    >>>>>>>>

    http://www.instituteforenergyresearch.org/2013/08/21/mit-economist-on-bogus-climate-damage-functions/

  22. Richard C (NZ) on October 24, 2013 at 8:47 pm said:

    ‘World Is Spending $1 Billion Per Day To Tackle Global Warming’

    * EurActiv

    The world invested almost a billion dollars a day in limiting global warming last year, but the total figure – $359 billion – was slightly down on last year, and barely half the $700 billion per year that the World Economic Forum has said is needed to tackle climate change.

    These are the findings spelled out in the latest Climate Policy Initiative (CPI) report. For the first time, it estimated global North-South cash flows at between $39 and $62 billion.

    But the total funding pot fell $5 billion from 2012, and remains just a tiny fraction of the $5 trillion that the International Energy Agency estimates is required by 2020 for clean energy projects alone, if rising temperatures are to be pegged at 2 degrees Celsius.

    >>>>>>>

    http://www.thegwpf.org/world-spending-1-billion-day-tackle-global-warming/

  23. Richard C (NZ) on February 13, 2014 at 7:38 am said:

    ‘Economist Says Best Climate Fix A Tough Sell, But Worth It’

    by Richard Harris | February 11, 2014

    We often talk about climate change as a matter of science. But the biggest questions are really about money. How much would it cost to fix the problem — and what price will we pay if we don’t?

    The man who invented the field of climate economics 40 years ago says there’s actually a straightforward way to solve the problem. William Nordhaus has written a book [‘Climate Casino’] that lays it out in simple terms.

    […]

    “Actually from an economic point of view, it’s a pretty simple problem,” he says.

    If people would simply pay the cost of using the atmosphere as a dump for carbon dioxide, that would create a powerful incentive to dump less and invest in cleaner ways to generate energy. But how do you do that?

    “We need to put a price on carbon, so that when anyone, anywhere, anytime does something that puts carbon dioxide in the atmosphere, there’s a price tag on that,” he says.

    His colleagues say that inspiration — now taken for granted — makes Nordhaus a prime candidate for a Nobel Prize. A lot of his work has been figuring out how big a price we should pay, and what form it should take.

    […]

    Nordhaus is hardly a saber rattler on this subject. Though he sees the potential for very serious problems down the road, he still says that some climate change can actually be good for agriculture — at least up to a point. And he says we shouldn’t do any more to address climate change than makes economic sense, even if that means letting the planet warm more than the international target of 2 degrees Celsius.

    His calm approach has at times infuriated environmental activists, who are dismayed at the pace of global action.

    More>>>>>

    http://www.kqed.org/news/story/2014/02/11/133777/economist_says_best_climate_fix_a_tough_sell_but_worth_it?source=npr&category=science

  24. Richard C (NZ) on August 28, 2014 at 2:07 pm said:

    ‘The crazy world of Renewable Energy Targets’

    JoNova, August 18th, 2014

    […] The RET scheme in Australian pays a subsidy to wind farms and solar installations. Below, Tom Quirk shows that this is effectively a carbon tax (but a lousy one), and it shifts supply — perversely taxing brown coal at $27/ton, black coal at $40/ton and gas at up to $100/ton. Because it’s applied to renewables rather than CO2 directly, it’s effectively a higher tax rate for the non-renewable but lower CO2 emitters. […]

    Renewable energy sources – Complications!

    Guest post by Tom Quirk

    http://joannenova.com.au/2014/08/the-crazy-world-of-renewable-energy-targets/

  25. Richard C (NZ) on August 28, 2014 at 8:10 pm said:

    RET Review report
    Renewable Energy Target Scheme
    Report of the Expert Panel

    Here:
    http://www.climateconversation.wordshine.co.nz/open-threads/climate/regions/australia/comment-page-2/#comment-869818

  26. Richard C (NZ) on September 20, 2014 at 12:34 pm said:

    The Hartwell Paper
    A new direction for climate policy after the crash of 2009
    May 2010

    http://eprints.lse.ac.uk/27939/1/HartwellPaper_English_version.pdf

    The Kaya Identity page 27 pdf

  27. Richard C (NZ) on September 20, 2014 at 12:53 pm said:

    The Left vs. the Climate
    Why Progressives Should Reject Naomi Klein’s Pastoral Fantasy — and Embrace Our High-Energy Planet

    September 18, 2014 | Will Boisvert

    http://thebreakthrough.org/index.php/programs/energy-and-climate/the-left-vs.-the-climate

  28. Richard C (NZ) on September 20, 2014 at 1:24 pm said:

    Stern’s Turn
    Posted by Ben Pile on September 16, 2014

    Stern presented the world with a stark choice: pay 1% of GDP to fix climate change now, or lose at least 5% of GDP in the future.

    It is a surprise then, to see Nicholas Stern in today’s Guardian, arguing that growth is now possible:………..

    http://www.climate-resistance.org/2014/09/sterns-turn.html

  29. Mike Jowsey on September 24, 2014 at 3:35 pm said:

    Even our own Rod Oram is drinking the Stern koolaid…
    http://www.stuff.co.nz/business/opinion-analysis/10519660/Missing-the-big-picture

    The next 15 years will see major structural transformations in the global economy,” the report says. “As population growth and urbanisation continue, global output is likely to increase by half or more. Rapid technological advances will continue to reshape production and consumption patterns.”

    But countries will miss these opportunities if they fail over the next few years to introduce policies and strategies to start shifting their economies to low carbon.

    This needs to happen very widely across the world because we have only 15 years or so to make big progress towards reducing greenhouse gases. If we don’t, we will suffer from devastating climate changes in the years beyond, the report warns.

  30. Richard C (NZ) on September 25, 2014 at 10:02 am said:

    My reply to Mike went to moderation. Not sure how I became Richard+C+(NZ), I didn’t type that in. [That’s mysterious. Your original comment is still sitting there and it seems normal, except for the spurious characters. I’ve been carrying out some maintenance, so perhaps that affected something. Sorry about that. – RT]

  31. Richard C (NZ) on September 25, 2014 at 10:07 am said:

    Difficulties posting (comment in Mods or disappeared and Name changed) so here’s my reply to Mike again:

    From the Oram article:

    “The report [Stern’s] says that beginning the shift to a low carbon global economy is the best way to overcome two chronic issues: developed countries are suffering from economic stagnation following the Global Financial Crisis; and developing countries are suffering from rapid deterioration of their air, land and water. For example air pollution is causing seven million premature deaths a year around the world. ”

    Except neither situation is climate change and carbon dioxide emissions aren’t causing premature deaths right now and never will. “[D]evastating climate changes” will only occur “in the years beyond” “15 years or so” according to Stern, not now and not of that type. Wont happen as a result of GHG warming of course, but solar cooling? I think so, but perhaps not devastating.

    If economic change is really all about “overcoming” those “two chronic [non-climatic economic] issues” (since when was this the issue?), the proposed solution (“the shift to a low carbon global economy”) which involves shutting down large sectors of the global economy will have the opposite effect i.e. negative growth, recession. massive drops in GDP, unemployment, less revenue for health and education, etc. There are no replacement activities for those sectors and workers, see (H/t BH) Paul Homewood’s article:

    ‘Where Did All The Green Jobs Go?':

    http://notalotofpeopleknowthat.wordpress.com/2014/09/21/where-did-all-the-green-jobs-go/

    Mixed and contradictory messages.

  32. Richard C (NZ) on September 25, 2014 at 6:34 pm said:

    ‘Better Growth, Better Climate: The New Climate Economy Report’ (Stern 2.0) is from this outfit:

    The Global Commission on the Economy and Climate, commissioned by seven countries – Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom – as an independent initiative to report to the international community.

    http://newclimateeconomy.net/content/about

    The Global Commission (is it really?) includes Helen Clark, Administrator, UN Development Progamme, and former Prime Minister of New Zealand

    http://newclimateeconomy.net/content/global-commission

    All built on a house of cards. My comment at Stuff: http://www.stuff.co.nz/business/opinion-analysis/10519660/Missing-the-big-picture

    [Name still reverting to Richard+C+(NZ) RT, but I can edit that]

  33. Richard C (NZ) on September 25, 2014 at 8:32 pm said:

    ‘Better Growth, Better Climate: The New Climate Economy Report’

    “Delay in managing climate risk only worsens the problem.”

    “Above all, a global transition to a low-carbon and climate-resilient development path will need to be underpinned by an international agreement committing countries to this collective economic future.”

    >”committing countries to this collective economic future” ?

    Hmmm………many, many, people (66 million in the USSR alone) have died in countries “committing” to “collective” economic futures:

    Collectivism – Politics

    According to Moyra Grant, in political philosophy “collectivism” refers to any philosophy or system that puts any kind of group (such as a class, nation, race, society, state, etc.) before the individual.[4] According to Encyclopædia Britannica, “collectivism has found varying degrees of expression in the 20th century in such movements as socialism, communism, and fascism. The least collectivist of these is social democracy, which seeks to reduce the assumed inequities of unrestrained capitalism by government regulation, redistribution of income, and varying degrees of planning and public ownership. In communist systems collectivist economics are carried to their furthest extreme, with a minimum of private ownership and a maximum of planned economy.”[5]

    http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Collectivism.html

    What could possibly go wrong?

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