Why we should act

Jonathan G. Koomey, Ph.D. Project Scientist, LBNL

Consulting Professor, Stanford University April 9th, 2010

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What responsibility do we have to the future?

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A personal view of insurance

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Key points about climate

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IPCC2007scenariosto2100‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐>

Ifwedon’taltercourse,we’llendupwherewe’reheaded

GlobalaveragesurfacetemperatureisheadingwelloutsidetherangeexperiencedduringthetenureofHomosapiensonEarth(slidecourtesyofJohnP.Holdren,HarvardUniversity,modifiedbyJK).

Year2000concentra/ons

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MIT(Sokolovetal.)2009

One example: in a warming world, summers will get a LOT hotter

DerivedfromdataandanalysisinHayhoeetal.20086

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Long residence time of CO2 means big reductions needed to stabilize temps.

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Stabiliza/oncaseStabiliza/oncase

The longer we wait, the harder the task will be

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Areaunderbothcurvesisthesame,correspondingtothesameemissionsbudget.Stabiliza/oncurveisthesameasinthepreviousslide.

Most capital existing in 2050 will be built between now and then

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Percentage of total stock in 2050 Assumes growth in electricity use, GDP, and population from IEA’s World Energy Outlook 2009. Lifetimes of capital stock 50 years for power plants and comml bdgs, 30 yrs for industrial, and 100 years for residences.

Lomborg claims he’s bringing economic reasoning to the

climate issue.

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That’s a worthy goal.

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What does the neoclassical economics literature say?

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4/9/10 13

Analyzing a pollution externality: the standard approach

Op/maltax

Nordhaus of Yale says… •  “Global warming is a serious problem that will

not solve itself…There is no case for delay. The most fruitful and effective approach is for countries to put a harmonized price–perhaps a steep price–on greenhouse gas emissions…” (optimal price = $7.40/tonne CO2 in 2005 rising between 2 and 3% real each year to account for rising damages)

W. Nordhaus, A Question of Balance, pp.28-29 (p.15-16 for optimal price).

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Yohe of Wesleyan says… •  “Simple economics tells you that the most

cost-effective way of responding is to start now.”

•  “We should start with a price for carbon in, say, 2008…at $15 per ton increasing at the rate of interest.”

– Quoted in Scientific American online, November 26, 2007. David Biello was the interviewer.

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Anthoff, Tol, and Yohe say •  “We show that the social cost of carbon lies

anywhere in between 0 and $120,000/tC. However, if we restrict these two parameters to match observed behavior, an expected social cost of carbon of $60/tC ($16/tCO2) results. If we correct this estimate for income differences across the world, the social cost of carbon rises to over $200/tC ($55/tCO2).”

–Anthoff et al. 2008, Risk Aversion, Time Preference, and the Social Cost of Carbon

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Galiana and Green say… •  “Our technology-led policy also includes a

variant on carbon pricing…a $5 charge levied on each tonne of CO2 emitted…[that] would be allowed to gradually rise, doubling, say, every 10 years.”

– Lane et al. 2009. Copenhagen Consensus on Climate: Advice for Policy Makers. Copenhagen: Copenhagen Consensus Center. <http://www.fixtheclimate.com>

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Lomborg’s conclusions from Copenhagen Consensus: Wait

and see, no (or tiny) carbon taxes, no other climate policies,

only R&D on mitigation technologies and geoengineering.

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Lomborg says… •  “Short-term carbon emission reductions

through carbon taxes [even ones as low as $0.50/ton] are a ‘poor’ response to global warming [and] cutting carbon through cap-and-trade would be an even poorer solution.”

– Lomborg’s introduction to Lane et al. 2009. Copenhagen Consensus on Climate: Advice for Policy Makers. Copenhagen: Copenhagen Consensus Center. <http://www.fixtheclimate.com>

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He also says •  “[Instead of implementing] ambitious, early,

and large carbon-cutting programs…it would be smarter to act cautiously by implementing a low carbon tax of about $0.5 per ton…and increase it gradually through the century .”

–Lomborg, Bjorn. 2009. Beyond the Carbon Crusade. Copenhagen: Copenhagen Consensus Center. August. <http://www.fixtheclimate.com>

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?

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In addition, neoclassical economics has its limits…

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Neoclassical economic models biased towards

•  underestimating damages – Many impacts not convertible to dollars with

precision or at all – Potential nonlinearities and feedbacks not

represented well or at all •  overestimating mitigation costs

– Using incomplete technology + policy portfolios – Omitting learning and increasing returns to scale –  Ignoring options that save money and reduce C

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Pascal’s wager for climate •  What if I’m wrong?

– At most a 1-2 year delay of achieving a certain global GDP level because of costs of action (but costs will almost certainly be much lower)

– Shift away from fossil fuels, which is good for other reasons (avoids local air pollution, coal waste, mining accidents, and oil dependence. Also allows us to compete better with China)

•  What if Lomborg’s wrong? – Catastrophic, irreversible, and unpredictable

damages to the global life-support systems upon which we all depend

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Conclusions •  The science about climate risks is clear: our

current path is not sustainable •  Arguments for delay do not reflect current

thinking in neoclassical economics or the realities of the climate system.

•  We buy insurance against catastrophic risks all the time, and should do the same for climate by investing in a low carbon future

•  We have many proven money saving and low-cost options, we just need the will to act – And acting will substantially lower costs because

of learning-by-doing, but we only learn if we DO.

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Our responsibility: To create the future

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Useful web sites •  Nice summary for lay people of recent issues in the climate

debate: <http://www.chicagotribune.com/news/ct-met-0228-climate-science-questions-20100302,0,2670932.story>

•  Intergovernmental Panel on Climate Change: <http://www.ipcc.ch/>

•  Policy + science: <http://climateprogress.org> •  Climate science: <http://www.realclimate.org/> •  More on science: <http://www.skepticalscience.com/> •  McKinsey on climate: <http://www.mckinsey.com/clientservice/

ccsi/> •  Copenhagen consensus site: <http://

www.copenhagenconsensus.com/> •  The Lomborg Errors site is very thorough: <http://

www.lomborg-errors.dk/>

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Sources cited •  Anthoff, David, Richard S.J. Tol, and Gary W. Yohe. 2008. Risk Aversion, Time Preference, and the Social

Cost of Carbon. Dublin, Ireland: Economic and Social Research Institute (ESRI). Working paper No. 252. September. <http://www.esri.ie/UserFiles/publications/20080904135651/WP252.pdf>

•  Hayhoe, Katharine, Cameron Wake, Bruce Anderson, Xin-Zhong Liang, Edwin Maurer, Jinhong Zhu, James Bradbury, Art DeGaetano, Anne Marie Stoner, and Donald Wuebbles. 2008. "Regional climate change projections for the Northeast USA." Mitigation and Adaptation Strategies for Global Change. vol. 13, no. 5-6. June. pp. 425-436.

•  IEA. 2009. World Energy Outlook 2009. Paris, France: International Energy Agency, Organization for Economic Cooperation and Development (OECD). November. <http://www.worldenergyoutlook.org/>

•  Lane, Lee, J .Eric Bickel, Isabel Galiana, Chris Green, and Valentina Bosetti. 2009. Copenhagen Consensus on Climate: Advice for Policy Makers. Copenhagen: Copenhagen Consensus Center. <http://www.fixtheclimate.com>

•  Meinshausen, Malte, Nicolai Meinshausen, William Hare, Sarah C. B. Raper, Katja Frieler, Reto Knutti, David J. Frame, and Myles R. Allen. 2009. "Greenhouse-gas emission targets for limiting global warming to 2 degrees C." Nature. vol. 458, April 30. pp. 1158-1162. <http://www.nature.com/nature/journal/v458/n7242/full/nature08017.html>

•  Nordhaus, William D. 2008. A Question of Balance: Weighing the Options on Global Warming Policies. New Haven, CT: Yale University Press. See especially the excellent introductory chapter for interested lay people.

•  Sokolov, A.P., P.H. Stone, C.E. Forest, R. Prinn, M.C. Sarofim, M. Webster, S. Paltsev, C.A. Schlosser, D. Kicklighter, S. Dutkiewicz, J. Reilly, C. Wang, B. Felzer, J. Melillo, and H.D. Jacoby. 2009. Probabilistic Forecast for 21st Century Climate Based on Uncertainties in Emissions (without Policy) and Climate Parameters. Cambridge, MA: Massachusetts Institute of Technology (MIT) Joint Program on the Science and Policy of Climate Change. Report #169. January. Latest BAU forecast for the world.

•  DOWNLOAD HANDOUT FOR FURTHER READING: http://files.me.com/jgkoomey/iibjd8

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Backup slides

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It is fashionable today to assume that any figures about the future are better than none. To produce figures about the unknown, the current method is to make a guess about something or other–called an “assumption”–and to derive an estimate from it by subtle calculation. The estimate is then presented as the result of scientific reasoning, something far superior to mere guesswork. This is a pernicious practice that can only lead to the most colossal planning errors, because it offers a bogus answer where, in fact, an entrepreneurial judgment is required.

— E.F. SCHUMACHER

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Nature op-ed on hacked emails

"Nothing in the e-mails undermines the scientific case that global warming is real — or that human activities are almost certainly the cause. That case is supported by multiple, robust lines of evidence, including several that are completely independent of the climate reconstructions debated in the e-mails."

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AP on hacked emails "LONDON — E-mails stolen from climate

scientists show they stonewalled skeptics and discussed hiding data — but the messages don't support claims that the science of global warming was faked, according to an exhaustive review by The Associated Press…The AP studied all the e-mails for context, with five reporters reading and rereading them — about 1 million words in total…."

32hTp://abcnews.go.com/Technology/wireStory?id=9319400

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What do we know about climate? •  “Unequivocal” that the earth’s climate

is warming •  More than 90% certainty that human

emissions of CO2 and other greenhouse gases are the cause

(FindingsfromIPCC2007WGI,AR4)

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Average global temperatures* and sea levels are up, snow

cover is down *andthemodelsreproducethesehistoricaltemperaturechangeswell.

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Dramatic recent changes in CO2

and CH4 concentrations

Sourceofgraphs:IPCCWorkingGroup1SummaryforPolicyMakers,FourthAssessmentreport,2007.

“WeknowhumansareresponsiblefortheCO2spike[sincepre‐industrial/mes]becausefossilCO2lackscarbon‐14,andthedropinatmosphericC‐14fromthefossil‐CO2addi/onsismeasurable.”–JohnP.Holdren,HarvardUniversity

McKinsey cost curve

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Significant emissions reductions possible in US at zero net cost

Brown, Marilyn A., Mark D. Levine, Walter Short, and Jonathan G. Koomey. 2001. "Scenarios for a Clean Energy Future." Energy Policy (Also LBNL-48031). vol. 29, no. 14. November. pp. 1179-1196. Full report: hTp://www.ornl.gov/sci/eere/cef/

57%of2020savingsfromelectricity,28%fromtransport

Basecase

Advancedcase

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Actual

2 degrees C warming limit •  Keeps global T within humanity’s experience •  Implies cumulative GHG emissions “budget” •  Limit itself now widely accepted (e.g., G8 in

2009), but implications are not well known – Global emissions must turn down in a decade,

down 50% by 2050, more soon afterwards – Waiting has a real cost – We must act quickly on many fronts

•  It’s Sputnik, not Apollo

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2 deg C and fossil fuel reserves

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Source:Meinshausenetal.2009.NBthisgraphusesGtCO2,notC

Delaying makes no sense in the warming limit context

•  When we act makes a difference •  Delaying action on climate

–  eats up the budget – makes required reductions more rapid, more

difficult, and more costly later –  sacrifices learning and reduces possibilities for

future action (learning by doing requires that we DO!)

•  Remember, energy techs don’t ∆ fast and atmospheric residence time of C is ~100 yrs

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