In a Wall Street Journal opinion piece, Bjorn Lomborg drew attention to the inconsistency of the global warming costs and benefit estimates made by newly minted Nobel Prize recipient William Nordhaus, and the alarmist IPCC climate review issued out of Inchon. Lomborg, is a believer in the global warming myth but tends to think the money spent alleviating it is better spent elsewhere (his socialist background does not allow him to include an option of leaving the money with its owners!)
A New York Times article put the level of a carbon tax necessary to curtail emissions in line with an estimate of their social costs at somewhere between $135 and $5000 per tonne; the former would mean a twofold increase in Australian wholesale prices and the latter a thirteen fold increase.
Actually, though Nordhaus was a pioneer in marrying an emission reduction regime to economics, he uncritically accepted all the costs said to emanate from global warming – crop reductions, hurricanes, desertification of eastern Australia, increases in disease, lost infrastructure. Having done so, he set about estimating the level of global tax which would redirect spending and investment to take into account of these “externalities”.
It is worth noting that the level of loss he estimated from an increase in temperatures of 3°C, even with the outrageous exaggerations that were, and remain, part and parcel of the IPCC ideology, was just 2.5 per cent of world GDP – about one year’s growth rate!. So, the greatest moral issue of our time, the begetter and destroyer of political regimes and the policy bedrock undermining the Australian economy would, if resolved, even with all the exaggerated costs assessed by the alarmists, allow the saving of just one year’s growth!
Aside from the Nordhaus calculations, Tol (who was largely responsible for the economic chapters of the IPCC 2013 report) could only find two other peer reviewed studies of the costs (he dismissed the blatant propaganda exercises of Stern and Garnaut). One of these, Boselo, Eboli and Pierfederici put the cost of warming by 1.9°C at 0.5 per cent of global GDP and the other by Rosen and van der Mensbrugghe put the cost of warming of 2.3°C at 1.8 per cent of GDP and a warming of 4.9°C at 4.6 per cent of GDP.
To achieve a 2.5°C maximum temperature increase, on recent Nordhaus estimates would require a tax in 2015 at $184 (US 2010 dollars) rising to $351 by 2030. This, unrealistically assumes that the tax will be uniformly and immediately applied across all countries. And that those countries that are natural carbon sinks, like Australia, Russia and Canada don’t lay claims for their services from the rest of the world!
Even so, it is worth looking at what the Nordhaus tax would be required for Australia.
A tax at US184 per tonne in 2010 dollars equates to a tax today of about $A290 per tonne. Applied to the 560 million tonnes of Australian emissions, such a tax would be raising $160 billion this year. That’s about 13 per cent of GDP.
The alternative to the carbon tax has been the regulatory taxes and subsidies, chief among which have been those on renewable energy. Whatever pain these might have caused they have brought great comfort to some firms, as is illustrated in profit growths below
Revenues were little changed.
The latest accounts show that Ms Tanna the CEO of energyAustralia, who claimed the firms “were not bandits”, was amply rewarded with annualised income of $A8.86 million for the current year, more than that of her Hong Kong based boss and three times that of the CEO’s of the Hong Kong, Chinese and Indian subsidiaries.
Every cloud ….