The Stockholm Network: Carbon Scenarios

Yesterday evening I went to see the presentation of the Stockholm Network research project Carbon Scenarios (PDF).  I was, to put it mildly, horrified.

I’ll do a thematic summary, instead of a blow-by-blow as it’ll make things easier.  First, a word on the speakers:

Everyone on the panel was a part of the process that created the report.  No one spoke for moderate policies, or against targeting cuts in emissions.  There was no significant disagreement between the speakers and no suggestion they were merely given a platform by the Stockholm Network.  They were all presenting the report they worked on, as a group.

Helen Disney, the Stockholm Network CEO, chaired the event.

Paul Domjan, Energy Fellow at the Stockholm Network, was clearly the main guy behind the research project.

Hardin Tibbs, Dr. James Keirstead and Dr. Swenja Surminski all seemed to be pretty harmless and largely kept their views to themselves except on narrow methodological issues.  Surminski was the only one to suggest that the alarmism might be a bit overblown; she cautioned Mark Lynas and Oliver Tickell, when they started ranting about fire and brimstone in response to a question from me about cost/benefit analysis, that they might put the public off.  Those two were the off the deep-end alarmists.

The step change policy

They argue that a “step change”, with vastly more commitment to reducing carbon dioxide emissions, provides for the best plausible climate change policy.  They set out a few ingredients of such a policy:

• Global limits to hydrocarbon extraction.  The limit should be applied as close to the source as possible to make the scheme easier to monitor and administer.  The permits should be auctioned by a Climate Security Task Force under the United Nations Environment Programme.



• Use the proceeds from the auction to fund a series of things:

1. Compensating some countries for lost income under the scheme.



2. Supporting adaptation.



3. Supporting technology transfer – e.g. alternative power sources.

This is extremely worrying in a number of ways.  It is clearly alarmist.  The kind of dramatic, short-term carbon cutting regime that invariably fails any serious cost-benefit analysis.

As it is a cap and trade scheme it takes no account of the opportunity costs associated with massive cuts in carbon dioxide emissions.  If cutting carbon dioxide emissions by the amount required will completely decimate the economy – far more than can be justified in order to cut emissions – the economy will be left to go hang as the emissions have been capped.  There is none of the flexibility allowed by other policies to cut carbon dioxide emissions.

Beyond that, it invests huge economic power in a supranational organisation with little democratic accountability.  The UN Environment Programme would have a huge amount of money (it could quite plausibly be trillions of dollars) to distribute under this plan – it would make the EU’s structural funds (never cleared by the Court of Auditors) look impoverished.  That is an economic power that has never been vested in a supranational body before.  Given the record of the UN and EU in descending into a pit of sleaze and mismanagement at every opportunity there is little reason to think that money would be spent well.

The UNEP is given all this money because of “the importance of wealth transfer”.  A question they never quite answer is quite who the money is being transferred from, and who it is being transferred to.  The answer is from the relatively poor in the rich and poor worlds, as they consume the most energy as a share of their income, to corrupt governments who demand a bribe to stay in the system and anyone who can sell their ‘project’ to the UNEP.  This is a massive opportunity for special interests and the corrupt and, with little accountability at the supranational level, they’ll take it.

“It’s the consensus”

I skimmed Carbon Scenarios at the start looking for $, € and £.  That’s normally the quickest way of finding the estimates that should mark any serious policy proposal.  Unfortunately, the only currency I found was in the section setting out the potential safety valve on an American cap and trade policy - $15-$25/tonne apparently.  There simply wasn’t any analysis of the costs and benefits of the different plans, except the extent to which they reduced emissions.  Culling ninety percent of the human population would count as a ‘success’ under this report’s analysis as it would certainly reduce emissions sufficiently.

I had a lot of questions when the various speakers finished (it was tempting to start with, “do you really want to return to the Stone Age?”).  Unfortunately, I was only going to be able to ask one so I went with the safest, most mainstream, one I could.  Did they think their policy would fail to pass cost/benefit analysis as other severe policies to cut emissions do under mainstream analyses like that provided by the man the Economist called "the father of climate change economics" Nordhaus?

Domjan, the Stockholm Network’s Energy Fellow, was the first to respond.  He basically said that they didn’t want to rehearse the scientific debate (fair enough) and that all the governments had settled on a 90% chance of avoiding more than 3oC in warming so that was the consensus we all had to accept.  The problem with that stance is that it defines out of the debate huge swathes of entirely mainstream and respectable opinion; positions that are gaining ground as people prove unwilling to pay ever higher prices for energy.  It makes a mockery of their pretence to be trying to start a serious policy debate.

The precautionary principle

Next was Mark Lynas, who cited some of the more extreme predictions out there and stated that it was simply unethical to risk those consequences.  He argued that cost/benefit analysis wasn’t appropriate with potential harms that serious.  That is, basically, the precautionary principle.  The precautionary principle is utterly destructive to both economic liberalism and basic common sense.  It can justify anything if you start treating remote possibilities, effectively, as certainties.

Finally, Oliver Tickell repeated Lynas’ alarmism and then added that we can’t rely on the predictions that make a cost/benefit analysis possible.  He cited the change in oil prices since last year as evidence that we can’t rely on economic modelling.  Unwittingly, he was undermining the entire case put forward by the report.  All of their predictions of emissions under different policies and, as a result, all of their predictions about how much the planet might warm are utterly dependent upon economic models.  Tickell was so utterly clueless he didn’t realise that, by attacking the reliability of economic modelling, he was attacking the basic foundations of his own side’s arguments.  By contrast, while sceptics take economics seriously they are properly cautious about the long-term reliability of both economic and climate modelling.

Domjan nodded on through all this.  Does the Stockholm Network’s Energy Fellow really believe in the precautionary principle?  Would he apply it in other areas like EU chemicals regulation?

Conclusions

The policy aspirations of the Stockholm Network’s Carbon Scenarios report would be a nightmare.  Such policies would mean vast increases in energy costs.  If technology cannot deliver emissions reductions at the pace they expect their policies could lead to an economic catastrophe.  Huge amounts of money would be channelled from poor people dependent on affordable energy to maintain a decent standard of living to dubious projects and corrupt bureaucracies.  It is justified on the basis of every kind of woolly thinking and alarmism that the environmentalist movement has to offer and  now public opinion, and increasingly political parties, are moving away from.

Cross-posted from CentreRight.Com.