American isolationism? New US EPA policy disallows the effect of US CO2 emissions on the rest of the world and vice-versa

America’s flawed logic does not reduce the Social Cost of Carbon

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The Trump Administration’s assault on the US Social Cost of Carbon isolates America in a misinformed attempt to justify more fossil fuel infrastructure.

Buried in a backlog of Carbon Brief’s, our go-to source on climate news, there in the New York Times was Brad Plumer’s forensic dissection of the Trump Administration’s re-assessment of the Social Cost of Carbon (SCC).  This would be some dry, academic debate but it matters – by attempting to reduce the SCC from $50 to $1 per ton of CO2, President Trump hopes to nullify the Clean Power Plan, “an ambitious Obama-era program to cut pollution from coal plants”.

Central to the new logic are two changes that would render the SCC almost impotent. The first is the SCC’s Achilles Heel, its social discount rate (the extent to which we value our children’s planet as much as our own). By having such a lever, the SCC was always going to be vulnerable to myopic politicians. Predict Ability Ltd.’s (PAL) carbon pricing system, by contrast, is immune to such tampering.

The second change reveals a flawed and isolationist logic that now seems to hold sway at the EPA (the US Environmental Protection Agency) following its former chief, Scott Pruitt’s, intervention. Plumer says “the EPA took the Obama-era models and focused solely on damages that occurred within the borders of the United States, rather than looking at harm to other countries as well. That change alone reduced the social cost of carbon estimate to around $7 per ton”.

In the late 1930’s the principle of cross-border harm was clearly established in the groundbreaking Trail Smelter case in which the sulfurous emissions of a Canadian lead and zinc smelter harmed the crops and health of farmers in Washington State. If that principle is no longer active in the United States then the situation is as posed in Figure 1 where the EPA now deems that US CO2 emissions cannot harm the rest of the world and vice versa.

 

American isolationism? New US EPA policy disallows the effect of US CO2 emissions on the rest of the world and vice-versa

Figure 1. American isolationism? New US EPA policy disallows the effect of US CO2 emissions on the rest of the world and vice-versa.

 

At a physical level, the EPA’s deeming should mean that CO2 emissions emanating from US territories would remain above US territories. With roughly 6.5% of the world’s land area, the US has contributed ¼ of the world’s cumulative carbon emissions since 1750. Taking the pre-industrial atmospheric concentration to be 280ppm CO2, Pruitt’s logic would imply that, today, the CO2 concentration above America would be a ghastly 795ppm! Since climate change harm directly relates to excess CO2 concentration, 795ppm would push the US SCC towards $200/ton. Clearly, that would be an unintended outcome of Pruitt’s interventions. As NASA’s Mauna Loa data shows, the real-world CO2 concentration in the Pacific is now 414ppm and that is alarming enough.

In asserting that the logic of Figure 1 applies, Pruitt makes a scientific error in multiplying the SCC by the ratio of US emissions rate / global emissions rate. While the US contributes roughly 14% of current emissions, it is the CO2 stock (cumulative emissions) that matters.

Pruitt appears to be using legal devices to cherry pick the scientific rationale. On the one hand he seems to accept that excess CO2 causes harm but on the other he chooses to ignore the disproportionate harm that US emissions create abroad. This harm has accrued during the industrial history of the United States. And if the foreign CO2 molecules that reside over the US cause harm, who pays? The US taxpayer, of course, through higher taxes and personal loss. As with coastal flooding or the FEMA program, the significance of climate change will get blurred by administrative fudging.

The SCC represents the amount of attributable climate damage per ton of CO2. To calculate the amount of climate change damage caused by the United States, at home and abroad, the unadulterated SCC must be multiplied by US emissions. That is the correct and only equitable way to apply the SCC, preferably with a far-sighted social discount rate of 3% or less.

Pruitt’s adjustment for emissions is valid only if the attributable climate damage per ton of CO2 in the US is just 40% of the world average. Palpably, this is not the case as many studies have shown.

PAL has taken this analysis one stage further. For over 100 countries worldwide we have estimated the likely chances of a country economically surviving in the 21st Century. The survival rate, S, is the proportion of cases in which an economy keeps growing (our Monte-Carlo study covers climate scenarios, GDP, climate sensitivity and de-carbonisation costs). Some of the results are illustrated in Figure 2.

 

Some country’s economies will be annihilated by BAU climate change. Others, like Russia’s, may be largely unaffected. In between these extremes it is clear that high emissions are no guarantee of 21st Century economic survivability

Figure 2. Some country’s economies will be annihilated by BAU climate change. Others, like Russia’s, may be largely unaffected. In between these extremes it is clear that high emissions are no guarantee of 21st Century economic survivability.

 

If anything, the US and China have a higher-than-average propensity for economic self-harm than the world as whole. High emissions are no guarantee of economic survival. It is misguided, at best, for the Trump Administration to think the US can continue burning its way to economic prosperity. As Plumer illustrates in his New York Times article, by meddling with the science, the Trump Administration is inviting legal challenges both from inside and outside the US.

 

Richard Clarke

Author: Richard Clarke

Richard Clarke is Director (Research) and co-founder of PAL. He has authored many academic articles and made keynote presentations at conferences on heat exchangers, helium resources and supply. He has recently published his second book, on climate change and the insurance industry, Predicting The Price of Carbon. Richard developed the science behind PAL Carbon.

America’s flawed logic does not reduce the Social Cost of Carbon was last modified: May 7th, 2019 by Richard Clarke

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