Friday, September 6, 2013

WUWTBlog: "50 times more expensive! Don’t make me laugh!"

I've got to run off all day again, but I do have a few minutes to share a most insightful article reviewing some of the "flaws" in Topher Field's "50 to 1 (denial) Project"

I wasn’t going to discuss Topher Field’s 50-to-1 project as the premise is rather ridiculous and I don’t really want to give it any undue publicity. However, it sometimes seems better to at least try and address such things so that those who are uncertain can get an alternative view. I also thought I might add to what Sou – who has recommended that Topher takes the money and runs – has already said.

The basic argument that Topher Fields is making is that it is 50 times more expensive to stop climate change than to simply do nothing now and to then adapt as it when it become necessary. Let me make it clear that this is a ridiculous claim and I will do my best to explain why below. Topher claims that everything is based on published work and is fully referenced. I don’t dispute that one can find sources for all the numbers that he uses. The problem is how they’re combined to give the answer that he is presenting. I should make it clear that the initial calculation was done by Christopher Monckton and not by Topher Fields.

The basic calculation is as follows.
It is based on the Australian carbon tax (which I think has now changed). This carbon tax was estimated to reduce Australia’s CO2 emissions by 5%. Australia only emits 1.2% of the world’s carbon and so this would only reduce the world’s emissions by 0.06%. One can then estimate how much this would reduce the adjusted forcing associated with CO2 and then estimate how much this would reduce the warming over the next decade. The revenue associated with this Australian carbon tax was estimated to be $13 billion per year. That allows one to determine the cost per degree of warming per decade. The calculation then goes on to say that if we wish to prevent 0.17oC of warming over the next decade it would cost $420 trillion, or 80% of world GDP per year. 

He then claims (using the Stern report) that adapting to climate change (or the future cost) is 1.5% of world GDP and hence it is 50 times more expensive to mitigate than to adapt. I haven’t actually read the Stern review but, according to the Wikipedia entry
the overall costs of climate change will be equivalent to losing at least 5% of global gross domestic product (GDP) each year, now and forever. Including a wider range of risks and impacts could increase this to 20% of GDP or more, also indefinitely.

Hmm, that seems somewhat more severe than Topher seems to be suggesting.
So, what are the issues with this calculation? They are numerous, so it is actually quite difficult to know where to begin. A few basic ones to being with. As someone pointed out in a comment on an earlier post, the Australian carbon tax was intended to be revenue neutral. It was simply moving the tax burden from something else, onto carbon. 


As far as the actual calculation goes, it’s also just completely wrong. The Australian carbon tax was associated with revenues of about $13 billion and was expected to reduce carbon emissions by 5%. $13 billion is about 1% of Australian GDP. If one wants to expand this to the entire globe, then it would seem reasonable to assume that a carbon tax that would have revenues of 1% of world GDP would reduce CO2 emissions by 5%. If the effect is linear, then the maximum would presumably be 20% of world GDP per year, not 80%. There’s a further issue though. If 1% reduces emissions by 5%, then (if it’s linear) increasing the tax by a factor of 10 would reduce carbon emissions by 50%. 

However, this wouldn’t increase the associated revenue by a factor of 10 because you only pay for the CO2 that’s emitted. Since a 10 times increase has reduced emissions by a factor of 2, the revenue would only increase by a factor of 5. If you increase the tax even further, the revenue would actually decrease (at least based on the assumptions used by Monckton and Topher). A factor of 20 increase would reduce the carbon emissions to essentially zero, and so the revenues would be zero, not 20 times greater (I’m, of course, assuming here that an increase produces a certain absolute decrease, rather than a relative decrease).

So, in a simple sense, it seems that using the Australian carbon tax as a benchmark implies that the maximum global impact would be 5% of GDP per year, nowhere near the 80% per year suggested by Topher. ...

I thought I would address a few things actually said in the 50-to-1 video. . .
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Check out the full article at WottsUpWithThatBlog:

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Also see the article at


1 comment:

Victor Venema said...

"As someone pointed out in a comment on an earlier post, the Australian carbon tax was intended to be revenue neutral. It was simply moving the tax burden from something else, onto carbon."

As that someone was me, let me explain my comment a bit more. What I wanted to show by an argument ad absurdum, that you cannot take the revenue of a carbon tax as the cost of a carbon tax.

Thus I stated that a typical carbon tax is revenue neutral as it reduces other taxes, typically on labour. In the reasoning of Mockton this would mean that reducing CO2 can be done for free. This is naturally nonsense. The costs will be a fraction of the carbon tax, however.

Also your example of an extremely high carbon tax shows the error in Monckton's thinking. If you make the carbon tax high enough you can get to a point where no one will use fossil fuels any more and the revenue of the carbon tax will be zero (Laffer curve). In Mockton's reasoning this would again mean that carbon reduction could be done for free, which is clearly nonsense.

The revenue of a carbon tax can not be used to estimate the costs of carbon emission reductions.

As an aside, someone of WottsUpWithThatBlog replied that the Australian carbon tax is not revenue neutral, but that part of the funds are used to stimulate renewable energy. Interesting, but it does not refute the argument ad absurdum.

As a second aside, as a carbon tax is often used to reduce the tax burden on labour, it could lead to reductions in unemployment. Economic theory says that if something is cheaper you use more of it. Thus, especially in countries with a social system, a carbon tax could well be good for the economy and stimulate growth. I do not want to think what this would mean for Mockon's argument.

"The Australian carbon tax was associated with revenues of about $13 billion and was expected to reduce carbon emissions by 5%."

That is another error. Without carbon tax the carbon emissions would have grown. Thus the counter factual is not zero growth and the true emission reductions will have been larger than 5%.

I almost feel bad for the WUWT idealists that voluntarily contributed their hard earned money to this video.