BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

It's Time To Give Up The Two Degree Target

Following
This article is more than 9 years old.

Climate change is certainly one of the most highly profiled issues of the 21st century so far. The UN Secretary-General argues that it is “an existential challenge for the whole human race.” On the other hand, when five million people were asked by the UN what they saw as most important, climate change came at the bottom of the list of 17 issues: way below healthcare, education, corruption, nutrition and water – and even below phone and internet access.

This is astonishing, particularly given the consensus that climate change is real and happening. Are people right to be sceptical about current policies?

The Copenhagen Consensus, my think tank, has asked teams of expert economists to analyse all the options facing humanity – from health and education to violence, water and global warming – to estimate where we can do the most good for our money first. This matters, because the UN is about to set its next set of targets for the world from 2015-2030. Like the Millennium Development Goals, set 15 years ago, these targets will determine where trillions of dollars will be spent. In order to make progress, we can’t afford to pour money into projects, which pay back less than we put in. Likewise, we can’t afford not to focus on projects that will do immense amounts of good

Economist Isabel Galiana has written the main paper on climate change and comes to a conclusion which is sure to be controversial: that present policies designed to reduce emissions of greenhouse gases are failing and cannot be effective until better technology is available. Despite the Kyoto Protocol and many national initiatives, the fact is that emissions have increased by almost half since 1990 and will continue to increase for many decades to come.

In stark contrast, the UN and many national governments focus on committing to keep the average temperature rise below 2°C (3.6°F) above pre-industrial times. But there is a big problem: there is no realistic chance of keeping to this limit with current trends in fossil fuel use. To do this, emissions would have to peak and then be drastically cut with some technology capturing CO₂, liquefying it and injecting it deep underground. But this technology on the vast scale needed doesn’t exist yet. Moreover, solar and wind, though very popular, will even in 2035 contribute just a tiny fraction of global energy needs.

The upshot is that pursuing this 2°C target is very costly and not guaranteed to be successful. Estimating all the economic, social and environmental costs and benefits is difficult, but one thing is clear: the program would cost much more than the benefits it would bring. In the meantime, that money could have been used to improve people’s welfare in much more cost-effective programs.

Galiana suggests that investing 0.5% of global GDP into development of better energy technology would be a much better use of money. This could be funded with a slowly rising carbon tax (giving businesses an incentive to cut emissions but not telling them how to do it) and could give a payback of $11 for every dollar spent.

Galiana also suggests the world should spend 0.05% of GDP for adaptation, essentially helping many nations to cope better with specific climate impacts. Every dollar spent will likely do more than two dollars of social good.

Another economist who has contributed his perspective, Robert Mendelsohn, points out that the cost of action on climate change rises rapidly as the targets get tougher. Keeping average temperature rises below 5°C (9°F) might cost about $10 trillion, but aiming for a 2°C target would cost ten times as much.

Much better, then, to target a maximum of, say, 3°C (5.4°F) rise, which will cost about $40 trillion but avoid most damages. If we insist on 2°C, we will pay an extra $60,000 billion dollars, but only prevent a stream of $100 billion damages that begins in 70-80 years. Moreover, all of these estimates assume cost-effective climate policies, whereas in real life they have often become many times more expensive.

Climate change is a big issue and cannot be ignored. But we need to take the emotion away and look at the facts; otherwise it will be the world’s poorest that will suffer. Money which is not spent on costly, ineffective CO₂ cuts can be used to fund programs which are guaranteed to improve their lives.