A working paper on the economic effects of climate change presented at the American Economic Association annual meeting found that increased temperatures due to global warming over the past half century “show substantial negative effects on poor countries’ growth.” The authors, economists at the Massachusetts Institute of Technology and Northwestern University, looked for correlations in average annual temperatures and indicators of economic growth at the country level. They found that Third World nations have seen a marked, long-term decline in economic growth over the past fifty years due to global warming.

The Heritage Foundation’s Conn Carroll misinterprets their findings to claim “Study Shows Global Warming Will Not Hurt U.S. Economy.” Carroll bases this assertion on a passage in the paper that states, “In rich countries, changes in temperature had no discernable [sic] effect on growth.” This is a classic case of leaping from a limited, specific result — the lack of a significant correlation between economic growth and average temperatures in rich nations over the past fifty years — to a broad, unproven claim — that global warming will not hurt the U.S. economy.

Carroll’s leap is unsupported by this paper. In fact, the authors warned against jumping to such a conclusion:

Our results show that temperature per se has an important impact on national economic performance. The evidence thus rejects the hypothesis that climate does not influence national production. Moreover, the estimated impacts persist for at least a decade and are large in magnitude – in fact, more than large enough to explain the cross-sectional climate-income relationship between rich and poor countries. Our results do not rule out many other forces that may play important roles in economic development; rather, our contribution in this paper is to reject views that climate does not matter, show that climate’s effects are substantial, and identify a group of countries where climate appears to have large effects.

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One of my New Year’s resolutions is to blog more about the general lameness of the economics profession when it comes to energy and climate issues [Note to self: How about losing a few pounds?].

I was in the midst of putting this resolution off for a few weeks when I saw a quote by Robert Stavins that seemed to sum up the value-subtracted that economists bring to the world.

In an otherwise excellent New Yorker article on Van Jones’ efforts to push a green jobs agenda, which I will blog on separately, Elizabeth Kolbert feels compelled to “balance” Jones with some people who don’t think it’s a good idea to simultaneously address the climate problem and the poverty/jobs problem. Who else could a respectable journalist turn to than an economist, a profession that arguably has cost the country and the world more jobs than any other?

Indeed, I remember Bill Clinton opining at a Georgetown conference in 1997 on why he ignored the advice of Administration economists, like Larry Summers, who urged him not to adopt a serious greenhouse gas emissions target at Kyoto. Clinton said his economic team had assured him that his balanced budget plan would be a job killer, so he pretty much took everything they said from that point on it with a grain of salt. But I digress.

Kolbert manages to elicit this amazing response from one of our leading economists:

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Jurisdiction over energy and environmental issues — including global warming legislation — in a key House committee will be moving from two Democrats sympathetic to industrial polluters to a progressive environmentalist. According to the Boston Globe, Rep. Edward Markey (D-MA) will become chair of the Energy and Environment Subcommittee of Rep. Henry Waxman’s (D-CA) House Committee on Energy and Commerce. Markey’s new subcommittee will replace the Energy and Air Quality Subcommittee chaired by Rep. Rick Boucher (D-VA), a coal-country representative, and the Environment and Hazardous Materials Subcommittee chaired by Rep. Gene Green (D-TX), an oil-patch Democrat.

Rep. Henry Waxman (D-CA), like Markey a strong proponent of progressive action to combat climate change, is in the process of reorganizing the energy and commerce committee after wresting control from Rep. John Dingell (D-MI):

As chair of the energy and environment subcommittee, Markey will have jurisdiction over greenhouse gas emissions legislation, such as the iCAP bill he proposed last year. He will also oversee the Clean Air Act, fossil energy, nuclear energy, drinking water and Superfund cleanups. Markey will remain chair of the House Select Committee on Energy Independence and Global Warming, which has no power over legislation.

Boucher will take Markey’s former seat as chair of the subcommittee in charge of telecommunications and the Internet. Boucher, like Markey, is a champion of network neutrality and patent reform.

[I will post the details of how Obama will achieve this remarkable goal when they become available. But clues can no doubt be found in his August energy plan, "Breaking news -- A real energy plan for America: Efficiency now, 10% renewables by 2012, and one million plug-in hybrids by 2015," where he pledges to "Require 10 Percent of Electricity to Come from Renewable Sources by 2012" and 25 percent by 2025.]

In his big economic speech today at George Mason University, Obama pledged to jumpstart job creation and long-term growth by:

• Doubling the production of alternative energy in the next three years.
• Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills.
• Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.
• Equipping tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries.
• Expanding broadband across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.
• Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.

His full remarks as prepared for delivery are below:

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Part 1 presented a new study by power plant cost expert Craig Severance that puts the generation costs for power from new nuclear plants at from 25 to 30 cents per kilowatt-hour — triple current U.S. electricity rates!

Those ideologically promiscuous folks at the Heritage Foundation have replied with “New Study on Staggering Cost of Nuclear Energy, Staggeringly Pessimistic.” Craig’s point by point response follows a few of my comments.

Heritage is a leader of the conservative movement stagnation. They have written “the only thing a green ‘New Deal’ will do is lead us down a Green Road to Serfdom,” comparing such a policy to “collectivism in the Soviet Union and Nazi Germany,” and their Senior Policy Analyst in Energy Economics and Climate Change is quite confused about both of the subjects he analyzes (see “Heritage even opposes energy efficiency“).

The key paragraph in Heritage’s new critique is:

Aside from the cherry-picking of data and its clear tilt toward Big Green (the vast industrial complex and lobbying machine being built around global warming alarmism), its conclusions are potentially not that far off.

Yes Heritage is among those pushing the grand climate conspiracy, whereby the world’s National Academies of Science (including ours), the American Geophysical Union, the American Association for the Advancement of Science, every major government in the world, and the leading science journals are conspiring to deceive the public — see Diagnosing a victim of anti-science syndrome (ASS).

[Note to Heritage: 'Big' Green is a "Vast industrial complex"? The nuclear and fossil fuel industries have maybe 50 times the revenues of the cleantech industry. So what does that make them -- gargantuan? Try not to be so paranoid -- For 30 years now (100 years?), your guys have had the ball and written the rules.]

And still, they can’t really dispute the conclusions. They can only try to blame environmentalists (i.e. the public) for supposedly slowing down the construction of nuclear power plants and running up the costs. But given that the public is assuming most of the liability of any major nuclear accident and given that the public is now assuming most of the economic risk of new nuclear plants with major loan guarantees (see “Nuclear energy revival may cost $315 billion, with taxpayers’ risking over $100B“), it is hard to argue against the public weighing in to ensure that the plants are built and run safely and affordably!

Indeed, to support the public taking all the risk of new plants while opposing the public having any say in the licensing process is some strange combination of socialism and totalitarianism. Hmm. Could that be Soviet collectism? Nah.

The Heritage critique notes, “As one who believes in the value of nuclear energy, I am fully supportive of removing all the subsidies and government preferences and allowing the market to decide. If Big Green is so confident, then they should be prepared to do the same.”

If the government removed all subsidies and preferences for nuclear, we probably wouldn’t build another nuke. They simply couldn’t get insured or financed. I support removing subsidies and preferences for any power source that has more than a 5% market share. Nuclear is a mature technology and has seen vastly more subsidies than renewables, whereas many renewables are still coming down the cost curve and deserve government support (see “Nuclear Pork — Enough is Enough“).

That said, once we have correctly priced carbon dioxide to reflect its full harm to our health and well-being, then I would certainly be for removing virtually all subsidies and preferences for existing energy sources (though technologies with less than, say 1% marketshare could still get temporary support).

Finally, in Part 1, I wrote “So feel free to criticize the analysis, but anyone offering different all-in cost estimates for power from new nuclear plants should detail their own assumptions and calculation.” Heritage did not do that, so no one should take their critique too seriously. Nonetheless, here is Craig Severance’s detailed response:

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[I am reprinting a Dave Roberts story first posted on Grist.]

With Markey in place, the House is geared for ambition on climate and energy

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