The Weekly Carboholic: CBO produces climate analysis

Posted on May 6, 2009




The Congressional Budget Office (CBO) is well known for producing strictly non-partisan, tightly controlled and pretty conservative (as in careful not to overreach) economic forecasts for the effects of legislation on the national economy. These forecasts are usually quantitative in nature, giving dollar estimates for costs, benefits, savings, growth, and so on. Which is one of the reasons why last week’s release of the CBOs Potential Impacts of Climate Change in the United States was relatively unusual – it’s remarkably quantitative for a body whose products are usually numbers.

Perhaps more unusual, however, is the fact that the CBO produced the summary in the first place. Scientific summaries are usually the domain of the National Academies, NOAA, NASA, et al, not the budget office. But this time Senator Jeff Bingaman (D-NM), Chairman of the Senate Energy and Natural Resources Committee, requested that the CBO produce “an overview of the current understanding of the impacts of climate change in the United States,” with an emphasis on the uncertainties surrounding those impacts and the policy difficulties that fall out of the difficulties.

Here’s a brief summary of the paper’s findings regarding the effects of climate disruption on the United States:

  • U.S. temperatures are expected to increase ~25% more in the U.S. than the global average, with Alaska increasing ~70% more than global average.
  • Northern areas of the U.S. are expected to get more precipitation while southern areas (esp. the Southwest) are expected to get less, and severe precipitation events (blizzards, severe thunderstorms possibly leading to flash flooding, etc.) will become more common.
  • There’s not enough information to make solid predictions about hurricanes, but more powerful storms are probable due to warmer ocean temperatures.
  • There’s not enough information at this time to know how the El Nino or oceanic currents will be affected.
  • Sea level rise will cause significant flooding and more dangerous storm surges, especially along the Texas, Louisiana, Florida, North Carolina, and Maryland coastlines.
  • An unknown number of species will be at risk of extinction due to changing climate.
  • Agriculture will change, but how much is dependent on what region of the U.S. is affected and how: the West may become too dry to support current crops, California may become too hot for wine grapes, and so on. But many areas are expected to be able to adapt by changing crops and/or changing when crops are sown and harvested.
  • Forests are expected to expand significantly, but this may cause additional problems in the Arctic.
  • Cold water fish species may go extinct or move north out of their traditional ranges and out of U.S. territorial waters.
  • Water supplies will become a major problem for the west while flooding and saltwater invasion of aquifers will produce water quality problems for significant parts of the rest of the U.S.
  • Energy demand (driven by winter heating) is expected to fall overall, and coastal/Arctic infrastructure will need to be repaired and improved more often.
  • Human health is expected to stay about the same, although the causes for mortality will change (from cold to insect-borne disease, for example).

All in all, the CBO estimates that the cost to the U.S. by 2100 will be about 3% of GDP, adjusted for inflation, for a 7 degree Fahrenheit increase in U.S., but with a few important caveats.

The first caveat is that the studies the CBO based their estimated cost off of don’t estimate the costs for the high end of temperature increases (13 degrees F or more) and don’t include all of the projected effects on the U.S. The second caveat is there are non-economic effects (species extinction, for example) for which assessing value is difficult. And the third caveat is that abrupt changes that are, definitionally, difficult or impossible to adapt to have not been included in the estimate.

Ultimately, the CBO says that the uncertainties are too large to really make good economic estimates of the costs. Instead, the approach is more like risk assessment and mitigation than a cost/benefit analysis. And the CBO concludes with a call for Congress to abandon carbon capitalism in favor of a carbon tax.

Apparently the economists at the CBO haven’t given up on convincing Congress that a carbon tax is a better way to go.


HFC phaseout struggle at the White House

David Sassoon at SolveCliamte has been following the news of a significant struggle between the State Department and its allies and the White House economic team headed by Larry Summers. The struggle is over whether the administration should support an ammendment to the Montreal Protocols to phase out hydrofluorocarbons (HFCs) or should include HFCs within the carbon capitalism regieme described in the Waxman-Markey draft American Clean Energy and Security Act of 2009 (ACES).

The Montreal Protocol is the international treaty that phased out CFCs as a result of the discovery of the ozone hole over Antarctica. While HFCs don’t have the same ozone-destroying properties, they are very powerful greenhouse gases (GHGs). One ton of HFCs in the atmosphere acts like thousands of tons of carbon dioxide, and while releases of HFCs into the atmosphere are presently relatively small, the amount emitted is expected to grow dramatically.

If the HFCs were added to the Montreal Protocol, then they’d be gradually phased out independently of other GHGs and would be replaced by new products that were weaker GHGs and didn’t persist in the atmosphere for as long. And it appears that there are a number of other products already waiting in the wings to replace HFCs, so the phase out would likely be relatively painless. However, it appears that the White House economic team may want HFCs included in the carbon market specifically because they’re easy to replace. Sassoon runs some quick math and concludes that, at $25 per ton of CO2 equivalent, a ton of one common HFC would be $50,000, so high a price that market manipulation becomes a real concern and the U.S. could potentially meet all it’s CO2 emissions targets exclusively by stopping HFC production.

Sassoon points out that this kind of manipulation has already been observed in the EU emissions trading program.

Keep tuned to Sassoon’s blog at SolveClimate for more developments.

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