Delaying climate policy would triple short-term mitigation costs

Press release by the Potsdam Institute for Climate Impact Research 

09/12/2013

Further delay in the implementation of comprehensive international climate policies could substantially increase the short-term costs of climate change mitigation. Global economic growth would be cut back by up to 7 percent within the first decade after climate policy implementation if the current international stalemate is continued until 2030 – compared to 2 percent if a climate agreement is reached by 2015 already, a study to be published next tuesday by scientists of the Potsdam Institute for Climate Impact Research (PIK) shows. Higher costs would in turn increase the threshold for decision-makers to start the transition to a low-carbon economy. Thus, to keep climate targets within reach it seems to be most relevant to not further postpone mitigation, the researchers conclude.

“The transitional economic repercussions that would result if the switch towards a climate-friendly economy is delayed, are comparable to the costs of the financial crisis the world just experienced,” lead-author Gunnar Luderer says. The later climate policy implementation starts, the faster – hence the more expensive – emissions have to be reduced if states world-wide want to achieve the internationally agreed target of limiting global warming to 2 degrees above pre-industrial levels. A binding global agreement to implement the emissions reductions required to reach this target is currently still under negotiation, while global emissions have continued to rise.

“For the first time, our study quantifies the short-term costs of tiptoeing when confronted with the climate challenge,” Luderer says. “Economists tend to look at how things balance out in the long-term, but decision-makers understandably worry about additional burdens for the people and businesses they are responsible for right now. So increased short-term costs due to delaying climate policy might deter decision-makers from starting the transformation. The initial costs of climate policies thus can be more relevant than the total costs.”

Future energy price increases could be limited

The researchers investigated a number of cost dimensions, including climate policy effects on energy prices. If emissions reductions are delayed beyond 2030, global energy price levels are likely to increase by 80 percent in the short term. Such price increases are of particular concern because of the burden they put on the world’s poor. In the past, comparable energy price increases in developing countries have resulted in massive public opposition and social unrest, like in Indonesia in 1998 after a cutback of fuel subsidies. If an agreement on emissions reductions compatible with the 2 degree target is reached until 2015, short-term energy price increases could be limited to 25 percent.

Besides timing, the availability of low-emission technologies is a second crucial factor for climate policy costs, the scientists point out. In the long term, technologies for carbon dioxide removal from the atmosphere might be required for reaching climate targets. This applies in particular to the use of bio-energy, with plants consuming CO2, combined with CCS, storing underground the emissions from biomass combustion. If these technologies are unavailable, for technical or political reasons, the lower limit of achievable climate targets would rise by 0.3 degrees. The longer climate policies are delayed, the higher is the world’s reliance on these technologies.

Delaying greenhouse-gas reductions for two decades would rise the lower limit of achievable climate targets by 0.4 degrees, hence drastically reducing the room left for flexibility. “This shows how a continuation of ineffective climate policies reduces the option space for future climate policy, and also increases the threshold for switching to a more climate-friendly economy,” Luderer points out.

Today already, due to past CO2 emissions and the inertia in the transformation of the global energy systems, the world is committed to 1.7 degrees global warming, the researchers estimate.

Mapping out the trade-offs

The scientists examined the challenge of economic climate mitigation with extensive computer simulations. They produced 285 alternative climate change mitigation scenarios, with varying assumptions on the course of international climate negotiations on the one hand and on the other hand the availability of low carbon technologies from solar and wind power to bio-energy, carbon capture and storage (CCS) and energy efficiency. For the economic evaluation, they considered indicators like mitigation costs, energy prices or potential financial transfers induced by an international carbon market.

„Our study is the first to map out the trade-offs between the stringency of climate targets and economic mitigation challenges at this very high level of detail,” says Ottmar Edenhofer, co-author of the study and chief-economist of PIK. “We were able to pin down what we call the achievability frontier: depending on mitigation targets, timing and technology availability, costs of climate policy beyond a certain point grow disproportionally.” Continuing a wait-and-see strategy with lack-luster climate policies could not only be a costly option, but also close the door for achieving climate targets in the long-term, the researchers conclude.

The research leading to this publication was supported by the German Federal Environment Agency (UBA) under UFOPLAN FKZ 3710 41 135.

Article: Luderer, G., Pietzcker, R.C., Bertram, C., Kriegler, E., Meinshausen, M., Edenhofer, O. (2013): Economic mitigation challenges: how further delay closes the door for achieving climate targets. In: Environmental Research Letters (online)

Weblink to the article once it is published on tuesday: http://iopscience.iop.org/1748-9326/8/3/034033/article

For further information please contact:

PIK press office

Phone: +49 331 288 25 07

E-Mail: press@pik-potsdam.de

Twitter: @PIK_Climate

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Comment on “Delaying climate policy would triple short-term mitigation costs”

  1. Leave it to Potsdam to run around warning us that the sky is about to fall (again) before the much beleaguered Rajendra Pachauri and his also much beleaguered Intergovernmental Panel on Climate Change (IPCC) can release their 5th hysterical Assessment Report. Unlike Potsdam, however, leaked reports to the ever trust worthy New York Times suggest that The Panel has backed up a bit from their normal barrage of doomsday stories about climate change.
    I pay attention to these things and note with some interest that, contrary to previous reports and interviews with authors, summer did not arrive here in the Frozen North in February, Manhattan did not find itself under water, the Himalayas did not melt and we’ve got more polar bears than ever before in Hudson Bay and the regions to the north, like the Canadian Arctic. Rajendra and friends even concede that there has been no increase in global warming over the past 15 years and that maybe, just maybe their ‘models’ had been a tad aggressive so the catastrophic scenarios of previous reports have been pushed back beyond the lifetime of even your youngest unborn grandchild.

    The IPCC, according to the New York Times, is now 95% certain “human influence on climate caused more than half of the observed increase in global average surface temperature from 1951 to 2010.” In 2007 The Panel was 90% certain. Must be a new Panel with new ‘models.’ And by the way, what caused the other half? I blame it all those 4 billion ‘others’ that arrived on the planet after me.

    The new guys on The Panel now predict global sea levels could rise by more than three feet by the end of this century. That is up from the 2007 prediction of 23.” You will note the scientific use of the word “could.” I “could” live till the end of this century too. Or not. I haven’t seen the ‘model’ on it as of yet. The Panel will also suggest that it is possible the warming this century will not be as high as it previously predicted but it will still pose a crisis for humanity. They are 95% certain about this too. You will note the scientific use of the word “possible.” It is “possible” that I will get younger but, like most of The Panel’s findings, it’s not probable. I cannot age and grow young at the same time. There is no ‘model’ for that.

    Potsdam gives science a bad name. They turn economists into accountants. It’s all if this and then if that then maybe this would be possible depending, of course, on nothing else happening, certainly nothing good. We don’t input any of that good nonsense into our ‘models’. Their ‘models’ can’t seem to conceive of anything positive ever occurring. Potsdam is undeterred by its own past climate failings and wanders aimlessly into economic and social reform blithely unaware or ignorant of the fact that not even the closing of all North American industry would meet the ‘model targets’ these expensive climate forums they love so much produce. The U.S. will never sign on or implement such nonsense. Neither will the Frozen North.

    While The President of People Magazine continues to dilly, dally, dither and delay on everything from Keystone to Syria the rest of the world gets on with its business and life. Who can afford to wait? Here in the Great White North we have, courtesy the President’s pal Buffett, Warren not Jimmy, secured enough rail cars to begin shipping all Oil Sands production equal to any pipeline by the end of 2014. That is not counting east-west pipelines here that will reach local refineries and ports. Can you say oil tankers?

    6 billion people on this planet can cause a bit of a mess and, as we are between Ice Ages, we should talk about it. Endless global meetings at five-star luxury resorts, carbon taxes, cap-and-trade, massively subsidized wind and solar power simply do not work efficiently or economically. We’ve already proven that quite satisfactorily.

    Media screaming “run and tell the king” at the drop of the latest IPCC report will not help either. They love a good disaster story over any other, facts be damned but what to do? In spite of Potsdam’s best (?) efforts, the truth will out. Another study has found that climate predictions used by scientists, forecasters and academics have wildly overestimated global warming. First published in the science journal Nature Climate Change, John Christy, a professor at the University of Alabama in Huntsville, “looked at 73 climate models going back to 1979 and every single one predicted more warming than happened in the real world.” Christy “compared 117 climate predictions made in the 1990s to the actual amount of warming.” Out of those 117 predictions, “three were roughly accurate and 114 overestimated the amount of warming. On average, the predictions forecasted two times more global warming than actually occurred.”

    Naturally, many of these “overestimations also made their way into the popular press.” In 1989, the Associated Press reported, “Using computer models, researchers concluded that global warming would raise average annual temperatures nationwide 2 degrees by 2010.” Articles such as this, though false, fit the media narrative and became the launching point for many stories in local papers and national newscasts.

    “I think in one sense the climate establishment is embarrassed by this, and so they’re trying to minimize the problem,” Christy said. “The fundamental thing a climate model is supposed to predict is temperature. And yet it gets that wrong.”

    The models could have been off for many reasons including “solar irradiation and incorrect assumptions about the number of volcanic eruptions to bad estimates about how CO2 effects cloud patterns.” Another factor may have been the models overestimated global warming “because of the way they handle clouds,” Christy said. Garbage in, garbage out, I say.

    Let’s look at some options to the shrill demands of Potsdam and, to a lesser extent, The Panel at the IPCC. How about more carbon taxes? Norway has had a carbon tax since 1991. Statistics Norway researchers concluded in 2002 that these taxes had been ineffective in lowering emissions. Okay, how about cap-and-trade? The so-called “market-based solution,” has been an out and out failure. Interpol has warned that global cap-and-trade markets are overrun by fraud. Gee, what a surprise. What with the governments handing out targets and passes, fraud is the only possible outcome.

    Here at home here in Ontario, the Provincial Liberal Government, about to be turfed from office in the next election, has blown billions of tax dollars on wind and solar companies. They invested like Obama. Now personally I like both wind and solar but they have produced unreliable and expensive electricity that disappears with the subsidies. Unfortunately for us, this is not before whatever electricity produced is sold at a losing discount to the state of New York. Congratulations! You see, we don’t need the extra subsidy supported power inasmuch as we already have an energy surplus. Who knew except the average, able to read tax payer.

    Sadly for any open and reasonable debate, the alleged environmentalists are opposed to anything except what they call “winning.” Stop Keystone, for example, and while the eco-warriors are celebrating, what Oil Sands production that does not travel Canada and the U.S. in pipelines will simply travel by rail which is neither as safe nor environmentally friendly as pipelines. But, one does what one can. The Oil Sands will continue to develop regardless. Alberta is land locked and, as a sovereign country, we are morally, legally and ethically within our rights to develop our resources and access our own coasts. Think of us as Oklahoma North only a lot bigger.

    How about nuclear power? To this date it is the only reliable form of conventional energy that can ramp up quickly and does not emit greenhouse gases or air pollution. Or how about new fracking technology which would assist in replacing the dirtiest fossil fuel, coal, with the cleanest, natural gas. Where possible, there’s that word again, we should work towards reducing the costs and increasing the reliability of green energy. As it always has, technology will provide the solutions to lowering greenhouse gas emissions. Every other major environmental challenge has been solved in this manner. Rather than propping up industries that cannot survive on their own or creating world-wide scams and failed schemes like carbon taxes and cap-and-trade, we should be investing our hard earned tax dollars in the discovery of new technologies just as we do in science and health care.

    This, of course, flies in the face of big Obama donor Tom Steyer who made his money in oil but has invested heavily in clean energy investment funds. True, he is power mad and self-deluded but he is comical. I’ll give him that. He desperately needs legislation that cripples fossil fuels in order to cash in on his green holdings so he heavily invests in environmental protest groups on both sides of the border. Good luck with that. I never could stand hypocrites.

    And speaking of hypocrites, Al Gore and David Suzuki jet around the world telling us all to ride donkeys. The IPCC and Potsdam use scare tactics. They all somehow believe that green energy is best promoted by plunging North America into poverty all the while lining the pockets of Third World dictators with our tax payers billions. This isn’t just the money of the wealthy and powerful. Its wee pensioners like me too. As my late Father used to say, “Nertz to that!”

    I’d be happier and far less cynical if The Panel and the grant seekers at Potsdam toned down the rhetoric and stopped threatening people with their very existence. Some of us can read. People are aware the North West Passage has been open before, several times in fact, over several centuries. The Fright Plan isn’t working because the timeline keeps getting moved out to suit the latest ‘model.’ Like the man said, “I can make a computer model to tie my shoes.”

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