WASHINGTON, Nov. 17, 2015 -- Introducing a November report on climate change issues, Nobel Prize-winning economist Kenneth Arrow concludes that trillion-dollar benefits from climate control regulations “dwarf the higher energy costs of United States emissions control.” He insists that regulations enacted by the U.S. are vital “to avoid the enormous costs of unrestrained climate deterioration.”
The “Foreign Action, Domestic Windfall” report from the New York University School of Law finds that the U.S. “has already likely avoided billions of dollars of direct damage to its economy, public health, environment, and national security, thanks to actions undertaken by foreign jurisdictions, like the European Union, in the fight against climate change.”
With 195 nations headed to Paris for the international climate change conference (Nov. 30-Dec. 11), the NYU report warns that “trillions of dollars more for the United States are at stake in securing commitments for future emissions reductions from foreign countries, like China and India.”
Monetized Benefits from Three Scenarios for Global Carbon Reductions
* Note: Global emissions reductions include U.S. reductions.
Source: NYU’s “Foreign Action, Domestic Windfall” report
Estimates of multi-trillion dollar benefits from climate action don’t impress everyone. Senate Environment and Public Works (EPW) Committee Chairman Jim Inhofe, R-Okla., charged last week that by imposing carbon emissions limits in the EPA Clean Power Plan, “the president is attempting to steamroll ahead with an emissions reduction target that . . . the U.S. can neither reasonably achieve nor afford.” Expect to hear more when Inhofe’s EPW committee holds a Nov. 18 hearing titled “Examining Paris International Climate Negotiations.”
In another sign of strong opposition to the Obama administration’s carbon emissions limits, two recent Investor's Business Daily editorials dismiss what it calls “the fabricated climate crisis.”
“We’ve long known that the global warming scare is designed to cripple capitalism and redistribute wealth to poorer nations,” IBD says, and that activists favoring carbon limits are “far more dangerous than human CO2 output.”
The report from NYU’s Institute for Policy Integrity responds to Inhofe and other skeptics by listing major economic benefits from controls on emissions. “Opponents of U.S. regulation of greenhouse gas emissions have long cited fears that the rest of the world – and especially China and India – will free-ride on our climate policies if we act first,” the report notes, adding that, “In fact, the United States already stands to gain more from global efforts on climate change than proposed U.S. regulations would cost.”
The report goes on to warn that “Should the United States fail to mitigate its emissions, it is our country that risks looking like a free-rider and undermining an international climate agreement. With countries like China and India now making ambitious pledges leading up to the December 2015 negotiations, the United States has more than ever before to gain from a global agreement to act.”
Along with Inhofe, the U.S. Chamber of Commerce warned in its 2014 report, Assessing the Impact of Potential New Carbon Dioxide Regulations in the United States, that limiting power plants’ carbon emissions “will cost America’s economy over $50 billion a year” through 2030. In sharp contrast, the NYU report concludes that rather than climate measures being too expensive to pursue, “with trillions of dollars at stake, the United States simply cannot afford not to lead on climate change.”
The report identifies the “social cost” of greenhouse gas (GHG) emissions as the quantifiable economic impacts from climate change, including “lost agricultural and labor productivity, trade and energy supply disruptions, negative public health consequences, ocean acidification, extreme weather events, flooding, wildfires, increased pests and pathogens, water shortages, migration, regional conflicts, and loss of biodiversity and ecosystem services, among others.”
Because the social cost of carbon emissions increases over time, the report finds that the global social cost rises from $36 per additional ton of carbon or equivalent GHG in 2010 to $79 in 2050. It adds that “experts widely acknowledge that these SCC (social cost of carbon) numbers are almost certainly underestimates of true global damages – perhaps severe underestimates” – due to the challenge of calculating unknowns such as the rapid melting of Arctic permafrost or ice sheets.
Putting price tags on some specific expected damages, the NYU study cites a June 2015 EPA report showing that:
· “By the end of the century, the U.S. economy could face damages of $110 billion annually in lost labor productivity due to extreme temperatures; up to $11 billion annually in agricultural damages and $1.5 billion annually in forestry damages; and up to $180 billion in losses to key economic sectors due to water shortages.”
· “Over the next 85 years, without mitigation or adaptation to climate change, sea level rise and storm surges could damage $5 trillion worth of U.S. coastal property.”
In contrast to the U.S. Chamber’s estimate that the administration’s new power plant rules will cost the U.S. more than $50 billion per year, the White House Council of Economic Advisers’ July 2014 “Cost of Delaying Action to Stem Climate Change” report estimated that delaying climate programs “could cause an annual loss of $150 billion to U.S. GDP.”
Regarding EPA’s Clean Power Plan to limit power plant carbon emissions at a cost of $8 billion per year, the report concludes that “not only do the Clean Power Plan’s air quality co-benefits to U.S. public health (up to $34 billion per year) alone far exceed those costs, and not only do the regulation’s climate benefits (about $20 billion in 2030) also far exceed those costs, but the benefits to the United States from action taken by other countries far exceed the costs of this U.S. climate regulation.”
Looking at global climate policies already in place, the NYU report finds that “During the last five years alone, existing global policies have likely reduced up to 24 billion metric tons of carbon dioxide-equivalent emissions, thereby directly benefiting the United States by at least $60 billion to $231 billion. Over the next 15 years, direct U.S. benefits from global climate policies already in effect could reach over $2 trillion.”
Based on the emissions reduction pledges already submitted by more than 100 countries for consideration at the Paris climate summit, the report calculates that “If these foreign reduction pledges are achieved, over the years 2015-2030 the United States could gain direct benefits of at least $54 billion-$544 billion.”
The report sees even greater benefits for the U.S. if the world reduces its emissions further to limit global average temperatures to a 2 degree Celsius increase over pre-industrial levels: “If these climate-stabilizing reduction targets are achieved, the direct value to the United States from foreign reductions alone could total at least $874 billion to $2.873 trillion by 2030, and at least $3.1 trillion to $10 trillion by 2050.”
Highlighting the importance of the Paris climate talks, the NYU report concludes:
“U.S. leadership on climate change is well justified by the likely return on investment. With our economy, public health, environment, and national security at stake, the United States simply cannot afford not to act.”
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