Emissions: A Cool Assessment of a Hot-Button Issue
U.S. Secretary of State John Kerry attracted some attention last week by describing climate change as "perhaps the world's most fearsome weapon of mass destruction." Another part of his remarks, though, was just as revealing.
After saying we should not listen to those who deny that human activity is warming the globe, he said: "Nor should we allow any room for those who think that the costs associated with doing the right thing outweigh the benefits. There are people who say, 'Oh, it's too expensive, we can't do this.' No. No, folks."
For Kerry, then, the benefits of reducing carbon emissions so obviously exceed the costs that no debate on the question is necessary or even tolerable. But he's wrong. The cost-benefit calculation is the weak point in the case for reducing carbon emissions. It's possible to reject that case without questioning the science behind it.
My own thinking on this issue has been powerfully influenced by the Manhattan Institute's Jim Manzi, whose carefully considered view accepts the scientific case that carbon emissions are raising average temperatures but rejects cap-and-trade and similar policy solutions.
Manzi starts from the consensus represented by the United Nations Intergovernmental Panel on Climate Change. Its most recent report -- another one is due this year -- says that, by 2100, rising temperatures will impose costs amounting to 3 percent of the global economy. That is a huge amount of money.
Preventing those costs from arising would, unfortunately, also be expensive. William Nordhaus, a professor of economics at Yale University and an advocate of a carbon tax, has estimated that reducing emissions could yield a net benefit of about $3.4 trillion over the next several centuries -- which amounts to 0.17 percent of the present value of global economic output over that period.
As Manzi points out, though, that estimate assumes that a carbon-reduction program would be optimally designed, carried out and enforced. And that is inconceivable.
Consider the horse trading that had to take place in 2009 to get a cap-and-trade bill through the House of Representatives. Then add more deal making to get it through the Senate. Then multiply that by some very large number to get India, China and Brazil on board -- not that anyone has any real strategy to do that. Each of these side deals would add some new economic distortion and reduce the net benefits of action. You'd eat through that 0.17 percent pretty quickly. And that's before we actually started enforcing the caps worldwide, which would surely require more compromises.
Does that mean we should just do nothing? If we are sure that the IPCC has its projections right, then the answer would be yes: The realistic costs of restraining the rise in temperatures would not be worth the expected benefits. The next IPCC assessment would have to have radically different numbers to change that.
Yet Manzi does not draw a do-nothing conclusion, because it makes sense to ensure against the possibility that the consensus is too optimistic. He thinks governments should promote limited efforts to develop technologies to better predict climate change, mitigate it and its costs, and adapt to it. That doesn't mean permanent subsidies for particular technologies -- the sort of thinking that got federal taxpayers a share of the Solyndra LLC boondoggle.
Instead, he argues, we should "place a strong emphasis on large prizes for accomplishing measurable and audacious goals." The federal government could, for example, offer a $1 billion prize to anyone who invents a device to remove carbon from the atmosphere. We should, in short, approach global warming as "a manageable risk" rather than "an existential crisis."
Raising the cost of carbon through a tax or a cap would also spur some of this technological development. Indeed, that's arguably the main payoff from such strategies, because it is implausible that they would steer us toward a low-energy economy. Direct inducements for technological breakthroughs, in contrast, would have a much lower cost, because they would not raise the price of energy.
By inhibiting economic growth, aggressive attempts to reduce carbon emissions would make us less resilient and adaptable. "In the face of massive uncertainty, hedging your bets and keeping your options open is almost always the right strategy," Manzi writes.
Even conservatives who do not believe that global warming is real ought to support this strategy -- at least, those who are willing to concede that there is a nonzero risk that they have gotten this question wrong.
Arguments over global warming often have a moralistic or even religious cast. But a cold assessment of risks and how to ensure against them would doom the anti-carbon campaign. No wonder that's a debate John Kerry doesn't want to have.
(Ramesh Ponnuru is a Bloomberg View columnist, a visiting fellow at the American Enterprise Institute and a senior editor at National Review.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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