Research: Climate Change Mitigation Cost Estimates

A new paper published in today’s Nature (subs. req’d) estimates costs to keep total man-made temperature rise below a set of thresholds (including 2°C).  This paper joins a long list of previous estimates, all of which are highly dependent on sets of assumptions.  The authors try to take uncertainties from four disciplines into account: geophysical, technological, social and political.  They state that “Our information on temperature risk and mitigation costs provides crucial information for policy-making, because it clarifies the relative importance of mitigation costs, energy demand and the timing of global action in reducing the risk of exceeding a global temperature increase of 2°C, or other limits such as 3°C or 1.5°C, across a wide range of scenarios.”  Given my recent push into the policy side of climate change, this paper provides a good example of something interesting and useful.

I will briefly state a central economic tenet: if you want to reduce how often an action takes place, the most direct way of doing so is to tax it.  Thus, if we want to minimize CO₂ emissions, we should tax carbon at the source.  It is also obvious that the higher the cost of carbon, the lower carbon emissions will be within a set of real-world constraints.  What then should a carbon price be today that would work to keep global temperature rise above pre-industrial values below 2°C?  With a 50% probability, the authors estimate the 2012 price of carbon should be US$20 tCO₂e⁻¹ ($20 per ton of CO₂-equivalent emission), as the following graph shows:

You should ask yourself a question at this point.  If there was a 50% probability of arriving safely at a destination airport on an airplane, would you buy the ticket?  If there was a 1-in-2 chance of me not surviving that trip, there is no way I would buy that ticket.  But that’s me.  But let’s try to stay away from dire sounding language when talking about climate policy.  Yes, substantial changes would result from 2°C warming.   But most people and ecosystems would survive intact.  I mean only to illustrate what probability looks like for scenarios you or I might encounter.

What prices would generate higher probabilities?  A price of more than US$40 tCO₂e⁻¹ would achieve the 2°C objective with a probability exceeding 66% – much better odds for something we might think is a worthy goal.

It makes sense too that the graph shows an 80% probability of achieving a 2.5°C objective with a 2012 carbon price of US$20 tCO₂e⁻¹ and a >90% probability of achieving a 3°C objective at the same price.  We might not want to use 2.5°C or 3°C as our goal – that is our policy choice.  But probabilities increase for higher temperatures as well as higher carbon prices.  Our climate policies determine which of these two represents our actual goal.

The authors’ also state the following: “Yet, despite all of the uncertainty in the geophysical, social and technological aspects, our analysis indicates that the dominant factor affecting the likelihood and costs of achieving the 2°C objective is politics.  Only for low-energy-demand pathways can global mitigation action be delayed until 2020 and the 2°C objective still be achieved with a probability exceeding 66% (or delayed until 2030 with a 50% probability).”

Does anyone seriously believe that we can keep energy demand at turn-of-the-21st-century levels?  Developing nations want the same access to energy that developed nations have enjoyed for decades.  Demand will continue to rise throughout the 21st century.  Absent radical technological innovation (and continued political inaction), I find a 2°C target is already out of reach.  If carbon prices aren’t enacted in the next few years, it won’t matter very much what the price of carbon is afterwards, with respect to a 2°C target – the target will simply be unachievable.  Other targets will have to come into view.  Left unsaid in this discussion is whether a temperature value should even be our target.  There are other values that likely make more sense to more people in the world and should therefore be the central focus instead.

2011 CO2 Emissions Up

In 2011, global emissions of carbon reached an all-time high of 31.6 Gigatonnes, according to preliminary IEA estimates.  That was 3.2% (1.0 Gt) higher than 2010 emissions.  The IEA has developed an energy pathway consistent with a 50% chance of limiting global temperature increases to only 2°C, which requires CO₂ emissions to peak at 32.6 Gt no later than 2017.  This reinforces statements I’ve made in the past year that a maximum of 2°C warming is no longer feasible.  There is no reason short of worldwide economic collapse that emissions will peak at or below 32.6 Gt prior to 2017.  As emissions continue, more warming and additional effects are locked into Earth’s climate system.  The good news is due to transfer of power generation from coal to natural gas (more natural gas plants as gas prices fell in 2009 and 2010), US CO₂ emissions fell by 92 Mt (1.7%) from 2010 to 2011.  Indeed, emissions have fallen 7.7% from 2006 levels in the US.  A significant portion of that decrease was due to the economic troubles from which we still haven’t recovered, of course.  Do market forces exist to help reduce those emissions?  Absolutely they exist: taxes and permit systems.  Note that the second article includes a brief discussion of why previous environmental action was taken.  It cites the immediate identification of the causality behind environmental disasters.  I disagree with the author’s assessment that such an event will ever occur with respect to climate change.  I further disagree that such a “Climate Pearl Harbor” (as it has been described elsewhere) is the only means by which bottom-up action and support can be generated.