Has there ever been a more timely natural catastrophe than climate change? I mean, here we all are worrying about the future of the American economy—too much debt, jobs and industries moving overseas, new competitors in Asia and India—when what merrily comes along is a perceived civilizational challenge whose solution will not only create a better environment but also—talk about luck!—millions of those high-paying "green-collar" jobs and innovative new industries of the future that Barack Obama and Hillary Clinton have been talking about. As Clinton said in one presidential debate, "This issue of energy and global warming has the promise of creating millions of new jobs in America. It can be a win-win, if we do it right."
Heck, if climate change was a sham, it almost seems that it would be worthwhile to fabricate it, given all the apparent economic benefits. Then again, maybe not. Here is what William Pizer, an economist at Resources for the Future and a lead author on the most recent report from the U.N.'s Intergovernmental Panel on Climate Change, said at a symposium earlier this week here in Washington: "As an economist, I am skeptical that [dealing with climate change] is going to make money. You'll have new industries, but they'll be doing what old industries did but a higher net cost.... You'll be depleting other industries."
Of course, many economists will recognize "the green is good for growth" trap that Obama and Clinton have stumbled into. It's just a modern iteration of the famous "broken windows fallacy" where people mistake the shifting of wealth and resources for the creation of new wealth and resources.
Pizer went on to say that calls for dramatic reductions in carbon emissions—the Democrats want 80 percent, John McCain 65 percent—were also unrealistic unless there was"some event"that really galvanized public opinion. Instead, what he predicted was a modest price on carbon via a cap-and-trade plan, a greater push for efficiency, and more regulation of energy-intensive industries.
And it wasn't just Pizer who seemed skeptical that America was ready to undertake a massive commitment to stop perceived climate change. Another participant was Nikki Roy of the Pew Center on Global Climate Change who worried that none of the presidential candidates was campaigning hard on the climate issue and that, if they didn't, nothing major would get done on the issue during the next four years. And Robert McNally, an energy analyst for the Tudor Investment hedge fund, said he didn't think climate change, by itself, was a big enough issue to spur a radical change in American energy or economic policy that it needed to be turned into a national security issue.
It's easy to understand such skepticism when you fully grasp how hard it would be to dramatically cut U.S. carbon emissions without radical technological innovation or extreme impoverishment. Here is how analyst Stephen Hayward of the American Enterprise Institute put it in a recent Wall Street Journal opinion piece: Reducing U.S. greenhouse gas emissions by 80 percent (from 1990 levels) by 2050, as the Democrats want to do, would cut U.S. annual emissions from 6 billion metric tons a year, or 20 tons per person, to 1 billion metric tons—about what we emitted in 1910 when America had 92 million people and an economy a fraction of the size of the current one. When you consider that the U.S. population will be over 400 million by 2050 with a much larger economy, per capita emissions would have to fall to 2.5 tons, or about what you would find in today's Haiti and Somalia.
Other fun facts from Hayward:
Average household emissions will have to fall to no more than 1.5 tons per year. In our current electricity infrastructure, this would mean using no more than about 2,500 KwH per year. This is not enough juice to run the average hot water heater.... ...Right now our cars and trucks consume about 180 billion gallons of motor fuel. To meet the 2050 target, we shall have to limit consumption of gasoline to about 31 billion gallons, unless a genuine carbon-neutral liquid fuel can be produced. If the entire nation drove nothing but Toyota Priuses in 2050, we'd still overshoot the transportation emissions target by 40%
No free lunch, folks. Economist Nicholas Stern, in a report for the British government, has concluded that we should spend 1 percent of the global economy every year to avoid the worse effects of climate change. Now even if you take Stern's numbers as correct—and many think he overestimates the economic risks of doing nothing—he still advocates spending $700 billion a year on a supposed problem. Or to put it another way, if dealing with climate change slows the global economy as much as Stern thinks it will, the size of the global economy would be $243 trillion by 2100 . But if the global economy keep grow ing at a pace more like the one we have seen recently, we would have a $550 trillion global economy in the year 2100, more than twice the size of the economy assumed in the first scenario.