Leading climate alarmists claim that global greenhouse gas emissions need to decrease to 60 percent below present levels by 2050 if humans are to avoid catastrophic climate change. But such a drastic emissions reduction is at odds with the world’s energy needs. Economists predict that an 80 percent increase in global energy demand will cause global greenhouse gas emissions to grow by 70 percent by mid-century.
Almost all the increase in energy demand and emissions will come from developing countries, where a quarter of the global population lacks any access to electricity. Indeed, almost half of the world’s people have to rely on traditional biomass, agricultural residues, and dung for cooking and heating. These countries will require tremendous amounts of energy if they are to grow their economies and escape poverty.
Given the reality of increasing energy demand in the developing world, the only way to reduce emissions is de-carbonize energy production. Yet fossil fuels account for 85 percent of the world’s primary energy for a very simple reason: They are the world’s least expensive source of energy. Therefore, a carbon-free energy future is an expensive energy future.
According to the U.S. Department of Energy, annual global greenhouse gas emissions need to be reduced by 30.3 gigatons a year by 2050 to reduce emissions by 50 percent by 2050. To get an idea of the costs of de-carbonizing energy production, consider the chart below, which depicts actions that would “save” 1 gigaton of CO2-equivalent per year:
Someone would have to pay for all those new nuclear power plants and wind turbines. The International Energy Agency estimates that halving global emissions by 2050 would cost $45 trillion. That is $45 trillion above the cost of fossil fuel energy that would not be spent to create wealth. That would take a big bite out of global prosperity. Much is said about the so-called “consensus” on climate science, but the economic consensus is that reducing emissions reduces economic growth.
Making energy more expensive would be catastrophic for the developing world, for which access to affordable energy is a precondition for economic growth, the most important driver of human well-being. Costly emissions reductions policies would rob the world’s poorest people of opportunities to escape poverty.
Alarmists claim that rising temperatures threaten human welfare—but reducing emissions from energy production also threatens human welfare, especially in the developing world, since doing so limits economic growth. So what is worse, the warming or the policy?
In a Cato Institute study, Indur Goklany suggests that climate change is unlikely to be the world’s most important environmental problem during the 21st century, because a richer but warmer world is better for human welfare than a colder but poorer world would be.
In his book Cool It, Danish statistician Bjørn Lomborg applies a cost/benefit analysis to climate change mitigation measures like the Kyoto Protocol, and finds that they are a tragic waste of money. According to his research, we could spend a fraction of the cost of climate policies on immediate problems, like HIV or malaria, and save millions more lives than global warming would take.
Dr. William Nordhaus of Yale University estimates that 3°C of global warming would cost the world $22 trillion this century. Al Gore’s package of measures, which calls on the U.S. to “join an international treaty within the next two years that cuts global warming pollution by 90 percent in developed countries and by more than half worldwide in time for the next generation to inherit a healthy Earth,” would reduce warming costs to $10 trillion, at a cost of $34 trillion.
Climate change might harm human welfare, but so would climate change policy. Policy makers should assess and weigh both sets of risks before deciding on a course of action.