Could the Price of Climate Change REALLY Be $60 Trillion?
What’s the real imperative of the migration to renewable energy and cutting back our consumption of fossil fuels via efficiency and conservation? Might you say: Climate change?
We’ll, that certainly one good answer. Of course, there are half a dozen others: dealing with peak oil, health issues, ocean acidification, the loss of biodiversity, human hostility, etc. When I’m interviewed on the subject and I encounter climate change deniers, I’m quick to change the subject. As I often say, “If you don’t believe in climate change, that’s fine, just pick another good reason to curb our addiction to fossil fuels; most of them have nothing to do with this dreaded subject whatsoever.”
But having said all this, the build-up of greenhouse gases, which will eventually culminate in the melting of the arctic and the release of the methane beneath it, carries with it a fairly hefty price tag in terms of climate change per se, according to European researchers Gail Whiteman, from the school of management at Erasmus University in Rotterdam, Peter Wadhams, professor of ocean physics at the University of Cambridge, and Peter Hope, from the Judge Business School in Cambridge. In an article they published in the journal Nature, they try to piece together the cost of global climate change. Their total: $60 trillion.
Now wait a second. If the total world economy is estimated at $70 trillion annually, isn’t this a very large number? Indeed it is.
Let’s look at how they got there. Part of it is the valuation on human life that will be lost due to loss of homeland, flooding, starvation, dehydration, disease, etc. That’s always amused me, btw, in some perverse way. Apparently, we feel fairly comfortable ascribing a certain dollar figure to a human life. Maybe our willingness to equate lives and dollars is why we’re in this mess in the first place. It seems unlikely that Jesus, or Socrates, or Confucius would do that.
Be this as it may. Obviously, a lot of the rest of the damage is easier to quantify: the value of the real estate in low-lying areas like New York, Boston, Miami in the U.S. – and dozens of other huge cities around the world, that will cease to exist as the result of sea-level rise. Dollar figures like farmers’ crop loss are equally easy to nail down with some level of precision.
In the U.S., we’re unique in that many of us question the validity of anthropogenic global warming (AGW). And it’s an issue that divides almost precisely across party lines, too: only 19% of Republicans agree with the 97% of climate scientists that AGW is a valid and potent threat to humankind.
That’s interesting in and of itself, but consider this: none of this is lost on the business community. At the very same moment that the debate leaves the cocktail parties at the country clubs and the polo fields and enters the boardroom, everything changes. When the financial people have a voice, e.g., the insurance companies whose empires rise or fall according to the effects of climate change that are happening right this minute, e.g., extreme weather events, the unsupportable political opinions instantly disappear and science robustly takes over.
Here’s a recent New York Times article that I just found from Googling “insurance companies climate change” – one of 20.5 million such hits, called “For Insurers, No Doubts on Climate Change.” Evidently, the insurance industry, known for centuries for its mathematical precision, see what’s happening, and is acting accordingly. From the article:
And the industry expects the situation will get worse. “Numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the U.S. East Coast in the long term,” said Peter Höppe, who heads Geo Risks Research at the reinsurance giant Munich Re. “The rise in sea level caused by climate change will further increase the risk of storm surge.” Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening, and are quite comfortable with the scientific consensus that burning fossil fuels is the main culprit of global warming.
“Insurance is heavily dependent on scientific thought,” Frank Nutter, president of the Reinsurance Association of America, told me last week. “It is not as amenable to politicized scientific thought.”
We know that our fascination with cheap energy, stored in the Earth from the sun’s rays over the last few billion years, is killing us, but it’s our de facto energy policy nonetheless. How to characterize the fact that we Americans are still dragging our heels and supporting our oil companies with continued subsidies and tax breaks, while letting them essentially run our government? In a word, it’s pathetic.
Craig,
Here’s the disconnect: When business people here the number $60 trillion, it causes them to resist virtually all current greentech. The problem here is understanding how people think about costs… If you just give a median of the 90% confidence interval… then the number can look quite… er… Unimpressive.
$60 trillion by 2100. If we amortized that through a low-end projection of 3 trillion tons of CO2 emitted within that time frame, we only get ~$20/ton. If we were to then assume growth would exceed inflation, we would DEFLATE future spending based on our anticipated real growth. If, therefore, you anticipate that the accommodation costs of global warming will be back-loaded (far more spent in 2100 than today), then the number could be far lower:
If we assumed that accommodation costs were to be 100 billion this year, and increase by ~3.671%/year through 2100… that would get us to $60 trillion. If you then assumed a net global growth rate of only 3%/year, and deflated future accommodation costs by that amount, then the total impact of emissions today is deflated down to only ~11 trillion, which works out to ~$3.70/ton.
Obviously, if you assume lower economic growth, or higher accommodation costs, then the math starts to change…. but when environmentalists pound the table for crazy schemes such as electric vehicles – which even if you make the logically flawed assumption that the energy is all renewably sourced works out to ~$400-$500/ton-CO2. With a low number like $60 trillion, it’s just better to pay for the accommodation.
(For reference: Wind power in windy regions works out to ~$8-$15/ton-CO2, solar power in sunny regions works out to ~$50-$100/ton-CO2… efficiency improvements often work out to negative values/ton-CO2, but usually range from (-)$10/ton-$40/ton, switching from coal to natural gas works out to ~$20-$50/ton-CO2, and upgrading a sub-crtical coal plant to an ultra-supercritical coal plant costs ~$30-$40/ton-CO2.)
I haven’t read their report (yet), but I’ve long used an estimate of ~$40/ton as my personal number representing what I think of as “legitimacy” for investment from the government’s perspective (I support government dollars going into projects with mitigation costs less than that, and I oppose government dollars going into projects with mitigation costs greater than that)… If the actual accommodation cost is only $60 trillion… then I’ve been over-shooting by more than 10fold.
I suspect the disconnect will be found when I read the report, and my long held gut estimate will be closer to the mark.
That is the most unfeeling, insensitive, callous, cerebral, robotic comment I could imagine after what Craig wrote. You sir, are have completely missed the point with all your calculations…. that point is, this is the only planet we have, and no amount of actuarial or economic gymnastics will be comfort to those who are left to inhabit it after your kind have trashed it in the name of “understanding costs”. Wake up man…look outside your cubicle… get some fresh air!
Marc,
You have to understand who you are talking to. I’ve been an activist. I’ve been an eco-nazi. I’ve volunteered for political parties, I’ve quit my job and worked for political parties… I’ve been in charge of thousands of activists, and I’m now working on a revolutionary Greentech project that can actually make real headway towards reducing global greenhouse emissions (potentially as much as a 60% reduction over the next half-century).
There are few who are more passionate about protecting the environment.
But if you aren’t willing to engage the math, you’ll never win the argument. Because if the math is against you then you are probably on the wrong side of the argument. Unfeeling would be to let people suffer and die, or remain uneducated, or remain sick and untreated, or any other potential expense of the public funds… so that you can spend exorbitant amounts of money on some “neat” bit of techno-gadgetry that has no significant impact on global environmental concerns, when the math shows that the cost of simply accommodating the climate change would be mere fractions of the cost of your inefficient mitigation strategy… then brag about how awesome you are.
I read $60 trillion and was instantly terrified. That number is far too low to make any ground in shifting the argument towards making environmental responsibility look like a good monetary investment. I hope there were significant oversights in the study, or there is something that I don’t understand. But $60 trillion is not a high number for this discussion. Arm-waving and hysterics won’t magically turn that into a high number.
Hysterics rarely work to the advantage of environmental concerns.
Mr. Doty
Your figures for an electric car are suspect. A typical car emits about 1lb of CO2 per mile while an electric car battery such as that in the Volt costs about $5,000 with rapidly falling costs and is warranteed for 100,000 miles. This works out to $100 per ton and does not include the fact that the Lithium can be recycled. So you have overestimated the cost by at least a factor of 5. If we look at the oil that is being replaced (since less than a few percent of our electric power is generated from oil), then we should also consider what we have paid over the years for the Iraq War and for anit-terrorism operations.
Solar and wind are clearly not as continuous as nuclear, unless they are supplemented with peaking gas turbine generation, but the nuclear industry has major hidden subsidies such as the federal government providing liability coverage and anti-terrorism security at no charge. Also, the massive costs of decommissioning and fuel disposal are not included when presenting life cycle costs to the public utility commissions.
The drivers of the Volt who give it the highest rating ever for “would you buy again” don’t think the electric car is a “crazy scheme”.
Without going into preambles, what we must realize at this point in time { when the renewables – specifically – wind / solar – have not only developed considerably but are showing downward trends in total project cost } is that renewables will never be in a position to replace fossil fuel as the primary source of energy in foreseeable future.
However, besides reducing the consumption of fossil fuels renewable will definitely help the environment to regain its lost strength of self repair.
Currently, its very obvious that environment has lost all its strength to carryout the very urgently needed repairs.
Therefore the need of the hour is accelarated installation process of renewable source of energy – wind and solar – which shall in turn bring about desparately needed recovery of the environment to achieve the threshold to be able to repair itself.
Our children and grandchildren are going to need high tech education to be able to conceive and fight this challenge. Our generation and the one before us have f’d up the planet and our government makes cuts to college funding programs to make the solutions more difficult to obtain. I hope there are some brainiacs who don’t need financial help to education to pull the world out of this destruction.
This current social ability is un capable of understanding 60 trillion anything. As well we are way too short sighted to act, re act or take a collective approach to this. This is like bobbing for apples, but the apples are planet sized… I am an idealist and a big picture person to a fault, but I must say that the “Silo” mind set today is what got US, pun intended, here in the first place and the silos are just as if not more prominent today as they were in the beginning of the industrial revolution. Individual choices are needed on a daily basis, truth is needed, so what to do with the special interest paid “News”?
I’m of the firm opinion that the phrase “climate change”, which has been popularized by the main-stream media (MSM), is woefully misleading and serves quite well to minimize the phenomenon in the minds of readers. Jeremy Grantham, who heads a firm that manages billions globally, prefers the term “climate damage,” which is far more accurate to the nature of the presently recognized reality that has garnered a 97% consensus among the scientific community.
Incidentally, scientists are notoriously conservative and cautious people who are not given to grandiose pronouncements. This fact is illustrated in the accelerated timescale on which we’ve observed their predictions play out in the real world. A great many of their estimates of the consequences of climate damage have proven startlingly accurate and under-blown, despite generally erring on the side of underestimating the impacts.
A few years ago, an economist of the Chicago school estimated that the most severe impacts of climate damage would result in a 3% loss in our economy, and his reasoning was that agriculture accounts for only a small percent of the market as a whole. Of course, he blindly neglected to consider that this is the percent we eat to survive. I was reminded of a version of a Cree saying, which goes, “Only when the last tree has died, and the last river has been poisoned, and the last fish has been caught, will we realize we cannot eat money.”
I think the best option is to dumb down the projection. As environmental activist we get very excited but average citizens don’t understand the science or the business math. The greater impact is to reduce the info to common words. I find it most useful when I explain to my family and friends what their specific activity cost today and what it will cost their children. It’s like when an organization says your $100 feeds a family for 2 weeks. Americans need to hear that one year of mall trips will cost $210,000 in related climate feedback.
I would also suggest breaking down the cost savings in ceasing a behavior. For example. If everyone timed their tv out at night. We use less coal powered electricity. Saved this much in CO2 and then reduced this much in climate feedback.
60 trillion is huge and it becomes easy to ignore.
I agree with Glen Dotty $60 Trillion is nowhere near what the cost will be in money never mind the cost to humanity the environment and life as we know it.
As food water and resources become scarce Countries will go to War always have always will. Some of these countries may resort to Nukes
Refugees and displaced persons will suffer revolutions will start because the Leaders of those countries are unable or unwilling to assist them.
$60 Trillion is more likely the value lost on Coal stocks over the next 85 years.
Roy,
I doubt the study was that careless… but it seems pretty shocking to consider that the gradual inundation of all of the world’s coastlines (the most valuable land on the planet) would not result in more significant losses.
I hope to read the study this weekend, to see where the disconnect is between their findings and my first reaction. But the authors of the study are generally concerned with the environment and were trying to highlight awareness, so lumping them with big coal is pretty unfair.
Okay and what can somebody like me do about it. I am engage in research on
renewable energy. I am serious putting up a biomass or run or river (minihydro ) project here in our country the Philippines but where can i get million of dollars to be invested? I want to be a part of a worldwide concerns on climate change with all the horrors associated with it, like an end of this world. See, but how can i help or be a part of it? What organizastion would i let myself in? Who is the person to approach? Kindly have some piece of advise. Thank you.
Treat the $60 trillion as investment and magic will happen. There will be less polluting industries. People will travel more safely. There will be more jobs. More Excitement. People will be healthier and will be more productive. overall life will be better.
Glen Dotty talks about a 60% reduction in CO2 emissions. Actually, considering that the world’s need for power will greatly increase, probably by about FOUR TIMES if we include transportation, and considering that atmospheric CO2 is already too high, we will need to get about NINETY PERCENT of our power from non-CO2 emitting sources. I am not convinced that that can be done without nuclear power.
Wind and solar power are intermittent and very diffuse. There are no credible quantitative studies that indicate that they can do the job despite claims to the contrary. I would be convinced if a study were based on sensors installed in most of the places where it would be practical to instal wind and solar systems, the data were transmitted to a central location for analysis over a period of perhaps five years, and it could be shown that there would never be a failure to generate adequate power even briefly.
Germany has made the decision to phase out nuclear power and depend on renewables. What they are actually doing is building more coal-fired power plants, many to be fueled by lignite which is the dirtiest form of coal. Already their CO2 emissions are increasing.
Following is a link to an article about what is happening in Germany; it does not look encouraging:
http://thebreakthrough.org/index.php/programs/energy-and-climate/germanys-green-energy-bust/?utm_source=July+30+Newsletter&utm_campaign=August+2+newsletter&utm_medium=email
There are many types of nuclear reactors possible. Unfortunately, we have chosen to implement a basic reactor design that is more than 40 years old which should never have been implemented on a large scale. Instead of pushing to phase out nuclear power and thereby increasing dependency on fossil fuels, we should be pushing to develop better nuclear reactor technologies. Actually, the Chinese and others are already doing just that, but faster progress could be made if we contributed to the effort.
I just found this article in “Forbes” about the consequences of phasing out nuclear power. According the the article, phasing out nuclear power will increase the use of natural gas and coal.
Here is the link:
http://www.forbes.com/sites/kensilverstein/2013/08/03/less-nuclear-energy-means-more-coal-natural-gas-and-carbon-emissions/
The answer is concentrated solar power with molten salt storage and high voltage direct current.
Solar energy is stunningly abundant – according to the international weekly journal of science, Nature, “The Sun provides Earth with as much energy every hour as human civilization uses every year.”
In a report from the Desertec Foundation (a project of The Club of Rome), Anders Wijkman, MEP, President of GLOBE E, Vice President of The Club of Rome, Member of The World Future Council, Former Assistant Secretary-General of United Nations and Policy Director of UNDP, wrote, “We would only need an area representing a small fraction, like a per cent of the deserts in North Africa to provide Europe, the Middle East and North Africa with all the electricity needed.”
In section 2.2.1 – Survey on global energy demands, resources and solar capacities, compiled by Dr. Gerhard Knies, Chairman of the Supervisory Board of the DESERTEC Foundation, Member of the German Association for The Club of Rome (DGCoR), Former Scientist at the German Electron Synchrotron (DESY) – the following data is revealed:
“The largest accessible but least tapped form of energy on earth is solar radiation on deserts. Its capacity, i.e. the annually received amount can be estimated in a rather straight forward way, since radiation is quite uniform across the desert regions. The hot deserts cover around 36 Million km² (UNEP, 2006) of the 149 Million km² of the earth’s land surface. The solar energy arriving per 1 year on 1 km² desert is on average 2.2 Terawatt hours (TWh), yielding 80 Mio Terawatt hours/year. This is a factor of 750 more than the fossil energy consumption of 2005, and there is still a factor of 250 if this demand would triple until 2050.”
This section of the report goes on to state. “The global annual fossil energy consumption corresponds to the energy received by 5.7 hours sunshine in deserts. This is about 0.15 % of annually incoming [solar] radiation. We know how to convert 15% of solar radiation into the useful energy form of electricity (MED-CSP, 2005). This means, that 1% of the area of global deserts would be sufficient to produce the entire annual primary energy consumption of humankind as electric power. In other words: Any conceivable global demand of energy, today or in future, could be produced from solar energy in deserts.”
The report provides a neat summary to emphasize the impact of the information, “We notice, that all known fossil reserves contain an energy as is arriving in deserts within 47 days.” This calculation includes the radioactive energy sources uranium and thorium (as illustrated by the chart on page 19 of the report). This chart also reveals the combined uranium and thorium static depletion time of 101 years.
This report can be found here:
http://www.desertec.org/fileadmin/downloads/DESERTEC-WhiteBook_en_small.pdf
Rather than wasting time and money researching unproven technologies that may or may not yield a global solution, using a potential and estimated resource that may or may not last for a few generations, the focus should instead be on a known and present resource that will continue to provide safe and abundant energy for the next few billion years.
Interesting as a non-technical person to read all the responses to Craigs $60 trillion question. As a pragmatist, I would vote with Cameron and the notion of going with a concerted effort to harness solar power in our desert regions. I live in a country where coal is killing us, while we have enough sunny days and desert regions to power the whole world! And with fuel approaching $1.50 a litre, there is hardly a South African that would not consider an electric car if there were any to be bought here.
Sadly, a very promising EV, the Joule, was terminated by a lack of govt funding as the cost of mass production was considered too risky. The same fate befell the equally as promising Pebble Bed Reactor.
Reg Wessels
EarthCorporation
South Africa
I have thoroughly studied many such papers without finding a credible thorough analysis that proves that solar power or any other renewable source of power can provide for all our power needs 24 hours per day 365 days per year, year after year, at anything like an acceptable cost. The energy is there, but it is intermittent and often unpredictable.
From the pdf article:
“A central criterion for power generation is its availability at any moment on demand. Today, this is achieved by consuming stored fossil or
nuclear energy sources that can provide electricity whenever and wherever required. This is the easiest way to provide
power on demand. However, consuming the stored energy
reserves of the globe has a high price: they are quickly depleted and their residues contaminate the planet.”
Not quite.
Already enough thorium has been mined to provide enough power for the world for centuries, and far more is available. Almost all of the mined thorium is discarded as waste; it occurs with rare earth metals and currently is not being used in significant quantities. When utilized in the liquid fluoride thorium reactor (LFTR), which has been successfully tested in prototype form, the waste, which is in liquid form, can easily be recycled on-site as the reactor operates the result being that the actual waste is less than one percent of what is generated by our pressurized water reactors. Moreover, the actual waste needs to be sequestered (using the original definition of the word) for only a few hundred years rather than for thousands of years. Also, because the LFTR can operate at very high temperatures, it can use the Brayton cycle instead of the Rankine cycle and use air cooling instead of water cooling. Unfortunately, funds for the LFTR were cut off before enough R & D had been done to make it ready for implementation. Although there is no guarantee that it would be practical, indications are so promising that wisdom dictates resuming R & D on it.
If the LFTR won’t do the job, there are a number of other nuclear reactor technologies available that should be explored. Since uranium can be extracted from sea water, running out of it in the foreseeable future is unlikely contrary to what the pdf article implies. Also, uranium could be used far more efficiently than we are currently using it since now we are extracting less than 1% of the available energy from the uranium fuel then discarding the rest as waste.
Although it is true that solar power can be stored in the form of a mixture of molten NaCl and KCl, it has not been shown practical to have sufficient storage using that method.
It has been proposed to locate solar installations in deserts, including the Sahara. The problem of drifting sand dunes and the need for water to wash the collectors in areas where water is scarce seems not to have been adequately addressed. Without water cooling, solar thermal systems are very inefficient, especially in hot weather. PV systems cannot use thermal storage efficiently.
Depending on renewables, including solar, would require a far more elaborate grid, require picking up power from widely scattered sources, and require transmitting power for much greater distances. All that would greatly increase costs.
There are remote places and small Pacific island countries where renewable systems are currently more attractive than the alternatives; perhaps that will remain the case indefinitely. However, renewable systems are not practical to provide for the power needs of most large countries. Nuclear power is practical; R & D should be done to improve it and eliminate the real (but not the imagined) problems associated with it.
Eschewing nuclear power and pushing renewables will delay our moving away from using fossil fuels to the considerable and dangerous detriment of the environment.
Frank: We renewable energy people are pretty much onto the fact that solar and wind resources are variable, though we appreciate your resurfacing this idea. Putting aside the sarcasm, we hope that some sort of safe nuclear, e.g., thorium, will come along, but from what I can discern, it’s not exactly around the corner, is it?
Craig:
No, improved nuclear power is not just around the corner, but neither are renewable systems capable of providing for the energy needs of most large countries.
Actually, if R & D had not been halted, probably much better nuclear technology would already have been implemented. I greatly fear that we will end up spending untold billions of dollars on renewable systems that will not do the job but which will instead increase our dependence on fossil fuels. That seems to be happening in Deutschland right now. At least while attempts are made to try out renewables, we should be diligently working on R & D for better nuclear technologies. Otherwise, if it is demonstrated that renewables will not do the job, we will have wasted decades that we cannot afford to waste. Global warming will greatly increase the need for power to deal with the warming.
In only 15 years, France went from 0% nuclear to 80% nuclear, at least for electricity which, however, is not sufficient since transportation and other energy uses still require fossil fuels, but it does show how quickly nuclear can be implemented. It is unlikely that renewables could be implemented that quickly.
Here is another article on nuclear power R & D:
http://science.time.com/2013/08/05/amidst-economic-and-safety-concerns-nuclear-advocates-pin-their-hopes-on-new-designs/?xid=rss-topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+time%2Ftopstories+%28TIME%3A+Top+Stories%29
Here are some energy basics on solar thermal storage techniques – from the US Department of Energy – about just three of the storage solutions already currently in use:
http://www.eere.energy.gov/basics/renewable_energy/thermal_storage.html
Here’s another DOE Page where fourteen very promising thermal storage research projects are detailed…
http://www1.eere.energy.gov/solar/sunshot/csp_storage_awards.html
Here on another DOE page are more than a dozen Baseload Concentrating Solar Power Generation research projects:
http://www1.eere.energy.gov/solar/sunshot/csp_baseload_awards.html
Somehow, it appears that the few apprehensions about maintenance, water use, and intermittency have been insufficient to dissuade the decision-making of numerous science-based entities both public and private from already devoting about $3 billion to it by 2009.
Across the world currently, there are thirty-seven Concentrating Solar Power (CSP) installations that are each generating 50 MW or more, with nine at 100 MW, three at 150 MW and one at over 350 MW.
Nineteen more plants of 50 MW or more are under construction, and eleven of those are 100 MW or more, with 3 over 200 MW and one at 370 MW.
A further twenty plants of 50 MW or more are announced in the USA alone, eleven of which are 200 MW or more, with two over 500 MW.
According to the Renewable Energy Policy Network for the 21st Century, global CSP operating capacity “increased almost 37% annually” from the end of 2006 through 2011.
Here’s a good primer for CSP – definitely suggested reading for interested parties:
http://www.irena.org/DocumentDownloads/Publications/IRENA-ETSAP%20Tech%20Brief%20E10%20Concentrating%20Solar%20Power.pdf
Thanks. I remain convinced that CSP has the potential to come way down in levelized cost of energy, and it becomes especially attractive when one considers storage and the demand for baseload power; storing heat energy is much less expensive than storing electrical energy.
Reblogged this on Phoebe's Thoughts and commented:
Great article by Craig Shields. It reallly touches on the heart of the problem in the US; the conflict between the power of the corporations and the need for mass participation to overcome the biggest issue for our day…
CSP has plusses and minuses.
CSP is able to produce higher temperatures than non-CSP. That enables the system to operate at higher temperatures which increases efficiency, makes thermal storage more practical, and reduces the need for cooling. On the other hand, CSP requires direct sunlight whereas some non-CSP systems will work during slightly cloudy weather, although less effectively.
CSP also requires a tracking system and, unless the units are adequately spaced, will shade each other when the sun is not directly overhead.
Comparing the advantages and disadvantages of CSP with non-CSP under various conditions should be relatively straight forward. Which is better probably depends on location. Perhaps the comparison has been done.