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If the Congressional Budget Office is half wrong, what is the correct response to climate change in the United States?

Source: ‘Predicting the Price of Carbon’, Richard H. Clarke, PAL (2016) Image © Colin Henderson

The US must both decarbonise (at less than $25/tonne CO2) and re-join the Paris Accord if the US economy is to survive this century.

 

In our last blog we explained why the CBO is half right – the impact of climate change on the US economy in the coming decades may be relatively small. The trouble is that by the time we find out that that all is not well, it will be too late. BAU (business as usual) is not a safe option for the US economy, which is why the CBO is also half wrong.

 

So, is there an alternative? The US needs to achieve real-world decarbonisation at $25 per tonne CO2 or less. That money must be used to stop emissions – not just divert them as today’s US CCU (carbon capture and utilisation) funding allows. In its current form, the US policy pays $30/tonne for CO2 used in EOR (enhanced oil recovery) and $50 for straight carbon capture and storage (CCS). This should have put the US in pole position. The trouble is CCS is really hard to do at the rate required.

 

What is needed is funding for other actions that will reduce emissions – vehicle efficiency standards, smart buildings, retiring coal power, more onshore wind and solar farms and plant-rich diets i.e. mostly the policies President Trump has acted against. Yet the majority of these actions can be done for less than $25/tonne. If the US economy was very strong (if its GDP was consistently growing at 3% per year or more) then President Trump’s actions would be brutally rational; but it’s not and they aren’t.

 

If the world (the major economies) adopted the Paris carbon pathway, and there’s still hope it could if America played ball, then at just $25 per tonne CO2 the US could have an economy at least as good as BAU as shown in Table 1.

 

And there’s an added benefit. By steadily decarbonising the US economy will gain resilience and will, probably still be in one piece in 2100. The alternative is mayhem. It is a stark choice – dithering and denial versus a tolerable future.

 

In Table 1 we show the results for 5 scenarios all based around a central average 2% US economic growth:

 

  1. If there were no climate change – surely we are past denying this?
  2. Business as usual (BAU) – in which we become ‘boiled frogs’!
  3. Decarbonising the economy at $50/tonne – that is too costly
  4. Decarbonising the economy at no cost – most unlikely
  5. Decarbonising at $25/tonne would yield the same net growth rate of 1.64% as BAU – surely that passes the sanity test?

 

The real challenge is how to get the decarbonisation policies and technologies that actually deliver the carbon cuts that the Paris Agreement demands without impacting the US economy (or any other economy for that matter). There is a pressing need for real, practical and cheap decarbonisation tools and technologies that deliver at scale the demands of markets – predictable, reliable, clean, affordable and sustainable energy, agriculture and transportation.

 

As symbolically depicted in Figure 1, the CBO have a dilemma: wreck the economy by decarbonising at too high a cost or do nothing and risk economic collapse by climate change. The path to economic survival is narrow and growing narrower every day.

 

The US must both decarbonise (at less than $25/tonne CO2) and re-join the Paris Accord if the US economy is to survive this century.

 

Table 1: Some possible scenarios for survivability of the US economy this century compared to the ‘let’s suppose there is no [man-made] climate change’ case

 Some possible scenarios for survivability of the US economy this century compared to the ‘let’s suppose there is no [man-made] climate change’ case

 

If the Congressional Budget Office is half wrong, what is the correct response to climate change in the United States?

Figure 1. From the once sure ground, the path ahead is precarious: the perils of sliding scree (costly decarbonisation) or an icy abyss (climate catastrophe). Source: ‘Predicting the Price of Carbon’, Richard H. Clarke, PAL (2016) Image © Colin Henderson

 

Bruce Menzies, Chairman, Predict Ability Ltd (PAL)

© Copyright Predict Ability Ltd 2018. All rights reserved.

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