The UN climate summit is underway in Madrid, and activists are sounding their usual calls for world leaders to achieve carbon neutrality as fast as possible. It’s a fool’s errand.
From California to France to Chile, environmentalists laud leaders for already making the promise, and sometimes even passing legislation, to stop putting more greenhouse gases into the air than they take out.
Democratic presidential hopefuls are adding their voices to the chorus. Front-runner Joe Biden promises to “ensure the US achieves a 100 percent clean-energy economy and reaches net-zero emissions no later than 2050.” Some of his competitors, including Cory Booker and Julian Castro, envision completing this Herculean task at least five years earlier.
Climate change is a real problem. It is man-made, and it will have negative consequences. But trying to stop emitting CO₂ by 2050 or sooner is a very expensive way to do almost no good.
We just have to look to New Zealand, the only country to have actually made an estimate of the cost of achieving carbon neutrality.
New Zealand’s prime minister, Jacinda Ardern, received plaudits this year for passing legislation designed to achieve carbon neutrality by 2050. To her credit, her government asked a respected economics institute to estimate the cost. This revealed that getting to 50 percent below 1990-levels in 2050 would cost at least 5 percent of GDP annually by 2050.
Why so expensive? For the same reason it is expensive anywhere: Weaning economies off fossil fuels and onto pricier, less efficient forms of energy reduces growth and prosperity. The impact quickly adds up.
For New Zealand, the cost is similar to today’s entire expenditure on socialized education and health care. And getting all the way, rather than halfway, will likely cost 16 percent of GDP by 2050. That is more than New Zealand today spends on social security and welfare, health, education, police, courts, defense, environment, and every other part of government combined.
Across the century, the cost for the small island nation of 5 million souls would add up to at least $5 trillion. And this assumes New Zealand implements climate policies efficiently, with a single carbon tax across all sectors of the economy over 80 years.
No economy has ever introduced climate policies that effectively, because politicians love to pick winners, promote ineffective solutions like electric cars and lavish subsidies on poorly performing technologies.
What will this achieve? Let’s assume that in every one of New Zealand’s elections between now and 2100, governments are chosen that continue to fulfill the promise of going to zero by 2050 and staying there. Imagine, too, that New Zealanders don’t rebel against the inevitably large tax hikes on energy — no “yellow-vest” protests.
In these artificial conditions, if New Zealand meets its promise of zero emissions in 2050 and stays at zero for five decades, then the greenhouse-gas reduction, according to the standard estimate from the United Nations’ climate panel, will deliver a temperature cut by 2100 of 0.004 degrees.
New Zealand is considering spending at least $5 trillion to deliver a physically unmeasurable impact by the end of the century.
The math is comparable for most economies: enormous costs and very small benefits. Of course, huge nations like China and America going carbon-neutral by mid-century would indeed generate measurable impacts by 2100, but the costs would also run into the hundreds of trillions, and in the case of China, mean more poverty. Unsurprisingly, most governments and presidential candidates shy away from publishing any real analysis of their promises.
The climate challenge will not be solved by asking people to use less and more expensive energy. A sensible middle ground must be found that could include policies like a low and rising carbon tax. But we must ultimately focus on the reality that the best way to fix climate change is innovation that lowers the price of clean energy below that of fossil fuels.
In Paris in 2015, world leaders promised to double spending on research and development into green energy. They are on track to miss that target. The Madrid conference should focus its energy on innovation — rather than wild-goose chases.
Bjorn Lomborg is president of the Copenhagen Consensus Center.
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