Costs and benefits of CO2 abatement

Richard Tol­l’s paper for the 2009 Copen­hagen Cli­mate Con­sen­sus that I men­tion in my pre­vi­ous post is well worth revis­it­ing. It con­tains an excel­lent review of eco­nom­ic research on the poten­tial aggre­gate costs of the warm­ing pro­ject­ed by the U.N.

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Toll—who, as a UNIPCC lead author, is hard­ly a cli­mate skeptic—estimates that glob­al con­sump­tion and out­put would be crip­pled by a car­bon abate­ment scheme aimed at achiev­ing the 450ppm atmos­pher­ic goal that Ross Gar­naut now endors­es. Glob­al GDP would be down 12.5% on expect­ed val­ues in 2001. The cumu­la­tive slug to glob­al out­put over the remain­der of this cen­tu­ry would be much larger.

To put that extreme plan in per­spec­tive you need to con­sid­er the extreme alter­na­tive: the cost of doing noth­ing about warm­ing or CO2. It turns out that nine inde­pen­dent stud­ies by experts in cli­mate cost pro­jec­tions put the cost of doing noth­ing at less than one-fifth of cost of the 450ppm target.

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Pro­jec­tions for the aggre­gate loss­es in out­put due even to the alarm­ing glob­al warm­ing pro­jec­tions of the U.N. are sim­i­lar in most of the nine inde­pen­dent mod­els and sur­pris­ing­ly mod­est: a glob­al GDP cut of 0.9% in 2001 as a result of 2.5° warm­ing, and as high as a GDP cut of 2.7% for a 3° tem­per­a­ture rise (but these lat­ter esti­mates are from the mid-1990s). The most com­mon (i.e. modal) esti­mate of the mar­gin­al social cost of carbon-dioxide-equivalents—the “pol­lu­tion” (sic) cost of an extra tonne of CO2 emissions—in the nine mod­els is only $13 per tonne (the mean esti­mate is $105 per tonne due to one or two extreme guesses).

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