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Title: "Climate versus the economy: what's the right trade-off?


1
"Climate versus the economy what's the right
trade-off?
  • Prof. William Moomaw
  • The Fletcher School
  • October 17, 2008

2
Four reasons to be concerned
  • Energy security means economic security, and our
    supply of oil is vulnerable to disruption in
    unstable regions of the world
  • The era of cheap fossil fuels is over and spiking
    prices are contributing to current economic
    recession world wide
  • Diplomatic implications of current system of oil
    dependence on governments that are not
    necessarily allies of democratic nations
  • Climate change and other pollution is growing at
    a staggering rate

3
(No Transcript)
4
Volatile oil prices
5
Comments of Secretary of State Condoleezza Rice
  • We do have to do something about the energy
    problem. I can tell you that nothing has really
    taken me aback more as secretary of State than
    the way that the politics of energy is -- I will
    use the word warping -- diplomacy around the
    world. It has given extraordinary power to some
    states that are using that power in not very good
    ways for the international system
  • Testimony before US Senate Committee on Foreign
    Relations April 12, 2006

6
What has been happening to the economy?
  • IMF says US crisis is 'largest financial shock
    since Great Depression
  • U.S. Banking Losses
  • estimated at 1.4 trillion
  • Forecasters see U.S. leading global downturn

7
  • If you think the financial crisis is a downer
    climate change will produce even more severe
    economic dislocations!

8
Temperatures are up! 2007 tied for second warmest
year
9
Heat trapping gases are up!
  • Carbon dioxide output jumps to record level in
    2007
  • The world pumped up its pollution of the chief
    man-made global warming gas last year, setting a
    course that could push beyond leading scientists'
    projected worst-case scenario, international
    researchers said Thursday.
  • The increase was 3 from 2006-2007

10
Carbon dioxide concentrations continue to soar
11
Is it climate change vs. economic growth?
  • Climate change and global warming are the result
    of fueling our economic growth with oil, gas and
    coal, and using the atmosphere as a waste dump
    for the heat trapping gases released in their
    combustion
  • We are already seeing major negative impacts and
    costs of human caused climate change that
    threaten our economic growth

12
The Climate and Economy are Intimately Linked
  • The Stern Review concluded that climate warming
    could reduce GWP by 3-10 and in the worst case
    could lead to a depression with a drop of up to
    20 in per capita consumption
  • Estimated cost of avoiding worst climate damage
    would be 1 of GWP
  • Addressing climate creates jobs and a sustainable
    economy

13
Joseph Stiglitz commenting on Stern Review for UK
government
  • It makes clear that the question is not whether
    we can afford to act, but whether we can afford
    not to act. To be sure, there are uncertainties,
    but what it makes clear is that the downside
    uncertainties make a compelling case for action.
  • And it provides a comprehensive agenda - one
    which is economically and politically feasible -
    behind which the entire world can unite in
    addressing this most important threat to our
    future well being.

14
What does science say?
The paper concludes that it is increasingly
unlikely any global agreement will deliver the
radical reversal in emission trends required for
stabilization at 450 ppmv carbon dioxide
equivalent (CO2e). Similarly, the current framing
of climate change cannot be reconciled with the
rates of mitigation necessary to stabilize at 550
ppmv CO2e and even an optimistic interpretation
suggests stabilization much below 650 ppmv CO2e
is improbable.
15
IPCC 2007 Assessment Report
  • Warming of the climate system is unequivocal, as
    is now evident from observations in global air
    and sea temperatures, widespread melting of snow
    and ice and rising of global average sea levels.
  • Most of the observed increase in global average
    temperatures since the mid-20th century is very
    likely due to the observed increase in
    anthropogenic greenhouse gas concentrations.
    (90 confidence level)

16
Has anything changed since our last debate?
  • 2007 second warmest year
  • More droughts in Africa, U.S. and Australia
  • Intense storms such as the Myanmar typhoon
  • More loss of ice from Greenland
  • Glaciers continue to retreat at accelerating
    rates
  • Loss of arctic sea ice in 2007 was 1 million sq.
    miles more than the average from 1979-2000
  • Loss of Arctic Sea Ice in 2008 was large as well
  • Other than that, not much

17
Sea ice extent 9/16/07
18
With the opening of the Northwest Passage
  • New shipping route will allow cheaper transport
    of Chinese goods to Europe
  • Everyone is rushing to drill for more oil and gas
    in the Arctic to put more CO2 into the atmosphere
  • Russia has claimed the North Pole
  • Welcome to 19th century diplomacy and a 21st
    century climate

19
Greenland ice melt is faster than previously
measured - NASA
20
Climate change is already causing damage
  • Frequency of hot days is increasing with major
    health effects from Europe to India
  • Drought is more frequent and intense in US and in
    Africa
  • Forest fires have increased because of early snow
    melt in Rocky Mountains
  • Coastal erosion is increasing along US and
    European coasts
  • Intensity of hurricanes has increased by 50
  • Insured storm losses have grown dramatically

21
In the words of the U.S. insurance industry
  • Wildfires have increased fourfold since the
    1980s, and they are bigger and harder to contain
    because of earlier-arriving springs and hotter,
    bone-dry summers. Last year's fires broke
    records this year could be worse.

22
Fires in Los Angeles Oct. 2008
23
Wildfire activity increased suddenly in the
mid-1980s. Hydroclimate and fires are closely
related, and climate variation has been the
primary cause of the increase in fires during
the period of their study. Longer springs and
summers that could result as the world warms will
continue to lengthen the fire season and continue
to cause more large wildfires.
Science 313 pp 940-943 18 August 2006
24
This is hardly increasing economic growth
  • The loss of forests to fire in the world changes
    the economic return from an otherwise sustainable
    resource from an economic gain to an economic
    loss while increasing the amount of carbon
    dioxide to the atmosphere

25
Insurance Industry (cont.)
  • Increasingly destructive weather -- including
    heat waves, hurricanes, typhoons, tornadoes,
    floods, wildfires, hailstorms and drought --
    accounted for 88 percent of all property losses
    paid by insurers from 1980 through 2005. Seven of
    the 10 most expensive catastrophes for the U.S.
    property and casualty industry happened between
    2001 and 2005.?

26
Storm activity in Massachusetts
27
Drought in Africa is worsening
28
Cyclone Nargis in Myanmar, like Hurricane
Katrina, may have been intensified by warmer
oceans
29
Future damage will only increase more
  • We are likely to see increases in heat waves such
    as the 2003 event that killed 16,000 people in
    Europe
  • Will see agricultural losses continue to grow as
    they did in US in 2006 and Australia from 2005-07
  • The rising cost of rice is due in large measure
    to climate change induced droughts in Australia
    that dropped rice production by 98 last year

30
Climate change is largely irreversible so we
should take precautionary actions soon
  • The major heat trapping gas in the atmosphere is
    carbon dioxide from the burning of fossil fuels
  • It has a half life of approximately 100 years
  • Sea level is rising faster than predicted and can
    not be reversed over periods of thousands of
    years
  • Tropical storm intensity is up 50 since 1970

31
Nobel Memorial Prize winning economists agree
action now is justified to address climate change
  • Robert M. Solow 1987 prize
  • James Mirrlees 1996 prize
  • Amartya Sen 1998 prize
  • Joseph Stiglitz 2001 prize

32
Solutions are possible and profitable if we act
soon
  • The United States could reduce GHG emissions in
    2030 by 3.0 to 4.5 gigatons of CO2e using tested
    approaches and high-potential emerging
    technologies. These reductions would involve
    pursuing a wide array of abatement options with
    marginal costs less than 50 per ton, with the
    average net cost to the economy being far lower
    if the nation can capture sizable gains from
    energy efficiency.
  • McKinsey Reducing U.S. Greenhouse Gas Emissions
    How Much Will it Cost? December 2007

33
Economic gains from renewable energy industry
  • Germany has added nearly 300,000 industrial jobs
    in the renewable energy industry
  • Canada produces some of worlds most efficient
    windows doors and other building components
  • Denmarks wind turbines are a leading global
    brand and employ thousands

34
Economic Opportunities
  • Solar Energy
  • Domestic hot water from solar thermal panels
  • Sun Tech began in 2001 and is now a 7 billion
    per year company
  • It will exceed all of US capacity by 2010
  • Its CEO is the worlds first solar billionaire
  • The company is based in ChinaO

35
Economic Opportunities
  • Wind power installations for electricity are
    doubling every three years
  • In 2007 wind capacity installed exceeded either
    that of nuclear power or hydroelectricity
  • Wind provides 21 of Danish electricity and much
    of northern Germanys
  • Wind provided more than 1 of global electricity
    last year
  • The fastest growing wind company is Suzlon of
    India which is buying US and European firms

36
Why has the US government waited?
  • Powerful interests ensure the continued use of
    19th century fuels, sunset technologies, and
    continue to block the full introduction of
    sunrise 21st century technology
  • Disinformation campaign by think tanks and the
    fossil fuel industry
  • Because George Bush was a Child Left Behind
  • All of the above

37
Things may be changing in U.S.
  • Cities and states are moving rapidly to reduce
    emissions - Chicago, NY, MA, NY, CA
  • Supreme Court ruled CO2 is a pollutant
  • A dozen climate bills before US Congress
  • They set emission reductions of 50-80 by 2050
  • All three presidential candidates support a
    strong climate action plan

38
Things may be changing (cont.)
  • Large private sector companies are calling on
    federal government to require GHG emissions
    reductions
  • This includes Alcoa, BP, Duke Energy, Dupont,
    General Electric, Shell, Rio Tinto
  • 15 members of the Rockefeller family have
    publicly asked Exxon Mobil to provide an action
    plan for addressing climate change to protect
    shareholder value

39
Address climate change and the financial crises
together
  • Blocking climate protecting energy efficient
    vehicles and efficient power plants has not
    served US industry well
  • Utilize targeted energy transforming expenditures
    for efficient vehicles, renewable energy,
    investment in a new efficient electrical grid
    into economic stimulus
  • Provide tax benefits for job creation

40
International Negotiations are under way
  • Beginning last December in Bali, new
    international negotiations began for a new
    agreement for nations to take real action
  • The U.S. is now out of compliance with
    international norms on climate change
  • Now is the time to enter the lucrative
    opportunities that are available to address
    climate change at a profit

41
A warming climate will reduce our economic growth
and well being!Take actions now that improve
our lifestyles, make economic sense and reverse
the growth of heat trapping gasesReductions in
emissions of just 3/year will set us on the path
to a prosperous and sustainable 21st century
economy and climate
42
The Moomaw Everett Debate Continues
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