The Dirty Little Climate Secret: CO2 Reductions Are So Costly, Very Few Climate Policies Can Survive Cost-Benefit Tests!

The great Ross McKitrick, who famously helped break the hockey stick, has a wonderful post up on Judith Curry’s site. It’s about the Social Cost of Carbon and how it doesn’t work at all for the folks who came up with the concept.

Why are some climate scientists avoiding listening to or seeing objections to their work when assessing the Social Cost of Carbon?

Read the whole article here, but the following are the critical points made by McKitrick:

I have a new paper out in the journal Nature Scientific Reports in which I re-examine some empirical work regarding agricultural yield changes under CO₂-induced climate warming. An influential 2017 study had argued that warming would cause large losses in agricultural outputs on a global scale, and this played a large role in an upward revision to the Biden Administration’s Social Cost of Carbon (SCC) estimate, which drives regulatory decision in US climate rulemaking…

In 2023 a team of economists working for the Biden Administration concluded the SCC needed to be increased by a considerable amount. The higher the SCC, the costlier the regulatory burden that can be justified by the agency. This not only affected US regulations but Canada’s as well since our own environment ministry adopted the new US values when justifying a sweeping set of new greenhouse gas regulations.

I wrote an op-ed about the SCC change in May 2023 in which I drew attention to the important role played by a revision to projected agricultural yield damages. While it is difficult to trace where, precisely, all the changes came from, I estimate about $50 of an approximately $100 increase in the 2030 value of the SCC (holding the discount rate constant) was attributable to the revised agricultural yield damage estimates…

Of course, the topic has now been rendered somewhat moot by the Trump Administration’s January 20 Executive Order suspending the SCC on the grounds that it is “marked by logical deficiencies, a poor basis in empirical science, politicization, and the absence of a foundation in legislation.”

The EPA has until mid-March to issue guidance on how to address these problems including possibly scrapping the use of the SCC altogether. I have had no contact with people working on that undertaking but if any of them were to ask me I would tell them the following.

Measuring the SCC is not a scientific procedure akin to measuring the weight of an atom or the speed of light. The SCC is based on so-called Integrated Assessment Models (IAMs) that contain countless assumptions and yield complicated “if-then” statements. If the following assumptions are true, then a ton of CO₂ emissions will cause $X worth of damage to the world.

Whoever gets to pick the “If” statements determines what the “then” statement will be. And you can pick studies that guarantee any SCC value you like, although some are more plausible than others.

Ultimately the SCC is determined by the political and social process of choosing who gets to write the report. The Biden-era SCC report was written by people whose antennae were up for any reasons whatsoever to boost the SCC estimate, and who ignored evidence pointing in the other direction.

The report even warns the reader that they probably overlooked many reasons why the SCC is even higher than they have estimated because surely there are many other damages associated with CO₂ that they have not yet thought of…

From an economic perspective, the dirty little secret of climate policy is that CO₂emission reductions are so costly, even if the US government accepted the Biden SCC estimate very few climate policies would survive a cost-benefit test, and if the SCC were lowered to something more reasonable none of them would. So, in that sense climate activists will get no joy from hanging onto the SCC.

But beyond the question of what the magic SCC number should be, the bigger question is how you convince a bureaucracy not to rig the report-writing process.

The 2013 Interagency Working Group SCC report boasted of consulting 11 separate government agencies, and the 2023 report additionally boasted of input from the National Academies of Science and outside expert reviewers.

Yawn. The more agencies involved, the less scrutiny a report gets. It is all but certain that no one checked any underlying data or undertook any replication work. And, I know from experience in the IPCC and other bureaucratic processes that review comments going against a chapter author’s biases are ignored or argued away, while comments confirming an author’s biases are welcomed at face value.

The scientific establishment has resisted all attempts to fix climate assessment processes because they always got to pick the authors. But, now, a very different team is going to do the picking. If the establishment grandees suddenly decide they don’t like the process, they should have said something sooner.

#IPCC #SCC #SocialCostOfCarbon #Science #Biden #Trump #ClimateScience #CO2