Not Worth the Money – The Costs and Benefits Of Global Climate Policies

 Contributed by Robert Lyman © 2023. Robert Lyman’s bio can be read here.

Global warming has become a priority problem across much of the world, with many countries committing to the political target of limiting global temperature rises to no more than 1.5 degrees C. over those that prevailed in the pre-industrial era. This is partly because climate impacts have been presented repeatedly by the media and governments as catastrophic, leading many people to believe that unmitigated climate change is likely to lead to devastated lives, collapsing societies, and even human extinction.

In fact, these claims of devastation are almost entirely unwarranted and can lead to wasteful climate policies in which money is spent and decisions are made driven by fear and panic. Consequently, before one can have an intelligent discussion of climate policy, one must first address the misplaced concerns about devastating impacts from climate change.

Climate modelers attempt to predict the trends in global greenhouse gas emissions, the effects of these trends on the concentrations of carbon dioxide equivalents in the atmosphere, the consequent changes in average global temperatures and climate and then the effects of those changes on the world’s economy and society, as measured by changes in gross domestic product (i.e. income).

The Intergovernmental Panel on Climate Change models use a range of scenarios for future emissions growth, based on different assumptions about future trends in population and economic growth, technological change, and emissions. This is a source of considerable controversy, as the worst-case scenario (RCP 8.5), now considered implausible, is treated as though it were the “business -as-usual” or most likely, case and it is given the most prominent coverage in UN public documents. It gives virtually no attention to the expected growth in global income to 2100. By then, global income is projected to increase by 4.5 times from today’s level. With climate damages deducted, income levels would be only 4.3 times its 2020 level, but much improved.

The costs of climate mitigation under the Paris Agreement were calculated on the basis of the Nationally Determined Contributions (NDCs) submitted to the United Nations in 2015 and 2016, just before and after the 2015 Conference of the Parties in Paris. The global cost of these measures will be at least $945 billion in annual lost GDP, but probably twice that high (i.e. about $2 trillion per year.)

The UN Framework Convention on Climate Change organization (UNFCCC) estimates that the impact of all the measures promised would be to reduce emissions by about 32 billion tonnes of CO2e over the period. That is equal to about 0.45% of global business-as-usual emissions from 2015 to 2100. This could reduce global temperatures by about 0.029 degrees C. If one assumed that the countries of the world continued adhering to their high-end promises from 2030 to 2100, global temperatures would be reduced by somewhere between 0.17 degrees C. and 0.24 degrees C. Even if the emissions reductions were twice as high, this cut is under 1% of what is necessary to reach the IPCC aspirational goal of limiting average global temperature increases to 1.5 degrees C by 2100.

The annual cost of the initial Paris commitments lies between $750 billion and $2 trillion per year, and it will deliver carbon dioxide cuts of at most 7.5 billion tonnes per year. Each tonne reduced will cost on average $109-$252. Under a wide range of optimistic or realistic cost estimates and under all the main estimates for the benefits of cutting a tonne of CO2e, the measures committed under the first round of Paris Agreement NDCs are not worth the costs. They will likely deliver just 11 cents of climate benefits for each dollar spent.