Tuesday, May 08, 2007

The 3% solution

As a new father I am finding little time for coherent thought, and the following may be redundant re-statement of the bloody obvious, but here goes.

The headline figure in IPCC Working Group III summary of a 3% reduction in global GDP in order to stabilise atmospheric concentrations at less than 450ppm does not mean that global GDP would be reduced by 3% every year. Rather, the estimate is 0.12% lower annual global average growth each year up to the year 2030, meaning global GDP would be 3% lower in that year than it would otherwise be (Table SPM.4 on page 14).

The summary further notes:
depending on the existing tax system and spending of the revenues, costs may be substantially lower under the assumption that revenues from carbon taxes of auctioned permits are used to promote low carbon technologies or reform of existing taxes
and:
studies that assume the possibility that climate change policy induces enhanced technplogical change also give lower costs. However, this may require higher upfront investment (page 15)...

...in all analysed world regions near term health co-benefits from reduced air pollution as a result of action to reduce GHG emissions can be subtantial and may offset a substantial fraction of mitigation cost (page 16).
In other words, the cost could be less than 0.12% of GDP per year, and we can afford not to put the planet at high risk of dangerous climate change.

[P.S. Climate curbs: Who will buy? by Paul Reynolds is good as brief analysis goes]

4 comments:

Clive Bates said...

Yes - but is GDP loss the barrier?

Caspar Henderson said...

I think it's being used as a rhetorical tool for those who want to block serious action.

Even Stern (who does not) said stabilisation at 450ppm is impractical, which I take to mean too expensive - not that magical 1% of GDP that the headline writers to picked up on:

"To stabilize at 450 ppm Co2e without overshooting, global emissions would need to peak in the next ten years and then fall at more than 5% per year, reaching 70% below current levels by 2050. This is likely to be unachievable with current and foreseeable technologies." (p 218)."

Clive Bates said...

I agree that GDP loss is used as a fake argument. But I don't agree that a low GDP loss shows the problem can be fixed... I think the problem is profound inertia in at least four systems:

1. The atmosphere / ocean system itself. This separates action (mitigation) and noticeable effect (reduced warming) by several decades - and so really test our intergenerational time preferences.

2. The large stock of existing energy using or ghg-producing assets - including the built environment, vehicles and energy and transport infrastructure

3. The manufacturing systems - producing energy using goods and services. Even if a hyper-car can be made today (it can) it just wont come on the market in big numbers that quickly. This is linked to where investment and R&D are going.

4. Behavioural norms - perhaps including the social geography of society (where we live. work, learn, shop), preferences for leisure travel, willingness to address domestic energy use - especially as we get richer (power shower anyone?), choice of car... These may be more than inertia - may be real barriers.

To change to the low carbon world requires overhaul of each of these interdependent interlocked systems - in a kind of lifting by the bootlaces exercise.

We know road pricing would (probably) be beneficial for GDP - but it is the distributional and behavioural barriers that stand in the way - witness No 10 petition.

Also, don't forget that all the key indicators are pointing in the wrong direction at the moment... increasing coal, increasing carbon intensity, huge materials intensive growth, minimal decarbonisation even in supposedly leadership countries (witness the new dash-for-coal in the UK) etc.

What Stern (and IPCC) didn't do was look at the pathway of investment in energy using assets, modernised production systems and changed behaviours that would be required to meet 450ppm. It is the rate of change in the systems above that presents the difficulty. The policies that would move everyone into 450ppm low-carbon lifestyles would need to be intrusive and powerful - and world be resisted at the ballot box (...remember the sorry end to the fuel duty escalator - another GDP enhancing, climate protecting measure that bit the dust. We couldn't even get Home Information Packs right).

Sorry for the pessimism - but I don't think GDP loss estimates tell us much about the difficulty of tackling climate change.

Caspar Henderson said...

a tonic for your pessimism, maybe (or maybe not), from No Impact Man in A Vision of what we can do, at last! (Hat tip, Robert Butler).