by Judith Curry
A burning question for the Paris negotiations: Are the INDCs sufficient to prevent 2 degrees of warming?
A provocative new paper addresses the feasibility of not exceeding the 2C target.
The uncertainty of climate sensitivity and its implication for the Paris negotiations
Yoichi Kaya, Mitsutsune Yamaguchi & Keigo Akimoto
Abstract. Uncertainty of climate sensitivity is one of the critical issues that may affect climate response strategies. Whereas the equilibrium climate sensitivity (ECS) was specified as 2–4.5 C with the best estimate of 3 C in the 4th Assessment Report of IPCC, it was revised to 1.5–4.5 C in the 5th Assessment Report. The authors examined the impact of a difference in ECS assuming a best estimate of 2.5 C, instead of 3 C. The current pledges of several countries including the U.S., EU and China on emission reductions beyond 2020 are not on track for the 2 C target with an ECS of 3 C but are compatible with the target with an ECS of 2.5 C. It is critically important for policymakers in Paris to know that they are in a position to make decisions under large uncertainty of ECS.
Published in Sustainability Science [link to abstract].
Excerpts:
By the end of June, 2015, the United States, the European Union, China and several other countries submitted their intended nationally determined contributions (INDCs) to the UNFCCC secretariat. This is a good start toward the coming Paris climate conference (COP 21). However, according to our estimate based on our global energy systems model DNE21+ and a simple climate change model MAGICC, these pledges are nowhere near sufficient to limit the temperature increase to less than 2 C since pre-industrialization if we apply 3 C as the best estimate of the equilibrium climate sensitivity (ECS).
As pointed out previously, the likely range of ECS was lowered to 1.5–4.5 C (in AR5) from 2 to 4.5 C (in AR4), and experts were unable to agree on the value of the best estimate in AR5 though it was agreed as 3 C in AR4. In addition, the value of 2.5 C had been used as best estimate (most likely value) throughout IPCC’s 1st to 3rd assessment reports where the likely range of climate sensitivity had been 1.5–4.5 C. Under the above situation, it is only natural to assume the best estimate (median) for AR5 will be lower than 3 C. Therefore, we chose the best estimate value of 2.5 C for the purpose of comparison to explore the impact of difference in ECS on climate negotiations. The point at issue here is whether INDCs submitted by major countries are consistent with the 2 C target under different climate sensitivities. Note that it is not the authors’ intention to argue 2.5 C is the correct value.
Fig. 1: Estimated emission pathways toward 2050 by the DNE21+ – model (and MAGICC model): Black dotted line shows the emissions pathway under current policies, green line shows the emissions pathway that limits the temperature increase below 2 C through 2100 under a climate sensitivity of 2.5 C, which corresponds to the scenario of a slight temporal overshoot of 580ppm CO2- eq. concentration in AR5. Temperature is expected to stabilize below 2 C in the long run. Orange line shows the emissions pathway that limits the temperature increase to below 2 C through 2100 under a climate sensitivity of 3 C, which corresponds to the scenario in which the concentration stays below 500ppmCO2 eq. through 2100 in AR5. Temperature is expected to stabilize below 2 C even under a climate sensitivity of 3 C. The red line shows emissions until 2030 based on the assumption that individual country’s INDCs submitted at the end of June will be implemented.
The outcome of our model shows global total emissions under major countries’ INDCs (red line) in 2030 will not be on track to attain the 2 C target if climate sensitivity is 3 C (orange line). On the other hand, the red line emissions are in line with the green line that is consistent with the 2 degree target if climate sensitivity is 2.5 C, and if we allow a temporal overshoot of 580 ppmCO2-eq. This implies, with ECS equal to 2.5 C, that the 2 C target is still within reach.
It is clear from the above explanations that the impact of a mere 0.5 C difference in climate sensitivity is of critical significance for policy objectives, which is especially significant given the large uncertainties over climate sensitivity.
JC comments
In my previous post Climate sensitivity: lopping off the fat tail, I argued that it is becoming increasingly difficult to defend high values of ECS. However, the uncertainty is sufficiently large that we can’t really identify a meaningful ‘best value’ of sensitivity, or rule out really high values.
A key issue is that emerging estimates of aerosol forcing are considerably lower than what was used in the AR5 determinations of ECS, implying lower values of ECS than was determined by the AR5.
This uncertainty in ECS makes emission targets rather meaningless. It will be interesting to see how this uncertainty is factored into the Paris negotiations
Note, there are other papers on this general topic that are in the review process, I expect a spate of such papers to appear during the next month.
I have been corresponding via email with Yamaguchi and Kaya. Also, on his recent trip to the U.S., Mits Yamaguchi spent a day visiting with me, some very stimulating conversations and interesting insights into WG3. Below is a photo from this meeting.
From pre-industrial to now the warming has been net beneficial and the greening nearly miraculous. Expectations for the future? You decide.
=================
Summers Day.
The shining river mingles with the land
where murmuring bees and trilling birds sound
the old harmonies.
The wintry west extends his blast,
And hail and rain does blaw;
Or the stormy north sends driving forth
The blinding sleet and snaw:
While, tumbling brown, the burn comes down,
And roars frae bank to brae;
And bird and beast in covert rest,
And pass the heartless day.
+1+1+1= +3 for K, BtS, and JN. The Normans were Nor men. They knew the cold, so headed south,. The rest is history…
Karma is God’s way of remaining anonymous:
https://greyenigma.wordpress.com/2015/10/01/karma-strikes-back-against-climate-criminals/
justinwonder | September 30, 2015 at 11:31 pm |
No the Normans headed north and invaded England. Maybe you were thinking of Norsemen. Justwondering.
Same same, cg.
============
These climate refugees get around. A famous bunch, from the area of modern Germany, ended up in Africa via Spain.
Interestingly, it is cooling episodes that produce desperate refugees; warming episodes merely encourage poleward settlers.
=======================
climategrog,
Normandy was name after Rollo – the viking invader of present day France. You are correct about “The Conquest” – see the tapestry, an oldy timey political cartoon.
Interesting exercise: What is the origin of the word “Russia”?
My wife is tall, fair, and proud, a direct descendant of a Mayflower Pilgrim and before that perhaps of Viking chieftains and fierce Celtic warlords.. I’m a not tall, swarthy semite with course, protective hair and sun darkened eyes.
Even if you buy the CAGW scenario, we humans are built to adapt.
So if the observational centennial ECS is 1.5 (newest Lewis newest aerosols) or 1.7 (Lewis and Curry) we can even call Paris off and all go home.
The most interesting part about interesting paper is that it got published now. If Phil Jones has any say,,heads will roll.
Models generally have ECS ~ 3.0 (is this correct?)
So far…Observed warming = 0.4 x model warming
Thus, my ballpark ECS is 0.4 x 3.0 = 1.2 which is almost the same as warming rate since satellites temps started in ’79.
What is important is that CO2 is beneficial until 3°C. Between 3°C and 4°C is where, according to the IPCC, CO2 harm becomes statistically significant.
If all the warming we can expect is 1.5°C we should be pumping out all of what little CO2 producing carbon we have available (760 GT) to maximize our benefit.
Carbon sequestration and other practices to minimize our benefit should be criminalized.
Can you support your first paragraph claim? As all that follows is based upon it, should you be wrong, your entire comment should be retracted.
Paleontology never shows a upper limit to the benefits of warming, and always shows the detriments of cooling.
==============
Of course, without the vital water vapour feedback – for which there is no evidence, the CO2 on its own is incapable of producing anything like a dangerous level of warming.
So you think a warmer atmosphere cannot hold more water vapor, i.e. that the Clausius-Claperon equation is wrong?
A warmer atmosphere CAN hold more water vapor, but it doesn’t because of increased convection. Remember that water exists in three phases. If it changes to the liquid or solid phase it falls out.
“So you think a warmer atmosphere cannot hold more water vapor, i.e. that the Clausius-Claperon equation is wrong?”
No.
Of the three analyses of NASA’s NVAP data, here’s Vonder Haar:
http://onlinelibrary.wiley.com/doi/10.1029/2012GL052094/full
find zero trend since 1988
Here’s Humlum:
http://www.climate4you.com/images/TotalColumnWaterVapourDifferentAltitudesObservationsSince1983.gif
And here’s Solomon et al.
Abstract
Stratospheric water vapor concentrations decreased by about 10% after the year 2000. Here we show that this acted to slow the rate of increase in global surface temperature over 2000–2009 by about 25% compared to that which would have occurred due only to carbon dioxide and other greenhouse gases. More limited data suggest that stratospheric water vapor probably increased between 1980 and 2000, which would have enhanced the decadal rate of surface warming during the 1990s by about 30% as compared to estimates neglecting this change. These findings show that stratospheric water vapor is an important driver of decadal global surface climate change.
https://www.sciencemag.org/content/327/5970/1219.abstract
So no increase in atmospheric water vapour correlating to the increase in atmospheric CO2.
Are you seriously suggesting that you, the Great Climate “Scientist” David Apple, is unaware of the NASA NVAP data analyses?
Or are you just blowing smoke, as is your custom?
David,
There is (of course) much more to the story than Clausius-Claperon. The C-C equation represents an equilibrium state. The actual atmosphere is not at all in equilibrium. Sure, warming has to cause some positive feed-back, but it may not be C-C like; and there is a lot of empirical evidence to indicate it is not..
Appell –
Clausius-Claperon is an equilibrium relationship. The earth is not a closed beaker.
I can’t put my finger on what’s exactly wrong with the climate models, but their inability to match the last ten years’ surface AND troposphere temperatures tells me they do have something wrong:
The models are too complex, the grid is too coarse, the parameterizations can’t really be tested, and a large portion of the physical processes aren’t tied down. The coupling between the atmosphere and the ocean is clunky. The input pathways for CO2 concentration are science fiction, the carbon cycle has gaps. It’s impossible to grasp the output, the processing time is too slow to allow sufficient experiments to figure out the glitches, and the whole mess is so political I don’t see anybody willing to discuss these matters in the open.
Fernando L: “I can’t put my finger on what’s exactly wrong with the climate models”
I can.
Anyone who claims that a computer
gamesimulation of an effectively infinitely large open-ended non-linear feedback-driven (where we don’t know all the feedbacks, and even the ones we do know, we are unsure of the signs of some critical ones) chaotic system – hence subject to inter alia extreme sensitivity to initial conditions – is capable of making meaningful predictions over any significant time period is either a charlatan or a computer salesman.Ironically, the first person to point this out was Edward Lorenz – a climate scientist.
You can add as much computing power as you like, the result is purely to produce the wrong answer faster.
So the fact that they DO appear to give relatively consistent answers – albeit entirely incorrect ones – is evidence that someone is extracting the urine.
Even the IPCC managed to work that out.
“In sum, a strategy must recognise what is possible. In climate research and modelling, we should recognise that we are dealing with a coupled non-linear chaotic system, and therefore that the long-term prediction of future climate states is not possible.”
IPCC Working Group I: The Scientific Basis, Third Assessment Report (TAR), Chapter 14 (final para., 14.2.2.2), p774.
All else is sound and fury, signifying money; the Masque of Paris nigh.
==================
There is plenty of evidence for the feedback that comes from water.
When you warm the oceans, you melt the sea ice cover, you beget water vapor, that begets snowfall and that begets an upper bound for temperature.
The Polar Oceans are giant ice machines and snowfall increases, without bound, every time the Polar Oceans get warm. Look at actual ice core data. Actual data does not look like flawed climate model output. Snowfall rate is always higher in warm times and the warm times always ends.
Models forecast warming and sea level rise.
Actual data forecasts more snowfall and ocean level dropping.
http://popesclimatetheory.com/page85.html
I wonder if the IPCC would have lowered climate sensitivity in the 5AR if they knew of the Karl et al corrections published in Science a few months ago.
I would guess not.
estimates of ECS are rather insensitive to the selection of temperature time series (and variants) and end period.
The big question is this
Can we see all lines of evidence pointing to median of 2.5C
A) observational? Yes
B) Paleo ? No
C) Models ? No
Steven, I agree, but then why did the 5AR lower climate sensitivity? Was it not in response to what was then thought to be a “pause” in surface temperatures of ~ 15 years, per a couple of papers by Myles Allen (et al) just before the 5AR finalized?
Looking at the drafts I thought it was the Lewis paper.
I could be wrong.. a more transparent process of how draft are changed would tell us.
but I dont think we want to get to a sentence by sentence acounting..
suffice it to say I would not feel comfortable leaning soley on the observational papers– or only on the “latest” pepr
Mosher,
A and B are are the same (both observational) and are science. Models are based on the beliefs and motivated reasoning of the modelers, so not as valuable as the observational evidence. In fact they should be calibrated to reproduce the observational evidence. The models should run backwards and reproduce the observational evidence for the past 500 million years.
Importantly, the paleo evidence does not indicate that warming would be bad for life on Earth but does indicate that cooling would be very bad.
I just don’t see a persuasive case to support policies that will do economic harm (as carbon pricing and incentivising renewable energy certainly do). However, I do support policies that will produce economic benefits for the world whether or not they mitigate global GHG emissions.
If you’ve actually worked with feedback series in real life, like me, then its fairly obvious that in an inter-glacial, the climate has strong negative feedbacks in operation.
Therefore the sensitivity will almost certainly be less than 1C.
And if you had worked in real engineering with real systems where people use real models and you know how often people go down a blind alleyway because of some false assumption that doesn’t pan out. You wouldn’t pay much heed at all to a bunch of numpties whose sum total experience is a total failure of their models after asserting a ridiculous 95% confidence in their own abilities.
“The big question is this
Can we see all lines of evidence pointing to median of 2.5C
A) observational? Yes”
Global SST trends from cold-to-cold AMO (1910-1976) compared to warm-to-warm AMO (1945-2010) don’t show any great acceleration of warming rates in the latter period. There’s no validity in including land temperatures, particularly post 1995 as the warm AMO is drying out continental interiors making them hotter.
http://www.woodfortrees.org/plot/hadsst3gl/from:1900/plot/hadsst3gl/from:1911/to:1976/trend/plot/hadsst3gl/from:1945/to:2010/trend
And when you see that declining solar since 1995, has increased the negative NAO responsible for shifting the AMO to its warm mode, then you have a measure for how small CO2 forcing really is, as it should have inhibited the increased negative NAO from 1995, and reduced the AMO warming relative to the post 1925 AMO warming. It may have a very slightly.
http://snag.gy/HxdKY.jpg
So consider a(n old-fashioned) thermostat in a house that drives a furnace. Would you call this a “negative feedback”? (I wouldn’t, but let’s use your definition.) Now, take a window next to that thermostat and open it a crack. What does it do to the average temperature?
Steven,
“Can we see all lines of evidence pointing to median of 2.5C
A) observational? Yes
B) Paleo ? No
C) Models ? No
A) I would say that sound, robust instrumental observation studies almost all point to effective climate sensitivity of 1.5-2.0 C as a best (median) estimate, albeit with considerable uncertainty (much reduced if one restricts the range of negative aerosol forcing, which seems reasonable). True equilibrium (of the atmosphere + ocean) climate sensitivity could be a bit higher, but that is largely irrelevant to the rise in GMST over the next two centuries.
B) Last glacial maximum (LGM) paleo estimates are usually thought most reliable and relevant. ECS estimates based directly on recent estimates of GMST and forcing changes over the transition from the LGM to the holocene are actually about 1.7 C or so. (CMIP3 models suggested that ECS now was somethat higher than it was for the LGM transition, implying an estiamte closer to 2.5 C, but in CMIP5 models the relationship between simulated LGM cooling and ECS disappeared.)
C) Models. Median effective sensitivity of CMIP5 models is ~ 3 C; equilibrium sensitivity a bit higher. But most models have been warming far faster than the real climate system has since their high aerosol cooling ceased to offset their high sensitivity. Modellers are now arguing that the real climate system has behaved abnormally over the instrumental period as a whole. IMO it is more probable that the CMIP5 models have serious faults that bias their ECS values up.
Having said all that, it is transient climate response (TCR) that is most relevant for warming this centrury, not ECS. Observations point to a best estimate for TCR being in the range 1.2 – 1.4 C, with much less uncertainty than for ECS. CMIP5 models exhibit an effective TCR over the rest of this century of 2 C or a little higher.
One final point. Observational estimates of ECS and TCR are virtually unaffected by the hiatus, despite propaganda to the contrary: ending the data analysed in the first few years of this century rather than in the most recent few years makes alsmost not difference to the median ECS or TCR estimate.
Nic,
But, if the hiatus is an internally-driven slowdown (as some seem to think) then the observed change in temperature could be slightly lower than the externally-forced response (by maybe 10% since 1950). So, your statement that it is virtually unaffected is – I think – only true under the assumption that the observed warming is externally forced only (i.e., no internally-forced influence).
If there has been internally-driven cooling then your estimate for TCR could be too low by a few percent. Of course, technically one might expect this internal variability to not influence the ECS, since any change in temperature should be associated with a corresponding change in system heat uptake rate. However, even this isn’t strictly the case (see Palmer & McNeall for example) and if it was, you would then have a result where the ratio of your best estimate for TCR to your best estimate for ECS is much greater than seems reasonable given the inertia in the system.
Also, given that actually reducing atmospheric concentrations is likely to be extremely difficult, this statement seems somewhat misguided
Nic,
Actually, here’s a specific question for you. Given your best estimates for TCR, I’ve seen Matt Ridley argue that we could follow an RCP6 pathway and still keep warming by 2100 below 2C (i.e., roughly 5.5/3.7*1.4). Do you agree with this? If you do, how do you explain that today our cumulative emissions are about one-third that of RCP6’s cumulative emissions by 2100 and yet we’ve already warmed by almost 1C? Doesn’t seem consistent to me. Do you think that we can follow an RCP6 pathway and only warm by around 2C by 2100 and, if so, how do you explain this?
“A) observational? Yes
B) Paleo ? No
C) Models ? No”
Models? Yes if you use lower aerosol forcing estimates and include things like the Iris effect. Models are also subject to confirmation bias due to the large number of parameters that need to be chosen and of course have numeric approximation issues.
Paleo? Yes! With respect to the Pleistocene, you just need to take Milankovitch cycles into account and also take into account that changes in radiative forcing in polar regions results in a larger change in global average temperature than changes in equatorial regions (due to the Stefan-Boltzman law) so many estimates overestimate climate sensitivity due to underestimating the relative strength between albedo feedbacks and GHG feedbacks.
I wrong a post a while back on this:
For climate sensitivity estimates that look at temperature changes prior to the Pleistocene, there are a number of issues with these estimates, including:
– Lack of a globally representative set of temperature reconstructions, large uncertainty in temperature reconstructions, and large uncertainty in atmospheric CO2 reconstructions result in estimates having so much uncertainty that not much confidence can be gained from these estimates. The estimates from Pleistocene + Holocene ice core data have far more confidence than the estimates of all the remaining Paleo data put together.
– Often these estimates do not properly take into account the effects of changes in the positions of the continents (which becomes significant at this timescale). Such changes can significantly affect the global distribution of albedo and the global pattern of heat transfer. Hansen et al. completely ignore the effect of changes in the position of continents, which means that they are overestimating climate sensitivity since the changes in the position of continents has led to a gradual cooling over the Cenozoic. The PALEOSENS 2012 paper does appear to try to address this issue by taking into account long term albedo changes though.
– When looking at temperature changes over large timescales such as the Cenozoic, it makes sense to take into account changes in solar irradiance. However, since solar irradiance and GHG forcing are negatively correlated in the Cenozoic, not taking into account the fact that solar irradiance is not distributed evenly across the surface of the planet can lead to an overestimation of the strength of changes in solar irradiance and therefore an overestimation in climate sensitivity estimates (I describe this effect in more detail further down).
– Most of these non-Pleistocene paleoclimate estimates are not taking into account changes in CH4 and N2O. Since CH4 and N2O are strongly correlated with temperature and were likely higher in the past when temperatures were higher, not taking CH4 and N2O into account results in an overestimation of climate sensitivity. Not only that, since radiative forcing is an approximately logarithmic function of CO2, but an approximately square root function of CH4 and N2O, as temperatures rise the relative importance of CH4 and N2O may rise relative to CO2.
In an attempt to quantify the magnitude of ignoring the effect of CH4 and N2O, look at Pleistocene ice core data. The 95% confidence interval for the change in global temperature from Holocene to LGM is 4.0 +/- 0.8 C (Annan and Hargreaves 2013). The difference in CH4 concentrations is approximately ~347 ppb and the difference in N2O concentrations is ~44 ppb. The early Eocene (55 mya) had global temperatures ~13C higher than current temperatures. If one were to treat N2O and CH4 concentrations as roughly linear functions of temperature, then this would suggest that there was ~1850 ppb of CH4 and ~413 ppb of N2O. If one uses the IPCC’s GHG radiative forcing formulas (http://www.esrl.noaa.gov/gmd/aggi/aggi.html) then this suggests that the CH4 and N2O levels would have caused ~0.95 W/m^2 more radiative forcing than pre-industrial levels. Alternatively, if the early Eocene had approximately 4 times current levels of CO2 then by http://www.pnas.org/content/108/24/9770.full.pdf, there would be ~3614 ppb of CH4 and 323 ppb of N2O, which gives a change in radiative forcing of ~1.22 W/m^2 relative to pre-industrial levels. In comparison, a quadrupling of CO2 causes a change in radiative forcing of ~7.42 W/m^2, so excluding changes in CH4 and N2O mean that climate sensitivity is being overestimated by ~16% (obviously there is a lot of uncertainty here, but the point remains).
– – – – –
Paleoclimate estimates that use Pleistocene + Holocene ice core data are far more reliable and give better estimates than other Paleoclimate estimates. However, many of the studies that try to estimate climate sensitivity have flaws that cause an upward bias in estimates and an underestimation of uncertainty. These flaws include:
– Overestimation of temperature changes over the Pleistocene can cause overestimation of climate sensitivity and not taking into account uncertainty in temperatures changes over the Pleistocene can cause an underestimation of uncertainty of climate sensitivity. Some studies (such as those by Hansen et al.) use outdated estimates of temperature changes since the LGM (such as Shakun and Carlson 2010) to infer global temperature changes over the Pleistocene. My understanding is that the current best estimate for LGM-Holocene temperature difference is 4.0 +/- 0.8 C (Annan and Hargreaves 2013). This means that estimates that used higher LGM-Holocene temperature differences of ~5C are overestimating climate sensitivity by ~25%. The PALEOSENS 2012 paper you refer to though has a reasonable polar amplification factor + uncertainty, so avoids this issue.
– Milankovitch Cycles. This is my biggest gripe with Pleistocene estimates. What causes the ice ages? Milankovitch Cycles. What do most Pleistocene estimates ignore when estimating climate sensitivity? Milankovitch Cycles. It’s insanity!
The ‘argument’ that is consistently given to dismiss the effect of Milankovitch Cycles is something along the lines of “because changes in global annual solar irradiance are small due to Milankovitch Cycles, they can be neglected”.
This is complete nonsense. For one, global annual solar irradiance is proportional to 1/sqrt(1 – e^2), where e is the eccentricity of the Earth’s orbit. So the above claim basically suggests that obliquity and precession do not matter as they don’t affect global annual solar irradiance. Perform a simple linear regression where global temperature over the Pleistocene is the dependant variable and eccentricity, obliquity and the precession index are the independent variables (add other explanatory factors if you want). You will find that obliquity is by far the most important Milankovitch Cycle, not eccentricity.
Obliquity has an effect on global temperatures beyond GHG or albedo feedbacks. This is due to the Stefan-Boltzman law. The earth’s surface does not have a uniform temperature; polar regions are colder than equatorial regions. Because of this, a change in the incoming radiation in a polar region will have a larger effect on global temperatures than a change in the incoming radiation in an equatorial region as the marginal change in emitted black body radiation due to a change in surface temperature is higher in the equator than in the poles. I’ll demonstrate the magnitude of this effect below:
– – – – –
Not taking into account the unevenness of changes in the distribution of solar insolation can cause significant bias and underestimation of uncertainty in estimates of climate sensitivity. For example, Van Hateren 2012 assumes that a change in solar irradiance will have approximately 0.7/4 (1 – albedo of earth divided by the ratio of the surface area of a sphere to the area of a circle of comparable radius) times the effect of an equivalent change in W/m^2 in GHG forcing. This arguably overestimates the strength of the sun relative to GHG forcing because it doesn’t take into account the fact that extra sunlight in the tropics has less affect on global temperatures than an equivalent amount of extra sunlight in the poles due to the Stefan-Boltzman law.
To illustrate the magnitude of this effect, consider a grey model of earth where in equilibrium:
(1-α)*S(φ) + B = G*σ*T4(φ) + k*(d2T(φ)/dφ2 – tan(φ)*dT(φ)/dφ)
Where α is the Albedo of Earth, S(φ) is the annual solar insolation at latitude φ, B = 0.087 W/m^2 is the heat flux due to the Earth’s internal energy, G is a factor due to greenhouse gasses, σ is the Stefan-Boltzmann constant, k is the constant that determines the rate of heat transfer across the surface of the Earth and S(φ) is the temperature at latitude φ.
If I impose a restriction that the average temperature of this grey earth is 288 K and that the temperature at the equator is 300 K (which gives a temperature profile that is similar to that of Earth), then I get G = 0.1967 and k = -0.0452. If I use this model and vary solar irradiance by 1 W/m^2 then I get an equilibrium global average temperature change that is 5.44% the temperature change I get if I change greenhouse gas forcing by 1 W/m^2 (if you wish to see my matlab code that gives me this I am happy to share it).
Now if the assumption by Van Hateren were valid then the above value should be 0.7/4 = 17.5%, not 5.44%. So not taking the unevenness in the distribution of global insolation and temperature can cause one to overestimate the strength of the sun relative to GHG forcing by a factor of 3; which suggests that Van Hateren’s estimate is an underestimate of climate sensitivity. More realistically, one should take into account the unevenness of albedo distribution and the effect of cosmic rays; if I try to estimate a Van Hateren impulse response function from instrumental data and allow the effect of the sun to vary as a free parameter relative to the effect of GHG forcing, then I find that a change in solar irradiance has about 8% the effect of an equivalent change in W/m^2 in GHG forcing; so the assumption by Van Hateren overestimates the relative strength of Solar Irradiance to changes in GHG forcing by a factor of two.
– – – – –
So clearly, changes in the distribution of incoming solar radiation causes global temperature changes beyond those caused by GHG or albedo feedbacks due to the Stefan-Boltzman law. In addition, the precession index is very relevant because the albedo distribution of the Northern Hemisphere is different from the albedo distribution of the Southern Hemisphere. So to have a decent climate sensitivity estimate using Pleistocene data, Milankovitch Cycles need to be taken into account.
Let’s say I take Dome C data of dO18, CO2, CH4 and N2O. I use Annan and Hargreaves 2013 to convert the dO18 into a proxy for global average temperatures and I convert the CO2 + CH4 + N2O data into GHG forcing. For albedo forcing, let’s assume for the sake of argument that the claim by Hansen et al. 2013 that the radiative forcing due to albedo changes from Holocene to LGM is 3.4 W/m^2 +/- 20%. I can then use a sea level reconstruction/dataset (say de Boer’s ANICE output) and an assumption of linearity to get a proxy for the albedo forcing.
For the effect of Milankovitch cycles, let’s use 3 variables: the change in solar irradiance (which is proportional to 1/sqrt(1 – e^2)), the sine of the obliquity, and the precession index (e*sin(precession). I can then perform a linear regression to estimate the model T = β0 + β1*(GHG + Albedo + 0.05*Solar) + β2*sin(obliquity) + β3*precession_index + model error. If I take into account all my sources of error (model error, temperature error and albedo error) and propagate error correctly my 95% confidence interval for ECS is (2.48 +/- 0.49) C.
And this is an overestimate of ECS since I am using a low value (0.05) of the strength of the sun relative to GHGs (my regressions using the instrumental data suggest this should be closer to 0.08) and I’m not taking into account the fact that the albedo changes are not uniform. As the albedo changes are higher in polar regions than equatorial regions the strength of albedo changes relative to GHG changes should be stronger than what is assumed in the model (due to the Stefan-Boltzman law).
In any case, I think I can conclude that a proper evaluation of the Pleistocene + Holocene ice-core data yields a 95% confidence interval of climate sensitivity that excludes ECS greater than 3 C. So an ECS greater than 3C is excluded at the 2.5% confidence level by Paleoclimate data!
I have posted a response to ATTP here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734324, as this sub-thread had got very long.
Typo.
“I wrong a post a while back on this:”
Should have read
I wrote a post a while back on this.
Darn post-concussion syndrome.
“how do you explain this?” [less warming per unit of CO2 going forward]
Negative feedbacks. The cumulative effect can best be seen in the very rapid temperature rise at the beginning of interglacials. Something limits the maximum to 2C above present each and every time.
http://ccir.ciesin.columbia.edu/nyc/images/1b_Fig1.jpg
How do you explain this?
Another thing in the paleo record that begs explanation is why the current interglacial never hit the high temperature peak of the previous several and why it appears stuck in an interim lower peak (becoming a plateau instead of a peak) lasting much longer than the usual peak.
The explanation that makes the most sense to me is the Younger Dryas, which can be seen as the glitch in rapid rise of the most recent interglacial which is absent from previous episodes. The Younger Dryas is believed to have been an ice dam breaking east of the Great Lakes prematurely flooding the north Atlantic ocean surface with fresh water which in turn raises the freezing temperatue. The end result was the preservation of the Greenland Ice Sheet. Maxiumu sea level in the present Holocene interglacial is seven to ten meters lower than the previous Eemian interglacial.
The Greenland Ice Sheet thus appears to be a stabilizing influence moderating the peak temperature during the Holocene interglacial and preventing temperature decline into the next glacial epic.
Ironically, if human influence on climate can melt the Greenland Ice Sheet it may pave the way for the normal temperature decline into the next glacial epic. In any case global warming appears limited by negative feedbacks to 2C above present but that amount is sufficient to condemn the Greenland Ice Sheet but that will take many centuries at a minimum to melt away. Presumably CO2 emission from fossil fuels will end long before that time and given the voracious appetite of carbon sinks which currently absorb half of the annual emissions despite the rate of emission rising exponentially it doesn’t seem reasonable that anthropogenic forcing can be sustained long enough to melt the ice sheet.
David Springer,
Excellent comment, thank you. (but hadn’t previously heard anything about Greenland melting starting the onset of the decline into the next ice age. As you say it would take centuries for Greenland to melt away.
The climate has been in a cooling trend for 50 million years, 10 million years, 1 million years and 8,000 years. the last four interglacial peaks are trending down and the trend is to cool for the past 8,000 years. We are also in only the third cold house phase in the past 1/ billion years – i.e. when the planet has permanent ice caps. Ice caps are rare over the past 1/billion years. We are in cold times. This puts the lie to catastrophic global warming. Global warming si definitely no a serious threat of catastrophe.
@lang
No recent interglacial has a lower-temperature plateau at the beginning like the Holocene. Why? As stated the only difference I can see to explain it is the Younger Dryas sparing the Greenland Ice Sheet from melting. This has numerous implications for global climate not the least of which is the global ocean surface area and land/ocean ratio in the Northern Hemisphere. The $64,000 question is how long the plateau will extend. Probably thousands of years minimum which, if true, makes it moot because human evolution is accelerating through technological means so rapidly that we have no idea what our species will be capable of in even a hundred more years to say nothing of a thousand.
David Springer,
Interesting point. Thank you. Aussies know that the extended Holocene ‘pause’ is entirely due to human intervention in the climate – Australian aboriginals have been burning the vegetation in massive wild fires for hunting purposes for 40,000 years. :)
So, you see, we can control the climate to within tight, comfortable tolerances without any help or instructions from CAGW Alarmists or Leftist ideologues.
Kar-har-har-harl.
============
The long term rise in GMST per Karl (NOAAv4.0), from the first 20 to the last 20 years (1880-1899 to 1995-2014 average) is, on my calculations, LOWER than that per HadCRUT4(v3 or v4), not higher!
Gee David, you seem to be pushing physics for third graders and math for con artists.
That would depend on how much they want to be seen as frauds.
back in 2008 (or so) Tom Fuller and I suggested planning based on a 2.5C
number.
With observational estimates lower than 2 and Paleo estimates around 3C
That suggests a concerted effort focused on Paleo.
So, in a perfect world the new republican president would make Judith head of NSF and we could get dollars focused on a best practices look at Paleo.
I’ll agree if you mean “focused on *determining* best practices”. What are the chances that AOGCM’s or simple energy balance models can provide suitably constrained insights?
First sentence of the Abstract says:
More important than the uncertainty of climate sensitivity is the uncertainty of the damage function. At the moment we haven’t a clue whether GHG emissions are doing more harm or more good, nor whether GHG emissions are reducing the risk of the next abrupt climate change by more than they are increasing it – e.g. reducing the likelihood and/or severity of the next abrupt cooling event by more than increasing the likelihood and severity of the next abrupt warming. The fact that we are past the time when the planet should have begun the long , 80,000 year, descent towards the next glacial maximum means that if not for our GHG emissions the risks would be very much on the down side.
I think this is a key point Kim has been making on CE for years – but more succinctly. :)
I see Kim has already said similar (very concisely) in the first comment on this thread. :)
Yes, it’s something like this;
warming over the next century or so is nothing to worry about, but OMG!, beware the coming cold apocalypse sometime in the next several millennia!! – we must act now!!!
More harm, more good, or possibly, nothing at all other than greening the planet.
Some are so frightened by CAGW they are planning to go to Mars. AMF I say, and have a nice cold day.
I know what GHG and CO2 and OMG! and CAGW are but I had to Google AMF. Nice. Adios My Friend is the polite version.
Obama was nice to Putin, but not to Bibi. How’s that working for him?
At the moment we haven’t a clue whether GHG emissions are doing more harm or more good
That is not true. There is plenty of evidence that most all green things on earth are growing better while using less water due to the CO2 increase, while temperatures stay below the upper bounds of the Roman and Medieval Warm times, which were good times for life on earth.
popesclimatetheory,
Yes, it does seem the weight of evidence suggests that GHG emissions are doing more harm than good. And paleo data shows that life thrived when the planet was warmer and struggled when cooler. And life thrived during periods of very rapid warming and struggled during cooling. And the climate changes by abrupt warming and abrupt cooling not as the models show.
So why to the CAGW scaremongers continually make silly emotive statements instead of continually denying the relevant facts?
“Yes, it does seem the weight of evidence suggests that GHG emissions are doing more harm than good.”
Did u mean to write this?
Rob,
No. My mistake. I meant to write:
“Yes, it does seem the weight of evidence suggests that GHG emissions are doing more good than harm.”
Thank you for picking that up
Michael. You really need to work on reading comprehension. Lang said we don’t know if GHG emissions are doing more harm than good. Also, he said we don’t know if in the future climate will warm or cool.
You are nothing more than a disingenuous obfuscator, sowing FUD among the innocents.
Concerning emissions vs concentrations, does MAGICC employ the Bern model? I recall it being used to assert that the natural ability to sequester atmospheric co2 was near saturation. I can’t recall any observational studies indicating this is true.
Que Jim D!
Sensitivity is what we need? Otherwise, in the name of conservatism, we could justify a return to whale oil as a renewable resource and brand as deniers all of the rest of us as mineral killers.
Fossil fuels saved the whales!!!!
+++++++++++++++++++++
I really do like that!
I would like to share this paper in which I show that the historical data in the post industrial era does not provide evidence that there is a measurable relationship between the rate of fossil fuel emissions and the rate of warming; and if there is no such relationship it may explain why it is so hard to find http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2662870
This analysis should be applied to the most recent 7000 years.
Look at temperature and CO2 for the past 7000 years.
http://popesclimatetheory.com/page38.html
While CO2 climbed from 260 to the 280 pre-industrial value, temperatures were not influenced. Now, that CO2 is 400, temperature is still well inside the same bounds.
I did get this CO2 data from:
Thomas C. Peterson, Ph.D.
Chief Scientist
NOAA’s National Climatic Data Center
I still have his email that he sent in Dec, 2009
How about the certainty of climate insensitivity and its implication for the Paris negotiations?
How about the climate of insensitivity toward the suffering of poor people demonstrated by elitist CAGWeenies?
First of all, a very attractive couple sitting at a meeting of the minds. Always good to see a human face to the dialogue.
I am partial to the color blue. I don’t see a blue curve to the graph whereby an equilibrium climate sensitivity is 0.8 +/- 0.3 which I have been told on good authority is also a reasonable speculation; i.e., just as good as 1.5 or 4.5 or for the currently discussed 2.5 and 580 PPMv CO2.
How about adding a blue curve? Then we can all go home after a collective sigh of relief. Unless of course, Paris is about saving Green Investors positions in renewable energy or carbon trading or…Then Paris is all about the economics of saving Green’s bacon.
I’ll say… JC is good lookin…. :)
The faddists of the kiddie console gen really think they can twiddle the climate with their Jerry Lewis calculations. Just don’t twiddle down too far, kiddies. For much of the world cooler=drier.
What a bunch of babies. Wouldn’t know actual complexity if it jumped into their laps and did a jig. Infants.
Ga-ga. Goo-goo.
Your goofiness is misplaced. We are dealing with a powerful and potentially destructive social movement. There is nothing infantile about it.
We’re both right. It is powerful and destructive. It is also utterly infantile.
The Paris talks are insensitive to the discussion of climate sensitivity.
David,
Who are the climate talks sensitive to? http://www.pewresearch.org/fact-tank/2015/09/25/relatively-few-in-u-s-europe-see-climate-change-as-a-serious-threat/?utm_source=Pew+Research+Center&utm_campaign=510d778d9f-Global_Attitudes_Release_7_287_31_2015&utm_medium=email&utm_term=0_3e953b9b70-510d778d9f-399622865
Turkey?
India?
http://www.nytimes.com/2014/09/25/world/asia/25climate.html
India certainly, plus a lot of groups. But these are professional diplomats, many of which have been doing this drill their entire professional lives. There will likely be an agreement, but it will not amount to much. In any case the science is irrelevant to the talks. Money is center stage.
The purpose of Paris is to guarantee there will always be another Paris…
Intro for Paris – several months in a row where LOTI has record highs in both ocean and land component. Check.
Possibly three months in a row with GMST anomalies above .90C.
Back-to-back warmest years.
This is what will drive Paris. It will be held in the middle of a global heatwave never seen by anybody alive today. That will be its stadium wave. Great time to fire the climate scientists.
I doubt there is in actuality a politician anywhere that truly believes the world is at risk from warming. There is certainly a fair amount of pandering to the left and greens, but for the most part, as the VW scandal is just starting to reveal, there is a considerable amount of sleight of hand going on. Given the laughable state of climate ‘science’ no one can blame them. As the pause lengthens, it is becoming abundantly clear there is nothing to fear except, perhaps, the few ecofanatics that might slip into a deep depression because their fantasies have not come to pass. Fake temperatures. Fake CO2 tests, fake CO2 emissions — eventually reality wins out.
I cannot agree Alan. There are, after all , a lot of left and green politicians. They believe what the left and greens believe.
Lefts and greens cannot be politicians, they must be activists
The sun gets quiet. The AMO goes negative. The Arctic ice returns eliminating a huge portion of the 20th century warming. Watching the climate sensitivity estimates for the next 20 years will be like watching a limbo competition. Everyone will be asking just how low can it go?
does anyone know of a politician who knows what ECS is?
politicians keep science advisers as pets
I know what ECS stands for
which is proof that no politician cares
and of course kim is right
Peter Lilley in the UK, Peter Walsh in Aus until his recent death, I could dig up more but my point is made. Both of them anti-CAGWers.
PS I’ve corresponded with Lilley and talked to Walsh.
“does anyone know of a politician who knows what ECS is?”
In truth no scientist “knows” what ECS is within a reasonably tight margin of error.
Low Climate Sensitivity Papers Raise Uncertainty, Reduce Risks
A substantial number of papers find climate sensitivity lower than IPCC’s. Some affirm the IPCC’s range. Together these indicate a science in flux with major Type B (bias) uncertainty far higher than was acknowledged by the IPCC. Recognition of this systemic high sensitivity bias further emphasizes the argument made above by Kaya et al.
Prudent policy should recognize the very substantial number of low climate sensitivity papers than acknowledged by the IPCC. These indicate that climate is much more robust than feared. Consequently, prudent stewardship should focus on known risks of natural extreme weather events. Along with this, we seek greater clarity on bounding highly uncertain climate models that are predicting temperatures much higher than reality.
Preliminary Bibliography on Low Climate Sensitivity
* Energy Policy and Environmental Stewardship: Risk Management Not Risk Avoidance Ross McKitrick, Greer-Heard Point-Counterpoint Forum, April 10-11, 2015. Mckitrick contrasts the anthropocentric of worldview of earth as a playground fit for us vs the secular environmentalism’s fragile china store where humans do not belong. He lists 7 papers with ECS below 2.0 C.
* Direct Testimony and Exhibits of Professor Roy Spencer June 1, 2015; Prof. Richard Lindzen; Prof. William Happer; & Prof. Robert Mendelsohn In the Matter of the Further Investigation into Environmental and Socioeconomic Costs Under Minnesota Statute 216B.2422, Subdivision 3; OAH Docket No. 80-2500-31888; MPUC Docket No. E-999-CI-14-643; 173 pp via “Minnesota Department of Commerce” https://www.edockets.state.mn.us
* 40 published papers find climate sensitivity to CO2 is significantly less than IPCC claims Hockey Schtick Nov. 2, 2014
* The Collection of Evidence for a Low Climate Sensitivity Continues to Grow, Patrick J. Michaels and Paul C. “Chip” Knappenberger, September 25, 2014 Cato Institute (14 papers with abstracts)
* 21 papers on low Climate Sensitivity in
* 1350+ Peer-Reviewed Papers Supporting Skeptic Arguments Against ACC/AGW Alarmism at Popular Technology.net Wed. Feb 12, 2014
* The implications for climate sensitivity of AR5 forcing and heat uptake estimates Nic Lewis Sept. 24, 2014 at Climate Audit
* The implications for climate sensitivity of AR5 forcing and heat uptake estimates, Nicholas Lewis, Judith A. Curry Climate Dynamics, Aug. 2015, Vol. 45, #3 pp 1009-1023 25 Sep. 2014. Lewis and Curry: Climate sensitivity uncertainty. See 18 citations to Lewis & Curry
* Implications of recent multimodel attribution studies for climate sensitivity, Nicholas Lewis, Climate Dynamics pp 1-10, 28 May 2015 (doi:10.?1007/?s00382-015-2653-7)
* Keeping it simple: the value of an irreducibly simple climate model, Christopher Monckton of Brenchley , Willie W.-H. Soon, David R. Legates, William M. Briggs, Correspondence Earth Sciences, Science Bulletin, August 2015, Volume 60, Issue 15, pp 1378-1390 10.1007/s11434-015-0856-2
* Missing iris effect as a possible cause of muted hydrological change and high climate sensitivity in models, Thorsten Mauritsen & Bjorn Stevens, Nature Geoscience *, 346-351 (2015) doi:10.1038/ngeo2414
* Model structure in observational constraints on transient climate response, Richard J. Miller et al. Climate Change, 2015, DOI 10.1007/s10584-015-1384-4 “Simple energy balance methods using observations and simple climate models indicate a region of low TCR and low ECS that is common to the simple models considered here but not sampled by GCMs.”
Some high sensitivity papers citing Lewis & Curry
* Disentangling Greenhouse Warming and Aerosol Cooling to Reveal Earth’s Transient Climate Sensitivity T Storelvmo, T Leirvik, U Lohmann, PCB Phillips… – mpimet.mpg.de 1.9K TCS
* Feedback temperature dependence determines the risk of high warming, J Bloch-Johnson, RT Pierrehumbert… – Geophysical Research …, 2015
* Recent Progress in Constraining Climate Sensitivity With Model Ensembles J.T. Fasullo, B.M. Sanderson, K.E. Trenberth, Current Climate Change Reports pp 1-9, 16 Aug. 2015 DOI 10.1007/s40641-015-0021-7 PDF
Roy Spencer’s Aug. 12th rebuttal documents publications with climate sensitivity lower than IPCC’s median 3C.
Richard Lindzen’s rebuttal similarly lists low climate sensitivity publications.
IMO they were already meaningless.
First place, the risks of non-linear catastrophic shifts (in the mathematical sense), while unquantifiable, are probably more important when it comes to urgency of dealing with fossil carbon than the steady increase in some “average” of the temperature field, or rather of predictions of what would be measured if the entire temperature field could be measured.
Second place, “emission targets” are a totally bassackwards way of dealing with the problem. Actual actions, whether carbon pricing, cap (&trade), or some more sensible option(s) (if any) aren’t necessarily tied to any specific future emission levels. A vast number of technological, economic, political, and financial factors will strongly influence the evolution of fossil carbon emissions and available replacements.
Predicting these influences is totally impossible. Indeed, since any model used for such predictions will be open to being gamed by many people, at least some of them smarter than the creators of the models, any such prediction would tend to be a self-defeating prophecy.
Better approaches, IMO, would involve creating immediate financial and economic incentives to build, improve, and profitably run innovative sources of (fossil) carbon-neutral energy, and fuel for vehicles, etc.
A notion I’ve suggested before is to require every amount of fossil fuel burned for energy to be accompanied, or offset by, a certain percentage of fossil-neutral fuel. Start with a small percentage, and agree that it will rise exponentially until it reaches 100%. By tuning the starting percentage, and growth rate, the cost to energy users could be kept small, say <1.0%, while the price available to be paid could be 10-20 times that of the fossil base, to start.
As the fossil-neutral technology matures, and costs fall exponentially with learning curve, technological synergy, and other advantages of scale, the percentage of fossil-neutral fuel used would increase at roughly the same rate that the price would decrease, until at some point 100% is being used. Even if the overall cost of fuel when complete is double or triple what it is today, the economy would have several decades to adjust. And fuel prices have bounced around at similar ratios over the last half century or so.
Examples of fossil-neutral fuels (qualified for use in such a program) might include:
• Gas or liquid hydrocarbons produced from extracted ambient CO2 and hydrogen (H2) from electrolysis, both processes powered by solar (which is decreasing exponentially in cost), or nuclear if economically feasible.
• Methane extracted from sea-floor methane hydrate clathrate using a replacement process that ends up burying as much carbon from (formerly) ambient CO2 as is extracted as methane. (Or more, which would produce a fossil-negative fuel.)
• Gas or liquid hydrocarbons produced from solar-powered “biocatalysts”.
• Coal, oil, or gas produced the traditional way, but offset by sequestration of any type of carbon extracted from the air or ocean surface (“ambient”). Such could include:
• Regular human waste (trash or sewage) in proper containment dumped into an ocean trench with high sedimentation rate.
• Agricultural waste in proper containment dumped into an ocean trench with high sedimentation rate.
• Extracted ambient CO2 sequestered in underground or under-ocean sites.
• Captured CO2 from bio-fuel power plant stacks sequestered in underground or under-ocean sites.
Now, it’s obvious that at present all these options are far to expensive to compete with normal fossil fuels. But with the requirement for using a small percentage, high prices for small amounts of such options would supported with very small increases in resultant energy prices.
As with most technologies, the price would probably decline exponentially with increasing deployment, so they could be nurtured to maturity without ever costing energy users more than a tiny increase.
Note that by requiring a percentage, this approach would avoid issues of changes to currency values inherent in any sort of international carbon tax scheme. In addition, It would provide immediate benefits for fossil-neutral technology, without serious increases in energy prices.
This is in diametrical contrast to carbon pricing schemes, which would make energy more expensive, without providing much of a relative profit margin for fossil-neutral fuels. And since the capacity to produce such fuels would be small, at least at first, the only effect of carbon pricing would be to make energy more expensive. The extra money would simply go to governments, where they would almost certainly waste most of it.
AK,
I cannot imagine what drives otherwise sensible people to propose limits on their future well being, by devising schemes whereby the impact of fossil fuels is diluted and made more digestible.
In my experience, if you design one impost to offset another, you will end up with both.
This is how restrictive bureaucracies operate. It is all about control.
At Paris, I can see numerous attendees – some estimates are 50,000 people – with bugger all knowledge about science, looking at the top graph as a pick-a-box and voting overwhelmingly for the orange line. They will not have a clue what the orange line represents in terms of how many countries will have their economies trashed by it.
It is horrifying to consider an important part of the future, over the next 30 years, being determined by the ignorance inherent in voting for an orange scribble as better than a black one, when neither has much to do with reality.
Look how far climate “science” wants to drag us down. It is not a science. Many times it is little more than pick-a-colour finger painting (with some obvious exceptions that I need not relist).
@Geoff Sherrington…
If you mean me, I see reduction in net fossil carbon emissions as a positive value, given the risk associated with dumping all that fossil carbon into the system.
To me, then, the question is: How can “we” reduce, eliminate, and perhaps reverse the process of digging up fossil carbon and dumping it into the system, without impacting the cost of energy, or its increasing availability to developing societies?
That’s the ideal. Proposals on the table clearly make no effort to achieve the second part, and mostly seem unlikely to achieve the first.
Unintended consequences abound, of course. Look at the real estate investment trust legislation, for instance. IMO the best way to minimize regulatory complexity (it can’t be eliminated entirely) is to establish clear, well-demarked guiding principles.
Hmmm, I can’t agree with that. IMO a “bureaucracy” is a hierarchically organized entity, or sub-entity, made up of people. Each with their own agenda(s). The unifying motivation (again, IMO) is lust for status, and/or power.
As for your vision of Paris, It wouldn’t surprise me. But IMO they’re trying to drive a screw with a hammer, then blaming the
oilfossil carbon companies because they’re not getting anywhere. I’m just trying to point out that a screwdriver might do the job better, at far lower cost.“This is how restrictive bureaucracies operate. It is all about control.”
AK, you are close. At best, a bureaucracy is an organism consisting of human “cells” whose ultimate goal is the sum of the individual goals of each cell, i.e. continued growth of revenue and mass in order to provide an ever more stable and comfortable environment for each cell. Bureaucracies thrive because external systems have no direct and effective means of detecting and exposing the damages caused by these organisms and controlling or removing them when needed.
Unless there is a readily available “magic bullet” to deal with each out-of-control bureaucracy, each one may be considered a potentially fatal cancerous tumor. Unfortunately we have created many without such control mechanisms, and more bureaucracies are proposed every day.
This is often true of governmental regulatory bureaucracies. But many large corporations have small (or not-so-small) bubbles of bureaucracy, where it can serve a useful purpose when subject to oversight by management and stockholders/owners. The larger system of free-market capitalism serves as a control against management and stockholders/owners, with corporations losing market share or going bankrupt when poorly managed, including failure to control corporate bureaucracy.
Unless, of course, such big corporations get far enough into bed with government cronies that they can avoid market forces.
But there are external systems for “detecting and exposing the damages caused by these organisms and controlling or removing them when needed.” The press, and political action via Congress and the courts, have the potential to provide this control, although that potential isn’t really being met very well at the moment.
The growth of regulatory bureaucracy in the US, like that in Imperial Rome, requires some sort of constitutional change(s) to avoid nightmares like the Byzantine Empire or the modern European Union. (Or at least, what the latter seems to be growing into.)
“But there are external systems for “detecting and exposing the damages caused by these organisms and controlling or removing them when needed.” ”
Today I would argue that there are few if any “effective” external mechanisms for detecting and exposing damages. In the US this is because the 4th estate has become little more than an activist confederacy of dunces.
Corporations are daily subject to the the vote. In a mature industry, a five percent swing in the vote (market share) over one quarter can be disastrous. Of course, some areas of operation (think product/price) are more visible than others (employee welfare and environmental impact). An objective and active press is still required to expose the less visible areas.
Governmental bureaucracies are extra-virulent because even if they are found to be out-of-control and harmful there are often only slow, indirect and weak mechanisms available for eliminating them.
AK: “IMO the best way to minimize regulatory complexity (it can’t be eliminated entirely) is to establish clear, well-demarked guiding principles.” In practice, it doesn’t work that way, whatever lip service is paid, most of those proposing, developing and implementing regulation would have little or no knowledge of, regard for or commitment to such guiding principles. They will operate in a way which best serves their interests and/or those of their masters. As you respond to sciguy, this is more constrained in the private sector than the public sector, because of the constraints of competitive markets. Another reason for reducing the role of government and of government regulation. I agree with sciguy’s final reservation on this.
@sciguy54, Faustino aka Genghis Cunn…
While I’m certainly in favor of minimizing the role of government, and especially regulatory bureaucracy, there are instances where it works surprisingly well. Check out the dispute, and the resolution process in this sector:
LTE over Wi-Fi spectrum sets up industry-wide fight over interference
Is there an alternative to LTE-U/LAA that won’t tick everyone off?
Why Some Operators Think LTE-U Is Rude
There are real conflicts of interests and agendas here, but all the players, both industry and regulatory, are working within an environment where the scientific and technological fundamentals are agreed on, subject to real-world verification.
The radio spectrums are a commons much more complex, and worth much more money right now than the Earth System’s ability to soak up fossil CO2. Allocation of these spectrums, and regulations involving them, are critical to the ongoing technological advance we all expect to benefit from over the next decade.
While not perfect, the way things work in this sector is good enough to support enormous growth of value based on properly using improving technology to make more efficient use of limited resources.
I can’t believe it’s impossible that the issues with fossil carbon could be steered into a similar situation. Government, even regulatory bureaucracy,
willwould probably have a role, subject to strong feedbacks from industry, science, and various stakeholders.But it would be difficult. And the most important thing is to shut out the ideologues, meaning anybody who wants to interpret the evidence so as to support some simplistic ideology. Even knee-jerk anti-government libertarianism.
The main difference I see involves goals in principle: the principles are clearly stated and everybody agrees on their substance, even if they don’t agree they ought to be that way:
The FCC didn’t spring to life in this market-friendly incarnation like Athena from Zeus’s forehead:
The question is, how close could some system for reducing fossil carbon come to this? And how quickly? How to minimize the delays, and interference with non-negotiables like cheap, abundant energy for everyone as quickly as possible?
AK – one of the issues that needs to be considered before launching into some grand scheme to limit co2 is that doing so may in fact be net harmful, a consideration you and others too frequently ignore or disregard. In the geologic history of the planet, co2 levels have been far higher than today and the planet not only survived, it thrived quite nicely. We need to start from a position other than “we know co2 causes warming and warming is bad” to something more along the lines of we don’t really know what the impacts will be, but we are quite certain that extreme weather events will continue regardless of any action/inaction on our part to affect our co2 footprint. We should therefore work towards adaptation.
Not relevant. Best evidence is that CO2 hasn’t been much over 300ppmv since before the Isthmus of Panama closed, before the Himalayas/Tibetan Plateau achieved their present configuration, and before modern tropical savanna ecosystems based on C4 grasses evolved and spread to their current extent.
The first two apply to climate, the last to ecosystem disturbances. All represent risks that can’t be quantified.
Does this mean that “We’re all going to die!”? No of course not. It’s highly unlikely the risk is existential, even to civilization much less the species.
But it does mean that the fossil fuel thing should be transitioned off of, just as quickly as is feasible without impacting the Industrial Revolution.
After all, “CO2 is plant food”, and kudzu is a plant.
http://info.ncagr.gov/blog/wp-content/uploads/kudzu.jpg
AK – please provide a link to your “best evidence”.
It’s been linked many times. You’re just wasting my time.
AK – you don’t have time to provide a link. I have no idea what your evidence is – or, do you say, there is only one single well-known link? You are wasting everybody’s time.
The evidence is all over the literature, along with good reasons to question it. Salby, for instance. And some interesting studies of leaf stomata during the last de-glaciation. But, pending further science, the best evidence is as I said.
The whole subject has been discussed here many times. I’m not going to waste my time digging up links so you can go into your fake “Curious” denial game.
You know how to use Google.
“And the modt important part is to shut out the ideologues…” seems to me you are being quite ideological uourself Ak. Yes, any action or non action we take comes with risks. Your analogy of the battle over wireless spectrums to the battle of “necessary/urgent” action re climate change is a poor one. We have a far greater understanding of technology surrounding wireless spectrum than we do about what makes the climate tick. Sticking to the viewpoint that we know that an increased level of co2 is net harmful reveals a blind ideology such as you suggest should be shut out.
Read harder.
It’s obvious you never bothered to read what I wrote, just expressed your knee-jerk talking points that you don’t understand. It’s types like you who make democracies fail.
You’re just like the knee-jerk conservatives who hear libertarian ideas and yell “commie”. Just like the knee-jerk alarmists who hear alternative economic proposals and yell “denier”.
I doubt your reading comprehension’s beyond about 3rd-grade level. Based on your performance.
[CO2 has been much higher in the past]
Not relevant. Best evidence is that CO2 hasn’t been much over 300ppmv since before the Isthmus of Panama closed,
Hmmm..
Looks to me that most the last 500 million years of evolution took place in 3 to 25 times current CO2.
http://rainbow.ldeo.columbia.edu/courses/v1001/co2.jpg
There’s a lot of wiggle room in the uncertainty band in this chart to entertain any claim one wants, but the median depicts a clear decline from levels significantly higher than 300ppm, including the last 15 million years or so.
Now, species today are not identical to their early ancestors, and many species arose in just the last few million years, but their traits didn’t start from scratch at some specific ‘perfect’ CO2 level.
After all, “CO2 is plant food”, and kudzu is a plant.
Try as we might, photosynthesis won’t be denied.
There are no carbohydrates without carbon dioxide.
And that includes Mosher’s beer and hot cheetos.
@Turbulent Eddie…
I suspect you are trying to waste my time here, but since you went to the trouble to come up with a picture, however irrelevant, I’ll respond:
First, consider the date on the reference: 1997. Specifically [Berner (1997)].
That’s almost 20 years ago. That 20-year old graph, taken specifically from paleosols, rather than all available proxies, was intended to illustrate points regarding the early evolution of the plants. Not the progress of the Cenozoic.
Here’s something in line with the current paradigm, from a more recent review [Beerling & Royer (2011)]:
http://www.nature.com/ngeo/journal/v4/n7/images_article/ngeo1186-f1.jpg
As you can see, the atmospheric pCO2 appears almost constant back to around 20MYA, although the earlier part shows some interesting issues WRT stomata. There’s also a sort of iffy spot around 3-5 MYA which might mean CO2 levels got up as far as 500ppm. Perhaps.
Now, best evidence today is that the Isthmus of Panama closed around 3-3.5 MYA, although recent evidence suggests a more complex closure process [Bacon et al. (2015)]. Here’s their figure 1:
http://www.pnas.org/content/112/19/6110/F1.large.jpg
As you can see, then, except for a possible period 3-5 MYA, CO2 levels have been around today’s values since at least 10MYA, with a good chance of it being 20 MYA.
Similarly for the Himalayas/Tibetan Plateau, with the original collision of the Indian plate into Eurasia starting perhaps 50 MYA and continuing today. Given that the Indian plate appears to be getting driven under Tibet, the process has been ongoing and the intensification of the effect has probably increased progressively over the last 20 MY.
As for the C4 grasses, recent synthesis of lots of research [e.g. Edwards et al. (2010)] indicates that the C4 grasses, and tropical grassland/savanna that features them, co-evolved with modern CO2 levels around 25-30 MYA:
http://www.sciencemag.org/content/328/5978/587/F2.large.jpg
From the abstract of Edwards et al. (2010):
As all these lines of evidence together show that the best evidence is that CO2 has been at roughly present values since 20MYA, that since at least 3-6 MYA the Himalayas/Tibetan Plateau and the Isthmus of Panama have been in a configuration never before experienced, and that the current system of C4-dominated tropical grassland/Savanna rose to “ecological dominance 3 to 8 million years ago” long after atmospheric pCO2 had stabalized at something like current levels.
As I mentioned before, this doesn’t prove that raising the pCO2 to 800-1000ppm would produce catastrophe, but there is certainly the risk that it would produce sudden changes to the climate, the global ecosystems, or both. These risks cannot be quantified at this time, and certainly wouldn’t (IMO) justify dramatic restructuring of the world’s economic structure. But if it’s possible to transfer away from fossil fuels without impacting energy prices or availability it would certainly be a good idea.
Ref’s:
Bacon et al. (2015) Biological evidence supports an early and complex emergence of the Isthmus of Panama by Christine D. Bacon, Daniele Silvestro, Carlos Jaramillo, Brian Tilston Smith, Prosanta Chakrabarty, and Alexandre Antonelli Proc Natl Acad Sci USA vol. 112 no. 19, 6110–6115, doi:10.1073/pnas.1423853112
Beerling & Royer (2011) Convergent Cenozoic CO2 history by David J. Beerling & Dana L. Royer Nature Geoscience 4 418–420 (2011) doi:10.1038/ngeo1186
Berner (1997) The Rise of Plants and Their Effect on Weathering and Atmospheric CO2 by Robert A. Berner Science 25 April 1997: Vol. 276 no. 5312 pp. 544-546 DOI: 10.1126/science.276.5312.544
Edwards et al. (2010) The Origins of C4 Grasslands: Integrating Evolutionary and Ecosystem Science by Erika J. Edwards, Colin P. Osborne, Caroline A. E. Strömberg, Stephen A. Smith, C4 Grasses Consortium Science 30 April 2010: Vol. 328 no. 5978 pp. 587-591 DOI: 10.1126/science.1177216
Nice tantrum there AK, blind ideology at its best. Keep coming up with those marvelous schemes of yours to save humanity from the evils of fossil fuels and kudzu. Maybe you can make a presentation in Paris to see how well it sells there. Its fools like you coming up with expensive, hairbrained solutions to non existent problems that pose the real dangers.
@ AK – “All represent risks that can’t be quantified.”
The possibility that climate change will cause the flying spaghetti monster to get angry, appear out of nowhere and rain meatballs on the Earth causing mass genocide represents a catastrophic risk of climate change that cannot be quantified.
On the other hand, the possibility that extreme mitigation measures will cause the flying spaghetti monster to get angry, appear out of nowhere and rain meatballs on the Earth causing mass genocide represents a catastrophic risk that cannot be quantified.
Appeals to the strong precautionary principle and unquantifiable risks with no empirical evidence to back them up gets us nowhere. And personally, I think the well being of 7 billion people is worth thinking things through and making decisions using risks that can be quantified. If these risks are not completely absurd like the flying spaghetti monster, then I think they can be quantified; you just need to put the evidence in. Claiming they can’t be quantified and giving up to me seems like laziness.
“you just need to put the evidence in”
This should read: you just need to put the effort in.
This is obvious nonsense, of course, an effort at reductio ad absurdum. But it actually applies to another low-probability event that represents a real species-level threat: what if there’s some alien species, or their listening device(s), out there that’ll respond to our presence by coming and destroying us? Should we focus on technological development as quickly as possible? Or will that increase the chance that they’ll notice us?
What “strong precautionary principle”? I would take the “strong precautionary principle” as saying something like “there’s a chance x will happen, therefore we need to do whatever it takes to avoid x.
The whole idea behind my proposal is that it would be very low-impact.
You’ve got the cart before the horse. If there’s a risk, and it can’t be quantified, then it can’t be quantified. Maybe some time in the future, when science has advanced sufficiently, it can. But saying there’s no such thing as a risk that can’t be be quantified is sheer denial.
Sorry, given the way science works, there will always be risks you know enough to know exist, but don’t have the ability to quantify. Or even the ability to know whether they can be quantified.
This is especially true with non-linear dynamics, especially of systems that provide for evolutionary change such as the global ecosystems. But even with climate, it may be impossible to quantify certain “dragon-king” risks. AFAIK the mathematics isn’t far enough advanced to say for sure.
@ AK –
“But it actually applies to another low-probability event that represents a real species-level threat: what if there’s some alien species, or their listening device(s), out there that’ll respond to our presence by coming and destroying us?”
Perhaps you could construct some sort of model, where you can infer the probability of a Dyson sphere existing in our galaxy based on the number of stars observed and the mass of our galaxy or something. It might be possible, if you put enough effort in, to construct some sort of model.
But until the risk is quantified, I don’t really think it makes much sense to take the possibility of extra-terrestrials in decision making.
“What “strong precautionary principle”? I would take the “strong precautionary principle” as saying something like “there’s a chance x will happen, therefore we need to do whatever it takes to avoid x.”
Yes. That is what I was referring to.
“The whole idea behind my proposal is that it would be very low-impact.”
I don’t find your proposal that unappealing, I was mostly concerned about what looked to me as a strong precautionary principle argument. Personally, I would prefer a global Pigouvian tax; dealing with exchange rates isn’t that big of a deal.
“But saying there’s no such thing as a risk that can’t be be quantified is sheer denial.”
Oh I agree that some risks can’t be quantified. Such as the risk of the flying spaghetti monster. But I think most of the unquantifiable ‘risks’ people allude to in climate change discussions are actually quantifiable risks that haven’t been quantified yet.
There is surely life out there, and surely it is far, far, away, but Shirley, what would be its need to come and find us? Are we that special?
=====================
Well, it’s an opening wedge for all sorts of world-wide regulatory bureaucracies with control over everybody’s money supply. Maybe not complete control, but enough to be dangerous (IMO).
But the biggest problem I see is that most of the money from the increased cost of carbon would go to governments, while the producers of “fossil-neutral” fuels (or offsets) would only be able to compete with the slightly increased fuel costs.
OTOH, with the percentage scheme, all the money paid for the increase in fuel cost would go to producers of a much smaller amount of “fossil-neutral” product. Thus, a 1-2% increase in fuel costs might work out to a 1000% (10x) increase in available price for “fossil-neutral” product.
The scenario I’ve seen most often is species-level paranoia.
Heh, like we should suddenly develop the urge to eradicate trilobites.
Hmmm, now that you mention it, I was horrified at my first sight of horseshoe crabs.
====================
There’s more. But for us, future Masters of the Universe would have been descended from the smallpox virus.
Oh, wait, there’s still hope.
================
Well, suppose it was discovered that chimpanzees actually talk to one another using a form of sign language so different than our artificial types that nobody had noticed before.
I can certainly see some cultures in recent history becoming paranoid and determining to wipe them out.
Come to think of it…
“Well, it’s an opening wedge for all sorts of world-wide regulatory bureaucracies”
Pretty much any mitigation policy is going to create bureaucracies. A global pigouvian tax arguably gives you a very small bureaucratic cost relative to other options.
“with control over everybody’s money supply.”
Why would you control everyone’s money supply? You only need to tax people or governments that emit CO2.
“But the biggest problem I see is that most of the money from the increased cost of carbon would go to governments”
It doesn’t have to. And to be honest, requiring that money generated by a CO2 emission tax within a country goes to the government of that country would create an incentive for governments around the world to cheat.
For example, China taxing CO2 emissions and then redirecting revenue from emissions to subsidize coal plants.
One way to avoid this is to have the money go to a collective pool, and then do something with that money pool provided it doesn’t provide incentives to cheat (the collected money could go toward funding geoengineering, funding international aid, funding research and development, or being redistributed to countries based on country population).
“would only be able to compete with the slightly increased fuel costs.”
‘Slight’ is vague. It depends how high you set the CO2 emission tax rate. If it is like $1000 per metric ton (which is not a position I support) then fossil fuels would basically become uncompetitive.
“OTOH, with the percentage scheme, all the money paid for the increase in fuel cost would go to producers of a much smaller amount of “fossil-neutral” product. Thus, a 1-2% increase in fuel costs might work out to a 1000% (10x) increase in available price for “fossil-neutral” product.”
1. I think that the implementation cost of this proposal would be higher than a pigouvian tax.
2. It is easier to determine the optimal pigouvian tax than an optimal percentage of what you propose here.
3. There is no reason to expect such a proposal to be Pareto Efficient. If you agree that there is a tradeoff between CO2 emissions and economic output at the Pareto frontier, then you should agree that each country will have a marginal cost of output per unit of CO2 emissions reduced.
Under a global pigouvian tax, all countries will tend towards having the same marginal cost of output per unit of CO2 emissions reduced. But under your proposal, there is no reason to expect that this will be the same across all countries, especially when the distribution and availability of renewable energy is quite different across countries.
Let’s suppose that your policy results in a case where 2 countries have different marginal costs of output per unit of CO2 emissions reduced. Say country A has a higher value than country B. If country A were to increase emissions slightly and country B were to reduce emissions slightly, then you would get the same emissions, but total output would be higher. And if country A were to transfer some of it’s excess production to country B, then both countries could be better off without increasing total emissions. Thus this would indicate that your policy does not result in a pareto efficient outcome.
AK, using biologics as proxies is always prone to biologic responses.
However, the range and uncertainty of all the proxies does not support ‘constant’ nor 300ppm.
We know what happens to many plant species in 1000ppm CO2 environment, because we create those environments on purpose in greenhouses for the benefit.
As I mentioned before, this doesn’t prove that raising the pCO2 to 800-1000ppm would produce catastrophe
Doesn’t prove – doesn’t even indicate.
but there is certainly the risk that it would produce sudden changes to the climate, the global ecosystems, or both.
Can you be specific and not general?
Increased temperature alone doesn’t change much about gradients.
Increased humidity means energy imbalances can more readily be resolved by latent heat meaning, as indeed Manabe theorized decades ago, reduced temperature variability and reduced kinetic energy.
These risks cannot be quantified at this time
It would be progress if you could even identify them, much less quantify them.
and certainly wouldn’t (IMO) justify dramatic restructuring of the world’s economic structure. But if it’s possible to transfer away from fossil fuels without impacting energy prices or availability it would certainly be a good idea.
Indeed. Most don’t care about the source of their energy.
They do care about the cost, availability, and reliability.
Right now, the winner in those three categories is natural gas, which is a compromise win for everyone.
However, given demographics, it probably irrelevant.
But that’s what governments are best at: solving non-problems and leaving future generations to fix unintended consequences.
@-1=e^iπ…
Obviously. See above.
I guess I hadn’t explained that properly.
What currency are you going to implement that tax in? Either you have an agreement that each polity’s government will levy it in the currency that is established for that polity, or you try to agree that it will be levied in a single currency: e.g. Euro’s, Dollars, Yuan.
I’ll try to explain the issues I see with each option below, but let me start with the point that the knee-jerk hecklers above have one thing right: the establishment of any sort of world-wide regulatory institution with significant enforcement powers is very undesirable. In my view, and that of many others, this is a much worse risk to human welfare than anything that adding fossil carbon could do. I’m going to take that as a given here, since it’s really a separate argument (socialism vs. capitalism), and my whole purpose here is to suggest ways to achieve fossil carbon reduction without “world-wide regulatory bureaucracie(s)”.
• Case I: Carbon Tax in National (etc.) currencies:
Assume that the agreement is that each nation (or other polity) will levy a tax in its own established currency. This tax will be enforced by trade barriers between nations that are part of the agreement and those that refuse. How will those barriers be determined? Will they be punitive, e.g. blocking or setting high tariffs on trade? Or will they be marginal, adding costs to the supposed difference in production costs due to lower energy/fuel prices?
• Case I.A: Punitive:
How will the specific barriers be determined? Will all parties to the agreement sign up for total trade blocks? If not: how will the height of the barriers be determined? Given the strong incentives for any one party to lower the barrier so as to channel trade to them, the issues of relative currency values become similar to those involved in the base tax (see below).
Another point: how will issues of developing regions be addressed? Will they be allowed to forego or reduce their tax levels? By how much? How will differences of opinion between parties to the base agreement be resolved? Without implementing a universal regulatory bureaucracy with enforcement powers over the various parties?
• Case I.B: Marginal:
How will the margin be determined? What information is used, and how, to determine how much tariff to charge goods coming from non-parties? How will this information be gathered? How will refusal to provide such information be punished? How will it be verified? All this without implementing a universal regulatory bureaucracy with enforcement powers over the various parties?
• Case I: Carbon Tax in National (etc.) currencies (Continued):
Back to issues surrounding the base case: how is the base tax going to be determined. You can say “pigouvian”, but AFAIK that requires a number of assumptions regarding how it’s calculated. Do those assumptions map cleanly to each nation’s/polity’s currency? If not, what currency are the calculated in?
How is the exchange rate between currencies calculated? Whether the currency floats, or is tied, to other currencies, changes to relative currency value will either automatically produce a change in the local carbon tax, or will need to be followed by a formal implementation.
How will the uncertainties around future tax rates impact local producers? Will polities sign up for hobbling their local production with such competitive disadvantages? (Remember that certainty of future tax rates is often more valuable than lower tax rates, depending on the circumstances, of course.)
What happens when the base calculation itself changes due to changing conditions? Each nation’s/polity’s tax will need to change. How will such changes be managed? What happens when the change process in one party (to the base agreement) gives it an advantage relative to another? How will differences of opinion regarding such advantage (if any) be resolved? Without implementing a universal regulatory bureaucracy with enforcement powers over the various parties?
• Case II: Carbon Tax levied in a single currency e.g. Euro’s, Dollars, Yuan:
Which Currency? How do nations/polities whose currency floats with respect to that currency deal with changing tax rates (see above)? How are disagreements to be handled (see above)?
Is everybody going to sign up for having the tax levied in some nations currency? We all know they won’t.
Conclusion: If the “carbon tax” is to be levied in a single currency, that will have to be a new currency set up for the purpose. With a new wold-wide “central bank” or equivalent “Federal Reserve”. But this completely violates the base assumption that “any sort of world-wide regulatory institution with significant enforcement powers is very undesirable.”
Looking at the issues, especially in light of the recent experiences involving the Euro, and the EMU, I would say that the chance of either of the above options working, without implementing a universal regulatory bureaucracy with enforcement powers over the various parties, is very small.
I doubt it. See above. Each nation that is party to the agreement would have to mandate the same percentage program, but then would only have to oversee a free, very lightly regulated, market in fossil-neutral fuels and/or offset credits. Issues of currency would be completely avoided because all “taxes” would be in kind.
Your notion of “optimal percentage” is highly speculative. Given the variety of agendas and values involved, there is no way that “optimal” could be determined, or even reach closure as a single value.This applies to your “pigouvian tax” as well.
But in the case of the percentage scheme, it isn’t necessary. Unlike economic projections, real-world economies respond to any such action as to an incentive. If a low enough starting rate is selected, and a growth rate consistent with current expectations, it would probably be acceptable to all parties. Once the agreement is in place, various market players would have immediate incentives for investment, with immediate payback.
Investment would be split, according to various investors’ projections and inclinations, between “plant” and R&D. Both types of investment would yield high immediate paybacks, with expectations of reduced payback as new technology brings down the price they can expect for their product.
This in contrast to any sort of carbon tax, where the immediate payback is small, because the price available from a small tax is little more than could be gotten without. Investment in plant would have far less incentive. Investment in R&D would look only to longer-term future payback, as either the tax rises or the results of the R&D bring production prices low enough.
There is a good body of work going to show that production cost decreases are exponentially linked to volume of production. This means that in order to achieve the maximum rate of rollout of “fossil-neutral” technology, the immediate investment in maximum production of such technology must be incentivized.
But the returns on building such technology are short-term. By 5-10 years later, newer technology will be much cheaper, by some applicable metric, and prices for the product will be much lower. (That’s the goal, after all.) So incentives for building current technology need to involve rapid payback.
A carbon tax, in fact any sort of carbon pricing scheme, won’t be able to achieve that without (something like) the “$1000 per metric ton” tax you don’t support either.
I don’t agree, and as far as I can tell, “Pareto efficiency” is a socialist fantasy.
Better/worse off is an individual value judgement. Allowing “society” in some form to determine that metric is tantamount to implementing socialism.
There is another important issue with the whole notion: it’s fundamentally anti-capitalist. One of the founding aspects of capitalism is that “wealth”, as roughly representing some measure of output or capacity for production, falls into two classes: wealth that is invested in future production efficiencies, and wealth that is “spent” on living, pleasure, or social manipulation.
This difference is ignored, AFAIK, in any scheme to calculate “Pareto efficiency”. By any capitalist metric, I’m better off when that $10,000,000,000 is in the hands of a competent tech investor such as Bill Gates or Elon Musk than in the hands of the government. Just to pick an example. AFAIK “Pareto efficiency” calculations ignore the value to downstream beneficiaries of having “wealth” in the hands of investors who will create general improvements.
Show me that I’m wrong. Then show me how, according to those calculations (that I say don’t and can’t exist) there’s “no reason to expect such a proposal to be Pareto Efficient.”
@Turbulent Eddie…
A handful. And a few known weed species specifically studied. And, IIRC, a few on-location studies with higher CO2 with strange results, including (sometimes) lowered carbon sinking.
But our knowledge of what “species” do is irrelevant to understanding how ecosystems will respond. Especially as local populations evolve under new systems of adaptive incentive.
Not with respect to low-probability “state” changes in a hyper-complex non-linear system. AFAIK all such systems that have been studied show capabilities for sudden “state” shifts. Details vary by system, but the tendency for such things to happen seems to be universal.
Obviously, with fossil CO2, the question is whether adding it increases the risk of such changes. Since we don’t know what it does to the probabilities of such changes, the risk, taking into account our ign0rance of the probabilities, is there. How great the risk is cannot be quantified, until models exist that can replicate the system(s) involved.
Which will be a while.
Let’s take sudden “state” changes and divide them into two categories: those that appear to have happened before, and those that don’t. Since adding all this fossil CO2 to the system is taking us into totally unexplored territory, let’s consider the effect on these two categories separately:
• Case I: Those that have happened before: Since we are ign0rant of the effect we could reasonably assume (pending further evidence) that the probability of increasing the tendency for such shifts is the same as the probability of decreasing them. Does the cost of the one equal the benefit of the second? Value judgment, but even if we assume it does:
• Case II: Those that have not happened before: Here, since we know nothing of how probabilities match up to potential impacts of such changes, the risk that the probability is increased is finite and positive, but we can’t reasonably claim a reduced risk from any reduced probability it that’s the effect. We’re assuming it won’t happen anyway.
If it were a change that was not taking both the climate system and the global ecosystem into unexplored territory, a plausible case could be made that both risks balance out.
But best evidence is that it is. There are certainly potential issues with the evidence, or its interpretation. Those should be investigated with high urgency, since some outcomes would reduce or eliminate the supposed risks. (Others might increase them, though.)
But even in their un-investigated state, they offer good arguments against high-impact “solutions”. Which is why low-impact solutions are worth investigating.
Yes. But most sensible people are thinking of the future as well.
The question is, how to steer the market-driven technology along a course that will quickly end, and potentially reverse, the current dumping of fossil carbon into the system without significant impact to energy or fuel prices.
And without imposing any sort of world-wide regulatory bureaucracy, which would almost certainly end up increasing energy prices, and impacting general freedom, whatever its proponents say.
“What currency are you going to implement that tax in?”
You want to relate it to the real value of some unit of currency in the past to deal with the issue of inflation. You could choose to implement the tax in a single currency or a linear combination of several currencies, or whatever. It’s not a big issue.
“Assume that the agreement is that each nation (or other polity) will levy a tax in its own established currency.”
Even this isn’t necessary. You could simply have an agreement where governments have to pay a tax for all the emissions within their countries annually, and then let governments determine how they want to pay for the tax on CO2 emissions. It would be preferable if they did it through a CO2 emission tax, but if they want to reduce emissions through regulatory requirements or cap and trade, then it might be more politically feasible to allow individual countries to decide as long as the governments pay up the tax for emissions within their countries.
“This tax will be enforced by trade barriers between nations that are part of the agreement and those that refuse.”
Trade barriers, sanctions, or even threats of military force might be necessary to ensure an agreement.
“How will those barriers be determined?”
Through negotiations?
“Given the strong incentives for any one party to lower the barrier”
Ensure that all countries within the agreement impose the same barrier, and clearly define what kind of trade sanctions are to be done on non-compliant countries in the agreement.
“how will issues of developing regions be addressed?”
What you want to do with the money collected by the pigouvian tax should be up to discussion. If you want to spend it on international aid, then that is a potential use of the money collected.
“Will they be allowed to forego or reduce their tax levels?”
No that is a bad idea and will lead to a Pareto inefficient outcome.
“Back to issues surrounding the base case: how is the base tax going to be determined. You can say “pigouvian”, but AFAIK that requires a number of assumptions regarding how it’s calculated.”
Integrated Assessment Model like Nordhaus’ DICE model. Except I would recommend that it be modified slightly to maximize expected social welfare and rather than picking precise values such as ECS, perform Monte Carlo simulations over the entire probability distribution to deal with uncertainty.
“Do those assumptions map cleanly to each nation’s/polity’s currency?”
They map cleanly to the appropriate real value of the tax in any given year. You can simply adjust it based on inflation.
“How is the exchange rate between currencies calculated?”
The market.
“Whether the currency floats, or is tied, to other currencies”
It’s not really a big issue as long as countries don’t impose some absurd domestic price control laws that causes a black market to form that has a different exchange rate than the government imposed exchange rate.
“How will the uncertainties around future tax rates impact local producers?”
You can make projections of what tax rates will be over the next 100 years or so. Obviously, you would want to adjust tax rates when new evidence is obtained. If anything, future CO2 tax rates will be more certain than things like income tax rates in countries.
“What happens when the base calculation itself changes due to changing conditions? Each nation’s/polity’s tax will need to change. How will such changes be managed?”
You probably want to agree to an IAM that determines the optimal path of tax, rather than an actual tax path. Then you can simply plug in better evidence into the IAM to change the tax path.
“What happens when the change process in one party (to the base agreement) gives it an advantage relative to another?”
Agree to a mechanism to change the tax path before coming to an agreement.
“If the “carbon tax” is to be levied in a single currency, that will have to be a new currency set up for the purpose. With a new wold-wide “central bank” or equivalent “Federal Reserve”.”
I don’t see how that’s necessary. I can determine how many 2015 US dollars, 2015 Canadian dollars, 2015 Euros, 2015 Yen, etc. are equivalent to 1990 US dollars by using exchange rates and GDP deflators.
“Each nation that is party to the agreement would have to mandate the same percentage program”
And then you need a giant bureaucracy with inspectors to ensure that every country is agreeing with the percentages. It’s inflexible and it doesn’t differentiate between say coal and natural gas. And as I explained earlier, there is no reason to expect it to be pareto efficient.
“Once the agreement is in place, various market players would have immediate incentives for investment, with immediate payback.”
I don’t understand why you think you won’t get this under a CO2 emission tax.
“This in contrast to any sort of carbon tax, where the immediate payback is small”
How can you claim it is small if the quantity of tax hasn’t been specified yet?
“There is a good body of work going to show that production cost decreases are exponentially linked to volume of production.”
If this is the case, then smart producers will take advantage of this once they are given a CO2 emission tax and its future projections.
“A carbon tax, in fact any sort of carbon pricing scheme, won’t be able to achieve that without (something like) the “$1000 per metric ton” tax you don’t support either.”
I don’t support $1000 per metric ton because this is well outside estimates of optimal taxation that I have seen. Anyway, this is a very strong claim, so could you please prove your claim?
“Allowing “society” in some form to determine that metric is tantamount to implementing socialism.”
As opposed to allowing governments to determine that metric?
“AFAIK “Pareto efficiency” calculations ignore the value to downstream beneficiaries of having “wealth” in the hands of investors who will create general improvements.”
I’m not sure how this claim logically follows from your premises.
Actually, it is a big issue. That’s my point.
In what currency? My basic point is that differences in currency values are a major stumbling block.
Will those negotiations beforehand agree on an international regulatory agency with enforcement powers? Or will they set up a formula that has to be re-negotiated every time something changes?
Who polices and enforces this “same barrier”? IMO negotiations like this are very likely to end in gridlock.
What are the assumptions involved in the “DICE model”” What are the chances that the various potential parties to the agreement will actually agree on them? What is the chance (very low, IMO) that they will actually understand the implications of those agreements, and how do you propose to deal with the actions of parties when they discover unpalatable consequences (of implications they didn’t think of) and back out of various detailed points?
Who determines “inflation”? Are you aware of how much fiddling goes into “inflation” even today? What happens when various parties “fiddle” with their “inflation” figures and other parties disagree?
It is a big issue, because countries/polities will have strong incentives to cheat (e.g. through manipulations by their central banks, or whatever), and the results will have to be dealt with.
You can’t make “projections of what tax rates will be” for any country/polity that levies its tax in a currency that varies relative to whatever base you’re using for the “pigouvian tax” calculations.
I seriously doubt any potential party to any such agreement would “agree to an IAM that determines the optimal path of tax” if they understood the actual implications. Once they discover them, they will almost certainly back out. How does your proposed agreement deal with that? Do you suppose that whatever enforcement agreement you come up with would be accepted by the victims?
See above.
“Pareto efficiency” is a socialist fantasy. As such, it’s irrelevant to any discussion of any “solution” that has any real chance of being implemented.
As for your “giant bureaucracy with inspectors to ensure that every country is agreeing with the percentages”, an exact equivalent exists for your “pigouvian tax”. But there are advantages to using the percentage scheme: suppliers, and would-be suppliers would have strong incentives to engage in surveillance of potential customers, and possible violators could be reported to an internal enforcement mechanism. Of course, local governments (tax agencies) would have similar incentives given a tax, but the potential for corruption is much higher in a single government taxing agency than a bunch of competing would-be vendors.
Because the incentives would be more than an order of magnitude higher.
Because, as we both know, there’s no chance of implementing a tax at a high enough rate to achieve the kind of incentives even a very small percentage requirement would.
Projections aren’t immediate reality. Besides, it’s not relevant, because the prices paid for “carbon neutral” fuels/offsets will certainly decrease with time. (Or if they don’t, the entire program is a failure.)
I’m not going to go digging up links, given the number of “studies” I’d have to plow through. My best understanding is that, in order for “fossil neutral” fuels or offsets to compete today, a tax would have to be on the order of $200/ton. Your proposal, IIRC, was $20/ton. That counts as “something like […] $1000 per metric ton” to me.
NO! As opposed to allowing each individual to own wealth which for they determine the relationship to “better/worse off”.
Fact is, you’ve got this bass-ackwards (I suspect deliberately): almost always when it’s claimed that “society” will do/decide something, that means government claiming to represent society. The opposition here is between individuals deciding for themselves, and governments claiming to decide for “Society”
It doesn’t. It’s based on my reading of descriptions of the whole idea. I simply don’t see how you can claim that “Pareto efficiency calculations” take into account “the value to downstream beneficiaries of having “wealth” in the hands of investors who will create general improvements.”
The value of investments in capital is an individual decision. Each individual attempts to balance the long-term value (given perceived risks) of such investments against immediate spending.
But the actual value of those investments, by hindsight, depends on a variety of technological, market, and political/economic factors that can’t be predicted. My take is that the entire existence of industrial capitalism, in a society with ongoing technological progress, completely invalidates some of the assumptions behind “Pareto efficiency”, and renders any sort of projections, or programs, based on them nothing but socialist fantasies.
“In what currency? My basic point is that differences in currency values are a major stumbling block.”
How? Just use market exchange rates.
“Will those negotiations beforehand agree on an international regulatory agency with enforcement powers?”
It would be best to have rules determined beforehand.
“Who polices and enforces this “same barrier”?”
I don’t know. WTO or some new organization? Countries that don’t impose the barriers they are supposed to are breaking the rules of the agreement and are therefore subject to potential sanctions themselves.
“What are the assumptions involved in the “DICE model””
Look it up yourself? There are pages of assumptions.
“What are the chances that the various potential parties to the agreement will actually agree on them?”
No idea. But if you have more clear objectives, and a clear objective function (social welfare function) and you reduce the degrees of freedom of negotiation (single CO2 emission tax rather than each country arbitrarily choosing an emission pathway) then you have a better chance of an agreement.
“how do you propose to deal with the actions of parties when they discover unpalatable consequences”
Sanctions, maybe military force if necessary.
“Do those assumptions map cleanly to each nation’s/polity’s currency?”
“Who determines “inflation”?”
You could use GDP deflators.
“Are you aware of how much fiddling goes into “inflation” even today?”
Yes.
“What happens when various parties “fiddle” with their “inflation” figures and other parties disagree?”
If you want to simplify things, you could always base it on US 2015 dollars. Then you only have to deal with the US GDP deflator and market exchange rates.
“will have strong incentives to cheat (e.g. through manipulations by their central banks, or whatever), and the results will have to be dealt with.”
You can ignore the rates set by a central bank and instead look at market rates. Of course it would be preferable if all countries float their currencies.
You probably want to agree to an IAM that determines the optimal path of tax, rather than an actual tax path. Then you can simply plug in better evidence into the IAM to change the tax path.
“I seriously doubt any potential party to any such agreement would “agree to an IAM that determines the optimal path of tax” if they understood the actual implications.”
You mean implications such as maximizing the well being of humanity? Oh the horror!
“Once they discover them, they will almost certainly back out.”
Why?
“Because the incentives would be more than an order of magnitude higher.”
Why? I haven’t specified the level of taxation, so you can’t comment on the order of magnitude. It could be 1 cent per ton or $1000 per ton.
“Because, as we both know, there’s no chance of implementing a tax at a high enough rate to achieve the kind of incentives even a very small percentage requirement would.”
Australia had a $23/ton tax until very recently, and with the change in prime minster it will probably get re-implemented.
British Columbia has a $30/ton tax.
Alberta will raise their tax rate to $30/ton under the new government.
Denmark has an ~$18/ton tax.
France has a 14.5 euro/ton tax.
Ireland has a 30 euro/ton tax.
Norway has a tax of about $21/ton.
Sweden has a tax of about 101 euros/ton.
https://en.wikipedia.org/wiki/Carbon_tax
Why would you think there is no change of implementing a CO2 emission tax?
“My best understanding is that, in order for “fossil neutral” fuels or offsets to compete today”
And why would it be desirable to go to 100% non renewable today? The economic costs would be too high.
“NO! As opposed to allowing each individual to own wealth which for they determine the relationship to “better/worse off”.”
And imposing a tax of CO2 emissions prevents ownership of wealth?
“I simply don’t see how you can claim that “Pareto efficiency calculations” take into account “the value to downstream beneficiaries of having “wealth” in the hands of investors who will create general improvements.”
It’s called discounting.
https://en.wikipedia.org/wiki/Discounting
@-1=e^iπ…
I suspect we’re wasting each other’s time here, but let me try once more, drilling down to the issue of investment, and production efficiency. First, let me back up and state the goal I’m pointing at:
To achieve the quickest possible transition away from fossil energy that requires dumping extra carbon into the system, with minimum impact to energy prices and/or availability, and minimum establishment of any world-wide bureaucracy with independent enforcement powers.
I’m going to abandon any effort to convince you on the subject of currency issues. For some reason my points just aren’t getting across.
Let me mention, also, that I’m not interested in any sort of “social welfare” calculations. I think that we could agree on the desirability of minimizing the transition time while also minimizing the impact to energy prices and availability, with the obvious caveat that there will probably be some sort of trade-off.
Currently, in most circumstances, fossil-neutral replacements for fossil energy sources are not cost-competitive with fossil fuels. In addition, except for solar PV, current and anticipated production levels are unlikely to achieve replacement in the near future.
This means that whatever scheme is used to address the fossil carbon problem should point to maximum growth of production, and as rapid as possible reduction in cost.
These factors are not unrelated, of course. A recent study [Nagy et al. (2013)] examined technological progress in a number of fields, strongly supporting a conclusion that technological production growth and price decline tend to be linked by an exponential relationship, such as “Moore’s Law”, or “Wright’s Law”.
Now, when I see such exponential growth (as in “Moore’s Law”), I tend to look for some sort of positive feedback loop. And there is is, explicit in “Wright’s law”: price tends to decline as a log/log (exp/exp) function of production. Nagy et al. (2013) supports this.
The feedback is obvious: lower price means more people buy. More people buying means more being produced. More being produced means lower prices.
If you want, then, to provide the maximum of growth in production, of resources for producing fossil-neutral fuels, for instance, you need to start with the current very-low-volume high-priced production, and provide maximum market for the product at that high price.
This will incent more investment in production facilities, and production itself, which in turn brings down the price as production volume increases.
Now, consider the case of a carbon tax that adds around 10¢/gal to the price of gasoline. (My calculations suggest this is roughly equivalent to $40/ton emitted carbon.) Producers of fossil-neutral replacements can’t provide their product at a competitive price to that of the fossil product today, even with an additional 10¢/gal added to it. So there’s no incentive to produce, or invest in production technology, except anticipation, which carries a high risk of failure, since by the time the price comes down enough to be competitive, other technologies may be more cost-effective.
By contrast, consider the case of a mandatory 1% addition of fossil-neutral replacement fuel to all gasoline sold. If the price of the replacement adds that same 10¢/gal to the final cost of the product, suppliers can afford to pay $10/gal for the replacement. AFAIK this is well within the envelope of what could be profitable with current technology.
The same logic applies to any level of carbon tax you want to suppose: the percentage scheme will provide at least an order of magnitude (two in the above example) higher price for the product.
The starting percentage would have to be small enough for anticipated production volume (of fossil-neutral fuels) to meet the demand. By careful tuning it could be made highly profitable for all investment in current technology, while anticipated growth of the market would incent further investment in R&D.
It’s my guess (pending detailed studies I don’t have the resources or time for) that the starting percentage would be small enough that even with exorbitant prices, and profits, for initial investors the actual amount added to the price of, say, gasoline would be far less than 10¢/gal. Which would fade into the background noise of price variation: I normally pay between $2.00/gal and $2.75/gal (at the pump) depending on market conditions.
Ref:
Nagy et al. (2013) Statistical Basis for Predicting Technological Progress by Nagy B, Farmer JD, Bui QM, Trancik JE (2013) PLoS ONE 8(2): e52669. doi:10.1371/journal.pone.0052669
@ AK –
Under your quota system, energy prices would tend towards the percentage weighted average of marginal energy price of fossil fuels and the marginal energy price of renewables.
Under a CO2 tax, energy prices would have to be as high as the marginal energy price of renewables in order for renewables to be competitive.
Obviously there are benefits to a CO2 emission tax that do not exist under such a quota system (differences between different types of fossil fuel sources are taken into account, taxes elsewhere in the economy can be lowered, etc.). So even if you do obtain lower energy prices under your system, it is a priori unclear if a quota system is a better system.
But let’s suppose hypothetically that conditions are such that the advantages of a CO2 emission tax I just mentioned are negligible (only 1 type of CO2 emitting technology, lower taxes elsewhere have negligible affect on the economy, etc.). Even then, if one simply took all the revenue from CO2 taxation and used it to subsidize renewable production, then one would get a similar outcome as your quota system.
So even in the best case scenario, taxing CO2 emissions and subsidizing renewables is no worse than imposing a quota on renewables.
Also, if we were to accept the claim that price of renewables decreases as more renewable energy is produced, then arguably this acts as a positive externality (since the production of renewable energy by 1 renewable company impacts the future production of renewable energy by another renewable company), which means a Pigouvian subsidy can be economically justified.
Yes.
Yes.
My example was explanatory. Obviously, a similar system would have to be applied to every type of fossil fuel.
It’s here where the potential for different systems by different nations/polities could be valuable. In theory, as long as every atom of fossil carbon added to the system is offset by the appropriate percentage of an atom either drawn from fossil-neutral sources or offset by sequestration, a nation would have met its obligation.
It would be up to each nation to decide how to facilitate “carbon trading” among various offsets. A universal system (applicable to every type of fuel) would tend to foster the growth of whatever technology is cheapest overall, while one categorized by fuel type would tend to foster the growth of specific measures for each fuel.
“Better” is a value judgement. I’ve already stated the values I’m aiming at include minimum impact to energy prices or availability.
Absolutely not! In fact, one of the biggest reasons I’m arguing that the percentage system is better is that the government would not be involved in deciding what industries to support. Investors would decide what industries to invest in, based on their best projections of return. The market in capital would decide. After that, a combination of technological and market factors would decide which industries were most successful.
This is capitalism in action. I’m surprised you don’t understand this important distinction, claiming expertise in “economics” as you do.
Far, far worse. (See above.) And, more importantly, far harder to sell to believers in the free market, both in capital and technology.
The problem with subsidies is the difficulty governments have in picking “winners”. Granted, in the wake of Solyndra, there are claims that the U.S. Energy Loan Program [is] Turning A Profit . But what about technologies that weren’t invested in? What about ideas that never made it to the table?
One advantage of the percentage scheme is that it rewards private investors who take their own risks, investing in whatever technologies they consider most likely to be successful. There’s plenty of money to invest at the moment, with interest rates where they are. Our civilization just needs more worthwhile technology to invest in, which means more immediate returns on investment.
The most impressive successes in capitalism have, AFAIK, been when governments set the goals, and the free market, in capital as well as technology and production, works to meet that goal. Taking money out of the market and directing it to government-chosen investments is far less likely to succeed.
@ AK
“Absolutely not! In fact, one of the biggest reasons I’m arguing that the percentage system is better is that the government would not be involved in deciding what industries to support.”
I’m don’t think I agree with this claim.
If you set up a quota system, then what will occur is there will be a market for CO2 emitting energy producers to buy partnerships with renewable sources. So money gets transferred from fossil fuel emitters to renewable energy producers via the market that forms due to the quota system.
If you taxed CO2 emissions and used that to subsidize renewables you would get a similar effect (money gets transferred from fossil fuel emitters to renewable energy producers).
So could you explain how it is completely different?
With the percentage system (not a “quota system”) fossil-CO2 emitters would be free to buy the “fossil-neutral” percentage from whatever suppliers they choose. Money gets transferred to the most efficient producers, as determined by the market.
True, horizontal integration would be an option, but so would an open market, or even some combination.
Let’s suppose a big oil company chooses to invest in a “renewable” process licensed from Joule, along with a CO2 extraction technology based on the USNavy’s process. Do you suppose their production will exactly match the percentage they need (to make their product meet the requirement)? If less, they will need to buy on the open market. If more, they will be able to sell to others who need it.
If their investment turns out to be less successful than somebody else’s, they can set up a supply agreement with that other producer. If theirs is especially successful, they can expand and set up agreements to supply others.
The market would be open, for fuel producers to produce a product already “offset”, or users to buy one that isn’t “offset” and take care of the percentage themselves. This would foster maximum innovation in both technology and finance.
At a national level, fuels (especially for vehicles) could be required to be offset in kind, prior to retail sale, while, perhaps, energy could be offset using carbon credits.
Each nation would be free to set up whatever categories they choose, depending on how they see their national interest, and potential means of dealing with the problem. In principle, carbon offsets could be produced by one nation and sold for use by another, allowing nations with strong interests in developing the industry to do so, while those more interested in simply purchasing offsets (and investing their resources elsewhere) can also do so.
IMO, based on what I’ve seen of the technology in progress, full parity with fossil for gas and liquid fuels will probably be achieved within a decade or two.
With subsidies, money is transferred to whichever producers the government chooses. Governments have a history of making pretty bad choices in this regard compared to markets. It’s called “crony capitalism”.
It’s completely different because with the percentage system money is transferred to the most efficient producers, based on optimum investments in research, development, and production, while with subsidies money is transferred to cronies and boondoggles.
Yeah, this percentage system is a quota system, where CO2 emitters have to buy the right to pollute from renewable energy producers.
You can get the exact same result using taxes and subsidies, except the tax system is cheaper to implement.
No you can’t. Totally different result.
Guess I should illustrate my point with a simple example.
Suppose that we have a competitive market for energy where producers can either choose to produce using renewables or fossil fuels. Furthermore, suppose that the marginal cost of production for renewables and fossil fuels depends on the total amount of energy produced for each type. For sake of simplicity, suppose simple linear cost functions; the cost of producing fossil fuel energy is A + BF, where F is the quantity of fossil fuel energy produced, and the cost of producing renewable energy is C + DR, where R is the quantity of renewable energy produced.
Now suppose that the government comes along and imposes a quota system where 10% of energy must be from renewables and 90% from fossil fuels, and that fossil fuel companies must buy the rights to emit from renewable companies. For sake of simplicity, suppose that total energy demanded by the market is 1, so that the marginal price of producing fossil fuels is A + 0.9B and the marginal price of producing renewables is C + 0.1D.
In order for fossil fuel producers to produce energy, they have to buy those rights from renewable producers. In this case, a fossil fuel producer producing 9x energy will have to purchase rights from a renewable producer producing x energy. This creates a market for the rights to produce energy. Let E be the price per unit energy that a fossil fuel producer must buy from the market in order to be able to produce energy.
A profit maximizing producer will choose to produce the type of energy with the lowest cost per unit energy. Therefore, the marginal cost of energy after accounting for the trading system should be equal for both fossil fuels and renewables.
This means that:
A + 0.9B + E = C + 0.1D – 9E
=> E = 0.1C + 0.01D – 0.1A – 0.09B
So the imposition of this quota system by the government causes will result in a market for the right to produce energy where the market price for the cost to produce energy for a fossil fuel based energy company is 0.1C + 0.01D – 0.1A – 0.09B.
Now let’s say instead, the government chooses to tax fossil fuel providers at a rate 0.1C + 0.01D – 0.1A – 0.09B and subsidize renewables at a rate 0.9C + 0.09D – 0.9A – 0.81B.
In this case, the cost to a fossil fuel energy producer to produce energy is:
A + BF + 0.1C + 0.01D – 0.1A – 0.09B
and the cost to a renewable energy producer to produce energy is:
C + DR – 0.9C – 0.09D + 0.9A + 0.81B
If total energy demanded is 1 then F + R = 1.
A profit maximizing producer will choose to produce the type of energy with the lowest cost per unit energy.
=> A + B(1-R) + 0.1C + 0.01D – 0.1A – 0.09B = C + DR – 0.9C – 0.09D + 0.9A + 0.81B
=> (D + B)R = 0.91B + 0.01D – 0.81B + 0.09D = 0.1(B+D)
=> R = 0.1
So this tax system results in 10% of energy produced being renewable and 90% of the energy produced being from fossil fuels. Not only that, but this choice of the tax and subsidy is revenue neutral. So you obtain the same result as the quota system.
Whatever you want to obtain using a quota system can be obtained with a tax and subsidy system. If you still disagree, then I invite you to construct a single example where this is not the case.
This is the sort of reasoning that shows why economists shouldn’t be allowed any input to policy.
Let me start with this:
[My bold.] Your “simplifying” assumption has just taken your whole argument out of the real world, into an economist’s simplistic fantasy.
Such costs vary continually, depending on a number of factors, some of which are critical to solving the actual problem. The primary purpose of the exercise I outlined was to provide incentives for specific costs to decrease. Certainly cumulative volume is useful for forecasting such cost decreases, but remember that the examples used in Nagy et al. (2013) (see above) all took place under somewhat free market conditions.
Yes! This “E” is not a number. Rather, it’s a continually fluctuating result which varies according to a number of market factors, especially including the actual “cost of producing renewable energy”. Producers of fossil energy will have strong incentives for investment in the best technology for producing “fossil-neutral” energy. The returns on those investments will be made up in volume: lower costs will lead to short-term higher profits, incenting more investment in the technology, and higher production. Not “higher production” of the market segment (or at least, not necessarily), but “higher production” by that specific technology, which means the developers will accrue more profit from their investment.
You might say that a similar process could take place under a tax/subsidy system, but whatever similarities, it would still be different, and IMO the differences would be critical.
Given that every one of those costs is changing every day, how is the government going to handle this? I see two immediate options:
1. Lock the tax and subsidy in based on an instantaneous rate, and let the market drift however it goes, or
2. Try to re-calculate the tax and subsidy every so often based on changed conditions.
Neither option seems very workable to me, and neither would have anything like the effect of the percentage proposal. In option 1 the evolution of the market would be entirely different, and in option 2, even if the numbers could be gathered, there would be transaction costs, along with constant political/ideological pressure on the re-calculation process.
Only at the beginning. The ratios would immediately begin to drift, whereas in the percentage scheme it’s the prices that would drift.
Since minimum energy prices are a positive externality (given), and the downwards drift of prices would, IMO, be more direct and faster with the percentage scheme than with the tax/subsidy scheme, I find it far more likely to achieve the optimum result.
“For sake of simplicity”
That was for illustration purposes. The result is the same if, for each instant in time, you have upward sloping supply curves. Actually, it is a far more general result than that; it works if given any proportion of renewable energy R, the change in marginal cost of renewable energy with respect to R minus the change in marginal cost of fossil fuel energy with respect to R is positive. Realistically, this is going to be the case.
“The primary purpose of the exercise I outlined was to provide incentives for specific costs to decrease.”
You can get the same result with a tax/subsidy system, only the tax/subsidy system is cheaper to implement.
Given any of your quota systems, there will be a price to produce fossil fuel energy on the market, call it E, and a proportion of renewable energy, call it R. If you instead use a tax/subsidy system where you tax fossil fuel energy at a rate E, and subsidize renewable energy at a rate E*(1-R)/R then you will get the same result as your quota system.
“Certainly cumulative volume is useful for forecasting such cost decreases”
Then treat production of renewable energy as having a positive externality on future fossil fuel energy and try to calculate the optimal level of pigouvian subsidy.
“Rather, it’s a continually fluctuating result which varies according to a number of market factors”
The fact that the price fluctuates doesn’t counter what I wrote, since I was talking about a single moment in time. The argument applies for all moments in time.
“but whatever similarities, it would still be different, and IMO the differences would be critical.”
Yeah, the biggest difference being it has higher implementation costs for basically the same outcome.
“Try to re-calculate the tax and subsidy every so often based on changed conditions.”
What is wrong with this?
“in option 2, even if the numbers could be gathered, there would be transaction costs, along with constant political/ideological pressure on the re-calculation process.”
And there aren’t transaction costs, or threats of ideological pressure in some percentage quota scheme?
“The ratios would immediately begin to drift, whereas in the percentage scheme it’s the prices that would drift.”
1. Obviously pigouvian taxes and subsidies would vary over time.
2. If you want to talk about creating stability for businesses, for an individual business, being able to predict pigouvian taxes/subsidies over time is more helpful than having the total market share of renewable energy being stable (but having the prices of a quota system fluctuate greatly).
No you can’t. The results would be entirely different.
No you won’t. The results would be entirely different.
It doesn’t take account of changes, or the fact that your “average” is nothing but an artifact of your simplistic analytical approach.
Such predictions would be highly unreliable, due to the nature of government action. This is why a single percentage, with a growth rate specified at the beginning, would be more reliable for any sensible business than a tax that’s continually recalculated by a government regulatory bureaucracy subject to political/ideological pressure.
This is actually a valid question. I thought about it a lot before ever proposing this scheme.
In any effort to influence the economy, there will be a lot of ideological and (mostly self-interested) political pressure to modify whatever scheme is agreed on. The advantage of using a fixed percentage, with a fixed growth rate, is that once that number is in place, and businesses begin planning their investments in R&D and production, there will be many with an incentive to keep things just the way they are.
As long as the added cost of energy is a small fraction of the total, demands to lower the percentage (from what’s planned) will probably be few, once most businesses have had a chance to factor it into their plans.
While there might be demands to raise the percentage, on the part of some fanatics, as long as the plan can be shown to be working most will probably accept it as originally instituted. Meanwhile, any attempt to raise the percentage will run up against accusations that such a raising would increase energy prices, which would be very unpopular.
As a result, IMO most businesses will regard the plan as much more stable than any tax/subsidy plan, which means they will be willing to invest more heavily in the technology, and finance for the technology. This in turn will reinforce the success of the plan, causing volumes of production, and drops in cost, to increase more than with any plan that involves subsidies, which are always subject to attack by someone.
If the plan actually works as well as it probably (IMO) will, within a decade or two the actual cost of producing fuel using fossil-neutral technology will actually reach parity with current-type fossil production, which will in turn lead to a runaway process of replacement.
“The results would be entirely different.”
I think someone’s in denial…
Look, if you set the tax on CO2 emissions at a million dollars per metric ton, you would get 100% non-fossil fuel energy. If you set it at zero, you would get very little renewable energy. You can get anything in between these two extremes by choosing a tax between zero and a million dollars per metric ton.
“Such predictions would be highly unreliable, due to the nature of government action.”
The percentage under a quota system is also subject to government action. Arguing that we should do policy A instead of policy B because policy B has property X doesn’t make sense if policy A also has property X.
“This is why a single percentage”
The percentage is based upon what? Empirical evidence?
The choice of optimal level of taxation/subsidy is based on what? Empirical evidence as well?
Your arguments that a pigouvian tax is unstable or has to be recalculated doesn’t make sense if the quota system also is subject to the same properties.
“would be more reliable for any sensible business than a tax that’s continually recalculated by a government regulatory bureaucracy subject to political/ideological pressure.”
A quota system has the same flaw. It would have to be continually recalculated.
I think it’s you.
No, you’d crash the economy, and everybody who pushed such a program would get lynched.
This seems to me to demonstrate total denial of the role of time and investment in technology.
Not nearly as much. See my follow-up above.
Well, my initial proposal was to start with 0.1% (one tenth of a percent) and double every three years. Even with today’s technology, the initial cost would be small, and as long as everybody could depend on the percentage to rise according to the initial agreement there would be strong incentive for investment.
Nope. That’s why it’s not a “quota system”. It’s a percentage system where the actual percentage is known from the beginning for the entire program, until it hits 100%.
“No, you’d crash the economy”
Having 100% non-fossil fuel energy and crashing the economy are not mutually exclusive.
“This seems to me to demonstrate total denial of the role of time and investment in technology.”
No. If you can vary a percentage over time, you can also vary a pigouvian tax over time. Why is that so difficult to understand?
“Well, my initial proposal was to start with 0.1% (one tenth of a percent) and double every three years.”
So policy should be based on AK’s subjective feelings? What is 0.1% based on? What is doubling every 3 years based on?
So policy should be made without taking into account the magnitude of climate change, the impacts of climate change, the mitigation costs of climate change, etc.?
Well then why bother with integrated assessment models? We can just base policy on subjective feelings.
“Nope. That’s why it’s not a “quota system”. It’s a percentage system”
It’s the same thing.
Not messing up the economy, or significantly impacting energy prices, is one of the boundary conditions.
Why is it so difficult for you to understand the difference? The percentage, and its growth rate, are set from the beginning. In your tax/subsidy scheme, the tax rate isn’t set. Rather, some complex calculation based on averages of production costs for various technologies is set. Totally different, since in the latter case we have to trust those doing the calculations. Which no sensible person does.
Since it was placed as an example, the 0.1% ws based on my best guess of the production level that could be achieved using current technology, without prohibitive costs. The every three year doubling means reaching 100% in 30 years. It’s also easy to calculate, since it’s about a 25% increase in percentage each year.
Obviously, the initial rate would have to be optimized, based on achievable production rates using current technology. The doubling every ;three years is about what we see in install growth rate for solar PV, and about half the growth rate of Moore’s Law.
Correct. We should determine what can be done in what time frame without significant impact to energy prices or availability, and settle for that. It won’t make that much difference.
Obviously, it’s not, since you are making assumptions based on your understanding of “quota system” that don’t apply to what I’ve described.
Let me put it this way: the key to getting maximum return with minimum impact is simple: NEVER LET THE GOVERNMENT(s) GET ITS HANDS ON THE MONEY! Once it/they do(es), most of it will end up going elsewhere than paying for production, investment in production, and investment in R&D towards production of “fossil-neutral” fuels and/or energy.
No matter what promises government makes. We all know how much those promises are worth.
-1=e^iπ,
You have explained very clearly to AK and you clearly have enormous patience and tolerance. I congratulate you. But you are wasting your time trying to explain anything to AK. You’ll never get through to him and even if you do he’ll never admit it. It’s always the same with him – motivated reasoning precludes rational analysis or debate
As an aside, and O/T for this sub thread, I am sorry you would not answer my question where I was asking for a reality check of the discount rates used in DICE-2013R (which are 5.2% in 2010 decreasing to 2.2% in 2300). I am looking for a reality check of those figures based on historical data (“descriptive” method). I do not want you to refer to the Ramsay equation to explain it. That is just one way to estimate what discount rates to use for the next 300 years. I’ve looked at the Ramsay equation many times. However, I don’t fully understand it and further explanation in blog posts will not help. I find it a turn-off because as you say it is based on moral judgments and uses “social” this and “social” that. It’s clearly influenced by the ideological agenda of the researcher. This is demonstrated by the very large differences selected by different researchers such as Stern, Garnaut, Nordhaus, and others. So, I find that a turn off. I don’t trust it.
The fact the the discount rates used in DICE for the world average is lower than we use for choosing between high and low emissions electricity generation technologies in the real world persuades me there is a problem with it and it can be overly influenced by ideological agendas. The discount rates used for choosing between abatement and no-abatement technologies should be the same as used for estimating the damage costs avoided by the presumed abatement the technologies are expected to deliver. Whitehouse, 2010, ’ Technical Support Document: ¬ Social Cost of Carbon for Regulatory Impact Analysis’ https://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf says (pp17-18):
I would like to see a chart of the historical discount rates over the past 100 and 300 years based on the “descriptive” approach.
Can you give me links to such a chart(s), please? I am not interested in excuses about why you can’t or don’t what to or why I am asking the wrong question. I want it answered first and then later we can discuss about what you think is wrong with it.
I always suspected Peter Lang was a socialist.
“Not messing up the economy, or significantly impacting energy prices, is one of the boundary conditions.”
I don’t think that is a desirable boundary condition since any significant mitigation policy is going to have economic impacts; and eventually the undesirability of additional climate change will justify performing significant mitigation policy.
Secondly, I don’t think switching to 100% renewables in 30 years will have no negative economic impacts.
“The percentage, and its growth rate, are set from the beginning. In your tax/subsidy scheme, the tax rate isn’t set.”
1. You can set a pigouvian tax and its growth rate from the beginning. If we take the results from Nordhaus’ 2013 DICE model, then this suggests a $17/metric ton of CO2 tax on CO2 emissions in 2015 US dollars for 2015, and then have this grow in real value by ~3% per year.
2. I’m don’t think it is desirable not to change the rate when confronted with new evidence. If better estimates of equilibrium climate sensitivity or the mitigation costs are made, then it makes sense to revise estimates of the optimal path of CO2 mitigation policy.
“Since it was placed as an example, the 0.1% ws based on my best guess of the production level that could be achieved using current technology, without prohibitive costs.”
Until I see some numbers, a model and some empirical data that justifies this 0.1%, I’m inclined to believe that this is based on subjective feelings.
“The every three year doubling means reaching 100% in 30 years.”
Why 100% renewable in 30 years? Why not 10 years or 60 years? What is the choice of 30 based on?
“The doubling every ;three years is about what we see in install growth rate for solar PV, and about half the growth rate of Moore’s Law.”
1. There is a fair amount of subsidies for renewable energy, especially solar, in many countries which are contributing to the growth rate of solar PV.
2. Just become one is observing an exponential trend of something for a short period of time doesn’t mean it will continue, and I think it is dangerous to do so. Moore’s Law has failed with respect to things such as clock speed, and population growth is slowing down; population will peak/plateau by mid century. Even the economic growth rate is arguably slowing down by about 0.4% per year per century.
“Obviously, it’s not, since you are making assumptions based on your understanding of “quota system” that don’t apply to what I’ve described.”
I’ll give you an example of a percentage system described as a quota system: Supply Management in Canada. For example, with the recent TPP deal, Canada will allow foreign milk an additional 3.25% of its market share (I think the current quota is 10%).
“NEVER LET THE GOVERNMENT(s) GET ITS HANDS ON THE MONEY!”
So we get to the root ideological reason for your policy position.
@-1=e^iπ…
I know. I do. More importantly, I think the likelihood of selling a scheme to most free-market proponents is much higher if it’s constructed with that boundary condition.
And “economic impacts” isn’t the same as crashing the system, or forcing significant increases to energy prices.
According to the IPCC, it’s highly unlikely by 2050 or so.
If you just decide to force the switch, maybe. IMO if it’s done right, it can be done without significant increases to the cost of energy, or impacts to the roll-out of availability.
First, that would produce almost no immediate incentive for switching to fossil-neutral fuels/energy.
Second, it would have a completely different effect than the percentage scheme I’m suggesting.
You’re pulling a bait-and-switch here: you start by saying “[y]ou can get the same result with a tax/subsidy system, only the tax/subsidy system is cheaper to implement”, then talk about a fixed tax rate and growth rate scheme which we both know would have a completely different result.
That’s because you’re not even looking at what I’ve proposed, you’re just taking a few talking points and fitting them into your own approach.
We should determine what can be done in what time frame without significant impact to energy prices or availability, and settle for that. It won’t make that much difference. That’s another of the basic boundary conditions I set in my suggestion.
It may not be the highest starting point we can set, but IMO it’s low enough that is wouldn’t significantly impact energy/fuel prices based on, say, a year’s lead time and current technology.
It’s based on the fact that the IPCC and most other models have shown no negative impacts from fossil carbon within that time frame. Also, I’m pretty sure it’s doable.
Granted, there are subsidies for PV. This would create a market without direct subsidies. A reliably growing market. Although, to be fair, it would be in the same class as schemes like net-metering, which have been called subsidies.
As you said above, it’s not “desirable not to change […] when confronted with new evidence.” If the exponential cost reductions for carbon-neutral energy/fuel don’t follow expectations, it would be appropriate to re-think the plan.
That’s at the overall market level. This percentage scheme would be at the level of individual economic units (e.g. corporate entities).
Wrong. It’s actually an intermediate result. I make no secret of being a libertarian, and like most libertarians I consider any government interference with anything to be a negative externality. (Although sometimes the results of a lack of interference would be a more negative externality.)
Given that even your “Pigouvian tax” is set at a rate incapable of stimulating the growth of fossil-neutral technology, it would be important to maximize the fraction of money being extracted from fossil energy that goes to this purpose. A properly designed market would, based on experience, be far more effective than allowing any government bureaucracy to get its hands on it.
And there’s a multiplier effect: the more confident investors are that all the money being extracted from added energy prices will go to fossil-neutral production, the more money they will be willing to risk for investments in production and R&D. Also, the more “level the playing field” among various innovative technologies, the greater the chance that someone will invest in some technology that turns out to be disruptive.
@ Peter Lang
“I am sorry you would not answer my question where I was asking for a reality check of the discount rates used in DICE-2013R (which are 5.2% in 2010 decreasing to 2.2% in 2300).”
If you are not at the very least going to acknowledge the difference between discount rate, real interest rate and rate of social time preference despite the numerous times I have pointed out the difference, then I feel that the conversation isn’t going anywhere.
In this context, what you are referring to is the real interest rate, not the discount rate. So please refer to it as the real interest rate.
Secondly, as I explained that a real interest rate of 5.2% is consistent with observed real interest rates (you can go to the world bank website and look up real interest rates by country if you don’t believe me). If anything, 5.2% higher than what was observed (I think I said the GDP weighted average for the G20 was about 3.8%), but that is mostly due to recent recessions. The economic model used by Nordhaus doesn’t really deal with business cycles and mostly focuses on long term trends so the choice of 5.2% is fine.
“I am looking for a reality check of those figures based on historical data (“descriptive” method).”
You keep asking for 300 years of data and I keep responding that there isn’t 300 years of good data. We have 150 years of decent data from some countries such as the USA.
Also, there has been a clear downward trend in interest rates since the 80s.
And the interest rates are determined from Ramsey’s equation (and sorry but I have to refer to it because this is what Nordhaus does) using empirically justified values of the social rate of time preference and the elasticity of marginal utility of consumption. So yes, the interest rates used by Nordhaus are justified using empirical data, just not in a direct way.
“That is just one way to estimate what discount rates to use for the next 300 years.”
I think you are obsessing too much over the 300 year time period. Ideally, you want to use all infinity years when determining the optimal path. But as one cannot solve the integrated assessment model analytically, one has to solve it numerically, and as one only has finite time to perform computations, one can only solve the integrated assessment model if one considers a finite time period.
As long as the time frame is large compared to the inverse of the discount rate, then the choice of the length of the time period doesn’t matter as the impact of later years on the evaluation of social welfare is basically negligible. The years from 2200 to 2300 have basically negligible impact because they have been discounted so much.
I think you should concentrate on the choice of the discount rate. The length of the time period just has to be long enough to reasonably approximate infinity time periods.
“I find it a turn-off because as you say it is based on moral judgments and uses “social” this and “social” that.”
I didn’t invent the terms. I just use them.
But yes, moral judgements do need to be made when making policy decisions. But the position of Arrow, Tol and Nordhaus is (as far as I can tell) that these judgements should be consistent with empirical data and/or that these judgements can be obtained from empirical data.
“This is demonstrated by the very large differences selected by different researchers such as Stern, Garnaut, Nordhaus, and others.”
Stern and Garnaut (from what I can tell Garnaut takes a similar position than Stern; correct me if I am wrong) take a very different position than Nordhaus/Tol/Arrow/others. Stern takes the position that discounting is immoral or something and doesn’t want to discount. Sterns position is absurd for a number of reasons, but primarily because not discounting results in not valuing the present since all the weight gets shifted towards the period as time approaches infinity and because you can’t evaluate the period as time approaches infinity so you can’t use it in a reasonable decision making methodology.
But if you take the position of Arrow, Tol and Nordhaus, that the discount rate should be the rate of social time preference (again, I apologize if I am accidentally misrepresenting their positions), then this greatly constrains the range of reasonable discount rates. There might be disagreement over the choice of discount rate, but it is going to be far smaller than the range of discount rates without the constraint of Ramsey’s equation.
“is lower than we use for choosing between high and low emissions electricity generation technologies in the real world persuades me there is a problem”
No because those are different types of analyses. Using the same discount rate would be a problem since you would not be satisfying Ramsey’s equation and thus not be taking elasticity of marginal utility of consumption into account. Nordhaus is using an elasticity of marginal utility of consumption of 1.45. The choice of electricity generation technologies is using an elasticity of marginal utility of consumption of 0. This reason suggests using a lower discount rate for trying to optimize social welfare, as Nordhaus tries to do. Secondly, for a private company making decisions about electricity generation, generally they want to use a risk premium since there is risk associated with their investments.
“The discount rates used for choosing between abatement and no-abatement technologies should be the same as used for estimating the damage costs avoided by the presumed abatement the technologies are expected to deliver.”
It’s a bit ironic you reference the white house when as explained in the Arrow et al 2012 paper, the US Interagency Working Group on Social Cost of Carbon, different interest rates were used for benefits and costs of CO2 mitigation.
But I agree, the same discount rate should be used. And this is the position of Arrow et al.
“there is no consensus about what rates to use in this context.”
There is no consensus yet. But it seems like Arrow et al. have a somewhat of a consensus (at least to the point where any remaining disagreement can be resolved by empirical evidence). And if more people can be convinced of the Arrow et al. position then perhaps agreement over the choice of the discount rate can be made.
“Advocates of this approach generally call for inferring the discount rate from market rates”
I agree. This is the position of myself, Arrow et al. and probably you as well. Using Ramsey’s equation is what allows you to infer social rate of time preference from market interest rates.
“I would like to see a chart of the historical discount rates over the past 100 and 300 years based on the “descriptive” approach.”
Are you referring to social rate of time preference or real interest rate here? Because I suspect you are referring to real interest rates, while Arrow is referring to the social rate of time preference.
“Can you give me links to such a chart(s), please?”
You can’t measure social rate of time preference precisely, but you can try to estimate it empirically. One way is to perform a linear regression, but that would involve data on both real interest rates and rates of real GDP per capita growth (and I would suggest using cross sectional data rather than time series data since countries tend to follow policies such as the Taylor rule with respect to monetary policy).
-1=e^iπ
If you start off like that and then write a long rant without answering my question and without providing a link and continuing to rave on about Ramsay equation even though I clearly asked you to set it aside for now, you are either incapable or not trying to communicate with me. I made it absolutely clear I am asking about a reality check on historical discount rates, not Ramsay equation social this that and the other. Discount rates in the real world are WACC, real interest rates for long term investments and also, as the “Discount Rate” section I quoted from the Whitehouse SCC report explains, ‘descriptive’ (i.e. from historical data, not Ramsay Function. And, yes, there are estimates of it historically (since Egyptian times, Roman, and since) but I understand you are not aware of that.
Referring to descriptive rates now and since the 1980s is not valid for projecting out 300 years.
If you are prepared to answer my question, briefly, clearly, staying on answering my exact question not ranting raving on endlessly about your interest in this subject (we may get to that later if you can ever actually answer my questions) and with a link or two I’d appreciate it.
If you do decide to answer my questions, please post your response in reply to one of my comments where we were discussing this. I can find comments here because I am having a computer problem at the moment).
-1=e^iπ
^
I don’t believe that is necessarily true. I’d suggest we should seriously consider policies that are the opposite of what the socialists have been arguing for the past 25 years or so. Instead of international agreements to targets and time tables, carbon pricing, legislation, regulations, coercion $1.5 trillion funding for the “Climate Industry”, there is an alternative. It has succeed for as long as man could communicate. It is (appropriate) deregulation to light regulation and removing the distortions that we’ve imposed over decades and centuries.
If we did this nuclear could become much cheaper than fossil fuels within a few decades and provide all our transport fuels too (gasoline/petrol, diesel, jet fuel etc.). The accelerating trajectory of nuclear capacity experienced in the 1960s and 70’s could be restarted. This explains how it could be achieved: http://judithcurry.com/2015/05/23/week-in-review-policy-and-politics-edition-6/#comment-705879
Let’s be clear. 100% renewables is not viable and probably never will be. They cannot power modern society and reproduce themselves. That is a physical constraint http://bravenewclimate.com/2014/08/22/catch-22-of-energy-storage/ The fact they are never likely to be economically viable is a result of the physical constraint.
It is highly unlikely renewables will be able to provide 50% of our electricity in 30 years, let alone 100%. The risk of them not being able to meet requirements and therefore not reduce emissions by the amounts expected I estimated to be about $50/MWh. Add that to the LCOE for the system with 50% renewables. Also add about %50/MWh for wind and $75/MWh for solar PV (projected to 50% penetration from here http://www.oecd-nea.org/ndd/reports/2012/system-effects-exec-sum.pdf ).
“If you start off like that and then write a long rant without answering my question and without providing a link and continuing to rave on about Ramsay equation even though I clearly asked you to set it aside for now”
You want me to answer your question while simultaneously requiring that I can’t refer to what is required to answer your question. It is absurd.
“Discount rates in the real world are WACC, real interest rates for long term investments”
The best discount rate to use varies depending on application.
“‘descriptive’ (i.e. from historical data, not Ramsay Function.”
Both are descriptive. Prescriptive is what people like Stern and Garnaut do.
“And, yes, there are estimates of it historically (since Egyptian times, Roman, and since) but I understand you are not aware of that.”
I didn’t say there were no estimates, just that there were no good estimates.
“Referring to descriptive rates now and since the 1980s is not valid for projecting out 300 years.”
The world in 100 years time will be more similar to the world over the past few decades than the world in Ancient Egyptian times.
Real interest rates have not been constant over time. If you can’t explain what has caused most of these fluctuations, then why would your model be reliable for the future.
Interest rates are higher when economic growth is higher and lower when economic growth is lower. Therefore, one should expect future interest rates to depend on future real GDP per capita growth. If real GDP per capita growth is expected to fall over the next century or two, then shouldn’t interest rates fall as well?
Anyway, I want to thank you for mentioning Garnaut. I have not been familiar with his work, but you have pointed me to work such as (http://www.garnautreview.org.au/update-2011/commissioned-work/discounting-risk-uncertainty-ecomonic-appraisals-climate-change-policy.html), which has a useful literature review of the subject, particularly with respect to people trying to maximize expected social welfare using Monte Carlo simulations.
Ramsay equation is not required to answer the question. That’;s what’s absurd. It;s the only thing you understand so you cant answer the question. It seem you are a narrow minded, inexperienced academic with negligible experience of the real world..
@ Peter Lang –
The choice of discount rate should depend on the application.
– If you are trying to maximize the profits of a private company through risky investments, then using a real interest rate with risk premium makes sense. The 10% you use is fine for that application.
– If you are trying to perform a traditional cost benefit analysis for a government where you are simply trying to determine which policy option has the greatest potential pareto improvement, using the risk free real interest rate (which is arguably around 5% in the long run right now) makes sense.
– If you are trying to maximize social welfare with a model that treats things deterministically even though in reality there is uncertainty in the future, then using a declining certainty-equivalent discount rate based on the social rate of time preference makes sense.
– If you are trying to maximize expected social welfare, where you are performing monte carlo simulations to try to take into account uncertainty from all sources, using a constant social rate of time preference as the discount rate makes sense.
-1=e^iπ,
I recognise all this. I’ve said it to you (in different words). But you are dodging and weaving and avoiding answering my questions. You’ll do anything but answer the questions. You should simply admit it’s outside your area of einterest and expertise and you don’t know the answer.
I’ve told you a dozen times I am not interested in the Ramsay equation at this stage or social this that and the other. That’s your interest and the preferred method (but not the only method) used by IAM developers and the CAGW alarmists for estimating discount rates. But it is not what is used for comparing technologies for policy decisions. The technologies are chosen on the basis of the discount rate that applies to the investment in, for example, power stations. They are a long term investment (plant lives up to 100 years). The same discount rate must be used for both abatement costs as for the hypothesized benefits of the abatement. Therefore, the technology discount rates should be used.
Therefore, I am not asking for your dot points 1,3 or 4 (at this stage). I am asking for your dot point 2. But I am not asking for a single number. I am looking for a chart of global average discount rates for civil infrastructure per say 10 or 20 years for the past 100 years minimum. I’d actually like to see a chart covering 30, 500, 1000 years.
USA and EU traditionally have among the lowest discount rates in the world. And all world discount rates are unusually low now. So the current rates and rates over recent decades are not a good guide to the next 300 years.
Since we want to use discount rates that are relevant for investment in civil engineering works, we need to use relevant applicable discount rates.
Since you keep writing long mostly relevant rants, I’ll follow your example and post some examples of how discount rates are determined for government policy decision analyses for electricity generation policy (and other government policy decisions). One from New Zealand and three from Australia. Current discount rates in NZ and Australia are 10%. Note that there is no a mention of Ramsay in any of these.
[I can’t be bothered formatting it. Go to the references if you want to.]
New Zealand Treasury, Cost Benefit Analysis Primer
http://www.treasury.govt.nz/publications/guidance/planning/costbenefitanalysis/primer/15.htm
3.3 Choosing a Discount Rate
Excerpt:
No mention of Ramsay.
ACIL Tasman, 2009, ‘Fuel resource, new entry and generation costs in the NEM’
http://www.aemo.com.au/~/media/Files/Other/planning/419-0035%20pdf.pdf
Below are the inputs needed for calculating the discount rate. Note there is not a mention of social thjis that or the other.
“2.2.2 Discount rate
ACIL Tasman uses a calculated WACC as a conservative proxy for an investment decision hurdle rate for electricity market modelling.
Table 4 WACC parameters
Liabilities 100%
Debt 60%
Equity 40%
Risk free RoR 6.0%
Market risk premium 6.0%
Market RoR 12.0%
Corporate tax rate 30%
Effective tax rate 22.5%
Debt basis point premium 200
Cost of debt 8.0%
Gamma 0.50
Asset Beta 0.80
Debt Beta 0.16
Equity Beta 1.75
Required return on equity 16.5%
Inflation 2.50%”
ACTL Tasman, 2009, used an after tax discount rate of 6.8%
EPRI, 2010, ‘Australian Electricity Generation Technology Costs – Reference Case 2010’
http://www.canadiancleanpowercoalition.com/files/2213/0179/5548/GS33-%20AEGTC_2010.pdf
EPRI, 2010, used Before-tax discount rate of 8.4%
Australian Energy Technology Assessment (AETA) report, 2012 and 2013 Update uses a discount rate of 10% http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/aeta/australian_energy_technology_assessment.pdf
“(b) Discount Rate
To ensure consistency in the comparison between technologies, and as a result of consultations with the Stakeholder Reference Group, a discount rate of 10 per cent has been applied to all technologies.”
Now, please answer my questions, – provide a link to a chart of historical discount rates for the world, not USA. But please reply on the thread where we were discussing the subject, not here.
@-1=e^iπ…
I’ve replied to you above, under your comment.
@ Peter Lang –
“I’ve told you a dozen times I am not interested in the Ramsay equation at this stage or social this that and the other.”
That’s what’s used in Nordhaus’ DICE model. So if you want to discuss the DICE model, and wonder why interest rates are what they are in the DICE model, it’s sort of difficult to avoid Ramsey’s equation, social welfare, etc.
“But it is not what is used for comparing technologies for policy decisions.”
Because it’s a different kind of analysis with a different objective.
“The same discount rate must be used for both abatement costs as for the hypothesized benefits of the abatement.”
Yes.
“Therefore, the technology discount rates should be used.”
No, this doesn’t logically follow. A = B doesn’t imply that A = C.
“USA and EU traditionally have among the lowest discount rates in the world.”
Because of lower risk and lower real GDP per capita growth rates.
“So the current rates and rates over recent decades are not a good guide to the next 300 years.”
Depends on the number of decades count as ‘recent’. Recessions and slowdowns in growth don’t last for decades. I would say a time frame of 2-3 decades is fine.
Also, things change over time. Demographics are changing. Technology level is changing. Society’s preferences are changing. Life expectancy is increasing. Real GDP per capita growth rate is declining. All these things have an effect of interest rates. It’s foolish to just assume that interest rates will remain constant, especially when they clearly haven’t over the past.
Would the average global temperature over the past 300 years be a good predictor for average global temperature over the next 300 years? No. So why would average interest rates over the past 300 years be a good predictor of interest rates over the next 300 years.
“Since we want to use discount rates that are relevant for investment in civil engineering works”
I don’t agree with this at all.
“Current discount rates in NZ and Australia are 10%.”
I know what they are in NZ and Australia. And in Germany, Britain and France they are 3-4%.
Let’s just forget social welfare for a second and consider the behaviour of a profit maximizing risk neutral firm, because I think your understanding of how to deal with risk is way off. Such a firm will try make decisions that maximize its expected net present value.
Under certainty of outcome, you would simply calculate the net present value using the riskless real interest rate. However, in reality there is uncertainty. One way you could deal with uncertainty is to use the riskless real interest rate, but calculate the expected net present value by taking into account the probability distribution for various outcomes. In the case of the power plant, perhaps over 100 years a government might expropriate your property, it might get destroyed in a war, it might get destroyed by a volcano, etc. However, for many applications, the calculation of this expected net present value is roughly equivalent to just calculating the net present value using a real interest rate with risk premium. Thus the use of the 10% in the applications of which you speak is simply a useful approximation for calculating expected net present value.
However, this isn’t the only way in which uncertainty can influence discount rates if you are trying to approximate the calculation of expected net present value with the calculation of net present value with a modified discount rate. As shown by the arrow et al. paper, uncertainty about future real interest rates cause the certainty-equivalent discount rate to decline over time. Some types of uncertainty justify an increase in the discount rate and some types of uncertainty justify an decrease in the discount rate if you are approximating expected net present value with net present value. Uncertainty about future interest rates is different from the uncertainty about if your power plant is going to get consumed by a volcano.
In short, what you do in your power plant calculations is simply an approximation of expected net present value. Expected net present value is what you want to maximize; but in many cases it is well approximated by net present value with a slightly modified discount rate.
“provide a link to a chart of historical discount rates for the world, not USA.”
This is the best I can do. Good data does exist for developed countries for the past 150 years, but not the entire world.
https://origin.ih.constantcontact.com/fs132/1103529695337/img/167.jpg
Are you totally incapable of listening and responding appropriately to the person you trying to communicate with?
Of course I am aware of that and I saw you say it before. But I am wanting a reality check on the discount rates, You began by disagreeing with my statement that the Nordhaus’s discount rates are too low. So, I want a reality check form a different approach not not just continually blabbering on about the only thing you seem to understand, i.e. the Ramsay equation. .
There’s no point in reading any more of your comment since clearly you are dodging and weaving, don’t understand and have no intention of attempting to.
“More importantly, I think the likelihood of selling a scheme to most free-market proponents is much higher if it’s constructed with that boundary condition.”
This isn’t relevant to the discussion of which policy is optimal for society. Secondly, ‘free-market proponents’ don’t hold significant political sway in most countries, so I don’t think this is a major barrier to implementing policy, as seen by numerous countries that have implemented CO2 emission taxes already.
“And “economic impacts” isn’t the same as crashing the system, or forcing significant increases to energy prices.”
No, but in the case of what was being discussed, the economic impacts are due primarily to increases in energy prices.
“If you just decide to force the switch”
Which is what would occur if you arbitrarily decide the world must go 100% renewable in 30 years.
“it can be done without significant increases to the cost of energy”
You can keep repeating a claim over and over again, but that doesn’t make it any more true.
I think you just want to live in a fantasy world where the clear trade-offs between energy prices / economic output and CO2 mitigation don’t exist.
“that would produce almost no immediate incentive for switching to fossil-neutral fuels/energy.”
Sure there is. There is $17/metric ton of incentive.
“You’re pulling a bait-and-switch here: you start by saying “[y]ou can get the same result with a tax/subsidy system, only the tax/subsidy system is cheaper to implement””
I’m not doing a bait and switch. I’m being very clear. With respect to impact on energy prices and CO2 mitigation the impact of both policies (assuming comparable levels of taxation and quota) is very similar. The two main differences are: 1. the percentage quota system doesn’t take into account the benefits of say natural gas over coal, so is less effective than a pigouvian tax. 2. the percentage quota system has higher implementation costs, in terms of the bureaucracy, inspectors, policing, etc. needed to implement such a policy.
“We should determine what can be done in what time frame without significant impact to energy prices”
“That’s another of the basic boundary conditions I set in my suggestion.”
It’s a dumb boundary condition that either involves living in a fantasy land where trade-offs don’t exist or choosing a policy that does not lead to an optimal outcome for society.
“but IMO”
Yes, exactly. IMO. Your position is based on subjective feelings. 0.1% is based on your subjective feelings.
Somehow, I think the well being of the 7 billion people on the planet is worth more than determining policy based upon your subjective feelings.
“Also, I’m pretty sure it’s doable.”
More subjective feelings.
“I consider any government interference with anything to be a negative externality.”
Well that’s just plain wrong. A pigouvian tax to deal with a negative externality is not a negative externality.
“Given that even your “Pigouvian tax” is set at a rate incapable of stimulating the growth of fossil-neutral technology”
It’s easy to make claims. It is far harder to prove them.
“be far more effective than allowing any government bureaucracy to get its hands on it.”
You realize creating a percentage quota system, will involve a bureaucracy needed to ensure that companies are complying with such a system, right?
@ Peter Lang –
“Are you totally incapable of listening…
There’s no point in reading any more of your comment.”
Do you not realize the irony of complaining that someone is not listening and then refusing to read their comment?
You have stack of opportunity to answer, instead you keep ranting on about your interest and arguing about irrelevancies. You clearly are not capable of answering the question. As I said before, you should have long ago said
“I don’t know, it’s not my area of expertise”
Your dismissal about discount rates for policy analysis and investing (e.g. in power stations) in demonstrates your ignorance about discount rates other than you one narrow view of it. Humans have been making comparing policy options and been making investment decisions since civilisation began. It seems you are totally ignorant of all this. You continual rants about your one interest, Ramsay function is frustrating and boring. So, when your comments are long and begin with dismissive comments and irrelevancies as most of them do, instead of clearly answering the question, I just can’t be bothered reading them.
If you want to be informative, write a short sharp, on topic reply that directly addresses my question without any other nonsense tha tis irrelevant to the question.
Or admit you don’t know the answer and it is all way outside your area of expertise. I now believe this is the case.
@ Peter Lang –
“You have stack of opportunity to answer”
I have answered your questions many times, you just haven’t liked the answers. Truth is independent on if you like the answers or not.
“You clearly are not capable of answering the question.”
This sounds like a good way to dismiss an answer you don’t like.
“Your dismissal about discount rates for policy analysis”
I dismiss discount rates by advocating the use of discount rates? Where is the logic in that?
“If you want to be informative, write a short sharp”
Sometimes not all answers can be contained within a short reply. It’s not my fault if you can’t handle that. Fine…
“Nordhaus is wrong, Tol is wrong, Noble prize winner Arrow is wrong, Weitzman is wrong, Ramsey is wrong. Only Peter Lang is right. We should all use a 10% discount rate because Peter Lang says so. It’s not like the discount rate would vary depending on what type of analysis it is or how risk is being treated.”
Is that what you want to hear?
-1=e^
That’s dishonest.
Prattling on about what you want to talk about and not answering the question I asked is not answering the question. You have never answered the question. If you were able to you would have – long ago.
@ Peter Lang-
Keep telling yourself that if you want. But you may want to read the comment you don’t want to read at some point, specifically the part about expected net present value.
-1=e^iπ,
When and if you actual make it clear from the start that your comment answers the question I’ve been asking and is not simply another rant about your interests, then I’ll read it – until the rant begins.
It is if it’s a choice between getting any sort of global policy implemented or none.
But these are very small taxes, incapable of driving any sort of rapid implementation of fossil-neutral energy. I think based on performance since Kyoto, you’ll have a much harder time with rates sufficient to nurture any sort of significant growth of fossil-neutral alternatives.
So if the conversion to fossil-neutral could be achieved without significant impact to energy prices, it wouldn’t have any “economic impacts”? Except, perhaps, to the coal industry.
Well, I’m not proposing implementing such a policy without a close look at the capabilities.
And you keep denying that claim over and over but that doesn’t make it false.
Obviously, the claim that such a conversion could be accomplished within 30 years without significant impact to fuel/energy prices needs to be studied before being accepted.
Careful projections of the economic evolution of fossil-neutral industries under such a scheme would certainly need to be done before adopting it. The purpose of my proposals here is to stimulate more detailed studies, as opposed to going with carbon taxes based on fantasy “social costs of carbon” or other calculations of “negative externalities” based on dodgy science and unwarranted arbitrary assumptions.
Actually, the history of free-market capitalism shows that such “clear trade-offs” exist primarily in the minds of “economists”, while human ingenuity can usually find ways around them if “economists” aren’t allowed to freeze their simplistic theories into law.
$17/metric ton is hardly an incentive. It means that customers for fossil-neutral fuels or energy would be willing to pay a few percent more than for the fossil version.
With the percentage scheme, they would be willing to pay 10-100 times more, when the increased cost of energy would be the same.
That’s a totally impossible assumption. If they start out having the same effect on energy prices, the effect on fossil-neutral production will differ by an order of magnitude or so. Unless there is a commitment up front to spend all the collected taxes on some sort of “level playing field” subsidy, but even then investors would certainly be realistically skeptical of whether that commitment would be kept.
Actually, that’s not true. Even if the percentage system was entirely open, the cost added to coal would still be roughly twice that of methane, with oil somewhere between. That’s a natural result of the ratio of carbon and hydrogen bonds being oxidized when burning for energy.
Not when the tax/subsidy scheme is set up to duplicate the effects of the percentage scheme. You’re doing your bait-and-switch again.
That’s just your opinion. Trade-offs certainly exist, but not necessarily the ones you believe in. And your idea of “optimal outcome for society” is based on nothing but “your subjective feelings.”
So you want to base it on your subjective feelings? Along with knee-jerk applications of formulas learned in school that you don’t seem to understand?
Yes it is.
Not hard at all. Given that the potential price for fossil-neutral products would be an order of magnitude or more higher, for any specific level of impact on fuel/energy prices.
Of course. I discussed that above. But there’s a very big difference between a bureaucracy set up to administer market issues among technological competitors, and one set up to administer the flow of money. Much more chance for interference and corruption in the latter.
“But these are very small taxes”
They are ‘small’ because they were chosen to balance economic costs of mitigation with benefits of mitigation. You could have much higher levels of taxation (as Sweden does), it just wouldn’t make any sense.
But you want to live in a fantasy land where somehow a percentage quota system avoids costs of mitigation.
“So if the conversion to fossil-neutral could be achieved without significant impact to energy prices, it wouldn’t have any “economic impacts”?”
Yes, and if a magic leprechaun appeared and gave me a pot of gold, I’d be rich. Unfortunately, I live in reality.
“Obviously, the claim that such a conversion could be accomplished within 30 years without significant impact to fuel/energy prices needs to be studied before being accepted.”
Of course it does. But even if you could go renewable in 30 years without significant impacts to energy prices, you could do that with a tax/subsidy system more efficiently than a percentage quota system.
“Actually, the history of free-market capitalism shows that such “clear trade-offs” exist primarily in the minds of “economists””
I’ll keep that next time I go the to grocery store with 20 dollars and want to buy both 20 dollars of apples and 20 dollars of bananas at the same time. Apparently there are no tradeoffs. It’s not like I would get arrested for stealing or anything.
You can’t have your cake and eat it too.
“With the percentage scheme, they would be willing to pay 10-100 times more”
This doesn’t follow. But I get you want to pretend that there is this magic solution that avoids tradeoffs.
“Given that the potential price for fossil-neutral products would be an order of magnitude or more higher”
‘Given’ is the key word here. This premise is not a ‘given’.
“Much more chance for interference and corruption in the latter.”
That’s not the mainstream economic position for a reason.
No, I want a system where all the extra money paid for energy because of the fossil carbon problem goes to pay for “fossil-neutral” production, in ways that maximize the growth of “fossil-neutral” technology.
You want to live in a “fantasy land” where all the extra money the government takes in taxes, and spends on other things (e.g. bureaucratic salaries) or “subsidies” to crony “capitalists” doesn’t make any difference.
No, you live in a simplistic “fantasy land” where the simplistic formulas you learned in school are somehow worth more than an astrologer’s horoscopic charts.
No you couldn’t. But you keep flipping around from one scenario to another evading that fact.
Of course not. But I can have half my cake, and eat the other half…
…or I can have 1/100 of my cake, eat another 1/100 of it, while the government takes the other 98% in taxes. Useless taxes that go for boondoggles, worthless pseudo-scientific research, and “subsidies” to nephews of powerful politicians and bureaucrats.
Of course it follows. You sound like the “economists” who dismiss Adam Smith’s “invisible hand” as a “magic solution” to resource allocation problems.
Well, I was using the output (the one you said doesn’t follow) as input to this step of logic.
And the fact that it’s “not the mainstream economic position” is why “mainstream economists” shouldn’t be allowed input to policy. Any more than astrologers.
“No, I want a system where all the extra money paid for energy because of the fossil carbon problem goes to pay for “fossil-neutral” production”
Which you can do with a tax-subsidy system.
“You want to live in a “fantasy land” where all the extra money the government takes in taxes”
You realize you could use revenue generated from a CO2 emission tax to lower taxes elsewhere, right?
“simplistic formulas you learned in school are somehow worth more than an astrologer’s horoscopic charts.”
Yes, falsifiable models supported by empirical data are worth more than astrology.
“Of course not. But I can have half my cake, and eat the other half…”
Yes, this is called a trade off.
“Of course it follows.”
Saying ‘of course’ doesn’t make it follow.
@-1=e^iπ…
Paying to Pollute Gains Ground as Nations Seek Climate Solution
[…]
[…]
[…]
Well, as far as I can tell, neither of us will get what we’re after. The trading schemes will be overwhelmed with funny “money” issued by a host of governments, and nothing will ever happen. At least the cost of energy won’t go up significantly.
Unless somebody’s been listening to me, but I find that highly unlikely. Hope you like it.
“are gaining traction as a way to reduce emissions without dragging down the economy.”
Because there are a lot of idiots that want to live in a fantasy land where there are no tradeoffs. If the price increases due to mitigation are more hidden and less obvious than a tax, then people can pretend they don’t exist.
Unfortunately, there are a lot of such people. Take the current Canadian election election. With respect to the impact of fossil fuel mitigation on economic output, the position of Steven Harper is that these policies only reduce economic output while not reducing emissions, and the position of Thomas Mulcair is that these policies only reduce emissions without reducing economic output. Idiot politicians deny the existence of trade-offs from the conservatives to the socialist NDP.
“the Canadian provinces of Ontario and Quebec are among governments coming out in favor of these carbon markets.”
And these governments are getting flak for it from economists, to Macleans magazine, to environmentalists like David Suzuki. The tax systems of British Columbia and Alberta are far superior.
Also, using Ontario of an example of an economy where mitigation doesn’t increase energy prices or drag down is a joke. In Ontario, energy prices have doubled over the past decade under our liberal government. Energy prices are now 2-3 times more expensive than most of the rest of North America. Manufacturing companies are leaving Ontario because energy prices are to high, even as the Canadian dollar has lowered significantly over the past year. Ontario, once the economic engine of Canada, is not considered a ‘have not province’ under Canada’s equalization system.
“Along with the growing number of state and and national governments backing carbon markets, China”
It’s a good way to pretend to do something while not actually doing anything.
“one that encourages companies to find the cheapest way to cut emissions.”
A tax system also does this, but is cheaper to implement. It makes no sense to go for a cap and trade system over a taxation system.
“but don’t offer the same incentive to innovate, according to proponents.”
According to proponents of homeopathy, homeopathy can cure all sorts of ailments.
“Glen Murray, Ontario’s environment minister”
Somehow I don’t think quoting idiots from my provincial government is going to be very convincing.
It appears that my last comment requires moderation. Is that because I used the word idiot? Am I violating the Blog Rules? If so, I apologize and will avoid such language in the future.
You misspelled it. It’s spelled “idi@t”
AK, your “Gas or liquid hydrocarbons produced from solar-powered biocatalysts” link looks pretty hopeful, at least until Rud Istvan puts on his green eyeshade and shoots some holes in it.
http://www.biofuelsdigest.com/bdigest/2015/03/23/joule-says-will-go-commercial-in-2017-solar-fuels-on-the-way/
Actually, I suspect that systems based on solar PV and electrolytic hydrogen, combined with extraction of ambient CO2 from sea-water, will turn out to be far cheaper. But every technology should have the chance.
Well, Dr. Curry, I know you’re a climate scientist and all, but you really can’t hold candle to Uncle Al. Are his lips moving? … you know the rest. From the article:
…
Miami (AFP) – Nobel Peace Prize winner Al Gore is busily training an army of organizers to go out and spread his environmental gospel ahead of key climate talks in Paris later this year.
The modern world is collapsing around us and we must change our ways, according to the former US vice president, who has led the training of more than 5,000 people in the last 18 months.
At each session, he delivers an updated version of his Academy Award-winning documentary “An Inconvenient Truth,” using the latest news footage and startling videos to show how the very fossil fuels that have powered so much innovation are leading to the demise of society.
Air so hot it melts airport runways, floodwaters that crumble roads and bridges, methane that blows terrifying holes in Siberia and air pollution so thick it has shortened life expectancy in China by several years featured prominently during his three-hour presentation in Miami this week.
“The world that we have built was built for different conditions,” Gore told about 1,000 people who came from 80 countries to attend the three-day climate training session.
…
http://news.yahoo.com/al-gore-spreads-environmental-gospel-climate-talks-073001537.html
I think climate scientists must speak out against this BS. Or maybe we can RICO gore and the 5,000.
Let’s RICO them! We have a new verb!
Other than the pejorative use of “gospel” to imply the tired old “science is just dogma” meme, I see nothing objectionable in the story. If the denial industry can spend ~$1 billion/yr misinforming, surely we can live with some volunteers trying to inform.
Problem is, the volunteers are being fed BS. They are BS spreaders, not informers. Gore is like some of the hell fire and damnation preachers that get caught with a prostitute.
Jim2 – So you assert. So does every denier ever. They always claim that the science is BS. That the anti-science denial industry propaganda that’s been thoroughly debunked and often is logically fallacious is correct. Bare assertions most of the time (as you’ve done). Repetition of PRATT’s all the time.
Kylie,
The deniers are those who deny the relevant facts, not those who critiques the claims by CAGW advocates who continually cherry pick irrelevant factoids from science and repeat them endlessly.
That’s a complete inversion of reality, of course. It’s a standard tactic. I support the totality of the science. Deniers cherry pick. “CAGW advocates” = the science. Those who “critique” them don’t do science.
For an example, see the earlier denier attempt to back up the old denial industry canard about the CO2 GHE being near saturation. A single foreign language pdf with no indication that it was ever published in a journal at all – forget peer-review.
Try again?
Kylie,
You have nothing to offer so you keep calling those who don’t accept your beliefs “deniers. You admitted you simply accept what the interpretation of “the science” that suits your beliefs. You are acting like a cult follower. I’d suggest you stop trolling or go somewhere else.
It’s not a reversion of reality. It is the reality. It’s an inversion of the beliefs of the CAGW alarmist cult you accept without question.
AGW is real, the catastrophe a perfect storm of greed, lust for power, and manipulation of fear and guilt. Cooling would be catastrophic; warming within the possibility of man to create is net beneficial.
A warmer world sustains more total life and more diversity of life. Paleontology has never shown the upper limit of benefit from warming and always shows the detriment of cooling.
================
j2, I suspect that Gore, in divinity school, never progressed past the lessons in ancient shamanism.
================
OMG – Kyle believes Gore is stating SCIENCE. I just read this little gem Kyle. Now I know you don’t know the science. Prattle on, my person.
Do you have a specific accusation of Gore being anti-science or is this just the usual “Al Gore Attack”, meant to handwave away a century of science by acting as if it’s all just one person? Similar to the creationist attacks on Darwin.
He’s a propagandist, and you’ve been propagandized.
==============
“He’s a propagandist, and you’ve been propagandized.”
Kim is the master of content-free rhetoric. That technique worls on the LCD denier.
This paper looks at AR5 scenarios, and doesn’t show that beyond 2050, emissions drop more sharply to achieve the warming levels they state. Having said that, if it looks like the INDCs achieve the 2 C limit for optimistic climate sensitivities like 2.5 C, why not support these policies whichever side you are on. It is neither hopeless to try nor ineffective in outcome.
JimD,
Don’t gloss it over. Which “these policies”?
Find some common ground. Start with land use.
Land use policies should be set by the governments of the land involved. It is not a done globally.
Geoff,
Yes, but!
There are many, many ways we can address environmental issues (and as a side benefit…. global warming) by improved land use and sharing of knowledge. Polices do not have to be regressive (nor punative). Some 20-30% of the known ‘anthropogenic’ issues we face deal in ag, run-off of waste, erosion (you know the score likely better than I).
I’m not necessarily suggesting some ‘new world order’ of how ‘other’ countries are required to put their land to use (or non use), but instead am suggesting that by improved land practice there is much to be gained. Those countries which profess such major concerns can provide resources which enable those countries who currently lack the capability to address (some) of those concerns. In the process, for example, the U.S. can benefit food issues of developing countries with mostly education and not (that much) cost.
Start there, enjoy the benefits, learn more about the science, and proceed based on that information. Reduce the acrimony and benefit those who need more basic assistance. My humble 2 cents.
Should sensitivities prove out to be at the lower end of the scale I can see multiple alternative benefits to such an approach than just (and in addition to) CO2.
The policy that achieves this is the RCP4.5 type that reduces emissions about 80% by 2100. Stopping deforestation would also be important.
Jim D,
But isn’t that based on a higher sensitivity?
“The requirement that the RCPs are based on existing literature (criterion 1) is related to the scientific requirement of traceability, and follows existing IPCC guidelines on this.” (Page 9).
http://download.springer.com/static/pdf/740/art%253A10.1007%252Fs10584-011-0148-z.pdf?originUrl=http%3A%2F%2Flink.springer.com%2Farticle%2F10.1007%2Fs10584-011-0148-z&token2=exp=1443677791~acl=%2Fstatic%2Fpdf%2F740%2Fart%25253A10.1007%25252Fs10584-011-0148-z.pdf%3ForiginUrl%3Dhttp%253A%252F%252Flink.springer.com%252Farticle%252F10.1007%252Fs10584-011-0148-z*~hmac=9c68939e7dba09c6a6577fb39afcf129eef19bff37c4a49c06f132221fdf7cec
“Finally, the RCP4.5 shows a clear turning point in global land use based on the assumption that carbon in natural vegetation will be valued as part of global climate policy. As a result of reforestation programs, the use of cropland and grassland decreases, following considerable yield increases and dietary changes”. (van Vuuren et.al. 2011)”
The above, assuming lower sensitivity, would not be considered ‘conservative’ but may indeed be an understatement.
The RCP scenarios are not dependent on sensitivity, only their effect. RCP4.5 is actually a little less severe than these ones leading to 530-580 ppm in WG3, but still unlikely to keep temperature rises below 2 C with a 3 C sensitivity, but it becomes more likely when you switch the sensitivity to 2.5 C. This all comes from AR5 WG3 Table SPM.1 that displays temperature ranges due to sensitivity uncertainty.
Jim D,
I understand that the scenarios are not sensitivity based, but the projections are which is why I suggested the conservative nature of the projections might be stated inaccurately. (And effectively, that’s what you’ve indicated).
The conservative projections give the policy a better chance of working. This would be good news, and it reduces the doubt that we can do anything if you stay optimistic about the sensitivity.
Jim D,
Or. This would be good news, and it reduces the doubt that we need to do as much if you stay optimistic about the sensitivity.
However, even these optimistic sensitivities require action along the lines of 80% reductions by 2100.
Danny,
There are numerous examples of a better outcome when separate countries apply their skills to problems loving. That is how we come to have rich and poor countries. Far better than trying to impose anything globally. Globally has less scope to try variations, one of which is a winner.
Personally,I have advised my Australian government to avoid pledges and global solutions. Many in our government agree. A fistfullin Canberra are not convinced and they have some power. Time will tell.
The case has not been made for any nation to take measures to reduce CO2 to halt global warming. It is little more than pushy advertising.
Geoff
Geoff, one of my letters to The Australian today:
Robert Gottliebsen sees promotion by Malcolm Turnbull and Greg Hunt of their environmental policies as an antidote to investors’ fear about Australia; I see them as a threat (“Ten reasons offshore investors are staying away,” 1/10). Australia is already committed to costly and economically damaging greenhouse-gas reduction policies which have little or no impact on climate, and any change by Turnbull and Hunt is only likely to increase the damage.
Jim D,
What policies are your referring to?
What is the net cost benefit of those policies, to say 2050 and 2100? What’s the uncertainty on your estimate of the net cost benefit?
If you can’t provide widely accepted estimates the net-cost benefit of the policies you advocate, why should any informed, rational person support them?
Please avoid motivated reasoning and responses that do not directly answer these questions.
Cost-benefit says that mitigation and adaptation is better than adaptation alone in the long run. This is just from WG3’s mitigation costs and a social cost put around $40 per tonne. In the long run, the social cost far outweighs the mitigation cost, mainly because it just keeps increasing without mitigation. it’s an analogy I have used before of just continuing to bail out the boat versus also putting some effort into plugging the hole.
Jim D,
I suggest you are reading but not understanding what you are reading. The claims that the benefits of GHG emissions abatement exceed the cost are based on a whole host of assumptions that are highly favourable to the catastrophists’ argument. For example:
1. They project abatement costs and benefits out 300 years and sum them for the 300 years and claim a benefit by spending enormous amounts now with benefits to accrue in hundreds of years. This is ridiculous. Only the gullible would swallow that nonsense. If, instead, you use their highly favourable (to their case) assumptions but show the net cost and benefit each period (e.g. each 5 years to 2100, then the costs greatly exceed the benefits for all this century.
2. If you want to see some of the assumptions see here:
http://catallaxyfiles.com/2014/10/26/cross-post-peter-lang-why-carbon-pricing-will-not-succeed-part-i/
Other assumptions:
– unrealistically low discount rate
– ECS = 3.2
– RCP8.5
– unrealistically optimistic participation rates
– others
At $40 per tonne, the annualized social cost of carbon is about ten times the annualized cost of mitigation. This is just spreading both costs over time the same way in order to compare them. This makes mitigation a good investment for the future because you gain more in reduced costs than you pay for it. Neither is free, but one is clearly better as it limits long-term cost growths.
Jim D,
Jim D,
You haven’t a clue what you are talking about form many reasons. I’ve already explained what is wrong with the estimate of SCC. Didn’t you read it, or didn’t you understand? Why didn’t you deal with the points I made instead of repeating your baseless assertion?
See the red line on this chart. It shows the net benefit-cost per 5 years for optimal carbon price with all the default DICE inputs but with 1/2 the “Copenhagen participation” rate:
http://catallaxyfiles.com/files/2014/10/Lang-3.jpg
Explanation here:
http://catallaxyfiles.com/2014/10/27/cross-post-peter-lang-why-the-world-will-not-agree-to-pricing-carbon-ii/
and here:
http://catallaxyfiles.com/2014/10/26/cross-post-peter-lang-why-carbon-pricing-will-not-succeed-part-i/
You are not using the AR5 WG3 successful mitigation scenario that costs only 0.06% GDP when annualized, while $40 per tonne gives a cost with no mitigation around 0.5% GDP when annualized, which is a significant drag on the economy.
Jim D,
Clearly I was not referring to AR5. Did you read the links? If you had, you would have realised that. I am using DICE 2013R which is the most widely used and cited IAM for estimating SCC, optimal CO2 price, abatement cost and AGW damages for the commonly advocated policies. Dice is one of the three used and recommended by the EPA. It is one of the main ones used by IPCC for WG3 until recently (presumably because IPCC wanted even more alarmist analyses since the main IAMs were not giving sufficiently alarmist numbers and did not make the case to support mitigation policies).
If your single source to support your CAGW beliefs is IPCC, then you really are not keeping an open mind, Jim D. Nor are you doing objective research, Jim D.
You are not using a successful mitigation strategy for the scenario. Use AR5’s 2 C strategy because that gives the most benefit. As far as I could tell you used half Copenhagen which isn’t a successful mitigation strategy by far. What CO2 level or reduction does that even have at 2100? I am not interested in that scenario.
Jim D,
You have no basis for claiming 2C is a strategy, let alone claim it is a successful strategy. Clearly you don’t even know what strategy means. You trust ipcc. I don’t.
Jim D,
That’s a statement of your belief, not fact. It’s a baseless assertion. Surely you know better. by know.
Well you couldn’t tell because yuou don’t understand what it is is. Its the assumed particpation rate in global mitigation policies. It unattainable, completely unrealistic. It’s purely an academic exercise – as are all the IPCC excercices.
You clearly don’t understand what strategy means. 2C target is not a strategy. In fact it is nothing except an ideologically based target.
Jim D, you have no credibility. You are not objective. You simply quote the mantra from the CAGW alarmist’s cult.
I quote AR5 and you choose not to accept it even when they use models of the type you keep referring to.
Jim D,
I quoted DICE-2013R and you you responded to my comment but didn’t deal with my comment. You’ve applied the 4th and 6th “Signs of Intellectual Dishonesty” http://judithcurry.com/2013/04/20/10-signs-of-intellectual-honesty/
I could also say you are ignoring AR5 and the studies that put the social cost of carbon at an average of $40 per tonne, because you haven’t commented on them, even though that is what I led with.
Jim D,
SCC of $40/tonne is meaningless without getting into a full debate about the underlying assumptions and the method.
You are diverting. I raised the comment and used DICE and posted links and a chart. Please come back to my comment. Have you found any significant errors in the analysis on which the chart is from, and particularly the red curve. If so please state them specifically.
Jim D,
I replied to your comment and asked:
You didn’t answer.
I am not making the estimates. I am using the numbers that are out there. You know the two numbers I used, so you can do the math yourself.
Jim D,
No you’re not making the estimates. But you don’t understand the estimates and don’tr unerstand the assumptions used. You are just quoting AR5 because you trust it. You’re not capable of doing as reality check on it and thinking for yourself – like most CAGW alarmists. If were capable you would be willing to comment constructively on the plot I provided of the Nordhaus DICE estimates where I plotted per period instead of summing out to 2300.
Unless your plot has compared an unmitigated 4 C rise continuing after 2100 with a stabilized 2 C rise, it is not relevant to the point I am making.
Jim D,
Your point is not relevant. No one sets out to determine SCC or optimal carbon price as you suggest. As I said, you haven’t even a basic understanding of what the IAMs do.
And clearly you haven’t even read the post to understand the basis of the chart I am referring to – which shows that the costs of abatement would exceed the benefits for all this century, and that’s even with highly favourable assumptions for the CAGW alarmists’ case. That is the key point which you are unable to refute.
It comes down to two costs. The difference between the damage at 4 C and 2 C, and the cost of mitigating to get to 2 C instead of 4 C. From a $40 per tonne SCC and AR5 mitigation estimate of 0.06% GDP per year, the former is nearly ten times the latter. If you have a different pair of numbers, you would need to state them.
Jim D,
This is just babble and FUD. Sorry. The fact is as I said, the abatement cost greatly exceed the benefits for all this century even with all key assumptions favouring the CAGW alarmists arguments. I summarised the main assumptiosn in previous posts. You have not addressed any of that. If you say believe there is an error in DICE-2013R results (nbased on the default assumptions) or in my chart whicjh plots them by persiod instead of cumulative, you need to state the significant errors and explain them clearly. So far no one has found an error.
It comes down to numbers. I gave you two to provide, but it looks like a fail. I’ll give you another, 3000-4000 GtCO2 is the difference in emissions for the unmitigated 4 C and the mitigated 2 C scenarios.
Jim D,”It is you that fail. You have not addressed the important point. You keep dodging it. The important point is that abatement cost would greatly exceed benefits for all this century, even using highly favourable inputs to the CAGW case. You have not refuted that. Clearly you are practicing avoidance and FUD. All signs of intellectual dishonesty.
I said the abatement cost is 0.06% GDP (AR5 WG3) when annualized. This works out to ten times less than the social cost difference from that abatement. The benefit is the difference in social costs. The choice is more damage versus less damage, the “benefit” being the difference.
Jim D,
You keep repeating the same nonsense that you don’t understand. You haven’t taken the trouble to unsderstand the assumptions that underly the figures you quote. I’ve explained and you’ve ignored it. So not point in continually repeating that.
Please address my question. Do you understand and accept that over the remainder of this century and beyoned (not summing out 100’s of years with dodgy assumptions), the abatement cost will exceed the benefits for all this century?
Since you have been avoiding answering the the question I’ve been asking I’ll phrase it another way.
Do you know of a significant error in the chart I posted in reply to one of your comments above? The chart is explained in the links I provided. All source data is linked. The data is from Nordhaus DICE-2013R but replotted as per period instead of cumulative. Plus I added the 1/2 Copenhagen participation rate scenario.
Are you prepared to answer that question, or will you keep dodging and avoiding it?
You have to state why you prefer a 4 C and rising scenario for 2100 to a 2 C and stabilized one. It should not take putting monetary value on it to make that decision. I don’t know how quickly the cost rises beyond 2 C, and nor do you, but the expense of non-action gets worse with time, and the SCC tells you how much it asymptotes to. The factor of ten means it is not even close to being a sane option over mitigation. It means that you can cost it at $4 per tonne and only then might it make sense not to do mitigation. It’s just comparing the numbers and using some common sense.
Jim D,
What on earth are you babbling on about?. I simply don’t understand what you are talking about and you clearly don’t either. Why don’t you simply answer the very clear question I asked you? You are you dodging and weaving instead of answering it?
Yes, the cost abated will be more than the cost spent on abating it. That is what I have been saying all along, and showing you how. It is ten times less, so even if you want to spread that over a longer time you don’t gain anything in the shorter term.
Jim D,
I still don’t know what you are talking about.
What do you meant. There is no cost abated.
The abatement cost is higher than the damages avoided for all this century. You have to make unrealistic assumptions out 300 years to support your argument.
There is no point continually blabbing on ablouit your assertions. You clearly haven’t a clue whazt you are talking about. I suggest you start by reading
Nordhaus “A Question of Balance”
Tol “Climate Economics”
Nordhaus “Dice 2013-r Unser Manual”
For a start.
The discount rate means that later costs are less important than earlier costs unless the damage is growing exponentially and faster than the discount rate. Your continual reference to later periods is a red herring.
Jim D,
You continue to dodge, weave, avoid the point and repeat what’s already already refuted.
I know what the discount rate means. However motherhood statements like this are meaningless. There is high cost of mitigation in the first century and virtually no benefit. In fat it could be disbenefit. The only way you can make the case is to sum net benefits – costs out 300 years and also make assumptions about the key inputs to the analysis for 300 years (including using unrealistically low discount rates). It ridiculous.
Even with assumptions that are highly favourtable to the case, the abatement costs exceed the benefits for all this century. If you use more realistic assumptions the abatement costs exceed the benefits by an order of magnitude this century.
It’s time for you to address this point, not try to avoid it any longer.
No it’s not!. If you don’t sum the projected costs and benefits out 300 years you cannot get benefits to exceed costs. Even summing out 300 years you have to use assumptions that are strongly favourable to the CAGW case (see previous comments). If you think I am wrong about this why haven’t you been prepared to show the error in my chart which is a per period plot of the DICE-2013 R discounted net benefit-cost to 2100. Or yoiu could show your version of the per period discounted benefits-costs to 2100. Alkso please state the key assumptions (like I did in an earlier comment) and state where they differ from the Nordhaus DiCE assumptions I listed.
The discount weights the cost to that of the first century, and therefore $40 per tonne is in large part the cost earlier in the period, just by the way discounting discounts the future more. On the other hand, the annualized mitigation at WG3’s 0.06% GDP is equivalent to about $48b per year, which is $1 per tonne when compared to emissions of 40 GtCO2 per year.
Jim D,
Derrrr! Why do you keep repeating motherhood statements. You’ve said that a dozen times so far. Of course I understand that. But you are ignoring the issue that with high discount rates the distant future is less relevant than with low discount rates where as with low discount the distant future is more relevant than with high discount rates. That’s why low discount rates must be assumed by CAGW alarmists to make the future important more significant. If you don’t sum out to 300 years and use low discount rates you cannot make the case that benefits exceed the abatement costs. Do you understand it yet?
You need to show a plot of the discounted net benefits per 5 years to 2100. If you do that it may just start to dawn on you what I’ve been saying – i.e. the abatement costs exceed the benefits for all this century.
What discount rate do you need to compete with $1 per tonne as a mitigation cost?
Jim D,
Please don’t divert. Please answer my question before asking me any more. To be clear:
Please provide a chart of the discounted net benefit-cost of optimal carbon price per 5 years for the period up to 2100
Or, if you can’t.do that, can you explain why this chart is wrong:
http://catallaxyfiles.com/files/2014/10/Lang-3.jpg
Explained here:
http://catallaxyfiles.com/2014/10/26/cross-post-peter-lang-why-carbon-pricing-will-not-succeed-part-i/
http://catallaxyfiles.com/2014/10/27/cross-post-peter-lang-why-the-world-will-not-agree-to-pricing-carbon-ii/
You are the one that is diverting. I am not using the SCC as a price to pay, but as a measure of the damage per tonne. The price to compare that with is the cost of mitigation from AR5 as I have been trying to tell you throughout this thread. This price is an order of magnitude less than the damage it averts.
Jim D,
You have not addressed the point I’ve been making all along. You continually avoid it and keep diverting to what you want to talk about. You are diverting to avoid dealing with what is relevant – i.e the net benefit up to 2100, not 2300.
so am I (although I don’t agree with the $40/tonne, but that’s a separate issue).
That’s where you are wrong. That’s what you need to justify. As I’ve been trying to explain to you throughout this thread, the optimal carbon price takes all the limit abatement costs and damages avoided into account and finds the least cost way to minimise damages (based on the input assumptions). This shows that abatement cost exceeds benefits thought this century. That’s because you don’t get much if any benefits this century but abatement costs a fortune.
Jim D, all the major IAM’s (which are used to estimate SCC, abatement cost, etc) show roughly the same figures. But you have to accumulate damages out to 230o to attempt make the case that benefits exceed the accumulated abatement cost.
The costs are in the near term to achieve projected benefits centuries from now.
Can I urge you to read Nordhaus “A Question of Balance”. It will help you to get a basic understanding of all this, because you don’t have much of an understanding at the moment.
You can read it online here:
http://www.econ.yale.edu/~nordhaus/homepage/Balance_2nd_proofs.pdf
Jim D,
Regarding which of us is diverting
You began this thread with:
I replied here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734132
I responded by making the point that (perhaps not clearly) that abatement policies are estimated to cost more than the benefits for all this century. Therefore, we should not embark on such policies. They are bad policies. They would do far more harm than good. Contrary to your last sentence the policies being advocated would be “ineffective in outcome”.
I explained why, e,g, here:
http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734314
and here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734515
You have not responded to that point. That is the key point you keep avoiding.
Can you please “Show a chart of the discounted net-benefit (i.e. benefit-cost) per 5-years to 2100.”
If you don’t it would seem you can’t or don’t want to – suggesting you are avoiding answering this question.
I am not continuing this circular saga because you insist on misunderstanding that I was not talking about carbon taxes, which everything you referred to was about, and it looks like you automatically associate SCC with a carbon tax. I can’t help you with that.
Jim D,
I expected that. You had a choice: admit you were wrong from the get go or try to wiggle out of it. You chose the latter.
You are dead wrong. It is you that insists on misunderstanding. It is you that is being intractably obstinate. What’s more I suspect you know you are wrong but display your intellectual dishonesty by being not prepared to admit when wrong.
I showed you what your first comment said and why it was wrong. I pointed you to the links to my replies. They clearly showed you why you are wrong.
I’ve shown you repeatedly that the the cost of abatement exceeds the benefits for all this century. You’ve never addressed that key issue.
I’ve showed you that you have to sum to around 2300 (and make assumptions that are not justifiable) to get an SCC like you are quoting to and to make the benefits exceed the abatement cost. If you don’t sum for hundreds of years there are no or negligible damages incurred so SCC is near $0. You never showed what the estimate of SCC is for just this century for median probability climate change – not that that is relevant for the point we were discussing.
Any reasonable, rational person recognises summing projections of policies and their consequences out 300 years is ridiculous.
I explained that high costs are incurred this century but negligible benefits are received this century. If you’d bothered to try to understand, or had not been so obstinate and intellectually dishonest you would have admitted you were wrong.
If you’d bothered to read Nordhaus “A Question of Balance” you’d have more chance of understanding all this.
I demonstrated clearly your first comment was wrong and you have not been prepared to acknowledge that. You are clearly intellectually dishonest. You displayed intellectual dishonesty repeatedly with Max Anacker too when he patiently and repeatedly explained to you that you were incorrect but you stubbornly refused to acknowledge you were wrong and didn’t know what you were talking about.
Not good Jim D.
You did not address the SCC (not carbon tax) versus mitigation costs, and therefore missed the point of what I was saying. I won’t try any further except to reiterate that mitigation is an order of magnitude less than the SCC-derived difference between mitigated and unmitigated climates. It’s two published numbers you choose not to compare.
You are diverting. You are changing the subject. Your initial comment I responded to was not about SCC. You began this thread with:
Jim D,
As an aside, because this is not what your point I addressed was about, but it’s what you want to keep diverting to. this is a quote from Nordhaus “A Question of Balance”, p11:
Jim D,
Please stop trying to divert to arguing about SCC. It’s not what the discussion was about (I’ll be happy to discuss SCC with you after we have reached closure on your initial point which I responded to). You began this thread with:
I replied here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734132
I explained that abatement policies are estimated to cost more than the benefits (i.e. SCC) for all this century. Therefore, we should not embark on such policies. They are bad policies. They would do far more harm than good. Contrary to your last sentence the policies being advocated would be “ineffective in outcome”.
I explained why, e,g, here:
http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734314
and here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734515
I also explained that you have to sum out around 300 years to get benefits to exceed abatement costs. [As an aside, Similar applies to get an SCC like you quoted. If you sum for just this century (or using TCR instead of ECS) the SCC would be negligible. But lets not get diverted to arguing about that until we’ve reached closure on your initial point and my response to it.]
I asked you to “Show a chart of the discounted net-benefit (i.e. benefit-cost) per 5-years to 2100.” You have not done so. If you do, you will understand why your point that started this thread is wrong.
Jim D,
Please stop trying to divert to arguing about SCC. It’s not what the discussion was about (I am happy to discuss SCC with you after we have reached closure on your initial point that I responded to). You began this thread with:
I replied here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734132
I explained that abatement policies are estimated to cost more than the benefits for all this century. Therefore, we should not embark on such policies. They are bad policies. They would do far more harm than good. Contrary to your last sentence the policies being advocated would be “ineffective in outcome” and cost more than the benefit.
I explained why, e,g, here:
http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734314
and here: http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734515
I also explained that you have to sum out around 300 years to get benefits to exceed abatement costs. [As an aside, this also applies to get an SCC like you quoted. If you sum over only this century (or using TCR instead of ECS) the SCC would be negligible. But let’s not get diverted to arguing about SCC until we’ve reached closure on your initial point and my response to it.]
I asked you to “Show a chart of the discounted net-benefit (i.e. benefit-cost) per 5-years to 2100.” If you had, you may now understand why you your initial comment was incorrect.
I repeat, you initial point and this discussion is not about SCC. It’s about net benefits (i.e. benefits minus abatement costs), because that’s what you initial point was about: i.e. “why not support these policies whichever side you are on.
I explained to you why discount rates make the contribution of the later parts of your 300 years small compared to the earlier parts. I explained to you that I define abatement costs as mitigation costs (from Table SPM.2), which is not what you were doing at all when you tried to answer. I explained that I am not talking about having a carbon tax, which is only an economic tactic to distribute costs over time to be more manageable rather than saving anything. What else do I have to explain? It is just mitigation cost versus social cost averted that make these policies cost effective.
Jim D,
No you didn’t explain any such thing. You made misleading, disingenuous assertion. I refuted it and explained what was wrong with your assertion. And I linked the chart which shows the facts; and the attached links explain it. I explained why you are wrong. And provided links to Nordhaus DICE 2013R which shows all the analyses and numbers. You could download it and learn. You clearly haven’t attempted to.
The statement is incorrect. Mitigation costs and abatement costs are the same thing. You keep making incorrect, baseless assertions and making no attempt to understand.
The chart I posted (with explanatory links) which directly addresses and refutes your original comment, is not a plot of carbon price or carbon tax. Got that yet? All you have to do is read the title on the chart to understand that! The chart is of the net benefits (i.e. benefits minus abatement cost or mitigation cost (same thing)) per 5 years to 2100. Got that yet? Do you understand yet? I’ve told you this repeatedly. Are you obstinately ignoring what you don’t want to try to understand?
You don’t understand the analysis at all. Try reading Nordhaus “A Question of Balance” instead of repeatedly displaying your ignorance.
First you need to gain an understanding of the issues. You can’t explain anything at the moment because you don’t understand the subject. Next you need acknowledge what you first comment said (it was wrong) and acknowledge your initial comment was not about SCC. It was why we should support mitigation policies and arguing (wrongly) they are cost effective. Then you’ve got to understand that SCC is not a measure of how much damage will be avoided by abatement this century. Then you need to recognize that mitigation policies will cost more than the benefits they deliver this century. Then you need to directly respond to my replies to your opening comment without getting distracted into talking about SCC. You need to either show the per period plot of the Nordhaus data to 2100 is wrong, or acknowledge you’ve been wrong all along.
The mitigation policies are not cost effective (unless you accumulate projected costs and benefits out to 2300 and use assumptions that support the CAGW alarmists case). The Nordhaus DICE analysis shows that the abatement cost exceed the benefits for all this century. You simply don’t understand what you are talking about. The mitigation cost does not avoid the SCC over this century. Nowhere near it. The benefits (i.e. the damage costs avoided) are less than the abatement cost. You really haven’t a clue what you are talking about.
Clearly you are intellectually dishonest. If not you’d be prepared to attempt to show what is wrong with the char of the Nordhaus DICE-2013R net benefits plotted per period for this century.
If you can’t show a significant flaw in the chart of the Nordhaus DICE 2013R net benefits plotted per period to 2100, you are clearly wrong with your original statement, which was:
Mitigation costs 0.06% GDP according to AR5 WG3 adding up to 5% GDP by 2100, by which time it is done. This does not put the world into debt and effectively saves us via the SCC where we save about 1.5 times GDP just by reducing emissions by 3000 GtCO2 at $40 per tonne. I am not expecting you to understand this, and I am expecting you to get angry when confronted with the numbers, but there it is.
Jim D,
OK, you say you don’t expect me to understand. Do you?
Strange, eh, that you say IPCC AR5 WG3 comes to an opposite conclusion to DICE 2013R and apparently to the other IAMs also (since they all give similar results)? Doesn’t that make you sceptical? Do you simply accept that without understanding the assumptions and what they’ve done?
Can you explain:
1. How IPCC AR5 WG3 estimated the benefits that amount to 1.5 times GDP and Mitigation costs of 0.06% GDP?
2. Why IPCC AR5 WG3 result is so different to the results from Nordhaus DICE 2013R (the most widely cited and accepted IAM)?
3. Why the US EPA uses DICE, FUND and PAGE instead of IPCC AR5 WG3 for estimating SCC? https://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf
I don’t expect you to understand nor to have questioned their assumptions. And I fully expect you will continue to avoid answering my question about whether or not there is an error in the chart using the DICE results plotted per period out to 2100.
P.S. Latest EPA estimate of SCC at 5% discount rate is $12/ton in 2015 to $29/ton in 2050. http://www3.epa.gov/climatechange/Downloads/EPAactivities/social-cost-carbon.pdf
AR5 gives 5% GDP as the cost of mitigation through 2100 in WG3 SPM. At $40 per tonne and 3000 GtCO2 of mitigation (these are two numbers I use as typical values), you get $120 trillion which is about 1.5 GDP saved at that cost of carbon. Annualized that is about 0.5% GDP, ten times the annualized mitigation cost of 0.06% GDP, as I have been saying all along. Your own links earlier refer to Nordhaus in the context of carbon pricing. He is assuming you pay the extra cost up front with the fossil fuels. They make no such assumption in the WG3 mitigation costs. You have to separate carbon pricing from mitigation. You can pay as you go which is what we do currently. Typical discount rates are 3%, not 5%, but even at $12 per tonne, mitigation pays off.
Jim D,
I asked you three specific questions. You have not answered them. I am asking you to answer them specifically, and explain the basis of the calculations and assumptions as I have done and provided in the links.
Yes, you have been saying that all along – repetitiously. But you haven’t once explained how it is calculated nor the assumptions. It is clear you don’t understand it. Because you do not accept when I tell you that you don’t understand what you are doing, I tried a different tack – I asked you to explain to me how the figures are calculated, the assumptions and inputs. I am hoping, by you attempting to understand the basis of the analyses you may begin to question and then understand why and what you are misunderstanding and misrepresenting.
This confirms what I’ve been saying all along. You don’t understand the subject. You don’t understand what the IAM’s do. You jumped on one part of what I said (where I listed what IAM’s do) and misunderstood it and misrepresented it. I could explain all this, when you are ready and after you have answered my questions I’ve been asking you since near the start, but you are not listening. You are stubbornly avoiding dealing with the relevant facts and with answering my quesitons.
Jim D, that statement is amazingly ignorant. How on Earth do you think they estimate the mitigation costs without assumptions? I can’t believe you really think that. I am truly amazed. It seems you are far more ignorant than I previously thought. Please provide the inputs to the calculation, the calculation method and the sources for the inputs (i.e. no assumptions)
Obviously I know that. But then you have to subtract one from the other to determine whether the policy is a net cost or a net benefit over a given period.
Irrelevant to this discussion.
Even 5% is too low (but discount rates are a separate discussion and highly controversial). Discount rates being advocated by CAGW alarmists for arguing their case are too low and not consistent with real world. Sir Nicholas Stern tried to use near 0%, he made an idiot of himself). US Government says government departments should use 3% and 7%. OECD has been using 5% and 10% for the past 30 years at least). But this is a separate discussion – leave until later.
Show your working, assumptions and references.
However, until you answer my three questions, you are just dodging admitting the bleeding obvious – as is your style.
Of course they don’t assume a carbon price in the AR5 mitigation costs. Mitigation is the cost of reducing emissions, nothing else. If you are factoring in a carbon price, you are talking about paying for damage too, which is not what mitigation is. To test a mitigation cost, you have to compare two scenarios, a mitigated (at 2C) and an unmitigated one. The differences between them are the relative damage minus the cost of mitigation. I am comparing these two specific scenarios, and I have not seen you do that in any way. It is completely talking past each other, and hardly worthwhile.
Jim,
Forget ythe carbo price. I’ve already told you, you misunderstood and misrepresented what I said. Are you ignoring all the responses I’ve written to you or are you unable to comprehend or motivated reasoning prevents you admitting you are so clearly wrong? Just forget the carbon pricing and answer my specific questions instead of dodging and weaving.
Jim D,
Let’s tackle one item at a time. Please explain in your own words, how the $40/ton SCC is calculated (including over what period the damages were summed to get that figure).
For that, you can take this as a recent reference. It uses multiple updated models including DICE.
https://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf
Jim D,
DICE 2013R is the latest version. That’s what I am using. However, no matter which model you use you still get the same conclusion; i.e abatement policies cost more than the benefit throughout this century so they should not be supported.
[Repost in correct place in this long thread, and with corrected format]
Jim D,
YOU HAVE CONTINUALLY FAILED TO UNDERSTAND WHAT YOU ARE DOING WRONG. I’VE TRIED TO MAKE THIS COMMENT SIMPLE ENOUGH FOR MOST PEOPLE TO UNDERSTAND
Did you read the quote I gave you from EPA Fact Sheet, 2015 July, on the Social Cost of Carbon? http://www3.epa.gov/climatechange/Downloads/EPAactivities/social-cost-carbon.pdf . Excerpt:
[my emphasis]
To be clear, the $40/ton SCC you are using is the estimated cumulative climate damages to 2300. Therefore, your calculation of $120 trillion climate damages avoided by abatement to 2100 (instead of 2300) is incorrect. Anyone with common sense and an ability to do reality checks would recognize that.
Furthermore, the projections of abatement costs and benefits (avoided climate damages) are based on many, many assumptions; the key assumptions used by the IAM models may overestimate the SCC by an order of magnitude (they are explained in earlier comments and links on this thread).
It seems appropriate to say what you said to me earlier back to you:
Peter, I suggest you read this highly instructive piece.
http://libertygibbert.com/2010/08/09/dobson-dykes-and-diverse-disputes/
catweazle666,
Thank you. I wonder if Jim D will read it and get the message or continue to behave like FORM and the other CAGW Cultists?
Youm probably should have addressed your comment to Jim D too, and also given the meaningful title:
The Fallacy of Debating “Post-Modern” Science With Cultists
0.5% is “a significant drag on the economy”? Keep stalling proper mitigation and see what % of GDP that’s going to be.
Yes, that is annualized, but the real burden increases with time unless the social costs are considered with carbon prices to even out the costs over time.
@Peter Lang
Your rational assessment should be the starting point for any discussion of potential national/international agreements.
Hi Peter Lang.
I appreciate when you pointed me the the DICE model by Nordhaus a while ago, because it’s an awesome IAM.
Anyway, I think I disagree with the following statement:
“unrealistically low discount rate”
Shouldn’t the choice of the discount rate satisfy Ramsey’s equation? In which case, an elasticity of marginal utility of consumption of 1.45 and a social rate of time preference of 1.5% is consistent with recent real interest rates and levels of real GDP growth per capita in the USA, Europe and elsewhere.
Maybe the choice of marginal utility of consumption is too high, which would indicate that the social rate of time preference should be higher. But if the desirable goal is to maximize the social welfare of the people, then you should use the social rate of time preference, which is obtainable from Ramsey’s equation.
-1=e^in
That’s an ideological argument. It’s suggesting environmentalists, NGOs, advocates, politicians, bureaucrats should set the discount rates to use in the analyses rather than the long term actual discount rates that have applied. I don;t agree with this.
Secondly, you say
“consistent with recent real interest rates and levels of real GDP growth per capita in the USA”
DICE uses average discount rate for the world which is much higher than for USA and for rich countries. Developing countries have much higher discount rates.
Lastly, take a look at the assumed rate of decline of interest rates in the future. This is ridiculous and not consistent with past experience.
http://www.rff.org/research/publications/how-should-benefits-and-costs-be-discounted-intergenerational-context-0
Don’t you just love the sort of reasoning that folks like Jim D (and the EPA) use to make their argument work when actual dollar numbers are counted?
Their point is justified only when they can insert a completely arbitrary and imaginary number. In Jim’s case the “social cost of carbon”. In the EPA’s, a 300 year payback period to determine net present value.
@ Peter Lang –
“That’s an ideological argument.”
It wasn’t so much an ideological argument as an if statement.
“It’s suggesting environmentalists, NGOs, advocates, politicians, bureaucrats should set the discount rates”
How? I was suggesting that the appropriate discount rate can be obtained from empirical data.
“to use in the analyses rather than the long term actual discount rates that have applied.”
Which ‘discount rates’ are you referring to here? Could you please clarify? Are you referring to the historical discount rates that have been used for cost benefit analysis, or observed real interest rates or what?
“DICE uses average discount rate for the world which is much higher than for USA and for rich countries. Developing countries have much higher discount rates.”
1. Am I wrong in that a discount rate of 1.5% was used in the DICE model?
http://www.econ.yale.edu/~nordhaus/homepage/documents/DICE_Manual_103113r2.pdf
For the USA, a social rate of time preference of 1.5% and an average real GDP per capita growth rate of 2% suggests, and an elasticity of marginal utility of consumption of 1.45 suggests a real interest rate of 4.4%, which isn’t that far off the long run average for what is observed. Obviously interest rates are lower now, but growth has also been lower.
2. To clarify, are you referring to the social rate of time preference or to interest rates here? If the social rate of time preference is related to life expectancy, then it should be expected that the social rate of time preference is lower in developed countries. In addition, real GDP growth rate and population growth rate are higher in developed countries, which cause expected real interest rates to be higher under the Ramsey equation with population growth taken into account.
r = p + εg + (ε-1)n, where r is the real interest rate, p is the rate of social time preference, ε is the elasticity of marginal utility of consumption, g is the real GDP growth rate per capita and n is the population growth rate.
“Lastly, take a look at the assumed rate of decline of interest rates in the future. This is ridiculous and not consistent with past experience.
http://www.rff.org/research/publications/how-should-benefits-and-costs-be-discounted-intergenerational-context-0”
I’m not sure how referencing a panel that suggests using Ramsey’s equation is a good idea supports your case. As for the paper by Arrow et al., which I have fortunately read before, the primary justification discussed for decreasing discount rates is due to them being certainty equivalent discount rates. The actual discount rate doesn’t decline, it only effectively declines due to uncertainty.
Though if someone wants to argue that the actual rate of social time preference should be declining over time due to increasing life expectancy, then I am open to that.
I’m getting the impression that you are confusing interest rates with social rates of time preference based on your ambiguous wording.
-1=e^in,
You didn’t say if you’d looked at the link I gave you with the declining discount rates.
You also need to explain why the US Government requires that all cost benefit analyses to justify programs need to use bot 3% and 7% discount rates in their analyses, but the EPA ignored that and did not use the 7% in estimating SCC.
You also need to explain why we use much higher discount rates for comparing the cost of electricity generation technologies – such as renewables, nuclear, coal gas, etc – than we use for estimating SCC. How can that discrepancy be justified?
Benefits and costs can be subjected to endless interpretation. If they can fiddle an old thermometer reading to make one of their “narratives”, imagine what they can do with vague abstractions like “cost” and “benefit” once they start translating them into numbers.
Under an oppressive ideology (right now that’s Green Blob) realists will be ignored. When Lenin started to get practical the benefits to Russia were glaring and immediate. The NEP was reversed by Stalin not because it did not work but because it DID work. Did bean-counter Joe have numbers to support this murderous folly? Did he what.
The economic and environmental benefits of thrift and efficiency (hence of fossil fuels and nukes) are obvious. Improving the thrift and efficiency of one’s best resources should be a no-brainer. Sadly, we now have power structures and intellectual industries dependent on maintaining ideology before all else. That will last till the money and cred run out, which can take a long, painful time, made longer by lukewarmers and those “moderates” who like a better class of white elephant to help with their “tackling” of the climate.
Even when departures from ideology occur (eg Germany’s desperate and large-scale dash back to coal) they are presented as temporary or transitional, and Green Blob continues to roll on, smashing and wasting in the name of “sustainability”. You just get a two-tier system, one despised tier for use, one indulged tier for display.
I think we need to be wary of invitations to discuss the details and nuances of an ideology we should be rejecting.
“You didn’t say if you’d looked at the link I gave you with the declining discount rates.”
Yes, I did read the link. It was mostly a summary of the paper by Arrow et al. It even stated:
The panelists also agree that the Ramsey formula provides a useful framework for thinking about intergenerational discounting
Which is the position I take.
“You also need to explain why the US Government requires that all cost benefit analyses to justify programs need to use bot 3% and 7% discount rates in their analyses, but the EPA ignored that and did not use the 7% in estimating SCC.”
Okay.
Look at the Office of Management and Budget’s justification for 7%:
https://www.whitehouse.gov/omb/circulars_a094
“Constant-dollar benefit-cost analyses… should report net present value and other outcomes determined using a real discount rate of 7 percent. This rate approximates the marginal pretax rate of return on an average investment in the private sector in recent years.”
What are ‘recent years’? Well given that this is from 1992, this recommendation of 7% is 23 years out of date.
What has happened to interest rates during the past 23 years? Well they have been gradually dropping:
https://research.stlouisfed.org/fred2/series/DGS1
For a person choosing a discount rate in 1992, 7% makes perfect sense. But for a person today, 4-5% makes more sense as it is more in line with the long term average of risk free real interest rates.
Recommended interest rates for cost benefit analysis varies greatly by country. http://www.neweconomics.org/page/-/publications/Economics_in_policymaking_Briefing_5.pdf
New Zealand: 10%
Canada: 8% (it says 10% but that has been changed)
Australia: 8%
USA: 7%
Italy: 5%
France: 4%
UK: 3.5%
Germany: 3%
Imo, Canada, Australia, New Zealand and USA are out of date and need to lower their recommended interest rates to be in line with recently observed real interest rates.
http://data.worldbank.org/indicator/FR.INR.RINR
Also, I’m not sure about France and Germany, but from memory, I’m pretty sure that the UK uses an elasticity of marginal utility of consumption of 1 when evaluating projects (where as Canada, US, Australia and New Zealand just go by what is potentially pareto improving so effectively have a value of 0), someone correct me if I’m wrong, so by Ramsey’s equation, a lower value can be justified by the UK.
Secondly, if you are doing a more traditional cost benefit analysis where you are just trying to determine the policy that maximizes the potential pareto improvement, then effectively you are doing social welfare maximization under the assumption that the elasticity of marginal utility of consumption is zero. Under this assumption, the social rate of time preference is equal to the real interest rate, so it makes sense to a higher discount rate corresponding to the real interest rate.
However, if you are trying to take into account risk aversion and inequality in the analysis, then you need a positive elasticity of marginal utility of consumption, which suggests a lower social rate of time preference. Note that the fact that you are discounting future consumption by less is offset by the fact that people in the future will be richer and the value of an additional dollar to a rich person will be less than the value of an additional dollar to a poor person under a positive elasticity of marginal utility of consumption.
“You also need to explain why we use much higher discount rates for comparing the cost of electricity generation technologies”
Same as what I just wrote above. The 7% discount rate is out of data / too high and the discount rate used should be lower for a social welfare maximization approach compared to a maximizing the potential pareto improvement approach. Also, the 3% rate doesn’t make much sense either in many cases where it is applied. Rather, the choice of the discount rate should satisfy Ramsey’s equation; which means that it should be determined by real interest rates and the choice of the elasticity of marginal utility of consumption.
I used to have a similar position as you on choice of discount rates earlier in the year. But after looking more into it, I have to agree with the arguments made by Arrow, Tol, Nordhaus and others.
-1=
This is a very lonkg comment and there is no point me dealing with all your detail until we’ve resolved the main point. You are advocating for a discount rate to apply for 300 years for the whole world. What has been the average discount rate for the past 300 years for the whole world, not USA?
You say:
Thrwoing money at carbon abatement is not risk free. It enormously hig risk. Many people believe that the advocated policies will make no difference to the climate. It’s almost a certain waste of money. Therefore it is very high risk. You should use private sector discount rates for mitigation policies.
Also, not the discrepancy between the discount rate we use for policy analysis for comparing LCOE of different energy technologiesd. In Australia we are currently using 10% discount rate for estimating the LCOE of new electricity technologies (Renewables, nuclear, coal, gas etc.). If we are using those discount rates for choosing energy policies to abating emissions, we should use the same discount rate for estimating the damages.
Lastly, my reason for providing the link to the EPA article on SCC was the two graphs showing the declining discount rates they are assuming for the future. Dhow me a chart of what the discount rates have been for the world over the past 300 years.
I’d also remind you again, the countries you selected to quote risk free discount rates for are not representative of the whole world nor of what the world’s average discount rate will be as the vast majority of the world lifts itself out of poverty this century.
I haven’t researched disount rates and Ramsay function to the level you have. And I am not competent to do so. So, id be interested in a link to a short explanation of why the discount rates they are choosing to use for projecting the cost and benefits of abatement out 300 years are comparable with the world average discount rates that have applied over the past 300 years.
I read Stern, Nordhaus, Tol and some others on this (don’t understand a lot of it) but am totally unconvinced by using low discount rates, risk free rates of return, discount rates that are higher for selecting abatement technologies in practice that for estimating costs and benefits of CO2 abatement.
I am also aware of the much higher discount rates that apply in the developing world and will for all this century. I am also aware that the discount rates we choose for CO2 mitigation must be the same as we use for comparing alternative policies such as to spend the funds on health, education, infrastructure, and better governance for the developing countries. The $1.5 trillion a year we are reportedly spending on the “climate Industry” seems to me to be pure waste.
-1=e
I should also point out that the chart I posted here http://judithcurry.com/2015/09/30/the-uncertainty-of-climate-sensitivity-and-its-implication-for-the-paris-negotiations/#comment-734515 uses the Nordhaus DICE-2013R default discount rate. And it shows that the costs would greatly exceed the benefits for all this century. Use more realistic assumptions for damage function, ECS, RCP etc. and the costs would exceed the benefits by much more. So, the discount rate is not the only thing that is exaggerated to try to justify the mitigation policies being advocated.
“You are advocating for a discount rate to apply for 300 years for the whole world.”
The time frame just has to be sufficiently large relative to the choice of the discount rate. Eventually additional years become negligible in the social welfare function. As a rule of thumb, I think a time frame of 3 / discount rate is sufficient.
“What has been the average discount rate for the past 300 years for the whole world, not USA?”
The discount rate is something that you choose in a cost benefit analysis. It can be whatever you want. So this question is meaningless. Do you instead mean the real interest rate or the social rate of time preference?
“You should use private sector discount rates for mitigation policies.”
You are doing that if you are using real interest rates and following Ramsey’s equation.
“If we are using those discount rates for choosing energy policies to abating emissions, we should use the same discount rate for estimating the damages.”
Yes, you should use the same discount rate for benefits and costs.
“the two graphs showing the declining discount rates they are assuming for the future.”
I already answered this question and you are misinterpreting the graphs. Those graphs show the certainty equivalent discount rate for a constant discount rate under uncertainty. Also, this isn’t a future prediction of the discount rate since again the discount rate can be anything you want it to be. Rather, it is basically saying: Suppose the discount rate is a constant rate of X%, and suppose that there is uncertainty in the future; this is what we think the equivalent discount rate would be if we did not have uncertainty.
“are not representative of the whole world”
No but given that most of the world will develop over the next century, looking at the social rate of time preference in the developed world might give a better representation of the expected social rate of time preference for the world will be over the next century. Also, the social rate of time preference is a lot more robust than the real discount rate because it takes into account the fact that the real interest rate is affected by the growth rate of real GDP per capita.
If you want to construct some sort of model of social time preference as a function of life expectancy, make projections of life expectancy of the Earth, and use that, then I am open to that. Or if you want to justify a better rate of social time preference to use then I am open to that. But my point is that you want to make a combination of choices of the rate of social time preference and elasticity of marginal utility of consumption that satisfy Ramsey’s equation.
“are comparable with the world average discount rates that have applied over the past 300 years.”
You can’t empirically measure discount rates that have applied over the past 300 years, because again the choice of a discount rate is a value judgement. However, you can measure real interest rates and rates of social time preference.
“but am totally unconvinced by using low discount rates”
You think that’s low? The Stern review used a 0 discount rate. Now that’s low/insane.
“risk free rates of return”
You want to use risk free rates of return to take into account the risk premium.
“discount rates that are higher for selecting abatement technologies in practice that for estimating costs and benefits of CO2 abatement.”
In practice, you are trying to maximize the potential pareto improvement, so you want to use the real interest rate. However, trying to maximize the well being of society involves consideration of the elasticity of marginal utility of consumption, which means you should use a lower discount rate than when you don’t take into account the elasticity of marginal utility of consumption.
Choosing to use the rate of social time preference as the basis for the discount rate is basically like saying ‘society should value the future the same as individuals in society value the future’.
“I am also aware of the much higher discount rates that apply in the developing world and will for all this century.”
Again, please distinguish between:
– real interest rates
– discount rates
– rates of social time preference
Differences in rates of social time preference are not that big and arguably can be mostly explained by life expectancy differences.
“I am also aware that the discount rates we choose for CO2 mitigation must be the same as we use for comparing alternative policies such as to spend the funds on health, education, infrastructure, and better governance for the developing countries.”
Yes, of course it should be the same.
“And it shows that the costs would greatly exceed the benefits for all this century.”
1. Maybe Nordhaus’ choice of discount rate is too low. Certainly with a lower elasticity of marginal utility of consumption and a slightly different data set you could justify a higher rate of social time preference. 2-2.5% easily.
2. You are just looking at the net change in economic output (as far as I can tell). That doesn’t take into account changes in inequality in society. Maximizing social welfare and using a positive elasticity of marginal utility of consumption means that you are taking inequality into account. Given that equatorial countries are generally poorer than polar countries, mitigation policy also has an effect of transferring resources from richer countries to poorer countries.
“Use more realistic assumptions for damage function, ECS, RCP etc. and the costs would exceed the benefits by much more.”
I agree, but that’s irrelevant to the discussion on if the discount rate should be the rate of social time preference or not.
“Also, the social rate of time preference is a lot more robust than the real discount rate”
This should read:
Also, the social rate of time preference is a lot more robust than the real interest rate
-1=e^
The default values in DICE-2013R for (rows 152 to 154 on the Base sheet in the Excel file):
• Consumption discount rate
• Risk-free rate of return
• Real rate of return on capital (with full risks)
are 5.2% in 2015, declining to 3.5% in 2100 and 2.2% in 2300.
What is the historical justification for this decline?
The current very low discount rates are no guide to the future. I’ve read they are the lowest in 5000 years. They are artificial and caused by US bureaucrats and agreements between central banks. They are not sustainable.
I’ll reread your comments tomorrow. Your comments are excellent and interesting.
I think it would be good if you could explain all this in a post. Can I suggest you ask Judith if she’d like you to write a post to explain it? Faustino was intending to write a post on discount rates, but wasn’t able to. It would be very timely given the upcoming Paris UN climate conference.
“The default values in DICE-2013R for (rows 152 to 154 on the Base sheet in the Excel file):
• Consumption discount rate
• Risk-free rate of return
• Real rate of return on capital (with full risks)
are 5.2% in 2015, declining to 3.5% in 2100 and 2.2% in 2300.
What is the historical justification for this decline?”
Those are real interest rates. They are calculated from lines 148-150.
Line 149 determines the rate of social time preference and is constant at 1.5%, which stems from B16.
Line 150 is the ratio of marginal utility and is calculated from line 126 (consumption per capita) and B19 (elasticity of marginal utility of consumption, which is 1.45).
Modify B16 and B19 if you want to chance the choice of social time preference and elasticity of marginal utility of consumption.
“I’ve read they are the lowest in 5000 years.”
Well given that the population growth rate and even the GDP per capita growth rate are expected to slow down over the coming century that isn’t that surprising, although I question the meaning of interest rates from 5000 years ago. Another reason to expect low interest rates is that life expectancy is declining; although that isn’t factored into the DICE model.
“They are artificial and caused by US bureaucrats and agreements between central banks. They are not sustainable.”
I wouldn’t pay too much attention to short term interest rates (which obviously diverge from the Ramsey equation are are closer to the Taylor rule https://en.wikipedia.org/wiki/Taylor_rule). But long term interest rates should satisfy Ramsey’s equation.
“I think it would be good if you could explain all this in a post. Can I suggest you ask Judith if she’d like you to write a post to explain it?”
I have an open invitation for a guest post from Judith Curry on exactly this topic.
I would like to do one eventually, but right now I need to concentrate on obtaining employment so I don’t starve to death.
-1=e^
I am not wanting to change the default inputs. I am seeking empirical evidence to demonstrate that:
1) historically discount rates have declined over 300 years at the rate Nordhaus has used as the default value in DICE-2013 and
2) they are now down to 5.2% average for the whole world, and
3) risk free rate is appropriate for investments in mitigation policies given there is no evidence whatsoever they will provide any measureable benefit ever. Given this it seems appropriate that money lent for mitigation policies should be loaned by private sector as they, not bureaucrats and politicians, are best able to assess all the risks.
“which obviously diverge from the Ramsey equation are are closer to the Taylor rule”
Should read:
which obviously diverge from the Ramsey equation and are closer to the Taylor rule
“historically discount rates have declined over 300 years at the rate Nordhaus has used as the default value in DICE-2013”
There is no historic discount rate because discount rates are a moral judgement. Do you mean real interest rate? I’m also not sure where you are going to get good data on real interest rate over the past 300 years. Anyway, in the USA for example, interest rates have been on a clear downward trend since 1980. https://research.stlouisfed.org/fred2/series/DGS1
“2) they are now down to 5.2% average for the whole world”
If I take 2013 interest rates for the G-20 (https://www.quandl.com/collections/economics/real-interest-rate-by-country ; I exclude, Saudi Arabia, Turkey, Germany, France and Spain since data is missing) and take the average real interest rate weighted by country GDP PPP I get an average interest rate of 3.70%. Yes real interest rates are that low. Lower than 5.2 since economic growth is relatively weak across the world.
“3) risk free rate is appropriate for investments in mitigation policies given there is no evidence whatsoever they will provide any measureable benefit ever.”
You want to use risk free interest rates when using Ramsey’s equation, otherwise you have to take into account the risk premium. Yes there is uncertainty in the effectiveness of mitigation policy, but there are better ways to account for that than arbitrarily choosing a risk premium to associate with mitigation policy.
-1=e,
Thank you for all your replies and explanations. My computer is broken at the moment so this a short reply on an Apple iPad.
You are answering by referring to Ramsay equation. I am seeking answers at a higher level because I don’t fully understand npthe Ramsay inputs or the empirical basis for them. So, can you please answer my question about what is the discount rate over the past 300 years. For evaluating discount rates to use for new power plants we use the weighted average cost of capital . It is the best estimate frm long term bond yields, risk premiums, etc. I don’t understandhow we could justify using a lower rate than what we should apply for selecting the technologies for reducing emissions.
“I am seeking answers at a higher level because I don’t fully understand npthe Ramsay inputs or the empirical basis for them.”
This may help:
http://www98.griffith.edu.au/dspace/bitstream/handle/10072/21590/52378_1.pdf?sequence=1
Chapter 4 derives Ramsey’s equation.
“So, can you please answer my question about what is the discount rate over the past 300 years.”
I can’t because ‘discount rate’ is a moral judgement. As for interest rates, I don’t think there is any good data going back 300 years. This is the best I could find from a quick google search:
https://www.google.ca/search?q=US+interest+rate+historic&newwindow=1&source=lnms&tbm=isch&sa=X&ved=0CAgQ_AUoAmoVChMIgqDGoO-nyAIVBFoeCh0khA7n&biw=1536&bih=755#imgrc=QsU3m40gX6qm1M%3A
Note of course that the above aren’t risk free interest rates, so have a risk premium on them.
“For evaluating discount rates to use for new power plants we use the weighted average cost of capital.”
Because obviously that’s what you would want to use since power plants have risk associated with them, and you aren’t concerned about inequality in society. You are discouting future benefits to determine the net present value. You aren’t trying to optimize a social welfare function.
-1=e,
You keep saying tat discount rate is moral judgement. That is silly. You cannot have sensible debate about morals. If discount rate is simply a moral judgement then I choose 10% for power systems and 50% for renewable energy because they can never make an impact. Where does that leave us?
“You keep saying tat discount rate is moral judgement. That is silly.”
It’s a moral judgement since it determines the value of the future relative to the present.
In order to make decisions, some moral judgements need to be made.
The pareto principle is a moral judgement.
Even something like the pareto principle is a moral judgement.
If you are a person with savings and you decide to invest your money to maximize your return, you are making a moral judgement that having more money is good.
Every time you wake up and decide not to jump off a cliff, you are making a moral decision that not killing yourself is good.
“You cannot have sensible debate about morals.”
Sure you can. But if you want to have any agreement for policy then you need to stick to relatively uncontroversial moral principles such as the pareto principle.
“If discount rate is simply a moral judgement then I choose 10% for power systems and 50% for renewable energy because they can never make an impact. Where does that leave us?”
You can do that, but almost no one is going to agree with your moral judgements.
What you could do is take the position that society should value future consumption relative to present consumption in the same manner that the individuals in society do. In which case the question of discounting becomes an empirical question.
-1=E,
OK, you are arguing that discount rate is a moral judgement. If that is the case the argument about discount rates will go indefinitely. I prefer to have it base don empirical evidence, such as is used for decide the discount rate to use for power station technologies – i.e.the Weighted Average Cost of Capital for the expected life of the project. The Australian Government is currently using 10% for the discount rate based on WACC for new electricity generation plants.
However, being rational, renewable energy cannot do much ans will not be capable of supplying much of the worlds electricity by 2050 or 2100, so it is a very high risk investment. If it wasn’t such a high risk the private sector would invest with no need for government incentives. Yet carbon pricing is supposed to incentivise renewables. That;s clearly irrational. Clearly mitigation policies are very high risk (almost no chance of a return for the massive investments). It’s making people poorer than they would otherwise be. Its’s diverting funds from investments with better returns (such as health and education). It’s keeping people in poverty longer than they otherwise would be. Yet the Left argue for the immorality of low discount rates to encourage mitigation, carbon pricing and renewable energy. Where is the morals in that?
-1=E,
Your comments have done nothing to persuade me that the very low discount rates being used in the IAMs to justify mitigation policies have a sound basis. Saying that discount rate is a moral judgement and cannot be derived from long term historical trends is unhelpful. I think about where my father and grand father would have invested 70 and 100 years ago if they’d been asked to invest in climate mitigation policies or in their childrens’ education. I know what they would have done.
“If that is the case the argument about discount rates will go indefinitely.”
Not really. The question on if murder is wrong is a moral question. The vast majority of people in society agree murder is wrong.
“I prefer to have it base don empirical evidence”
This isn’t exclusive to the fact that choice of discount rate is a moral question. You can still use empirical evidence when answering that question.
Anyway, can we first focus on agreeing about what to use (rate of social time preference or real interest rate) in cases of no risk? Then deal with the question of risk?
“Your comments have done nothing to persuade me that the very low discount rates being used in the IAMs to justify mitigation policies have a sound basis.”
Okay, I’ll a different approach.
Suppose that you are an individual that earns $10 per year for the rest of your life and you have a rate of social time preference of 2% (that is, you value consumption in 1 years time at 98% the value of present consumption). Well if the interest rate were more than 2%, you would be willing to save some money for future consumption and if the interest rate were less than 2%, you would be willing to borrow some money for present consumption. So a society that consisted of such individuals would result in a real interest rate of 2%.
Now suppose we have the exact same scenario, except in this case the economy is growing in real value per capita by 2% per year, so every year the person gets a 2% raise. In this case, would the individual being willing to borrow or save if the interest rate were 2%? Well if the individual has diminishing marginal utility, then the person would be willing to borrow some money for present consumption since in the future they will be richer (and thus have a lower marginal utility). So in this case, the interest rate will be more than 2% in such an economy.
That is, the combination of diminishing marginal utility + economic growth causes a departure of the social rate of time preference from the real interest rate. This is basically all the Ramsey equation states.
If you wish to compare Utility levels of the individual at different points in time, the rate of social time preference is what you want.
Or maybe look at things another way.
Let’s say you are trying to determine the net present value of consumption using a discount rate r. Then you are calculating:
sum(i = 0 to infinity; (1+r)^(-i)*C(i)).
This gives you a way of ranking varies consumption distributions over time.
Now lets say instead you wanted to determine the net present value of utility of consumption, where utility is a constant relative risk aversion function of consumption. I.e. U(C) = C^(1-a)/(1-a), where a is the coefficient of relative risk aversion.
Does net present utility give you the same ranking of consumption distributions?
sum(i = 0 to infinity; (1+r)^(-i)*(C(i))^(1-a)/(1-a))
No it does not. If a is positive, then generally the choice of r will be too high to give you the same ranking (and thus maximizing net present value of consumption is not the same decision rule as maximizing net present value of utility; at least if you use the same discount rate).
However, if consumption is growing at a rate of approximately g per year, then if you use the social rate of time preference p = r – a*g when determining net present utility
sum(i = 0 to infinity; (1+r-a*g)^(-i)*(C(i))^(1-a)/(1-a))
Then this is what gives you approximately the same decision rule as when you are maximizing net present value of consumption.
Or put more bluntly.
Using the real interest rate when comparing consumption levels, or things measured in dollar values makes sense.
However, when comparing utility levels, or levels of social welfare, the social rate of time preference is more appropriate.
-1=e^
Certainly.
I don’t understand well enough ‘rate of social time preference’ or Ramsay Equation. So let’s deal with risk free real interest rates plus risk premium for the advocated policy. I agree we can do that in two steps.
So, can you show a chart of risk-free, real interest rates for the world for the historical past – e.g. over 300 years, 1000 years?
If you can’t show that, can you show me an authoritative chart (not from the CAGW consensus advocates) which justifies discount rates of 5.2% declining to 2.2% by 2300 for high risk investments (with virtually no chance of a return on investment)?
You used real interest rate of 2% in your example. Consumers preferences demonstrate they use discount rates of 20% to 50% in their purchasing choices.
You are using many economists’ terms but they are not defined. Nordhaus does the same. And he, Tol and others keep changing the terms without defining what they are and which ones they use in an equivalent sense. I wrote to Nordhaus about it after a long discussion we had following release of his book “A Question of Balance”. He replied and agreed he should define all the terms and state which terms are used interchangeably. If he has done that I haven’t seen it. Perhaps you could do it in a post so we can all use it to reference to.
So, there is no point in keeping using all these terms. For me they are just confusing. That’s why I asked you to stay at the high level and justify the discount rates used in DICE-2013R (without reverting to discussion about the Ramsay equation). I just want an unbiased sanity check about the discount rates and why they are so much lower than governments use for other economic analyses.
“So, can you show a chart of risk-free, real interest rates for the world for the historical past – e.g. over 300 years, 1000 years?”
No.
“If you can’t show that, can you show me an authoritative chart (not from the CAGW consensus advocates) which justifies discount rates of 5.2% declining to 2.2% by 2300 for high risk investments (with virtually no chance of a return on investment)?”
No. But too be honest, at that interest rate, the last 100 years have basically negligible impact on the social welfare function. So I wouldn’t pay too much attention to it. Is the DICE model perfect? No. Could it use improvement? Yes. Are predicted interest rates fairly reasonable over the next 100 years? I would say yes.
Perhaps Nordhaus should have chosen a smaller elasticity of marginal utility of consumption, which would have caused a smaller drop in interest rates.
Anyway, in the discussion of whether it makes sense to use the rate of social time preference, the exact values chosen by Nordhaus is a bit of a distraction.
“You used real interest rate of 2% in your example. Consumers preferences demonstrate they use discount rates of 20% to 50% in their purchasing choices.”
That number was relatively arbitrary. The point was to illustrate how the rate social time preference can diverge from the real interest rate due to economic growth. Also, consumers are dealing with very risky situations (I certainly am) and their GDP per capita is increasing over time. So the fact that consumers use much higher discount rates in their purchasing choices doesn’t mean the rate of social time preference is much lower.
“You are using many economists’ terms but they are not defined.”
List terms that you think are undefined and I can define them for you.
“Perhaps you could do it in a post so we can all use it to reference to.”
Okay. I’ll keep in mind to have clear definitions for the less economically inclined if I do a guest post.
“So, there is no point in keeping using all these terms.”
Why? If they weren’t useful, I wouldn’t be using them.
“That’s why I asked you to stay at the high level and justify the discount rates used in DICE-2013R (without reverting to discussion about the Ramsay equation).”
Well understanding Ramsey’s equation is part of the reason that can explain the drop in the interest rate. Population growth is declining and GDP per capita growth is declining. These both will cause a declining interest rate. And yes we have observed a declining interest rate since the 80’s. And yes, the current global interest rate is actually lower than what is in the DICE model for 2015.
“I just want an unbiased sanity check about the discount rates and why they are so much lower than governments use for other economic analyses.”
Because it’s a different type of analysis. It is comparing utility values over time, not dollar values over time.
Let’s say I have a bunch of pairs of spheres. Is finding the pair of spheres that has the maximum combined surface area the same thing as finding the pair of spheres that has the maximum combined volume? No. The pair of spheres might be the same in both cases, but maybe not. In the case of maximizing social welfare, that isn’t the same thing as maximizing net present value, so why would you expect the use of similar discount rates?
-1=e^
Why? Surely the long term real interest rates over the past 300 years should be a good reality check on what to expect for the next 300 years.
I am not criticizing the model. It seems to be the most or one of the most widely accepted and cited IAMs for estimating SCC, optimal carbon price, abatement costs and benefits (i.e. climate damages avoided). However, I’ve followed Nordhaus for a long time and noticed him being “got at” by the alarmists. It’s always the alarmists he’s responding to by tuning the inputs to show higher damages. His book “Climate Casino” shows this very clearly.
So, for me, it is not the model that I am disagreeing with. It’s the input assumptions:
Discount rates (for 300 years)
Damage function
ECS = 3.2
RSP8.5
Totally unrealistic participation rates
The other assumptions I listed in my two part post here:
‘Why carbon pricing will not succeed Part I‘ http://catallaxyfiles.com/2014/10/26/cross-post-peter-lang-why-carbon-pricing-will-not-succeed-part-i/
‘Why The World Will Not Agree to Pricing Carbon II’
http://catallaxyfiles.com/2014/10/27/cross-post-peter-lang-why-the-world-will-not-agree-to-pricing-carbon-ii/
I am still hoping you can give me something authoritative that provides a reality check on Nordhaus’s discount rates of 5.2% now decreasing to 2.2% in 2300. I believe these is far too low for making policy decisions on what is clearly an extremely high risk investment with enormous consequences of diverting money away from clearly very beneficial projects (health, education, infrastructure, institutional strengthening etc.) on the basis of ideological beliefs about highly controversial CAGW.
In short I am not swallowing it and you have given me nothing so far to change my mind.
But I hope you will, because I am learning a lot (but not about Ramsay Function – I need that much more clearly laid out before I can tackle that again. And I need all the terms defined and all the different terms that are used by different authors to mean the same thing listed as well). That’s too big for a blog comment, so there is no point down into Ramsay equation here (I have to skip over that for now).
Why? That’s a statement of your belief. But you haven’t been able to justify it with a reasonable reality check – such as discount rates or WACC or real interest rates plus risk premium for the past 300 years.
They are useful to economists but you are not communicating clearly with me because you haven’t defined the terms and explained them clearly and fully. It’s the same as if an engineer or geologist or brain surgeon uses their specialist terms while talking to a lay audience. Even if you tried here it would be no help. It’s too much.
So, please let the Ramsay equation go for now, and answer my questions.
-1=e^,
Here are two reports on the Equity Risk Premium for Australia over the past 128 years and one for Discount Rate. Equity Risk Premium is one of the inputs used to estimate the Weighted Average Cost of Capital (WACC) which is used as the basis for the average discount rate to apply for LCOE calculations. However, as explained in the AETA report (linked below), some technologies are much higher risk than others and more advanced analyses of LCOE adjust the discount rate to take the technology risk into account. Renewables are high risk. CO2 pricing is high risk because it has negligible probability of succeeding.
Source, Report prepared for the Australian Ene4rgy Regulator, (see Table 5): https://www.aer.gov.au/system/files/John%20C.%20Handley%20-%20estimate%20of%20historical%20equity%20risk%20premium%20report.pdf )
A higher risk premium would be required for investments in GHG abatement (I’ve explained why in earlier comments in this subthread).
Source: http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1594&context=business_pubs
Source: Australian Technology Assessment (AETA) Report http://industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/aeta/australian_energy_technology_assessment.pdf
“Why? Surely the long term real interest rates over the past 300 years should be a good reality check on what to expect for the next 300 years.”
Why would it? Would the average birth rates over the past 300 years be a good prediction for the birth rates over the next 300 years?
Or maybe there is a general downward trend.
If population growth rates are expected to decrease, real GDP per capita growth is expected to decrease and life expectancy is expected to increase (although this isn’t in Nordhaus’ model) then those are all reasons to expect a decreasing interest rate over time.
“I believe these is far too low for making policy decisions on what is clearly an extremely high risk investment with enormous consequences”
Not mitigating has risks. Mitigation has risks. But these risks are quite different in nature than the risk that, say, a person who was lent money defaults on their debt. Uncertainty does need to be taken into account, but adding an arbitrary risk premium does not do this.
Also, as was pointed out in the Arrow et al. paper, uncertainty in the future can cause the certainty equivalent discount rate to decrease over time.
“Why? That’s a statement of your belief.”
Values are roughly 5% initially (which is roughly the current long term real interest rate) and decreases gradually over time (which is to be expected).
“It’s the same as if an engineer or geologist or brain surgeon uses their specialist terms while talking to a lay audience. Even if you tried here it would be no help. It’s too much.”
Out of curiosity, what is your background?
-1=e^
If that’s the best you can do to answer my question and support your beliefs I am now convinced you have no answer.
You are believing you can look into your crystal ball and choose the future discount rate better than by looking at the what’s happened in the past. Well, sorry, but that is not persuasive.
A better analogy you could have used is investment advisors who reckon they pick the future better than simply using historical data as the best guide. However, evidence shows that 2/3 of investment gurus perform worse than the market over the long term.
Therefore, if your conviction about future discount rates is unsupported by the long term historical rates, then I do not accept your beliefs.
I’ve pretty well given up on this discussion. I am not persuaded by your statements of what you believe. It’s going nowhere. I am going to bed. If you can’t answer my questions I may not respond any further.
“Here are two reports on the Equity Risk Premium for Australia”
That’s not really that relevant to the discussion since there is no reason to add a risk premium to the IAM.
“CO2 pricing is high risk because it has negligible probability of succeeding.”
How is it a risk if countries can take the position that they will only perform mitigation if all countries make an agreement?
“A higher risk premium would be required for investments in GHG abatement”
The risk is of a different nature than the risk of someone defaulting on a loan.
I think you are sort of falling into the same trap as many alarmists. Many alarmists will try to use an unnecessarily low discount rate in the name of risk aversion just to be ‘on the safe side’. You are sort of doing the same thing but in the other direction. Fiddling with the discount rate is not the best way to be risk averse. If you want to be risk averse, choose a coefficient of relative risk aversion and then take into account all sources of uncertainty when maximizing expected social welfare.
…I doubt this conversation will be able to make much more progress since you probably don’t know what I mean by expected social welfare. Maybe you should wait for me to make a guest blog. But I’ll summarize the key points I’m trying to make (though I doubt you will agree with them yet):
– You want to use a the rate of social time preference rather than the real interest rate when trying to maximize social welfare, since your social welfare function considers inequality and the economy is growing.
– Adding an arbitrary risk premium to the discount rate is not the appropriate way to take into account uncertainty in this kind of analysis.
– Interest rates are expected to decline gradually over the next century since real GDP per capita growth is expected to decline and population growth rates are expected to decline.
Lots of unsupported assertions. Discount rate is WACC and risk premium above long term interest rates is one of the inputs.
This is going nowhere. It’s a waste of time.
I’ll leave this on a more positive note. I thank you for your many comments and apologise for getting frustrated. I assume you are an economist and understand the terms you are using. I understand you accept that the estimated discount rate Nordhaus uses for the next 300 years is about right. I am not persuaded. I don’t believe it is close to being valid for making policy decisions for best assignment of scarce resources.
So, lets set this aside.
Can you tell me if you have reviewed the posts I wrote and especially can you say if you have found any significant error in the red line on the chart here or in the way I’ve plotted all lines (i.e. by period instead of cumulative out to 2300 as is the commonly done to support the carbon pricing arguments. If you have found significant errors can you please explain them clearly for a non economist.
“Discount rate is WACC and risk premium above long term interest rates is one of the inputs.”
And the default risk premium is zero, for a reason.
“Can you tell me if you have reviewed the posts I wrote and especially can you say if you have found any significant error in the red line”
I’m a bit unclear on how you obtained this ‘red line’. Did you just take the excel version and change participation to 0.5? I just want to say that you should be a bit skeptical of results when just modifying the excel version since the results have not been optimized by some sort of Newton algorithm.
With respect to the cost penalty; my understanding is that is the ratio of the cost under less than ideal participation relative to the cost under 100% participation assuming both result in the same outcome in atmospheric CO2e. Realistically, if you were to have a pigouvian tax that only affected half of emission sources, things wouldn’t be this extreme since there would be less mitigation and emission levels would be higher.
Anyway, I’m a bit concerned if you can’t be convinced about rates of social time preference for the discount rate since you seem to be one of the more economically literate people in the comment section. Let’s see if I can get you to agree with some basic premises which can be used to justify the rate of social time preference:
A utility function is a function that takes various factors that affect an individual’s well being (such as consumption, leisure, social freedom, whether they get a foot massage weekly from a spouse, etc.) and outputs a real number that represents the well being of an individual.
A social welfare function is a function that takes the utilities of all individuals in society and outputs a real number. Social welfare can be thought of as the well being of society at large.
Now I think that most people would agree that it would make sense to choose a mitigation path that maximizes the well being of society. But one needs to define a social welfare function, which requires moral judgements to be made. Obviously people like ISIS or Hitler would have very different ideas of how to evaluate the well being of society that me.
Moral Judgement 1: Separability axiom. The well being of society is equal to the sum of the well being of individuals within society. This results in the social welfare function being the sum of the utilities of the individuals within society.
Moral Judgement 2: Anonymity principle. Everyone has the same utility function. This principle can be justified in one of two ways. The first way is that out of necessity, due to not having enough information about the preferences of all individuals in society, one has to make simplifying assumptions in order to be able to make conclusions. A second way is in order to satisfy egalitarianism; if everyone has the same utility function in the social welfare function, then this will result in them having equal value to society.
So lets say both the anonymity principle and the separability axiom are both satisfied. Then the problem of defining a social welfare function is reduced to a problem of defining a utility function for individuals in society.
Moral Judgement 3: People know their own preferences. Under the assumption of the anonymity principle, it is possible to estimate the utility function of individuals in society by observing their behaviour. In other words, you aren’t taking the position that society at large is wrong about their preferences and that somehow you know people’s preferences better than they do.
If you take the above position, then the moral problem of trying to determine people’s utility functions becomes one of empiricism.
In addition to the above judgements, for the sake of simplicity, it is convenient to consider utility as a function of an individual’s consumption only. This is sufficient to take into account inequality in society and to have a risk averse social welfare function in order to evaluate the risks of climate change. Obviously a person’s well being depends on more than just their consumption; this is a simplifying approximation. Also, the anonymity principle is a lot harder to justify for utility functions that take into account more parameters (since people obviously have slightly different preferences).
If one considers utility as a function of consumption only, then it is possible to infer the utility function by looking at how risk averse humans are. Empirical evidence suggests that humans have roughly constant relative risk aversion (definition here: https://en.wikipedia.org/wiki/Risk_aversion#Relative_risk_aversion), which suggest that a constant relative risk aversion utility function is a good place to start for modelling a person’s utility function.
This means that we can define the utility function (for one period) as C^(1-a)/(1-a) if a is not 1 and ln(C) if a is 1, where a is the coefficient of relative risk aversion. For the DICE model, a coefficient of 1.45 is used.
Now obviously humans live for multiple periods, and humans value the present as well as the future, which suggests they discount the future. For the sake of simplicity, suppose that humans discount future utility at a constant rate (call it p, the rate of social time preference), such that a human will try to maximize sum(t = 0 to infinity; (1+p)^(-t) * U(C(i))), where t is time. If humans try to maximize their utility over all periods, then this has implications on their decisions about whether to borrow or save. In particular, a society of such individuals (assuming constant relative risk aversion) will have a risk free real interest rate that satisfies Ramsey’s equation (one of the links I provided earlier explains exactly why).
So basically, if you accept the separability axiom, the anonymity principle and that sum(t = 0 to infinity; (1+p)^(-t) * (C(t))^(1-a)/(1-a)) might be a reasonable definition of a person’s utility as a function of consumption over all periods, then this suggests that you might want to define the social welfare function as:
sum(t = 0 to infinity; (1+p)^(-t) * sum(i = 1 to N(t) ; (C(i,t))^(1-a)/(1-a)))
where N(t) is the number of individuals in society at time t.
And if you accept that people roughly know their own preferences, then the social rate of time preference p and the coefficient of relative risk aversion a, can both be determined empirically.
-1=e^
There is no point in writing your long comments that do not attempt to address my questions. I’ve given up reading through them. I started doing so but, given your responses are mostly dismissive comments, baseless assertions and FUD (undefined economic lingo, rather than explanations in simple clear terms for lay people), I’ve given up. I now see interpret this as playing games like the CAGW cultists do. I don’t interpret your comments as a serious atempt to answer my questions.
Your first two response to my points are an example:
You made no attempt to show you understand that WACC is what is used for determining the discount rate to use for deciding which technologies to invest in – i.e. which abatement technologies can be justified compared with other alternative uses for the funds, such as health, education, etc. But no point in addressing this again – I’ve concluded you don’t understand this and any more dismissive points without addressing the key questions are further eroding my opinion that you are prepared to engage seriously.
Well, if you seriously want to check or critique my analysis (which I would appreciate) why don’t you:
1. Reeview, carefully, the two posts I wrote
2. Check that you can reproduce my plot of the discounted net benefit per 5 year period to 2100 (for the six scenarios analysed in DICE (i.e. excluding ‘½ Copenhagen participation rate’ scenario)
3. Halve the participation rate throughout and see if you get the same result as I got
4. Let me know if you have managed to reproduce my results
5. Let me know if you find a significant error and please explain it so I can understand and fix it.
I am very skeptical, as always. That’s why I’ve been asking economists to critique what I’ve done. So far, no one has reported any errors. The results I calculated for ‘½ Copenhagen Participation’ have been checked using the program and with the optimiser and are correct running.
This is a misunderstanding (read the source) and is irrelevant to addressing my key questions. If you want to argue about that you should take it up with Nordhaus, Tol and the other IAM modellers. As I said earlier I am not arguing about the DICE IAM. The cost of less than 100% participation is explained in ‘A Question of Balance’. You can reproduce my chart from there. I gave the source in Part 1.
If you continue to write long comments, loaded with economic jargon that are not addressing my two main questions, then I will not bother reading them. I will treat them as continued obfuscation. My main two questions are:
1. Is my plot of Nordhaus DICE-2013R discounted net benefit-abatement cost correct a) for the Nordhaus six scenarios, and b) for my ‘½ Copenhagen Participation’ rate scenario?
2. Give me a good reality check on what world average discount rates have been for the past 300 years; I am looking for a chart. Please don’t repeat again that discount rates are based on moral values – I’ve heard that assertion from you repeatedly – no point in repeating it any more or any of the other similar dismissive comments.
Please, don’t waste any more time writing about Ramsay equation. I’ll ask if I want to. I’ve been reading about it on and off for many years and have many papers on it. However, that is not where I am at. There is far too much that is debatable. I want a simple reality check of what discount rates or WACC have been for the past 300 years (or even 100 years) for high risk policies like global CO2 abatement.
“I started doing so but, given your responses are mostly dismissive comments, baseless assertions and FUD (undefined economic lingo, rather than explanations in simple clear terms for lay people), I’ve given up. I now see interpret this as playing games like the CAGW cultists do. I don’t interpret your comments as a serious atempt to answer my questions.”
My intention was not be dismissive or not attempt to answer your questions. But if that is how you feel, then I guess we should end the conversation here, because it is unproductive.
“You made no attempt to show you understand that WACC is what is used for determining the discount rate to use for deciding which technologies to invest in”
I understand that, and tried to give a detailed explanation for why you want to use the social rate of time preference when optimizing social welfare. But you dismissed that as ‘economic jargon’.
“Reeview, carefully, the two posts I wrote”
I did, and I could not adequately determine the exact methodology based on what was written, which is why I was asking for clarification.
“Give me a good reality check on what world average discount rates have been for the past 300 years”
It would help if you could understand the difference between discount rates and real interest rates, but I’ve given up trying to explain the difference to you.
“My intention was not be dismissive”
Should read:
My intention was not to be dismissive
sorry for the typo
I agree the discussion is unproductive. It was unproductive from my p[erspectice for reasoins I esplained way back. I asled you to leave Ramsay equation aside fro now and simply answer my question. You wouldn’t or couldn’t and kept reverting to long explanations about the Ramsay equation (despite my repeated requests to leave it aside until you’s answered my request for a simple reality check). You are so confined to your own world of economics you cannot see beyond it and are unable to communicate outside your area of expertise.
It would have been helpful if you’d answered my two questions but you continually avoded doiong so and instead went down one rabbit hole aftr another. I didn’ get into arguing about all your tangential point you raised from the start (your dismissive comments) and instead tried to stay focused on the key point.
You may be confident in the Ramsay equation, but why should I be if you can’t provide evidence of discount rates over the long historical past. the fact that discount rates range enormously depending on the researcher’s agenda, shows it’s not the most reliable way to judge what future discount rates should be used in the analyses. If you can’t provide a reality check over the long historical past, then why trust your assertions.
If Ramsay function can be relied upon as a good predictor of future discount rates, why does the value change so enormously between differnet researchers and between real world discount rates and economists crystall balls of what they will be in the future. You’ve done nothinhg to show that Nordhaus’ or Stern’s or Garnaut’s selected discount rates are valid (they differ by an order of magnitude).
Peter Lang: Jim D,
I asked you three specific questions. You have not answered them.
Yeh. He does that a lot.
I did answer the 3 questions.
1. I explained where I got 1.5 times GDP
2. I explained the difference between AR5’s mitigation cost and what DICE is doing which is not a mitigation cost.
3. That is one reference I used for $40/tonne which was one of my numbers, so it is not different from those models.
You did not answer these three questions:
I already gave you this 2013 reference https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf and it still uses DICE, FUND and PAGE, not AR5!
You have not answered the questions. Read them again with an intention to try to comprehend the question. Your previous answers are a fail.
Jim D,
YOU HAVE CONTINUALLY FAILED TO UNDERSTAND WHAT YOU ARE DOING WRONG. I’VE TRIED TO MAKE THIS COMMENT SIMPLE ENOUGH FOR MOST PEOPLE TO UNDERSTAND
Did you read the quote I gave you from EPA Fact Sheet, 2015 July, on the Social Cost of Carbon? http://www3.epa.gov/climatechange/Downloads/EPAactivities/social-cost-carbon.pdf . Excerpt:
[my emphasis]
To be clear, the $40/ton SCC you are using is the estimated cumulative climate damages to 2300. Therefore, your calculation of $120 trillion climate damages avoided by abatement to 2100 (instead of 2300) is incorrect. Anyone with common sense and an ability to do reality checks would recognize that.
Furthermore, the projections of abatement costs and benefits (avoided climate damages) are based on many, many assumptions; the key assumptions used by the IAM models may overestimate the SCC by an order of magnitude (they are explained in earlier comments and links on this thread).
It seems appropriate to say what you said to me earlier back to you:
The last time it was this clement – the 1200s – there was an extensive priestly class, but neither the priests nor the common punters complained about Peak Glacier or Peak Cathedral. Crusading, cultivating and populating were the big pastimes. We have a great opportunity to learn from past experience and accept more readily than our forebears that absolutely everything ends. Trends end. (1300s not so good!)
Yet, amazingly, we are even more dogma-ridden and even more inclined to extrapolate from current conditions and trends, both real and confected, than were our medieval forebears. Those who talk most of “climate change” have no notion of change. They extrapolate because that’s all they are equipped to do. The New Man at Year Zero has to hid from history, complexity and contradiction at every moment.
Creepy, when you think about it.
The one constant is change, the only thing that we cannot foresee is the future.
Why shouldn’t we be planning for the high-end tail of ECS?
For the same reason that 20 year olds don’t buy a lot of life insurance. The “tail” is a chimera made up of 1 part nutty climate models, 1 part nutty paleo studies, 1 part fear, and 1 part excessive caution. This is not the way people actually judge risk..
At climate confabs, when they say “shake your money maker” they are referring to the high-end ECS “tail” rather than a derrière.
Rather a bland presentation of a trillion-dollar question. How much does the insurance cost? How much is the estimated cost of the damage from high ECS, and how likely is it? Does the amount of insurance that we can actually purchase truly help? Are there ways to hedge our bets by trying to improve the estimate of ECS and of the resulting damage before spending money on insurance that we may not need? If our goal is the best result overall for the world’s population, are there other ways to spend that same money that produce better results?
Why shouldn’t we be planning for the high-end tail of ECS?
The highest observed backward looking warming rate is about 1.7C per century.
The rate of RF peaked in the late 1970s.
Therefore, there’s no evidence of a high sensitivity, and perhaps more important, there won’t be high rates of forcing. The most intense warming is behind us.
Further, global temperature rise is climate.
Did you have some secret formula that depends on GAT?
TE,
Can I use your time machine when you’re finished with it?
Because in the real world there are limited resources and many seeking the limited resources use.
David- your question seems typical of people who spend until they are out of checks
… and then there’s phantasmagoria,
Say attap, pay heed ter RS, CG and SB,
no sich thing as wealth generated by top
d
o
w
n
wealth creation, print money schemes,
they’re jest hot – air – dreams.
David – please plan for the high-end tail of ECS at your expense. Don’t use my money to support your religion.
Because the costs are enormous and the benefits illusory.
David Appell: Why shouldn’t we be planning for the high-end tail of ECS?
We should be planning for the recurrent floods and droughts that will recur no matter what the ECS. That is quite an expensive undertaking on its own, and its achievable goals are being ignored by the catastrophists. There is no evidence that reducing CO2 should have a higher priority than preparing for more calamities of the sort that always happen, so we can continue to research the details of ECS for at least a few decades.
Consider California and Japan: whatever the eventual mean temperature increase 300 years from now, California will continue to experience fires and alternations of drought and flooding, and Japan will continue to suffer from earthquakes and tsunamis. For each, dramatic reductions in fossil fuel use ought not be the highest priority.
Oregon and Washington should be planning for a M9.5 earthquake.
” I argued that it is becoming increasingly difficult to defend high values of ECS. However, the uncertainty is sufficiently large that we can’t really identify a meaningful ‘best value’ of sensitivity, or rule out really high values.”
Due to uncertainty the climate science community cannot currently identify any values for ECS, INCLUDING ZERO. The value of ZERO must be included in any policy talks. Yes, it might be high (the fat tail), but it may also be ZERO, AKA the non-exsistant tail…..
Cheers, KevinK.
Not true at all…. but why plan for the best case scenario, and not the worst case scenario?
Do you have alien invasion insurance?
Believing things without evidence is not a good way to lead your life.
I don’t know David.
Maybe for the same reasons we don’t plan for:
The Yellowstone caldera eruption.
Cascadia subduction zone quake and tsunami
A Carrington event
A strike by a large asteriod.
Invasion by an alien species.
The sun unexpectedly running out of fuel.
A zombie virus.
Nice photo!
Un-validated climate models should not be considered to be a source of TCR and ECS uncertainty. They should be ignored for public policy decision-making until such time that they can be validated with observational data. In the meantime, the only uncertainty we should consider is the uncertainty in the observational determination of TCR and ECS. The more recent published values for TCR and ECS based on observational data do not justify drastic efforts to reduce CO2 emissions.
Climate change is occurring slowly enough for us to use the more certain TCR climate sensitivity metric for policy decisions rather than the less accurate ECS metric. Paleo data attempts to evaluate ECS as suggested in several comments above will always have much more uncertainty than TCR determined from the thermometer record since 1850. It is going to take about 230 years to double the 1850 atm. CO2 level of about 285 ppm to 570 ppm (I estimate in about 2080). We have already increased the 1850 atm. CO2 level by about 40% and have less than 0.8C warming from all sources, natural and anthropogenic, since 1850. This is sufficient to make a conservative estimate of TCR (assuming all warming is anthropogenic) which Lewis and Curry (2014) found a best estimate of TCR = 1.33C and Lewis later adjusted downward to TCS = 1.2C when the strong cooling effects of aerosols assumed in the IPCC AR5 report were challenged by Stevens (2015);
The cooling effect of aerosols provides by far the most uncertainty to the observational TCR value, with uncertainty in Global Mean Surface Temperature (GMST) rise since 1850 providing much less uncertainty to the determination of TCR (Lewis and Curry (2014)). If we define beta to be the fraction of CO2 radiative forcing provided by all other GHG and aerosols since 1850, and CO2(year) to be the annual average atm. CO2 concentration in ppm, with 3.71 W/m^2 the value of radiative forcing for doubling atm. CO2 levels, then
GHG Radiative Forcing(year) =(1+beta)(3.71)LOG[CO2(year)/285]/LOG[2]
is the total GHG radiative forcing since 1850 (including effects of aerosols) in any year. It can be derived from an earth surface energy (power) balance equation that the GMST temperature change due to GHG radiative forcing are related by,
dT(year) = 0.302(Radiative Forcing(year)
Therefore,
dT(year) = (0.302)(1+beta)(3.71)LOG[CO2(year)/285]/LOG[2]
= TCR(1+beta)LOG[CO2(year)/285]/LOG[2]
forecasts the GHG global warming in the years until about 2080 when the atm. CO2 level should have doubled the 1850 value of about 285 ppm. When the CO2(year) value is 570 ppm, double the 1850 value of 285 ppm, the GHG caused temp rise since 1850 forecast by the above equation is TCR(1+beta).
Assuming the entire increase in the HadCRUT4 temp anomaly since 1850 is due to GHG radiative forcing, then the above dT(year) function can be used to extract a value from the HadCRUT4 data set of
TCR(1+beta) < 1.8C
without significant uncertainty in the 1.8C value. If one assumes a "business as usual" scenario with the avg. value of beta not changing from its historical value looking forward to about 2080 when atm. CO2 levels will have doubled, then
TCR(1+beta) = 1.8C
can be used as an accurate forecaster of GHG warming from
dT(year) = (1.8)LOG[CO2(year)/285]/LOG[2]
that provides a somewhat conservative approach for predicting the HadCRUT4 temperature anomaly increase since 1850 until the atm. CO2 CO2 level doubles its 1850 level. At that time, TCR can be computed directly from the HadCRUT4 temp anomaly and beta with very little uncertainty. If we evaluate avg. beta since 1850 to be 0.5, then
TCR = 1.2C. However we can avoid the uncertainty of past aerosol effects on the HadCRUT4 temp anomaly by forecasting with the value TCR(1+beta) = 1.8C.
As the current "pause" in the HadCRUT4 temp anomaly continues, the HadCRUT4 temperature anomaly in the years since 2005 have fallen below this conservative predictor of HadCRUT4 temperature trends as a function of atm. CO2 levels. This forecasting approach should provide a somewhat conservative forecast of GHG warming due to various atm. GHG level forecasts for current decision-making. The forecast and forecasting method can be re-evaluated periodically to confirm the basis for current public policy decisions while continued research focuses on removing uncertainty from TCR and ECS.
Methane and N2O do not have forcings proportional to their logarithms.
Methane and N2O forcings are a fraction of CO2 forcing that does have a logarithmic relationship to atm. CO2 concentrations. Uncertainty in aerosol cooling effects tends to dominate uncertainty in the value of beta used in the forecasting equation. Your comment is helpful if the non-logarithmic forcings of methane and N2O in the future significantly increase the historical, approx. 0.5 value of beta in the next 70 years or so. Otherwise, the equation remains a conservative predictor of GHG warming. The equation presented (plus other natural climate variation terms involving solar TSI and albedo changes and deep ocean heat transport changes ignored for simplicity and conservatism here) has been derived from an earth surface power balance and is validated with 165 years of climate and atm. GHG data.
https://www.youtube.com/watch?v=Uigq9iiN76Y
It is far more accurate and useful than an un-validated climate model.
We use this equation as a bounding function for the HadCRUT4 temp anomaly in the past as well as in the future by using an upper bound value for the HadCRUT4 temp in the 1850-1860 time period of -0.2C as an initial baseline temp rather than an average of this data scatter. The dT(year) values from this equation *relative to the initial -0.2C value” in 1850 bound all HadCRUT4 data points except for a few “out of family” extraneous warm points in 5 years associated with very large El Nino events such as occurred in 1998 and the late 1870’s. These large El Nino events tend to occur at the end of periods of more rapid warming associated with approximately 62 year period cycles of HadCRUT4 temperature data superimposed upon the more gradual GHG warming trend. As a result of the current “pause” that we suspect is caused by opposing forcing from continuing rise in atm. GHG levels and a natural cooling trend associated with PDO and AMO, HadCRUT4 data points since 2005 fall further below this bounding curve in each subsequent year through 2014.
“Methane and N2O do not have forcings proportional to their logarithms.”
They are square root dependent, so they STILL tend to approach the asymptote.
You’re getting desperate.
Your opponents raise excellent points, David. In case a shorter argument would help, anyone who has not explored the feasibility of distinguishing the peak of a bell curve from the peak of a sine wave is likely to be unqualified to deny the proportionality of a given function to a logarithmic dependence.
Thank you, Harold, for a clear and de-alarming post.
Melbourne University late3st Magazine ‘The ESSAY’
same ol’ same ol with pickchure.
The road ter Paris
ain’t the road ter Damascus
fer the ideologically committed..
http://mag.alumni.unimelb.edu.au/the-essay-signs-of-hope-on-the-road-to-paris/
Paraphrasing David Victor, Paris will be the funeral of the 2K target.
50,000 mourners are expected at the wake.
Richard Tol,
O/T, would you be able to explain for me, or provide a link to answer a question I posted (late) on a previous thread http://judithcurry.com/2015/09/20/week-in-review-energy-and-policy-edition-13/#comment-732145 . Below is a copy of the comment for convenience (slightly reworded):
Richard Tol,
Could you please compare the projected economic impact of warming plotted in Figure 1 in your new paper with Figure 2 in your earlier paper, and explain the reasons for any differences.
Richard Tol, 2015, Economic impacts of climate change: New evidence, Figure 1,
http://www.voxeu.org/article/economic-impacts-climate-change-new-evidence
Richard Tol, 2013, The economic impact of climate change in the 20th and 21st centuries, Figure 2,
http://link.springer.com/article/10.1007%2Fs10584-012-0613-3
Free access to prepublication version: Richard Tol, 2011, The economic impact of climate change in the 20th and 21st centuries, Figure 2, http://www.copenhagenconsensus.com/sites/default/files/climate_change.pdf
If you’ve explained the differences elsewhere, could you please provide a link.
Paraphrasing David Victor, Paris will be the funeral of the 2K target.
Yes, that was my expectation too, Richard. I also expect it will be the funeral of some 50,000 species, not that this is the sort of expectation likely to resonate with Climate Etc. denizens.
Please identify the 50k species that will go extinct.
A warmer world sustains greater total life and greater diversity of life. Gaia only knows the extra contribution of increased CO2 to that simple and obvious truth. One wonders why Vaughan won’t see it. Is it mistaken fear? Is it unnecessary guilt? Is it ideology?
Once I said ‘supports’ instead of ‘sustains’ and oh, the trouble I got into.
============================
Lol. The pause has made fools out of a lot of smart people, and poets too.
First, fool all the models.
==================
All models are wrong, so only fools believe they should be “right”. We’re warming. And we are warming, right now, very fast. September anomaly looks to be plus .90C. Satellites will be doing their ridicule ketchup routine this fall.
Jan – 2nd warmest in the NOAA record
Feb – 2nd warmest in the NOAA record
Mar – warmest in the NOAA record
Apr – 4th warmest in the NOAA record
And then it kicked in:
May – warmest land, warmest ocean, warmest May in the NOAA record
Jun – warmest land, warmest ocean, warmest June in the NOAA record
Jul – 6th warmest land, warmest ocean, warmest July in the NOAA record
Aug – warmest land, warmest ocean, warmest August in the NOAA record
Why, it looks like a stadium wave… lol.
And this will continue will into Spring 2016. 2015 is going to a be a warmest year, and 2016 well could be another one.
“It’s cooling, folks, etc.” … yeah, right.
Gee Vaughan,
You gotta come up with something better than this. Demise of 50,000 species? When it is estimated by some that as much as half of the species in existence have yet to be classified and when people have a hard time pointing to any species known to have gone extinct since the second half of the 20th century, your 50,000 claim looks to be on par with the one about the 50 million climate refugees by 2010.
Please identify the 50k species that will go extinct.
The tip of the species-extinction iceberg can be seen with the very large animals here:
http://www.pixable.com/article/heres-every-single-animal-that-became-extinct-in-the-last-100-years-photos-67674
If you can prove that there exists even one animal today in this long list, please do so!
The most accurate estimate to date of the total number of species is 8.7 million, as described by
http://journals.plos.org/plosbiology/article?id=10.1371/journal.pbio.1001127
Given how many as yet unnamed species there are, asking to identify the species that have gone or will go extinct is like the guy who robbed the convenience store and told the police, “please identify the serial numbers of the bank notes you claim I took”. Obviously with 8.7 million species on the planet, any listing of the species going extinct would be impossible to post here.
Eleven studies of marine invertebrates reviewed by the article “The Future of Biodiversity” at
http://www.sciencemag.org/content/269/5222/347.full.pdf
arrived at a figure of between 1,000 and 10,000 ky (kiloyears) for the average lifetime of a species, or 1 to 0.1 “E/MSY” (extinctions per million species-years). A similar degree of uncertainty exists for the age today of homo sapiens, which is considered to be between 200 and 1,800 ky old thus far.
Are humans today at the prime of their life, or geriatric? It would be very interesting to take a poll of what people consider the odds of the species homo sapiens adding even 10 ky to its age before self-extinction, corresponding to 5 to 0.55 E/MSY. A poll of this particular blog would predictably yield the expectation that humans could outrun the expanding Sun without a sweat, long after it had boiled Earth’s oceans dry a biillon years hence, corresponding to 0.001 E/MSY. That would be a hundred times the most optimistic estimate of the average lifetime of a species.
While the point about uncertainty of number of species is a good one, it does not in any way contradict that rate of species extinction is increasing rapidly. The above article points out that the 0.1-1.0 E/MSY rate of extinction of less than a millennium ago is now up to 20-200 E/MSY (Figure 2). On the one hand there is no sign of this increase letting up any time soon. On the other there is the interesting point made in the article that the introduction of a single species of snake into Guam 30 years ago had the effect of eliminating every bird species on the island in that short period of time. This shows just how hard it is to model future biodiversity on the planet when extinction rates can turn out to be an order of magnitude faster than predicted by naive models due to a single snake species.
Or a single homo species.
A warmer world sustains more total life and more diversity of life.
==================
No. Too many Club of Rome doomsday failed
predictions,like Tetlock says. we’re not too
good at predictin’, but serf’s say naychure’s
resillient, despite seesaw climate ups and downs
(contrary ter hocky stick models that don’t correlate
with observations. Remember that 4th IPCC graph
they tried ter toss down the memory whole. Tsk!
So much sacrifice demanded based on so little.
https://climateaudit.files.wordpress.com/2013/09/figure-1-4-models-vs-observations-annotated.png
Paris should acknowledge the huge knowledge gaps in climate science. They could start by earmarking funding for observational equipment, launch initiatives to attract the best and brightest into climate science, dozens of more things I can’t think of. An intergovernmental organization seems to be an excellent vehicle to do this.
I’d suggest, nomore public funds. In fact, cut back the $1.5 trillion p.a. (reportedly) climate industry to what ever can be justified on an economically rational basis – i.e. every little if the Copenhagen Consensus has it about right.
Peter, this comment only so that all “Recent comments” are by you and I! I’d better take a break now.
Faustino, Perhaps you could have said (accurately):
“all valid, relevant comments are by you and I!” :)
Peter, I think that my 3.53 comment gives the lie to that!
Well said, Michael.
Looniness on a scale of 1 to 10 is just as well represented on the right as on the left. Those least equipped to see this are the loons.
I’d hope that the “best and brightest” had better things to do, enough resources have been wasted in the alleged CAGW field already, let’s cut back on the waste and keep people in useful areas.
The waste will increase as long as United Nations is the locomotive.
Not to me! “An intergovernmental organization” doesn’t seem to me “to be an excellent vehicle to do” anything. An intergovernmental framework might serve effectively as a sort of “agorá” where those who are actually doing things (about, say, fossil carbon) can interact, everything from trading carbon credits (if any) to publishing research, offering patents or other intellectual property for licensing, and theorizing about policy.
The agorás of typical Hellenic towns could serve as centers for a variety of communal activities because the population was usually small (Athens was an exception, of course). For some framework to do likewise for a modern global community, even WRT the narrow focus of fossil-neutral energy, the technology of the Internet would have to be recruited.
For such a system to work, the research and especially theorizing about policy would have to be open, available for anybody’s opinion. Somehow, I don’t see such a system growing out of Paris, or any organization made up of the sort of warmists found here. (Maybe a good fraction of the “luke“-warmists.)
“An intergovernmental organization seems to be an excellent vehicle to do this.”
Not necessarily, and probably not. May I suggest that you read the following document: “Principles governing IPCC”
https://www.ipcc.ch/pdf/ipcc-principles/ipcc-principles.pdf
Let me pinpoint two fallacies, among several, in the principles governing IPCC:
Paragraph 1 :
“The Intergovernmental Panel on Climate Change … shall concentrate its activities …. on actions in support of the UN Framework Convention on Climate Change process.”
Here is an extract from Wikipedia that will help to understand this better: The United Nations Framework Convention on Climate Change .. is an international environmental treaty .. The objective of the treaty is to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”.
Hence the following will be a legitimate interpretation of Paragraph 1:
“The panel shall concentrate its activities on actions in support of stabilizing the greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”.
This means that IPCC is created for a particular mission. Obviously, the principles does not nourish a culture of systematic scrutiny. Which is fundamental to a modern scientific method.
Paragraph 10 :
“In taking decisions, and approving, adopting and accepting reports, the Panel, its Working Groups and any Task Forces shall use all best endeavors to reach consensus”
Obviously, consensus is a very central value for the Panel. This can be regarded as a dangerous value to endorse – groupthink is a well known cause of unsound decisions – and argument by consensus is a well known logical fallacy.
If you established an international organization based on a modern scientific method. Poppers empirical method, commonly known as The hypothetic deductive method it would look more like this:
“The organization shell be characterized by its manner of exposing to falsification, in every conceivable way, the system to be tested. Its aim is not to save the lives of untenable systems but exposing them all to the fiercest struggle for survival.”
Still, I would have my doubts. I really don´t know how groupthink can be avoided within an organization.
Enjoy some Popper. First 25 pages contains the essence.
http://strangebeautiful.com/other-texts/popper-logic-scientific-discovery.pdf
Just for fun: http://www.ajc.com/news/news/education/two-ga-schools-make-top-100-best-universities-worl/nnrqD/
Australia did pretty well too, with six in the top 100, though we have 24 million to GA’s 10, and our highest ranked – Melbourne – was 33rd. UWA, which refused to allow Bjorn Lomborg near it’s hallowed walls, somehow jumped from 157 to 109.
Is this new set of papers going to change the thinking on feedback.
http://scottishsceptic.co.uk/2015/09/30/massive-global-cooling-process-discovered-could-explain-the-recent-disagreements-between-models-and-reality/
Not directly, but it seems to be another pointer to the change in aerosol forcing over the industrial period being lower than previously thought, and simulated by most current (CMIP5) climate models, and so indirectly to climate sensitivity being lower than in models and, in particualr, to the risk of very high sensitivity being substantially reduced.
Fred: Is this new set of papers going to change the thinking on feedback.
You never know for sure what will attract the attention of dedicated graduate students and young researchers. I would expect that this will alert at least a few to the fact that the effect of an increase in downwelling LWIR on ocean surface is almost totally unknown due to being almost totally unstudied. The authors do not say how much energy goes into the production of isoprene, but however much increased DWLWIR goes into increased production of ispoprene will not go into raising the temperature of the water.
Something analogous can be said about the non-dry land surface, savannahs and forests: however much of the increased energy in the increased DWLWIR goes into increased biomass (high energy bonds) and other chemicals will not go into increased surface temperature.
if fun’s ok, reflecting US values I thought I’d look at who balances educational reputation with football prominence to think about an alternate top 10. Taking the top 100 and being generous with Football prominence, these stand out over time: Stanford, Berkeley, UCLA, Duke, Michigan, Northwestern, Washington, Georgia Tech, University of Texas, Wisconsin, North Carolina, Southern Cal, Penn St, Pittsburgh, Vandy (I am being kind),Ohio State and Michigan State,
“if fun’s okay” Well, outside of engineering circles, it usually is. And my engineer daughter, her engineer husband and my engineer brothers-in-law think so too.
Why blame the mid 1970’s surface cooling on aerosols when you can see that La Nina and a cold AMO were dominating it, and you should also know that La Nina and a cold AMO will make continental interiors wetter and cool them too.
Your main problem is that La Nina and a cold AMO are directly associated with increased positive NAO/AO, and so is increased CO2 forcing.
Spot the contradiction?
Because the notion that the climate (i.e. the “global average temperature”) was exactly stable absent anthropogenic influences is an essential part of the paradigm. It’s taken for granted, research is done with that assumption, and then any results that don’t conflict with the assumption are taken to prove it.
Can you spell “circularity“
@AK, despite such an assumption, technically speaking, as an increase in climate forcing results in increased positive NAO/AO, which is associated with La Nina and a cooler AMO, if anything one should be looking for an increase in forcing to explain the mid 1970’s surface cooling, and not a decrease in forcing by aerosols.
In fact El Nino conditions are the expected response to the reduction in surface forcing due to stratospheric volcanic aerosol events.
Because the PDO was dominating it… the AMO just tags along, or roams aimlessly.
Totally obsolete approach to understanding how the climate really works.
BS.
you should also know that La Nina and a cold AMO will make continental interiors wetter and cool them too.
Would you happen to have any compelling statistical or other evidence for a cold AMO, ulriclyons?
Reason I ask is that I don’t, so evidence of that sort would make a big difference to how I model future climate.
Here are a couple:
http://www.atmos.umd.edu/~nigam/GRL.AMO.Droughts.August.26.2011.pdf
http://www.ess.uci.edu/~yu/PDF/environmentalresearchweb.3-12-2015
Rural temp’s, e.g. Australia:
http://hidethedecline.eu/pages/ruti.php
Modeling future climate is not possible without solar forecasts. To see when the AMO will next again be cold like the mid 1970’s, takes knowledge of why the solar wind was so strong then, and when that will next occur. Which will be in the the mid 2040’s.
Very interesting, ulriclyons. You’ve tied a putative 60-year cycle to the solar wind. My own take is that the solar wind is tied to a 20-year cycle.
Interesting to see how that turns out in the long run.
Nobody’s doing actual physics, so the tails, fat or not, are imaginary.
The number of imaginary disasters is infinite. You have to set the false alarm rate to zero in response.
The saving principle might be called the anthropic principle, as in cosmology. The world is such that we can survive in it.
Which in climate would mean that the sensitivity is low, a priori. Bayes then keeps it low because the prior dominates.
Pingback: The Uncertainty Of Climate Sensitivity | Transterrestrial Musings
Isoprene?
I dunno what you mean.
=======
Isoprene
It makes me wonder how many more “discoveries” will be made in the next 85 years leaving scientists vintage 2100 viewing current knowledge the way we view Model T’s. It ain’t over till it’s over.
They don’t know half the things they know…
Isoprene they put it on the test just to be mean,
But Google told me it was butadiene.
Oh I believe in isoprene.
Suddenly I got half the grades they gave that nerd
Now my applications won’t get heard
Oh isoprene is so absurd.
Why they drag it out, I don’t know, they just won’t say.
I wrote something wrong in my wonderful essay.
Chemistry—you gotta have it to be green,
It’s not physics, math, it’s in between.
Dear god I must have isoprene.
Vaughan! Now THAT was funny! :)
I hope it didn’t get too hot around your home during the last few heat waves. Down in my neck of the woods it was blistering hot – my big leaf maples dropped their leaves and left us exposed to that merciless sun. No AC for us, so we had to ” hunker down and take it like a mule in a hailstorm” ( LBJ).
It’s gotta be global warmin’ I tell yah…
Be well.
All this showing off about chemistry is just isopreening!
Thanks, justin. The muse visits kim more often than me, but on those rare occasions she seems to go all out. I guess it balances out. ;)
Yesterday, all my worries seemed so far away…
The long term warming trend is lower than 0.06°C/decade.
Furthermore there is no sign of acceleration in the warming despite increasing fossil fuels burning / CO2 emissions.
Whatever are the INDCs, warming by the end of the century won’t exceed 1°C.
As AGW, COP21 is a big swindle.
Salutations from Paris.
Why the focus on ECS, equilibruim has a a relaxation time of 300 years, so is absolutely irrelivan for near future policy. Transient response is the only sensistivity that matters this century.
https://klimaathype.files.wordpress.com/2015/06/sres_1_3_sensitivity.png
+1000
I am sick and tired of people blathering on about ECS, which has absolutely nothing to do with the likely climate in 2100.
Vaughan and I occasionally agree
Rob Starkey,
+1
The uncertainty of climate …
From the Telegraph: Scotland is known for its unpredictable weather. But a remote village in the Highlands has achieved the unprecedented feat of being both the hottest and coldest place in Britain – in the same day. In the early hours of Thursday morning, the temperature in the village of Aviemore was close to freezing, with the mercury showing just 1C. But later in the day, the Cairngorms National Park tourist spot experienced weather that was hotter than Barcelona, Rome and Paris at 21C.
Due to a lingering fog that hangs in the mountains overnight, Aviemore endured freezing temperatures before the sun rose and the air pressure shot up, bathing the village in summer-like warmth. The Met Office said that the two extreme recordings “go against normal atmospheric conditions”.
http://www.telegraph.co.uk/news/weather/11905263/UK-weather-Highlands-village-has-hottest-and-coldest-temperature-in-Britain-on-the-same-day.html
It only goes to show that that naughty weather has a mind of its own, and doesn’t give a hoot about humans’ interpretation of it.
Interesting, and it highlights the difficulty of “knowing” temps on the basis of min/max records. Of course, I wouldn’t dare say that all those graphs and charts which recreate old temps on the basis of min/max are an exercise in futility. They are an exercise in compiling min/max readings…and nothing else.
Around here in the 90s (especially), during the late winter and early spring, the same clear skies and light westerlies which could cover the ground in twelve hour frosts could also give you a hot and parching day. To reduce all that to a sterile reading of low min and high max is to miss the point of what actually was happening.
But missing the point and extrapolating from sterile numbers can pass for hard science these days. The rest, where you try to get the point, is “anecdote”.
ATTP, I’m replying here since the sub-thread is rather long. You wrote:
“Nic,
Observational estimates of ECS and TCR are virtually unaffected by the hiatus, despite propaganda to the contrary:
But, if the hiatus is an internally-driven slowdown (as some seem to think) then the observed change in temperature could be slightly lower than the externally-forced response (by maybe 10% since 1950). So, your statement that it is virtually unaffected is – I think – only true under the assumption that the observed warming is externally forced only (i.e., no internally-forced influence).
If there has been internally-driven cooling then your estimate for TCR could be too low by a few percent. Of course, technically one might expect this internal variability to not influence the ECS, since any change in temperature should be associated with a corresponding change in system heat uptake rate. However, even this isn’t strictly the case (see Palmer & McNeall for example) and if it was, you would then have a result where the ratio of your best estimate for TCR to your best estimate for ECS is much greater than seems reasonable given the inertia in the system.”
I think it reasonable to assume that both the hiatus and the preceding faster than trend warming were due primarily to internal variability, but with multidecadal variability as well as interannual (mainly ENSO) and decadal variability. The AMO and related multidecadal variability probably depressed GMST during the grand hiatus (~3rd quarter of the 20th century), boosted it from the late 1970s to the start of this century and has since turned down again.
What you seem to forget is that, despite the hiatus, decadal temperature changes have been almost constant. Look at Fig. SPM.1 of AR5 WG1, which shows decadal average GMST over 1850-2012. The last four decadal values are all evenly spaced. Although the GMST trend was low over, e.g, 2002-2012, the average value (which is what counts for estimating TCR and ECS from long term warming) was much higher than in the preceding 10 years, due to a big jump in the second half of the 1990s/ start of this century.
You also suggested that my statement that transient climate response (TCR) was most relevant for warming this century, not ECS, was somewhat misguided “given that actually reducing atmospheric concentrations is likely to be extremely difficult”.
I don’t disagree about the importance of ECS (although effective climate sensitivity is more relevant out for the next 300 years, at least). But warming over this century, which is what the paper being discussed was about, is far more closely related to TCR than to ECS. TCR is a measure of warming after a 70 year forcing ramp – that takes us into the last bidecade of the century. There seems to be little “warming in the pipeline”, with the Earth’s energy imbalance only 0.5 to 0.6 W/m2 – which would be expected to produce a warming over rest of the next century of only ~0.1 x ECS, probably less.
Nic,
Maybe for you, but there are other analyses that suggest that the forced response since 1950 is maybe 10% greater than what is observed. That you can construct an argument as to why internal variability has averaged out over some time interval, does not make that true. What I was getting at, though, was that your claim (a rather strong one) that the estimates are virtually unaffected by the “hiatus” is based on the assumption that the observed temperature change is a good representation of the forced response. There is evidence to suggest that this may not be the case.
I don’t think I’ve forgotten any such thing.
I realise, which I why I phrased it as I did. TCR is certainly relevant, but appearing to dismiss ECS (which you did appear to do) is – in my view – misguided. I would actually argue that TCR and ECS are really just model metrics and are not necessarily good indicators of what will happen. They can certainly guide us, but what is more interesting is what will happen given various emission pathways, not simply what will happen if we double CO2 at 1% per year.
I was hoping you might also answer my other question about Matt Ridley’s claim that RCP6 would only lead to around 2C by 2100. Do you agree with this and can you explain how we can only warm by around another degree while emitting 1.5 to 2 times as much as we have already? (Actually, this may still be in moderation, but I would be interested in your answer)
Also, you appear to be promoting the idea that climate sensitivity could be (probably is, in fact) lower than the IPCC suggests. What if you’re wrong? Even your own analyses do not rule out a TCR of 2K and an ECS of 3K with high confidence. Be wonderful if climate sensitivity is as low as you seem to be suggesting, but what will we do if we do follow what seems to be your, at least, implicit advice and we discover in 20-30 years time that your estimates are low? I realise that there are risks associated with whatever we may decide to do, but by promoting low CS values, you appear to be minimising the risk associated with climate change and, consequently, strengthening the argument that the risks associated with acting outweigh the risks associated with climate change itself. What if you’re wrong? Also, that you may disagree with some of the other evidence isn’t necessarily a good reason for effectively dismissing it.
ATTP,
“I was hoping you might also answer my other question about Matt Ridley’s claim that RCP6 would only lead to around 2C by 2100. Do you agree with this and can you explain how we can only warm by around another degree while emitting 1.5 to 2 times as much as we have already?”
Sure I agree with it. It is what I give as the best estimate (to 2081-2100) in this report, published by the GWPF: http://www.thegwpf.org/content/uploads/2014/03/A-Sensitive-Matter-download.pdf . If you read it, you will find the answer to your second question.
Nic,
I was hoping you might do more than simply point me at something to read (that’s what I expect of the denizens at BH). I have also read what you link to; it doesn’t answer my question. Evasion? Anyway, what you’re saying is that if your median is indeed a good representation of the actual TCR, then RCP6 would give around 2C by 2100. That I would agree with. However, even your analysis suggests a 50% chance of it being more than 2C, and your analysis is lower than many others. Well, thank goodness; we can all breathe easy,….oh….hold on…..
NicLewis, from the paper “A Sensitive Matter”: The IPCC process of being ‘comprehensive’ allows the authors to stay away from the clear statement that we have made in this report, namely that the best evidence suggests climate sensitivity is close to the reduced, 1.5◦C, lower bound.
If the climate sensitivity is 1.5C (for example) what exactly is it that increases by 1.5C? Surface temp (wet or dry), troposphere temp (lower, middle, upper), some weighted combination?
matthewrmarler,
Climate sensitivity is defined in terms of the change in global mean surface temperature (GMST), not tropospheric temperature. GMST is area weighted.
In practice GMST is usually taken as referring to ~2m air temperature over land and bulk temperature of the top 5-10m layer sea temperature over ocean (SST), used as a proxy for air temperature above the ocean (MAT) since records of SST are more comprehensive and thought to be more reliable. Over the instrumental record, SST apears to have risen very slightly faster than MAT, although there are theoretical reasons to expect the opposite to be the case.
NicLewis: Climate sensitivity is defined in terms of the change in global mean surface temperature (GMST), not tropospheric temperature. GMST is area weighted.
Thank you. How exactly I had missed reading an explicit definition I do not know. I have read calculations and analyses that seemed to assume the surface and atmosphere to be in thermodynamic equilibrium, and to consider only top-of-atmosphere changes in net radiation fluxes.
I think that the surface sensitivity to an increase in 4W/m^2 of DWLWIR is considerably lower than 1C. I presented my calculations here some months ago.
For what it’s worth, my analysis shows a CO2 concentration peak at around 630 ppm, driven simply by fossil fuel depletion, which drives consumption down as prices increase. The assumption being that a steep fossil fuel price increase leads to replacement by SOMETHING, or demand destruction as poorer nations can’t afford the price of energy.
I realize many of you are cornucopians, believe the fossil fuel resources are quite ample, but that’s not what I see looking at it from within the extraction industry. We are simply unable to find new fields or concepts we can exploit profitably. By 2030 to 2040 the most critical problem we will have is very high energy prices as the world starts ramping down oil production.
True perhaps for sweet crude. Absolutely not true for coal. And there is a lot of coal. There’s a lot of tar sands, too. And frackable NG. Best estimates are that we have 5X more economically extractable FF’s than are required to send us over the cliff.
Or I should say that they’re pseudo-economically extractable. To avoid a continued Tragedy of the Commons and the free-riding of those who benefit from the extraction and consumption on the backs of those who do not, the external costs of FF’s related to CC must be added to their prices. When this market distortion is corrected, much of current FF usage becomes less economical than current alternatives.
Alarmists Outraged! Joaquin will not hit USA.
Further to my comment above, let’s assume I’m right, and fossil fuel exhaustion causes co2 emissions to peak.
During subsequent years emissions will decline.
The carbon sinks will keep absorbing CO2 from the atmosphere as a function of concentration (not emissions).
It’s also possible the carbon sink ability to remove or sequester CO2 will continue to be a function of concentration.
Meanwhile the emissions rate will be declining.
Draw a graph, X axis is time, y axis is gigatons of co2. Now sketch two curves, one is the rate of emissions, declining from left to right. The second is the carbon sink removal rate, which is increasing, but reaching a plateau. Eventually the two curves cross over. At this point co2 atmospheric concentration will start dropping. This implies that TCR is indeed a key parameter to consider, simply because CO2 concentration will peak and start to drop before the climate reaches equilibrium.
I realize I simplify these topics too much, and may have errors in the way I visualize the system dynamics. But I also suggest you try to divorce yourselves from preconceived notions and start thinking about the consequences if I happen to be close.
There is more uncertainty than they admit. The sensitivity is not the same for the surface, mid to upper troposphere, and stratosphere — lower at the surface, higher at the upper troposphere, and probably higher at the stratosphere. More than that, the sensitivity is not the same for ocean surface, rain forest, savannah, and dry land far from the ocean.
So what? Everything you said is both trivially true and of no use as an argument against either the science or mitigation.
The aura of apples pervades.
======================
Enigmatic = nonsensical = concession?
Kyle: So what? Everything you said is both trivially true and of no use as an argument against either the science or mitigation.
If it is trivially true that the sensitivity of the Earth surface is lower than the sensitivity of the mid to upper troposphere, could you show me where someone has tried to calculate the sensitivities of the ocean surface, wet land surface, and dry land surface? And that an appropriately weighted average of them is lower than the mid to upper troposphere? Most of the calculations are with reference to some aggregate of land and water surface and atmosphere, following the simplifying assumption of an equilibrium.
“Against the science”? As with the newly discovered creation of isoprene in the upper layer of the ocean surface, these are indications of ignorance where complete and accurate knowledge is presumed. What else do we not know about the effects of an increase of 4 W/m^2 on the large fraction of the Earth surface that is not dry?
” could you show me where someone has tried to calculate the sensitivities of the ocean surface, wet land surface, and dry land surface?”
Why would you demand that? In order to continue your denial, of course. Do you posit that somehow these three portions of the Earth’s surface will go their separate ways? That the laws of thermodynamics will cease to function? Hell, the areas of these three surface types will often change!
“And that an appropriately weighted average of them is lower than the mid to upper troposphere?”
Mid to upper troposphere isn’t where 99.99999% of the biosphere resides, so what’s your point?
“Most of the calculations are with reference to some aggregate of land and water surface and atmosphere, following the simplifying assumption of an equilibrium.”
And that’s terrible and unwarranted because 1000 PhD’s are wrong but you’re right?
““Against the science”? As with the newly discovered creation of isoprene in the upper layer of the ocean surface, . . . ”
This discovery is a refinement in our knowledge, not an indictment of it. That’s a very old creationist fallacy.
” these are indications of ignorance where complete and accurate knowledge is presumed.”
Childish straw man. Anyone that can read the science or the IPCC summaries of it and declare that they are claiming complete and accurate knowledge is either delusional or a liar.
“What else do we not know about the effects of an increase of 4 W/m^2 on the large fraction of the Earth surface that is not dry?”
Don’t even know where you’re going with this. The only thing I get from it is the impression that you accept that there is a net energy imbalance. If so, the First Law of Thermo says it’s warming. Capeche?
Hey Kyle, the “energy imbalance” is enough to raise ocean basin temperature by 0.2C in one hundred years. What’s so troubling about that?
That is one way to frame that, even Bernie is against it, whatever it is.
http://www.washingtonpost.com/business/economy/deal-reached-on-pacific-rim-trade-pact/2015/10/05/7c567f00-6b56-11e5-b31c-d80d62b53e28_story.html
Oranges still rule today.
There is no uncertainty of climate sensitivity, Judith. Because it is inherently meaningless to put uncertainty bounds on a mere assumption. The starting point – that there somehow exists a specific physical phenomenon or relationship like a “global surface temperature sensitivity” to more CO2 in the atmosphere – is nothing but an theoretical assumption. It is NOT an empirically established fact in any way. It has NEVER been shown ANYWHERE by empirical observation in the real Earth system that more CO2 in the atmosphere causes global T_sfc to rise. Such an effect is ONLY hypothetically derived. A simplistic mental construct.
And supported only by models that have never been validated, and whose predictions are daily contradicted by observations.
Kim writes–“Heh, Kyle, observation based estimates are coming in much lower, like 1.5 degrees C/doubling.”
My reply—I agree. A reasonable person should be skeptical of claims that a higher sensitivity will occur in the future. Claims of fully understanding the impact of the various forcings seem highly ill advised based on the current performance of models.
Beyond the basic rate of warming is the great leap that alarmist make in claiming that conditions will change in a “net negative” manner.
That’s simply balderdash. It’s anything but an assumption.
One absolutely can define an average global surface temperature and therefore sensitivity based on that metric. The basic physics of the GHE (the absorption of a photon in a certain region of the IR band and subsequent reemission in a random direction) is as certain as anything in science.
The fact of a climate sensitivity to CO2 doubling is supported by many independent lines of evidence such that denial of it is akin to creationism. The next question is magnitude and science’s best estimates have just happened to be quite similar to the current 1.5 – 4.5C range from the earliest estimates and remained there as our knowledge and the evidence have grown by many orders of magnitude.
Dismissing the range calculated (based upon decades of science by thousands of researchers using millions of data points) as meaningless using your specious claims is anti-scientific in the extreme.
But the basic physics of GHE is getting more complex when taking into account that in most of the IR band, the absorption capability is saturated by water vapor…
For mean atmosphere (average humidity rate) 200 ppmv of CO2 (half of current concentration) already provide 99% of the absorptivity with 400ppmv. And if you double CO2 concentration (i.e.up to 800ppmv), absorptivity only increases by about 1%…
Eric Ollivet, may I take your change of subject as a concession that Kristian’s arguments claims and arguments are as I stated?
You have repeated errors that have been corrected many, many times and imply that thousands of PhD’s are utterly wrong on basics. The absorption bands of H2O and CO2 are not the same, though they’re close enough that that was not known long ago. For that matter, neither H2O or CO2 are remotely close to saturation. You made a very specific claim:
200 ppmv of CO2 (half of current concentration) already provide 99% of the absorptivity with 400ppmv.
That’s an extraordinary – and anti-science – claim and therefore demands extraordinary evidence. I’d settle for any peer-reviewed science that hasn’t been shredded long ago.
No, Kyle, observation based estimates are coming in much lower.
===============
If our knowledge of ECS and TCR have grown by “many orders of magnitude” (that means at least three, implying a growth in our level of knowledge by a factor of at least 1000), dont you think that we would have been able to narrow our uncertainty regarding the actual value of those two phenomena just a tiny bit from our earliest estimates?
That we haven’t calls your assertion into question.
Kyle,
It is not a change of subject nor a concession that Kristian’s arguments claims and arguments are as you stated.
The core issue is that the basic physics of GH remains two simplistic and unable to describe and explain the real world of climate.
Confrontation between “real world” measurements and theory shows that basic GH physics is wrong or at least incomplete.
My claim that “200 ppmv of CO2 (half of current concentration) already provide 99% of the absorptivity with 400ppmv” is not an “an extraordinary – and anti-science – claim” as you stated.
It is grounded on a conference presentation made by a french climate scientist JeanLouis Dufresne, from the Laboratoire de Météorologie Dynamique (laboratory of dynamic meteorology).
Cf slides 8 of the presentation here below (unfortunately in french)
http://www.inter-mines.org/docs/2012101419_pr_100408_dufresne.pdf
Eric Olivett – You did change the subject by abandoning the line of argumentation. No one claims that the simple GHE alone is sufficient to characterize climate change; that’s a straw man. Your assertion that there is a “confrontation between real world observations and theory is a standard denial industry talking point but only supported by willful refusal to understand. The reality is that – as many papers and articles have discussed – the models have performed remarkably well. Que the conspiracy theories about data manipulation.
And yes, your crazy claim is extraordinary – even though some pro deniers have used it. Science has clearly found that it is nowhere close to saturation. The pseudoscience that I’m familiar with that say that it is has been shredded. That’s most likely why you posted a paper in French. It’s seems more responsive than refusing to support your claim but prevents me from even knowing what it really says.
One thing I can tell is that it’s NOT a peer-reviewed paper. It appears to be self-published or published by the universities to whom the authors belong – a courtesy that many a denier has taken advantage of but that doesn’t imply any oversight whatsoever.
Try again?
kim – “No, Kyle, observation based estimates are coming in much lower.”
You seem to specialize in being too vague to respond to. Nice tactic.
Kyle writes— “The fact of a climate sensitivity to CO2 doubling is supported by many independent lines of evidence such that denial of it is akin to creationism. ”
My response–Kyle demonstrates a strong system of belief. In reality the system is a complex one and its sensitivity to warming by adding CO2 likely changes greatly over time in response to other changes in the system.
Kyle has more fears about climate change than seem justified
Rob Starkey – “Kyle writes— “The fact of a climate sensitivity to CO2 doubling is supported by many independent lines of evidence such that denial of it is akin to creationism. ”
My response–Kyle demonstrates a strong system of belief.”
My response is that I demonstrate an acceptance of the science. The “acceptance of science is dogma” denial industry meme is getting damn tiresome.
“In reality the system is a complex one and its sensitivity to warming by adding CO2 likely changes greatly over time in response to other changes in the system.”
Absolutely. It is a childish straw man attack to imply that I or the researchers don’t agree. You also seem to be implying the denial industry meme that other changes are ignored by the science when in fact, the vast majority of the science is all about quantifying other effects so as to better understand the proble