* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Main title
Effects of global warming on human health wikipedia , lookup
Global warming wikipedia , lookup
Climate change in Tuvalu wikipedia , lookup
Climate change mitigation wikipedia , lookup
Climatic Research Unit documents wikipedia , lookup
Climate-friendly gardening wikipedia , lookup
2009 United Nations Climate Change Conference wikipedia , lookup
Attribution of recent climate change wikipedia , lookup
Fred Singer wikipedia , lookup
Climate change adaptation wikipedia , lookup
Media coverage of global warming wikipedia , lookup
Climate change and agriculture wikipedia , lookup
Public opinion on global warming wikipedia , lookup
German Climate Action Plan 2050 wikipedia , lookup
General circulation model wikipedia , lookup
Stern Review wikipedia , lookup
Climate sensitivity wikipedia , lookup
Effects of global warming on humans wikipedia , lookup
Climate change, industry and society wikipedia , lookup
Climate engineering wikipedia , lookup
Climate change in Canada wikipedia , lookup
Scientific opinion on climate change wikipedia , lookup
Climate governance wikipedia , lookup
Mitigation of global warming in Australia wikipedia , lookup
Decarbonisation measures in proposed UK electricity market reform wikipedia , lookup
Solar radiation management wikipedia , lookup
Climate change feedback wikipedia , lookup
Climate change in the United States wikipedia , lookup
Surveys of scientists' views on climate change wikipedia , lookup
Economics of climate change mitigation wikipedia , lookup
Economics of global warming wikipedia , lookup
Low-carbon economy wikipedia , lookup
Climate change and poverty wikipedia , lookup
Politics of global warming wikipedia , lookup
Citizens' Climate Lobby wikipedia , lookup
Carbon Pollution Reduction Scheme wikipedia , lookup
Climate Risks and Carbon Prices: Interpreting the Social Cost of Carbon Frank Ackerman 19 October 2011 Climate science vs. economics • Climate change in science – Immediate response is needed – Business as usual threatens lives, communities • Climate change in economics – Cost-benefit analysis is needed – Important to ensure we don’t spend too much • Both cannot be correct! – A major effort to refute the science has failed – Therefore, a new climate economics is needed Valuing climate damages • Cost-benefit analysis requires monetary prices for everything of value • Climate damages summarized in “social cost of carbon” (SCC) – Defined as present value of present and future damages from emission of one more ton of CO2 – Depends on discount rate, modeling of future damages • Larger SCC → stronger climate policy recommendation • No active proposals to use as basis for carbon tax The U.S. “social cost of carbon” APPENDIX 15A. SOCIAL COST OF CARBON FOR REGULATORY IMPACT ANALYSIS UNDER EXECUTIVE ORDER 12866 Interagency Working Group on Social Cost of Carbon, United States Government With participation by Council of Economic Advisers Council on Environmental Quality Department of Agriculture Department of Commerce Department of Energy Department of Transportation Environmental Protection Agency National Economic Council Office of Energy and Climate Change Office of Management and Budget Office of Science and Technology Policy Department of the Treasury (No office, no address, no website, no publicity, no named authors) The number: $21 per ton of CO2 • $21 / ton CO2 ≈ US $0.21 / gallon of gasoline – Equivalent to 0.74 peso / liter • The $21 estimate is an average of 15 results – 5 emission scenarios, 3 models; constant 3% discount rate • Emission scenarios from EMF-22 – Roughly comparable to IPCC’s B2 emissions • Model averages – PAGE: $30 DICE: $28 FUND: $6 • FUND estimates big net benefit in agriculture – Based on very old research, now out of date – Also contains a serious software bug (divide-by-zero error) • Without FUND, average is $29 – Roughly 1 peso / liter of fuel Mapping science to economics: 1 Scientific assessment of damages This mapping changes the structure of information Economic assessment of damages $21/ton CO2 Mapping science to economics: 2 Scientific assessment of damages Economic assessment of damages Disastrously high SCC This mapping preserves the structure of information Higher SCC Low SCC ($21?) Our re-analysis of SCC • Use DICE model, as modified by Working Group for US analysis of SCC • Explore effects of four variations 1. Median vs. 95th percentile climate sensitivity (3.0 vs. 7.1) 2. Discount rate: 3.0% vs. 1.5% (close to Stern Review rate) 3. Low-temperature damages: DICE default (low) vs. Hanemann estimate (4 x DICE) 4. High-temperature damages: DICE default (low) vs. Weitzman estimate (disaster at 12oC) Fraction of output lost to climate damages Four damage functions 1 H-W Weitzman: 50% loss at 6o, 99% loss at 12o N-W 0.75 H-N N-N 0.5 Hanemann at 2.5o 0.25 Nordhaus at 2.5o DICE damage function: simple extrapolation from lowtemperature damage estimate 0 0 2 4 6 8 Temperature increase ( oC) 10 12 Alternate SCC values, 2010 Social cost of carbon ($/tCO2), 2010 $1,000 $888 $893 $800 $622 $600 $481 $411 $400 $347 $264 $200 $0 $118 $56 $28 N-N $200 $165 $96 H-N $77 N-W $232 $118 H-W Damage functions 1.5%, 95th percentile 1.5%, average 3%, 95th percentile 3%, average Alternate SCC values, 2050 Social cost of carbon ($/tCO2), 2050 $1,600 $1,550 $1,430 $1,200 $910 $800 $761 $150 - $500 $558 $400 $418 $198 $0 $534 $123 $64 N-N 1.5%, 95th percentile $315 $202 $225 H-N N-W Damage functions 1.5%, average 3%, 95th percentile $817 $509 $275 H-W 3%, average Marginal cost of maximum feasible abatement scenarios Costs of rapid abatement • Inter-model comparison project (PIK, Germany) – Five models: scenarios stabilizing at 400 ppm CO2 by 2100 – Marginal cost in 2050: $150 - $500 / ton CO2, average $260 • International Energy Agency “BLUE Map” – Stabilization at 450 ppm CO2 – Marginal cost in 2050: $175 - $500 / ton • Range of estimates reflects technology optimism / pessimism • UK government guidance on long-term carbon prices – Marginal abatement cost for a 2oC scenario – Range of about $150 - $500 / ton in 2050 How close to infinity is close enough? • Under many of our variants, the SCC exceeds the marginal cost of maximum feasible abatement – So anything reasonable passes a cost-benefit test – Cost-benefit analysis becomes identical to precaution • Weitzman: under plausible assumptions, the marginal benefit of abatement is infinite – Our analysis: under worst-case risks, SCC is so high that it has the same implication as infinite cost – Doubling worst-case SCC has no effect on policy • Compare to: 2 * = • Policy recommendation: reduce emissions as fast as feasible [email protected] http://www.sei-us.org/ClimateEconomics Stockholm Environment Institute - US Center Tufts University Somerville MA USA Our study of the SCC: http://www.economics-ejournal.org/economics/discussionpapers/2011-40 - or Google “Ackerman e-journal SCC”