A Landscape Littered with Climate Cash

Contributed by Robert Lyman © 2020

Evaluating Global Climate Policy Expenditures – A Summary

In September 2020 a group of scientists published an article in an open access scientific journal entitled Energy and Climate Policy – An Evaluation of Global Climate Change Expenditure 2011-2018. The authors included Collin OhAiseadha, Gerre Quinn, Ronan Connolly, Michael Connolly and Willie Soon. The objective of the article, as stated in the abstract, was to “consider the potential engineering challenges and environmental and socioeconomic impacts of the main energy sources” that have been proposed as solutions to the climate change policy problem”. The article contains a fascinating compendium of facts and recent analysis of the actions that have been taken by governments over the eight-year period and of the alternative energy options that could be pursued in future. The purpose of this note is to summarize the article’s main findings and conclusions. I recommend that anyone interested in this topic take the time to read the entire article.

Since 2010, the Climate Policy Initiative (CPT) has been publishing annual Global Landscape of Climate Finance reports. Figure 1 indicates the expenditures by governments and industry on climate mitigation and adaptation measures by year and in total over the 2010 to 2018 period.

Figure 1

Table 1 shows the breakdown of expenditures during the 2011-2018 period by sector.

Table 1
Global Climate Change Expenditures 2011-2018

Source: Climate Policy Initiative

So, almost US $3.7 trillion was spent on climate measures globally over the eight-year period. The Climate Policy Initiative acknowledges that this is almost certainly an under-estimate “due to methodological issues related to date coverage and data limitations, particularly domestic government expenditures on climate finance and private investments in energy efficiency, transport, land use and adaptation.” It is unclear, for example, whether these totals include expenditures by state, provincial and municipal governments. They almost certainly do not include the foregone revenues resulting from policies and regulations that impede or prevent the implementation of fossil fuel development and transportation projects for climate policy-related reasons.

The enormity of these expenditures is striking. They average US $458 billion per year, more than the United States spends on Medicaid, or slightly more than the annual GDP of Iran. If spending continued at this rate for a decade, the total expenditures would be almost $4.6 trillion, more that the total expenditures of the United States government in 2019.

Apart from that, at least three important things stand out from these figures. The first is that 95% of them are on climate mitigation, which may or may not have the effect claimed on influencing changes in the global climate, and only 5% on adaptation, a climate policy strategy that would offer insurance value regardless of what is causing climate change. The second is that 55%, more than half the total spending, is on wind and solar energy to generate electricity, options with distinct disadvantages in terms of costs, reliability, and adverse environmental consequences. The most common baseload electricity generation technologies are coal, natural gas, oil, peat, nuclear, hydropower, geothermal and biomass; these energy sources current account for more than 96% of the world’s energy, while wind and solar account for 3%. Finally, in spite of these expenditures, global greenhouse gas emissions rose over the period.

The article deals at length with what now should be the well-known problems associated with the intermittency of wind and solar energy generation. A steady supply of electrical energy on a 24-hour basis is indispensable to the safe and reliable operation of systems such as water treatment plants, hospitals, domestic heating /air-conditioning systems, manufacturing plants, and mass transit systems. Households need reliable energy to keep a refrigerator running around the clock, and it must be available at the flick of a switch to provide lighting as needed at any time of the night. Some researchers have argued that, in principle, the intermittency problem could be reduced through energy storage. Others have responded that storage capacity required would be unrealistically enormous, and satisfactory solutions to this problem have not yet been demonstrated with available technologies.

The OhAiseadha et. al. article examines the issues associated with the use of various energy technologies to reduce GHG emissions. Specifically, it examines seven broad approaches: conversion from coal and oil to natural gas; carbon dioxide capture and storage (CCS); improving energy efficiency; increased use of nuclear energy; increased use of hydroelectricity and geothermal; the conversion from fossil fuels to biomass or waste; and increased use of intermittent renewables (i.e. wind and solar). It also examines the impact of these different approaches on a range of concerns such as reducing local air pollution (frequently confused in popular culture with reducing GHG emissions), protecting biodiversity, and meeting socioeconomic objectives. The socioeconomic objectives notably include assuring access to affordable modern energy supplies for the approximately 3 billion people who now do not have these and protecting people in developing countries from the ravages associated with artisanal mining of rare earth minerals.

The authors’ observations concerning the relationship between carbon dioxide emissions and economic development will not win them any invitations to address the World Economic Forum at Davos. They note, among other things, that on average CO2 emissions appear to increase with economic development, but draw some interesting corollary points:

“(1) The goal of reducing global CO2 emissions is directly opposed to the standard pathways of economic development which have been followed historically.

(2) We stress that this does not in itself preclude the possibility that alternative pathways to economic development which also reduce CO2 emissions could exist. Indeed, as discussed in section 4.1, France and Sweden are two notable examples of developed countries that combined economic growth with relatively low CO2 emissions through investment in nuclear. Therefore, research into the possibility of new pathways to economic development is justifiable and laudable. However, we should acknowledge that new pathways by their very nature will not have been tested to the extent of standard historical pathways.

(3) Aside from CO2 emissions…, the EKC* studies confirm that the standard pathways to economic development actually lead to reductions in environmental degradation for many aspects of the environment, especially those associated with local air pollution.

*Environmental Kuznets Curve

In other words, the most straightforward routes for helping nations develop and/or reducing world poverty fundamentally conflict with the goal of reducing CO2 emissions. We suggest that even within developed nations, policies to reduce CO2 emissions similarly are often at odds with improving the livelihoods of the less affluent in society.”

The article’s conclusions include some useful advice for policy makers, which I would paraphrase as follows:

• In trying to decide among various energy policies, consider what the main priorities are and which are the priorities on which one is prepared to compromise;
• If reducing CO2 emissions is the top priority, remember that there are seven different approaches to attaining this, and that there are important conflicts with other priorities;
• If protecting biodiversity is also a top priority, the use of biomass should be avoided, and that of hydroelectricity or wind energy should be treated warily;
• If having a stable and reliable electricity supply is also a top priority, minimize the use of any of the intermittent sources (solar, wind, or tidal), and prioritize the use of nuclear, or transition from coal or oil to natural gas, or invest in carbon dioxide capture and storage technology;
• If, instead, the top priority is to increase economic growth and improve social equity, seek to assure that consumers have access to cheap, affordable and reliable electricity (i.e. some combination of coal, oil, gas and nuclear).

The paper pointedly notes that the majority of climate policy-driven funds have been spent on the two energy sources, wind and solar, that have many disadvantages, while only 5% has been spent on adaptation. This suggests that global climate change expenditure is not being allocated using a critical assessment of the pros and cons of the key policies.

About the Author

ROBERT LYMAN is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans Policy Research Group. He is a frequent contributor of articles and reports for Friends of Science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.