Bloomberg’s coverage of the leaked draft summary of the IPCC’s Fifth Assessment Report on climate change mitigation was misleading in several respects. The article tilted its conclusion toward inaction, by ignoring many benefits from mitigation and leaving many harmful impacts uncounted. Its headline focused on a single year (2030), obscuring the true nature of the threat before us and the decision we face.
The following is a guest post by Climate Nexus (text in PDF here):
Reducing Greenhouse Gas Pollution Is the Cheapest Path
In a Warming World
Last week, the draft summary of the third portion of the Intergovernmental Panel on Climate Change (IPCC)’s Fifth Assessment Report was leaked to the press. Most coverage of the report looked at the slow progress in reducing our greenhouse gas pollution (also called climate mitigation). But one Bloomberg article sought to compare the cost estimates of mitigation against cost estimates of climate impacts, ultimately concluding that “… the cost of fighting climate change could outstrip the cost of dealing with the effects of climate change.”
Some have misconstrued how these costs should be compared, implying that we have an either/or choice; to pay for the cost of limiting greenhouse gas concentrations to 480 ppm (the atmospheric concentration the IPCC says is the maximum possible that will keep warming to 2 degrees), or pay for the cost of the climate impacts that arrive with two degrees of warming. In fact, we’ll pay the costs associated with 2 degrees of warming either way. Mitigation will enable us to avoid the catastrophic costs associated with warming of four degrees and beyond, costs that are not mentioned in the Bloomberg story. It functions as an investment now that will deliver financial benefits in the long term.
Overall, several key points need to be considered when making this kind of comparison.
- The cost estimates used here do not account for many benefits of mitigation now, as well as many harmful impacts of climate change both now and in the future.
- Climate mitigation pays off over the long term: the article’s focus on a single, near-term year (2030) is misleading.
- To reap the greatest net financial benefits from climate mitigation, we must begin now. The longer we wait, the more future impacts we lock in.
The figures used here tilt the conclusion towards inaction, by ignoring many benefits from mitigation and leaving many harmful impacts uncounted.
- Mitigation efforts bring many “co-benefits” in addition to their reduction of greenhouse gas pollution. They benefit human health, energy security, biodiversity, and the general resilience of our environment and economy. The figures in the article do not include the economic impact of these co-benefits, which significantly reduces the net cost of mitigation.
- Likewise, climate change brings harmful impacts that are not included in the purely economic cost estimate used here. This is acknowledged in the article, but it bears repeating. Lost lives don’t have a recognized economic value, and many of the soonest and harshest impacts of climate change will be in poor countries that won’t make a big splash in terms of global GDP.
Climate mitigation is an investment that pays off over the long term. The headline’s focus on a single year (2030) obscures the true nature of the threat before us and the decision we face.
- Climate mitigation can be accurately characterized as an investment. Like any investment, money spent up-front reaps benefits later. On the face of things it might seem reasonable to compare the costs and benefits of mitigation in 2030, and declare it a bad investment if costs are higher than benefits. But the lifetime benefits of mitigation, especially post-2050 benefits, will far outstrip the costs of mitigation overall.
- The Bloomberg article cites the IPCC’s second working group, which provides an estimate of the costs of climate impacts at 2.5 degrees of warming. But if we really want to know what we’re averting through mitigation, we need to include the costs of climate impacts at 4 degrees of warming and beyond. The IPCC doesn’t provide these numbers, but outside sources indicate that the costs of such warming (and therefore the benefits of averting this catastrophe) would be extremely high – much more than double the cost of two degrees of warming.
- For example, as highlighted by William Nordhaus (an economist generally considered a moderate voice on climate) in his book The Climate Casino, Yale economic models show a clear monetary benefit to mitigation. He writes, “Our estimate is that, taking all countries together, the net benefits in the post-2050 period are $7.4 trillion as compared with the pre-2050 net costs of $1.6 trillion.” In other words, the investment pre-2050 reaps a 462% return post-2050. Other analyses have yielded similar results.
To get this profitable “deal,” the investment must be made now. We won’t have the same options available in the future.
- Mitigating the problem of climate change is not an either/or proposition when facing its impacts. We are currently paying the price for inaction on climate during the previous decades. We no longer have the option of averting the warming incurred during this time, which is why even (most) best-case scenarios involve warming of 2 degrees. Likewise, our projected mitigation costs are higher than they would be if we had started decades ago.
- Some people claim that in order for mitigation to be economically worthwhile, it must be profitable from day one. But the climate just doesn’t work that way. Mitigation will always yield a delayed benefit. All we will gain by waiting is a much larger problem to deal with, and the need to take more severe and costly measures to solve it.
The “cost” statistic quoted in Bloomberg (a possible 4% of economic consumption by 2030) might seem like a high price to pay to avert climate change. But those costs are likely lower than what’s reflected in that number alone. When the decision is placed in the context of net costs and benefits, we’re looking at the best deal we’re going to get, and we’d be wise to take it.
This latest portrayal of the economics around climate change reflects the daunting challenge ahead, but unfortunately skews it. Scientists and economists are trying to understand the potential costs and benefits of different courses of action. The media is rightly trying to keep the public apprised of these efforts and findings. But drawing these hasty and incomplete conclusions does more to confuse the public understanding than clarify it.
Some earlier CSW posts: