The Real Costs of Saving the Planet; Carbon Emissions costs low

Critics say limiting carbon emissions could cost trillions. But a new study suggests the costs are much lower
by John Carey

On Dec. 5, the U.S. Senate will begin marking up a bill that would, for the first time, put mandatory limits on the gas emissions that are warming the planet. The bill, sponsored by Senators John Warner (R-Va.) and Joe Lieberman (I-Conn.), imposes caps on the amount of carbon dioxide allowed to spew from power plants, cars, and others sources. It would also permit companies that cut more emissions than required to sell their excess reductions to those that can't afford to meet the limit. Economists say this sort of cap and trade scheme, which has worked well in reducing acid rain-causing pollution, could help the economy slash emissions at the lowest possible costs.

Meanwhile, delegates from around the world are meeting in Bali, Indonesia, trying to hammer out a global agreement to cut emissions. One of the biggest stumbling blocks: the perceived high costs.

But what are those costs? If you listen to opponents of action against climate change, the American economy will be brought to its knees by such efforts. The Chamber of Commerce, for instance, says the bill would cost 3.4 million Americans their jobs; the nation's gross domestic product, now about $13 trillion, would drop to $12 trillion; and American consumers would pay as much as $6 trillion more because of higher prices for gas, heating oil, and many other goods. Other economic projections put the total price tag for preventing dangerous climate change at up to $20 trillion.

Yet a new analysis from McKinsey & Co. not only pegs the price tag for making substantial cuts at just a few billion dollars, it also shows that at least 40% of the reductions bring actual savings to the economy, not costs.


entire article @ the link: http://www.businessweek.com/bwdaily/dnflash/content/dec2007/db2007123_373996.htm?chan=top+news_top+news+index_top+story

The following is from the Senate record where Kerry is debating Inofe. He quotes studies that try to put a price on the effects of global warming if we do nothing. Many Republican arguments implicitly assume that the cost of the status quo is zero - it isn't. (Kerry spoke of this in several other forums - this was the easiest to find - and gives the name of the British report.)

From the Senate record - May 15, 2007:
" Let's go to the economy. That is the big one that they love to pick on and say to Americans: Oh, this is going to cost you so much money if you do this, and it is going to wind up being terrible. Well, that is not what the best economists in the world say. That is not what the best business leaders in the world say.

In fact, they have concluded if you do not do something, it is going to cost a lot of money. You want to pay a lot more money for insurance? You want to pay a lot more money for dams that are bigger, pay a lot more money for hospitalizations, more cancer, for more asthma, for more problems of the particulates in the air? Then you can go ahead and burn dirty coal and not be smart about the future.

The fact is, Sir Nicholas Stearn, who is one of the leading economists in Britain, former head of the Bank of England and one of the people whom Prime Minister Blair tapped to give them an analysis, wrote this in a report last fall:

The scientific evidence is now overwhelming.

This an economist.

Climate change is a serious global threat, and it demands an urgent global response. The review has assessed the wide range of evidence on the impacts of climate change and on the economic costs, and has used a number of different techniques to assess cost and risks. From all of those perspectives, the evidence gathered by the review leads to a simple conclusion. The benefits of strong and early action far outweigh the economic costs of not acting. Climate change will affect the basic elements of life for people around the world, access to water, food production, health, and the environment. Hundreds of millions of people could suffer hunger, water shortages, coastal flooding as the world warms. Using the results from formal economic models, the review estimates that if we don't act, the overall costs and risks of climate change will be equivalent to losing at least 5 percent of global GDP each year now and forever.

Losing 5 percent of GDP now and forever, that is the economic prediction of not acting. And they say if a wider risk of impacts is taken into account, the estimates of damage could rise to 20 percent of GDP or more. In contrast, the cost of action, reducing greenhouse gas emissions to avoid the worst impacts of climate change can be limited to around 1 percent of global GDP each year.

That is an economic standard that, in fact, MIT economists have also confirmed, not quite the same figures but very similar. The bottom line is there is a consensus that the cost of not acting is far more expensive to the American people than the cost of acting.

I go back to the experience we had on the Clean Air Act in 1990. I don't remember Senator Inhofe being part of that discussion. But the fact is, in 1990, when we did that act, the same arguments were put forward about not proceeding forward, and every one of those arguments was blown away by the reality of what happened as well as by the judgments of Republicans and Democrats alike that it was important to act.

Back then, incidentally, DuPont, which has already been castigated by the Senator as somehow being in this for the money--DuPont was the principal producer of the chlorofluorocarbons that were part of the Montreal Protocol. DuPont was unwilling to move until they knew that the marketplace was going to be the same for everybody, which is what happened when the protocol went into effect. Once they knew what the marketplace was going to do, then they proceeded forward with an alternative to the CFCs.

So they proved that, No. 1, you can do it, but, No. 2, you have to do it where the marketplace is, in fact, working. That is why people believe--incidentally, this amendment has nothing to do with cap and trade. I happen to support it. We will have that debate down the road. But this amendment has nothing to do with it. This merely suggests if we are going to spend Federal dollars on water projects in America and levees and other kinds of projects, that we ought to know for certain every one of those projects is being judged specifically as to the impact of global climate change.

With respect to the cap and trade issue, the fact is, those companies don't want to proceed ahead until they have the same kind of certainty that the marketplace will give them when there is a uniform standard throughout the marketplace.

That is far from a bottom-line, profit-seeking motive. "

1. Building mass transit and intercity rail systems

2. Insulating buildings

3. Creating green spaces

4. Building new vehicles

5. Retrofitting car-oriented communities for accessibility to non-automotive forms of transportation (trains, bicycles, feet, electric buses)

6. Putting scrubbers on factory smokestacks