Everett: With climate change, is it garbage in, trillions out? | Commentary

A basic principle of computer modeling is “garbage in, garbage out”. In other words, you cannot model phenomena that you do not understand. Yet politicians often use bad models to give weak ideas a legitimate veneer.

Climate policy is essentially a debate about models. The general circulation models for assessing the climate cannot make useful predictions. Bad models don’t do much harm in an academic setting, but the Biden government is proposing to reshape our economy at the expense of trillions of taxpayers’ money based on their performance.

While these climate models don’t work on a planetary level, Richard Newell of Resources for the Future and Rachel Cleetus of the Union of Concerned Scientists recently announced in a National Academy of Sciences (NAS) podcast that so too, models are now being used to assess the impact at the community level. In reality, this claim reflects nothing other than a political need to combine social justice with climate policy. The government’s new “Justice 40” program requires 40% of the benefits of federal investment to help “disadvantaged communities”.

Good motives are nice, but effective policy requires both judgment and common sense. The main effect of atmospheric CO2 is to promote plant growth and drought resistance. NASA studies document the “greening” of many areas, including the Sahara, which can be attributed to increased CO2 levels. If we are to help the world’s poor, improving food production would be a good place to start. Climate damage caused by CO2 emissions is a modeling tool that lacks empirical support. Supplying America’s poorest communities with expensive and unreliable electricity, transportation, and heating is hardly a formula for social progress.

A key to the president’s environmental justice initiative is the Social Cost of Carbon (SCC), which claims to quantify the economic damage caused by an extra ton of carbon dioxide. In 2009, the Obama administration assembled an Interagency Working Group (IWG) that valued the SCC at $ 40 to $ 50. A federal regulation that costs consumers $ 30 but cuts carbon emissions by a ton would supposedly produce a net benefit. The Trump administration reduced the SCC to $ 1-6. Newell and Cleetus expect the Biden government to generate a much higher SCC by January 2022.

However, a close look at the government’s SCC methodology is a real eye opener. The calculation couples climate science models with “damage functions”. The time horizon for this damage is not 50 years or 100 years in the future, but almost 300 years. In other words, the modelers claim to understand what our economy will be like in 2300 and how climate change would affect that economy, even though we cannot make meaningful predictions about economic development over the next six months. The present value of this future damage is then calculated using a discount rate of 3%.

Analysis by the CO2 Coalition, a non-partisan research group of which I am director, found that limiting the time horizon to 2100 (still a stretch) and using a discount rate of 5% t instead of 3% would reduce the SCC by 85 %, even without addressing the flawed climate science of the models. These economic models can generate any number by simply manipulating their basic assumptions. The National Academy of Sciences should be embarrassed to name such a superficial and misleading exercise.

Models like this are worse than useless. In the real world, contrary to the modelers’ imagination, carbon dioxide would be understood as a net good to society and the SCC would be negative. If we capitalize trillions of dollars in our economy, most of the people the government claims to serve will do the most harm.

Bruce Everett has over 45 years of international energy experience, including at the US Department of Energy and ExxonMobil. He is a member of the Board of Directors of the CO2 Coalition.