Written by Bob Carter
1. Compensation is being demanded by China/India of 1% of the developed world's GDP (more than $300 billion for Group of 7 countries): it is estimated that this will cost each US family US $1,900/yr (Wall St. Journal, April 3:
2. President Obama's intended carbon dioxide cap and trade bill is now estimated to now cost $1.9 trillion (up from $646 billion): this is an additional US $4,500 extra costs/family/yr. (The Washington Times, March 18:
3. In the U.K., the range of estimated costs of their new Climate Change Bill is GBP 324-404 billion: this is GBP 16,000-20,000/family/yr. (Peter Lilley, U.K. MP, Letter to the U.K. Secretary of State for Energy and Climate Change, at:
4. Spanish study shows that since 2000, each job created in the alternative energy industry has been accompanied by the loss of 2.2 other jobs, and cost US $774,000 to create. (Bloomberg, March 27: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2PHwqAs7BS0)
Assuming a BAU usage of 560 Mt of carbon dioxide emissions in the first year after the introduction of an ETS, an Australian population of 22 million persons, and a carbon dioxide tax level of $30/t of carbon dioxide on introduction, and of $250/t later when the "floating price" (Garnaut) is reached, then the following costs can be calculated will be imposed on the taxpayer:
Other increased indirect costs associated with emissions trading include unemployment caused by replacing coal-fired with wind power, transitional economic costs (estimated in the U.K. as roughly 1% of GNP), contributions towards the huge aid sums now being demanded by 3rd world countries (another 1% of GNP) and the economic growth foregone because of the whole exercise (Australian treasury estimate, 1.8% of GNP). These will result in an overall cost to the Australian community of more than double the direct charge levied upon carbon dioxide emissions.
C. CLIMATIC BENEFIT
DICE (dynamic integrated model of climate and the economy) modelling for the U.K. indicates that a reduction in emission of ~1 billion tonnes of carbon dioxide by 2030, as targeted by British climate policy, might result in a reduction in temperature by 2100 of 0.00038 deg. (http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4849167.ece)
The U.K.'s share of global fossil fuel emissions in 2007 was ~1.7% of the total; Australia's is ~1.2%
Therefore, the possible effect of Australia cutting even all of its emissions is a theoretical reduction of global temperature of about 2/10,000 of a degree.
•D. OVERALL COST-BENEFIT -- WILL THERE BE ANY?
Mr Ed Milliband, the British Minister for Energy and Climate Change, recently released an updated Impact Assesssement of the U.K. Climate Change Act, asserting that "I have read the Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options".
Here, I compare the original costs:benefits estimated when the Act was tabled, and the new estimates just released by Mr Milliband which apply to the Act as amended.
Thus an initial benefit of roughly 50 p for every 100 p invested, has changed to a benefit of more than 200 p for every 100 p invested. The "benefits" calculated in the revised Impact Assessment mainly represent the avoided imputed damages that would be caused by allowing carbon dioxide to increase on a BAU path. Instead, the MARKAL model used assumes emissions limitation to no more than 450 ppm globally.
The many flaws in the U.K. Impact Assessment have been discussed by Dr. Roger Pielke (Jr.), who estimates that even using the most benefit-favourable estimates, the likely benefit: cost ratio to the British taxpayer of the Climate Change Act is 0.06 and that even that tiny and doubtful benefit is dependent upon the world (and not the UK alone) achieving a 450 ppm emissions stabilisation scenario. See: http://sciencepolicy.colorado.edu/prometheus/the-uk-climate-change-committee-illustrates-how-not-to-do-cost-benefit-analysis-of-climate-policies-5118.
Finally, it should be noted that the new British Impact Assessment estimates appear to exclude transitional costs (which could amount to 1% of GDP up to 2020), ignore the cost of driving British firms overseas, and assume that all businesses identify and immediately apply the most carbon efficient technology available.
RightSideNews would like to take this opportunity to thank Dr. Robert M. Carter for submitting this analysis.
About Dr. Robert M. Carter
Bob has wide experience in management and research administration, including service as Chair of the Earth Sciences Discipline Panel of the Australian Research Council, Chair of the national Marine Science and Technologies Committee, Director of the Australian Office of the Ocean Drilling Program, and Co-Chief Scientist on ODP Leg 181 (Southwest Pacific Gateways).
Bob Carter's current research on climate change, sea-level change and stratigraphy is based on field studies of Cenozoic sediments (last 65 million years) from the Southwest Pacific region, especially the Great Barrier Reef and New Zealand, and includes the analysis of marine sediment cores collected during ODP Leg 181.
Bob's research has been supported by grants from competitive public research agencies, especially the Australian Research Council (ARC). He receives no research funding from special interest organisations such as environmental groups, energy companies or government departments. Bob strives to provide critical and dispassionate analysis based upon scientific principles, demonstrated facts and a knowledge of the scientific literature.
Dr. Carter's biography and links to articles may be found on: