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Once-cautious climate economist reverses course, issues warning against the cost of inaction

William Nordhaus says social cost of CO2 much higher than he thought, while team Trump says it is zero.

Superstorm Sandy inundates taxis on October 30, 2012. CREDIT: AP/Charles Sykes
Superstorm Sandy inundates taxis on October 30, 2012. CREDIT: AP/Charles Sykes

Leading climate economist William Nordhaus — who had been an advocate of a “go slow” approach on climate policy — now says carbon pollution is much more damaging to the economy than he previously estimated.

While the Yale economics professor has previously advocated for a very low carbon tax, his new analysis examining our “era of minimal climate policies” has changed his mind. Now Nordhaus says our dawdling has been costly — nearly doubling his calculation of the so-called social cost of carbon (SCC), which is the long-term damage caused by an additional ton of CO2 emissions (or, the benefit of a ton of CO2 reduction).

Nordhaus warns that further inaction will lead to rapid climate change and incur increasingly greater costs.

Tragically, Trump has pledged to kill both national climate action and the Paris climate agreement, the world’s first serious effort to reverse the CO2 emissions trend, and the last best chance to avoid catastrophic warming. A leaked memo from the Trump team proposed “ending the use of the social cost of carbon in federal rulemakings (original emphasis).

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In other words, Trump’s team of climate science deniers wants to pretend CO2 has no economic cost, and therefore no significant climate action or regulation is justified.

Nordhaus disagrees now. He calculates the social cost of carbon (SCC) at $31 per ton of CO2 (almost twice his 2013 estimate). If that were a carbon tax, it would add about $0.30 to a gallon of gasoline. Nordhaus notes that is slightly lower than the SCC the U.S. government’s Interagency Working Group (IAWG) on Social Cost of Carbon came up with in 2015 — which, of course team Trump has conveniently scrubbed from the White House website.

But Nordhaus discounts future damages by much more than the IAWG. So if he used the same discount rate (3 percent), his SCC “would be roughly twice that of the IAWG” and in 2020 his SCC would be $87 a ton.

Nordhaus was among the first to suggest 2°C (3.6°F) total warming above preindustrial temperatures as a policy target. In a 1977 paper, he looked at business as usual (“uncontrolled”) CO2 emissions and concluded, “the uncontrolled path will lead to very large increases in taking the climate outside of any temperature pattern observed in the last 100,000 years.” The paper identified 2°C as the “estimated maximum” climate pattern variation during that time, while warning we were headed toward over 4°C warming by 2100. All of these conclusions have been supported by an increasing amount of scientific research in recent years.

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That’s why than 190 nations unanimously agreed in 2015 to keep ratcheting down emissions to keep total warming “well below 2°C.”

Nordhaus’s December 2016 paper is not without its faults. He asserts “there has been little progress in taking strong policy measures” and that the world is still on a business as usual path of steady growth in CO2 emissions.

But the Global Carbon Project’s November report confirmed the continued plateauing of global CO2 emissions that has been evident for a while:

Global CO2 emissions have plateaued. CREDIT: Global Carbon Project.
Global CO2 emissions have plateaued. CREDIT: Global Carbon Project.

Nordhaus asserts “2°C appears to be infeasible with reasonably accessible technologies.” But he is not a technology expert and economic models notoriously lowball the rate of technology innovation, which right now is occurring faster than anyone had imagined. The International Energy Agency, along with the world’s leading scientists and governments, disagree with that conclusion. Their analysis finds it is technologically feasible to stay below 2°C and doing so would be super cheap.

Nordhaus’s pessimism is more justified on the basis of Trump’s election, a point he makes in passing: “Moreover, from the perspective of political economy in different countries as of December 2016, the prospects of strong policy measures appear to be dimming rather than brightening.”

And that is why fighting against Trump’s policies remains so vital to the nation and the world.