After Gutenberg

Senate Republicans are demanding lengthy economic analyses of clean energy policy, even though, attests the Director of Climate Strategy at the Center for American Progress Action Fund full EPA*, EIA, and CBO analyses were conducted of the House bill, the American Clean Energy and Security Act (H.R. 2454), and the EPA has conducted additional analysis of the Senate legislation.

House and Senate bills both propose the cap and trade system, which sets limits on pollutants and then allows utilities and other emitters to trade pollution permits among themselves. In testimony before the Senate Energy Committee on October 14, CBO director Douglas Elmendorf said that the “cap and trade” provisions in a bill passed by the House would cut U.S. GDP by between 1% and 3.5% by 2050.

*Note: HuffPo contributor A. Siegel provides an interesting critique of Republican criticism of the analysis that the EPA submitted.

The core problem for EPA analysis is that it is far too narrowly defined, focusing almost solely on only one segment of a four-part equation. The analysis is heavy on the costs of action in budgetary terms but with very limited discussion as to the benefits of action and, in essence, zero focus on the costs and (very limited) benefits of inaction. The EPA (and CBO and others) inadequately, for example, calculates the benefits to the economy of reduced fuel prices due to reduced demand. (Basic capitalist equation: supply vs demand. Reducing demand is, functionally, the same as increasing supply for price equation purposes.) The EPA did not consider the health care implications of fossil fuel pollution and how moving forward with global warming mitigation will, as a necessary corollary, drive down the pollution that is so seriously costing American society. (According to a study recently released by the National Academy of Sciences, this is a $120 billion / year cost. Oh, by the way, that study limited its examination to the use of fossil fuels and did not count implications of its production.) They do not examine productivity improvements that will occur due to greener work environments (and improved educational performance due to greening schools). Nor is there a valuing of the strengthened dollar due to reduced oil imports. Nor … The list of absent material is extensive enough to fill multiple books. And, these analysis do not even begin to calculate perhaps the most significant financial value of moving forward with climate change mitigation legislation: the insurance value for reducing the potential of (near) worst-case catastrophic climate change.

And, well, there is the real challenge that these analyses focus on “gross domestic product”, which is truly an inadequate measure of a society’s health and strength. For example, an oil spill will actually increase GDP (at least in the near term) due to the clean-up activities. Fossil-fuel pollution actually boosts (at least near and mid term) GDP due to the health care costs of treating asthma, mercury poisoning, cancers, and other resulting illnesses from that pollution. Thus, there is a fundamental question: do these analyses provide a meaningful window on societal strength and well-being?

Thus, James Inhofe, George Voinovich, and other Republican Senators staging their theater event today are absolutely right: the EPA (and CBO and …) analysis of climate legislation is inadequate. More importantly, Inhofe, Voinovich, and others are absolutely wrong as to why. Rather than failing to examine the true costs of action, these analytical organizations are failing to provide a robust window as to the much higher true costs of inaction and the much higher true benefits of action.

PS: Let us be clear, the problem really isn’t with the EPA analysts. The EPA study team clearly recognized that there is a larger picture than their analysis.

While this analysis doesn’t quantify the impacts of higher temperatures and other effects of increasing GHG concentrations, the U.S. Global Change Research Program (in its June 2009 report, “Global Climate Change Impacts in the United States“) described the impacts that we are already seeing and that are likely to dramatically increase this century if we allow global warming to continue unchecked. In the report, it documents how communities throughout America would experience increased costs, including from more sustained droughts, increased heat stress on livestock, more frequent and intense spring floods, and more frequent and intense forest wildfires.

Despite an Old Boyz boycott by Republican committee members, S.1733 has left the Senate Committee on Environment and Public Works.

Repugnants made much of the testimony of the director of the Congressional Budget Office when it was originally released on Sept. 17, for a hearing in the same committee scheduled to take place that day. The hearing was postponed due the involvement of the panel’s chairman, Sen. Jeff Bingaman, D-N.M., in health-care deliberations. Douglas Elmendorf testified before the Senate Energy Committee on October 14 and warned that “cap and trade” would have a negative impact upon U.S. GDP (Gross Domestic Product).

The strategy is familiar to those who study such things. The intent of such demands is to create “a reasonable doubt.” Wonk Room writer Brad Johnson was upset by other such reporting upon CBO testimony. “Although he [Elmendorf] recognized that his estimates do not take into account the economic impacts of climate change, he testified that the changes that scientists call “catastrophic” would be barely noticeable in the U.S. economy:

Most of the economy involves activities that are not likely to be directly affected by changes in climate. Moreover, researchers generally expect the growth in the U.S. economy over the coming century to be concentrated in sectors — such as information technology and medical care — that are relatively insulated from climate effects. Damages are therefore likely to be a smaller share of the future economy than they would be if they occurred today. As a consequence, a relatively pessimistic estimate for the loss in projected real gross domestic product is about 3 percent for warming of about 7° Fahrenheit (F) by 2100. [Dale W. Jorgenson et al., 2004]

Elmendorf testimony, October 14, 2009

“In the last two years,” writes Joseph Romm, “our scientific understanding of business-as-usual projections for global warming has changed dramatically.” Yet denial by members of Congress persists at a time when “inaction is inexcusable” and insufficient measures, malignant.

Elmendorf goes on to cite Nordhaus & Boyer (2000) to claim “the risk of catastrophic outcomes associated with about 11°F of warming by 2100? gives a projected “loss equivalent to about 5 percent of U.S. output and, because of substantially larger losses in a number of other countries, a loss of about 10 percent of global output.” (By way of comparison, US GDP collapsed by nearly 50 percent during the Great Depression.)

This is frighteningly nonsensical. The CBO is arguing that the collapse of the national electricity grid, water supply, food system, and physical infrastructure from heat waves, desertification, disease outbreaks, wildfires, floods, and catastrophic storms would barely affect the national economy. In fact, seven to 11° F (4 to 6°C) warming would lead to unimaginable changes in our planet by 2100:

– One to three billion people around the world exposed to “increased water stress” (aka drought)

– More than 40 percent of the world’s species go extinct

– Widespread coral reef mortality

– Terrestrial biosphere becomes a net carbon source

– Productivity of cereal grains decreases in low, mid, and high latitudes

– Sea level rise of 0.6 – 1.3 meters (2 to 4 feet)

– About 35 percent of global coastal wetlands are lost

– Twenty percent of world’s population exposed to increased floods

– About 20 percent of arable land disappears (same amount becomes arable in previously frozen north)

– Arctic warms by 27°F

AP Photo: Julie Jacobson
“A sign outside the Iowa Welcome Center is partially submerged by flood water on June 15, 2008. The link between global warming and extreme weather events is evident, and research predicts that the trend will intensify, most likely causing more crop losses for farmers.”

The effects in the United States would be similarly disastrous:

— heat waves of greater than 90° six months of the year in Texas, Florida, Arizona, southern California

– 5-month heat waves in California interior, Oklahoma, Louisiana, Arkansas, Mississippi, Georgia, South Carolina

– 4-month heat waves in Kansas, Missouri, Tennessee, North Carolina

– 4-month heat waves greater than 100° in Texas, Arizona, southern California

– 3-month heat waves greater than 100° in Louisiana, Arkansas, Oklahoma, California interior

– 2 to 3-month heat waves everywhere in US except New England, northern Great Lakes, and the mountains, Pacific NW coast

– 1 to 2 months of greater than 100° everywhere except New York-New England, northern Great Lakes, mountains, Pacific NW coast

– 40 percent less precipitation in the Southwest

– Dust Bowl returns to Midwest

– Smog levels throughout summer above 10 ppb all across country

– Pollen count doubles again to four times pre-industrial levels

– Doubling of large wildfires in the West, as aspen and lodgepole pine disappear completely

– Tripling of coastal damage from storms

– Inundation of 10,000 square miles of U.S. land, including 25 to 80 percent of coastal wetlands

Texas and California, our top agricultural states, are already suffering from unprecedented heat and drought. Under 7 to 11°F warming, they would no longer be able to support agriculture. Corn crops start failing at above 90 degree weather, and soybean fails above 100 degrees. There would be no snow, maple, or cranberry industries in New England. The economists’ argument is that since the U.S. agriculture industry only represents about three percent of GDP, its total devastation would be hardly noticeable.

The above figures are actually misleading, because these are just the effects estimated under 4°C warming, not the even more unimaginable 6°C. Scientists are now warning that our current emissions levels may lead to 4°C warming by the 2070s.

Lecturing to a packed house at Stanford University Physicist James E. Hansen, director of NASA’s Goddard Institute for Space Studies, flashed photos of his grandchildren, observing “a basic conflict between fossil fuel special interests and the interests of young people, nature and animals.”

HuffPo contributor, oysterman and labor activist Brendan Smith has a different take on what Elmendorf omitted in his testimony before the Senate Energy Committee.

While fewer and fewer people are willing to publicly deny the validity of global warming science, those who oppose action to protect the climate have taken up a new strategy: Denying that climate change will have a major impact on the U.S. economy.

This denial is rejected by most economists who have studied climate change. In a survey of 144 top climate economists released November 4, 2009 by the Institute for Policy Integrity at the New York University School of Law, 84% agreed that “the environmental effects of greenhouse gas emissions, as described by leading scientific experts, create significant risks to important sectors of the United States and global economies.” A majority stated that sectors that will be negatively affected include agriculture, fishing, forestry, insurance, and health services.

But the profound negative economic impact of climate change is being largely ignored or denied in the current public policy debate. This denial threatens to have a significant effect on public policy. For example, testimony October 14, 2009 by Douglas W. Elmendorf, the director of the Congressional Budget Office, states, “Most of the economy involves activities that are not likely to be directly affected by changes in climate.” He claims that “a relatively pessimistic estimate for the loss in projected real gross domestic product is about 3 percent for warming of about 7o Fahrenheit (F) by 2100.” He cites only two studies, one published in 2004; the other, which he describes as “The most comprehensive published study,” was published in 2000, a decade before current research on the impacts of climate change.

This testimony completely ignores the British government’s 700-page Stern Review, widely regarded as the most definitive study so far of the economic impact of global warming, released on October 30, 2006 by former World Bank chief economist Nicholas Stern. It states, “Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century.”

The CBO testimony ignores many studies that indicate significant negative effects of climate change on the U.S. economy in the coming years. For example, a study by the University of Maryland found that “the costs of climate change rapidly exceed benefits and place major strains on public sector budgets, personal income and job security. Because of the economic costs of climate change, we conclude that delayed action (or inaction) on global climate change will likely be the most expensive policy option.”

The CBO testimony ignores the June 16, 2009 government report Global Climate Change Impacts in the U.S. issued by the U.S. Global Change Research Program which described economically devastating results of global warming already under way:

• More rain is already coming in very heavy events, and this is projected to increase across the nation. This would have impacts on transportation, agriculture, water quality, health, and more;
• Heat waves will become more frequent and intense, increasing threats to human health and quality of life, especially in cities;
• Warming will decrease demand for heating energy in winter and increase demand for cooling energy in summer. The latter will increase peak electricity demand in most regions;
• Water resources will be stressed in many regions. For example, snowpack is declining in the West, and there is an increasing probability of drought in the Southwest, while floods and water quality issues are likely to be more of a problem in most regions;
• In coastal communities, sea-level rise and storm surge will increase threats to homes and infrastructure including water, sewer, transportation and communication systems.

One small example of the way impacts of climate change are ignored: The CBO testimony states that the “medical care” sector will be “relatively insulated from climate effects.” Global Climate Change Impacts in the U.S. states on the contrary that “Climate change poses unique challenges to human health including heat waves and severe storms, ailments caused or exacerbated by air pollution and airborne allergens, and many climate-sensitive infectious diseases.”

The CBO testimony also ignores a new study by the Union of Concerned Scientists Climate Change in the United States: The Prohibitive Costs of Inaction. After reviewing effects on flooding, hurricane intensity, tourism, public health, water scarcity, shipping, agriculture, energy and infrastructure stress, and wildfires, the study concludes, “If global warming emissions continue unabated, every region in the country will confront large costs from climate change in the form of damages to infrastructure, diminished public health, and threats to vital industries employing millions of Americans . . . These projected costs of climate change do not include those that are critical but hard to quantify, such as costs stemming from changes to ecosystems and the need to relocate coastal communities.”

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