When politicians around the world tell the story of global warming, they cast it as humanity’s greatest challenge. But they also promise that it is a challenge that they can meet at low cost, while improving the world in countless other ways. We now know that is nonsense.
Political heavyweights from U.S. Secretary of State John Kerry to U.N. Secretary General Ban Ki-moon call climate change “the greatest challenge of our generation.” If we fail to address it, Kerry says, the costs will be “catastrophic.” Indeed, this has been the standard assertion of politicians since the so-called Stern Review commissioned by the British government in 2006.
That report famously valued the damage caused by global warming at 5-20 percent of GDP – a major disruption “on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century.”
Tackling climate change, we are told, would carry a much lower cost. The president of the European Commission promised that while the European Union’s climate policies are “not cost-free,” they would amount to just 0.5 percent of GDP. Indeed, politicians of all stripes have reiterated the Stern Review’s finding that global warming can be curtailed by policies costing just 1 percent of world GDP.
Climate policies, moreover, are said to help in many other ways. U.S. President Barack Obama promised that policies to combat global warming would create 5 million new green jobs. The EU claimed that green energy would help “improve the EU’s security of energy supply.”
With the completion of the latest report by the United Nations Intergovernmental Panel on Climate Change, we can now see that this narrative is mostly wrong. The first installment of the IPCC report showed that there is indeed a climate problem – emissions of greenhouse gases, especially carbon-dioxide, lead to higher temperatures, which will become a net problem for the world. This result was highly publicized.
But the report also showed that global warming has dramatically slowed or entirely stopped in the last decade and a half. Almost all climate models are running far too hot, meaning the real challenge of global warming has been exaggerated. Germany and others called for the reference to the slowdown to be deleted.
The second IPCC installment showed that the temperature rise that we are expected to see sometime around 2055-2080 will create a net cost of 0.2-2 percent of GDP – the equivalent of less than one year of recession. So, while the IPCC establishes that global warming is a problem, the cost is much less than that of the 20th century’s two world wars and the Great Depression.
Again, not surprisingly, politicians tried to have this finding deleted. British officials found the peer-reviewed estimate “completely meaningless,” and, along with Belgium, Norway, Japan, and the U.S., wanted it rewritten or stricken. One academic speculated that governments possibly felt “a little embarrassed” that their previous exaggerated claims would be undercut by the U.N.
The third installment of the IPCC report showed that strong climate policies would be more expensive than claimed as well – costing upward of 4 percent of GDP in 2030, 6 percent in 2050, and 11 percent by 2100. And the real cost will likely be much higher, because these numbers assume smart policies, instantly enacted, with key technologies magically available.
Again, politicians tried to delete or change references to these high costs. British officials explained that they wanted such cost estimates cut because they “would give a boost to those who doubt action is needed.”
Green jobs have been created only with heavy subsidies, costing a similar number of jobs elsewhere. Indeed, each extra job created cost more than $11 million in the U.S. And facile claims that renewable sources can boost energy security look a lot less convincing after the Ukraine crisis; Europe now understands that only large and stable energy supplies matter.
Climate change has been portrayed as a huge catastrophe costing as much as 20 percent of world GDP, though brave politicians could counter it at a cost of just 1 percent of GDP. The reality is just the opposite: We now know that the damage cost will be perhaps 2 percent of world GDP, whereas climate policies can end up costing more than 11 percent of GDP.
What makes this story all the more amazing is that experts have known almost all of these facts for a long time. The Stern Review was produced by bureaucrats and never subjected to peer review. Economists knew that the damage costs had been extensively massaged, and that the estimates were outliers compared to the academic literature. The unfathomably low projections for policy costs were artifacts of ignoring most liabilities, again contradicting the academic literature.
The media, eager for breathless headlines, share the blame with politicians for this state of affairs. Following the release of the Stern Review, one British newspaper reportedly wrote: “Act now or the world we know will be lost forever.” Being accurate is less sexy, but much more informative.
We live in a world where one in six deaths are caused by easily curable infectious diseases; one in eight deaths stem from air pollution, mostly from cooking indoors with dung and twigs; and billions of people live in abject poverty, with no electricity and little food. We ought never to have entertained the notion that the world’s greatest challenge could be to reduce temperature rises in our generation by a fraction of a degree.
The solution is to stop applauding politicians who warn of catastrophe and promote poor policies. Instead of subsidizing inefficient solar and wind power with little benefit, we need to invest in long-term green innovation. And we need to give more attention to other problems. This is perhaps less entertaining, but it will do much more good.
Bjorn Lomborg, an adjunct professor at the Copenhagen Business School, founded and directs the Copenhagen Consensus Center. THE DAILY STAR publishes this commentary in collaboration with Project Syndicate © (www.project-syndicate.org).