Among the topics discussed during the Heartland Institute’s 13th International Conference on Climate Change (ICCC-13) that I attended on July 25 in Washington, DC, USA, was the social cost of carbon (SCC) vs social benefit of carbon (SBC).
Among the speakers was Dr. Kevin Dayaratna, Senior Statistician and Research Programmer of the Heritage Foundation’s Center for Data Analysis.
Kevin discussed the “Cost-Benefit Analysis of the Green New Deal.” The Obama administration proposed the Social Cost of Carbon (SCC) for regulation, defined as “the economic damages per MT of CO2 emission.”
Kevin wondered how does one actually estimate the SCC and what really is the long-term economic impact of CO2 emissions across a particular time horizon. He mentioned three statistical models (IAMs) to estimate SCC: the DICE model, the FUND model, and the PAGE model.
Heritage altered the assumptions made by the Obama administration, they ran two of the three models, the results show that SCC can drop by 40-200%, can even be negative at times, under very reasonable assumptions. Negative “social cost” means social benefits. Like the greening of the planet, 1982-2009.
Kevin concluded that for the newly proposed Green New Deal (GND) in the US, instituting carbon capture regulations by 2040 will result in income loss of more than $160,000 for a family of four, increase in household electricity expenditures of up to 30%, and an aggregate $15 trillion loss in GDP. Thus, the GND should be junked, using the SCC for cost-benefit analysis should be junked.
Another speaker, Dr. Roger Bezdek, Founder and President, MISI, a DC-based economic, energy and environmental research firm, noted that: 1.) Fossil fuels and CO2 are demonized and blamed for everything but they are essential to modern life and will remain so in the future. 2. To reduce 2050 GHGs to 80-95% of 1990 levels implies that 2050 living standards in the world would be reduced to levels of 1800s; 3.) Benefit-cost ratios are very high and will remain orders of magnitude larger than any reasonable SCC estimates; and, 4.) The social benefits of carbon (SCB) and fossil fuels outweigh costs by orders of magnitude and will continue to do so.
Dr. Craig Idso, founder and former President of the Center for the Study of Carbon Dioxide and Global Change, lead author of “Climate Change Reconsidered” series produced by the Non-governmental International Panel on Climate Change (NIPCC), argued that more CO2 emissions and fossil energy have improved human prosperity and benefit the human and natural world. Atmospheric CO2 is the basic food of plants, their primary raw material to construct their tissues and, aided by sunlight, produce their own food via photosynthesis. Thousands of laboratory and field experiments have shown that higher CO2 concentrations increase plant productivity and growth. Which means more trees, more crops, more food production. More, not less, fossil energy is needed to enhance the future of human environment.
He computed “total human life-years” until around 2017, I updated his computation to 2019 and expanded it to 2050. Data from the UN DESA and geoba.se/population. (See Table 1.)
From 1820 to 2019 or nearly 200 years, there was 17.4x expansion as humans live longer and healthier, mainly because humanity used fossil fuels to modernize their food production, transportation of goods and people, modern electricity that run 24/7 and so on. Projecting to 2050, there would be 24.3x over 1820 and 1.4x over 2019 levels.
The Philippines should never toy with the idea of following GND-type of energy policies. Currently, the per capita energy consumption of Filipinos on average is among the lowest in East Asia, only 18.5 gigajoule per person in 2018 — just one-half the consumption of an average Vietnamese and nearly one-fifth (1/5) of the global average. A gigajoule is equivalent to 277.8 kWh. (See Table 2.)
Last week, my friend and fellow BusinessWorld columnist Andrew Masigan invited me to a presentation by Trevor Neilson of i(x) investments, about the economics and technology of converting solid waste into aviation fuel or diesel. We often hear of biomass energy, converting agro-forest and household solid wastes into electricity, it is old technology but this one is new — solid wastes to aviation fuel. A summary of the economics and business prospects of this business innovation is found in Table 3.
It is a good initiative. Very costly investments but high potentials for the Philippines, singled out by the US business proponents because of its high solid waste production and geographical location — just two to four hours by plane to major business centers in the region, north-west-south of Manila.
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.