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Providing Insight
Into Climate Change
Economics
18Articles

The Private Benefit of Carbon Dioxide and its Social Cost

Economist Dr. Richard Tol calculates that the global average private benefit of the use of fossil fuel at the margin (ie., the benefit of the last unit used) is about US2010$411/tCO2. It is the weighted average of the price of energy times the carbon dioxide emission coefficient. The private benefit is lowest for coal use in industry (US$47/tCO2) and highest for residential electricity (US$1,877/tCO2 from Results, or US$780/tCO2 from Table 1). Affordable and reliable energy is a great good, which is why we purchase it. The mean of published estimates of the social cost of CO2 is $12/tCO2 assuming a 3% pure rate of time preference and the IPCC distribution of climate sensitivity. The FUND model calculates a net social benefit of $3.30/tCO2 assuming a climate sensitivity distribution from Lewis & Curry 2915 and a 3% discount rate. The marginal private benefit of fossil fuels is at least 123 times the social cost.



Climate Science and Economics

Strong correlations between solar activity and climate indicate and the recent grand maximum of solar activity indicates that much of the warming of the 20th century was natural. Climate models do not include most natural climate change and they are now running much to hot. Bulk atmosphere temperature trends are 2.5 times the measurements. The CO2 induced warming from 2018 to 2100 may be only 0.6 °C. Some economic models of climate change fail to include benefits of warming and CO2 fertilization of plants. Cold kills 17 times as many as hot weather, so warming will reduce temperature related deaths. The Alberta climate plan will increase cumulative electricity costs to 2030 by $3.3 to $5.9 billion. Warming may benefit the world by US$ 3 trillion/yr by 2100.



Dark Green Money - the Big Green Funding Machine

Major private foundations use their wealth and power to influence social movements and governments to fund green programs and provide grants to environmental organizations. Foundation and government funding affects climate policy and promotes the thesis that Canada should undertake very costly measures to reduce greenhouse gas emissions. Two Canadian government agencies together spend $1.14 billion dollars per year on climate programs. United States foundations are spending more than U.S. $100 million per year to influence government climate policy and block Canadian resource development.



The Economics of the IPCC’s Special Report on Limiting Temperatures to 1.5 °C

The Intergovernmental Panel on Climate Change (IPCC) published a special report (SR15) on the impacts of global warming of 1.5 °C above pre-industrial levels on October 8, 2018. The report says the cost of mitigating CO2 emissions in 2030 to meet the 1.5 °C target is about 880 US$/tCO2. Using a climate sensitivity based on observations including effects of natural climate change, urban warming and the best available economic model, the mitigation proposal will prevent a benefit of 8 $/tCO2, for a total loss of 888 $/tCO2 mitigated.



Calculating the “Social Cost” of CO2 Emissions Using FUND

The social cost of carbon dioxide (CO2) emissions (SCCO2) is defined as the social worldwide costs (net of benefits) of emitting one tonne of CO2 into the atmosphere. The estimated SCCO2 is used for doing cost-benefit calculations for proposed government regulations. Integrated assessment models are used to estimate the SCCO2 considering demographic and economic variables in addition to the physical climate system. The temperature responses in IAM approximately match complex climate models. One of the IAMs, FUND, is freely available. This article presents plots and tables that give some idea of what FUND does. Using a 3% discount rate FUND calculates net damages of US$8.3/tCO2 if the climate sensitivity is 3.5 °C, and US$4.4/tCO2 of net benefits if the climate sensitivity is 1.0 °C for emissions in 2010, in constant US$2016.




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