The High Costs and Negligible Benefits of Climate Policy

Heritage Article Link

Despite trends in the actual climate data and the failure of models to accurately depict reality, many alarmists still argue that carbon mitigation policies are necessary to combat damages caused by future climate change. Heritage Foundation research has found that any sort of carbon tax, cap and trade, or other combination of carbon regulations such as the regulations on new power plants and existing ones (the Clean Power Plan) will only kill jobs and cut income, all without having any meaningful impact on global temperatures, now or in the future.


Higher Energy Bills, Less Economic Growth.

A Heritage Foundation analysis[55] estimates that, by 2035, the costs of the Obama Administration’s climate agenda to be:


An average employment shortfall of nearly 400,000 jobs; Average employment shortfall in manufacturing of 200,000 jobs; An aggregate gross domestic product (GDP) loss of more than $2.5 trillion (inflation-adjusted); and A total income loss of more than $20,000 per family of four (inflation-adjusted).


Higher energy costs hurt low-income families the most as they spend a disproportionate percentage of their budget on energy bills. In fact, EPA Administrator McCarthy admitted that the Clean Power Plan would do as much, saying, “We know that low-income, minority communities would be hardest hit.”[56]


No Climate Benefit. The climate return, if any, is negligible as the President’s climate policies will have next to no impact on global temperatures. The same climate sensitivity modeling as used by the EPA shows that totally eliminating all CO2 emissions from the U.S. would moderate any warming by only 0.137 degree Celsius by 2100.[57] If the entire industrialized world totally eliminated all CO2 emissions, only 0.278 degree Celsius of warming would be averted by the end of the century.[58]

Even supporters of the Obama Administration who believe global warming is a crisis have complained the Administration’s efforts fall pathetically short of what is needed.[59] EPA Administrator McCarthy has admitted in congressional testimony that the benefits of the Clean Power Plan cannot be characterized in terms of global temperature reductions.[60] Secretary of State John Kerry perhaps put it most clearly while speaking at the United Nations Framework Convention on Climate Change (UNFCCC):

The fact is that even if every American citizen biked to work, carpooled to school, used only solar panels to power their homes, if we each planted a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what—that still wouldn’t be enough to offset the carbon pollution coming from the rest of the world.

If all the industrial nations went down to zero emissions—remember what I just said, all the industrial emissions went down to zero emissions—it wouldn’t be enough, not when more than 65 percent of the world’s carbon pollution comes from the developing world.[61]


Even the benefits of the Obama Administration’s climate policies need to be qualified. For example, the EPA claims that the Clean Power Plan, which is only one of a suite of the Obama Administration’s climate regulations,[62] will prevent up to 90,000 asthma attacks, 300,000 lost days of school and work, and 3,600 premature deaths. What the EPA does not communicate clearly to the public, however, is that none of these health benefits come from decreasing carbon dioxide emissions to avoid global warming, but from coincidental benefits (or “co-benefits”) from reducing other air pollutants which the EPA already heavily regulates. In essence, the few health benefits the EPA claims from this one rule are actually double counted from other regulations.[63] And virtually none are the result from climate change mitigation. In addition, the EPA’s health claims do not square with the data that show asthma rates rising even as levels of these very same pollutants fall.[64]


Social Cost of Carbon Deceptively Inflates Costs and Benefits. Underpinning the EPA’s proposed regulations and theoretically determining the degree of regulation is a cost-benefit analysis that uses the social cost of carbon (SCC). At least as it is currently calculated, the social cost of carbon is fundamentally unsuited for regulatory use. It purports to show the economic damage that one ton of carbon dioxide emitted in a given year will cause over the next 300 years. However, many of the factors used to calculate the SCC are arbitrary or imprecise.


The higher the SCC, the greater the alleged benefits of carbon-cutting regulations. The SCC as calculated by the federal government has created a way to make more expensive global warming rules seem like a good deal.


The EPA uses statistical models of the environment and economy (called integrated assessment models), to determine the value of the SCC. Regulatory use of the SCC is disturbing, because the method for determining the value of the SCC is fundamentally arbitrary. Even some proponents of policies to cut carbon dioxide emissions have pointed out the fatal flaws, particularly in the way the statistical models calculate damages from CO2 in estimating the SCC.[65]


The EPA’s Equilibrium Climate Sensitivity (ECS) distribution is also outdated and no longer considered scientifically defensible.[66] It was specified by Gerard Roe and Marcia Baker in the peer-reviewed journal Science in 2007. During the past few years, many more ECS distributions have been published in peer-reviewed literature, suggesting lower probabilities of extreme global warming.[67]


Heritage Foundation research has illustrated that the statistical models used to estimate the SCC are “flawed beyond use for policymaking,” noting that the models can be easily manipulated by user-selected assumptions. In fact, under reasonable alternative assumptions, one of the models used to estimate the SCC provides a negative estimate of the SCC—implying that there are net benefits to global warming, which would argue for subsidizing, not taxing, CO2 emissions.[68]


Ultimately, these models mislead the public and misinform politicians. Politicians should not base policy actions on models which have yet to accurately describe data from observed reality.


Green Handouts Have Economic and Real Environmental Costs. Among the supposed benefits is that the Obama Administration’s climate actions stimulate investment in renewable energy technologies like wind, solar, and bioenergy with federal tax credits, grants, loans and guarantees, worker training programs, and RD&D. Bloomberg New Energy Finance and Ceres estimate that $12.1 trillion in renewable energy investments globally must be made in the next 25 years to keep global warming to two degrees Celsius.[69]


Setting aside the harms federal subsidies do to the very industries they intend to help,[70] renewable energy sources have their own negative environmental impacts, like other energy choices, despite their “green” image. By one calculation, roughly 310 square miles are required on average for a wind facility to generate 1,000 megawatts of electricity and 60 square miles for a solar facility. By comparison, a 1,000 megawatt nuclear power plant requires 1.3 square miles on average.[71] Yet so many federal subsidies and regulations are geared toward replacing energy-dense (and therefore space-efficient) resources like coal with surface-hogging, intermittent renewables.[72]


Preventing a Better Standard of Living, Here and Abroad. Speaking at a preliminary climate meeting, the environmental minister of India, Prakash Javadekar, said: “Unless we tackle poverty, unless we eradicate poverty, we cannot really address the climate change.”[73] As a measure of general economic wellbeing, America’s GDP per capita was $54,629 in 2014. China’s was $7,590 and India’s was $1,581.[74] A mere 25 years ago, China and India’s GDP per capita were a few hundred dollars per person.


Developing nations like India and China argue they should not have to forgo economic growth simply because past growth by developed nations raised world CO2 levels. The developing countries also need economic growth powered by affordable energy. While China does have serious air and water quality problems, they are not from carbon dioxide. Carbon dioxide is a colorless, odorless, non-toxic gas. However, the Obama Administration’s climate regulations and international leadership at global warming venues like the UNFCC run directly counter to allowing the affordable, reliable, and widely available energy essential for combating poverty. Energy heats homes and meals; powers schools, hospitals, and factories; and creates products and opportunities that help lift people out of poverty.


Eighty percent of the world’s energy needs are met through carbon dioxide emitting natural resources like coal, oil, and natural gas. Preventing and significantly restricting their use is a huge barrier on the road out of poverty for billions of the world’s poorest.


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