ANALYSIS: Costs of global transition to clean energy sources smaller than expected, and could offer huge benefits
By Gerard Wynn
Cutting carbon emissions would save the world money once all costs and benefits are included in a wider ledger, a UN climate panel report shows.
Cost has been one of the most vexed question raised in the series of reports, which the Intergovernmental Panel on Climate Change (IPCC) publishes every six years or so.
The latest report published estimates both for the cost of letting climate change take its course, and of cutting emissions.
It found that the cost of cutting carbon emissions, for example by replacing coal with solar panels, would only mildly crimp continuing economic growth, leaving the world still vastly better off than today.
On the other hand, the IPCC found scientists struggled to measure the cost of allowing climate change to unfold with more droughts, floods and sea level rise, making direct comparison impossible.
They only provided an estimate for the cost of damage caused by a relatively safer level of climate change, which would require rapid cuts in greenhouse gas emissions, finding damage from more serious climate impacts very difficult to value.
It was clear that the risk was on the up-side, and that the uncertainty was for greater rather than smaller expected damage beyond about 2 degrees Celsius warming above present levels.
Besides these direct costs, were the indirect costs and benefits from phasing out fossil fuels.
On the “taking action” side of the ledger, there was the immediate benefit from improved air quality from continuing to burn fossil fuels, by cutting air pollution which the World Health Organisation stated two weeks ago was the world’s biggest killer.
In addition, there was the energy security benefit of reducing reliance on fossil fuels for big importers like Japan and the European Union.
However, there were also costs from phasing out fossil fuels, to exporters such as Saudi Arabia; and the risk of more expensive energy for the world’s poorest people.
After adding these so-called co-benefits to the direct costs, it seems clear that tackling climate change with urgency is vastly better value the long run.
“There are few benefits from doing nothing about climate change, especially as temperatures continue to warm; by contrast, there are lots of huge health benefits from curbing CO2 emissions,” the report said.
The IPCC reviews the latest published science on climate change every five to six years. Sunday’s report was the last instalment of the latest report, focusing on policy options to cut emissions, and compiled by some 235 authors.
They found that countries should roughly halve global carbon emissions by 2050, compared with present levels, which are still rising, to avoid the most dangerous climate change.
They said that “business as usual” was not an option, given expected temperature rises of 3 to 5 degrees Celsius without efforts to curb emissions.
The IPCC calculated the cost of cutting emissions, to limit climate change to safer levels, at around 3.4% of “global consumption”.
That was rather optimistic, given it assumed a perfect world where countries cooperated; used the most efficient policies to curb emissions (such as a global carbon price); and acted immediately.
Nevertheless, even a higher cost would be negligible compared with a 100% increase in the global economy expected by the middle of the century, assuming continuing global economic growth of around 2% annually.
The estimates for the cost of climate change were problematic, given the difficulty of accounting for extreme, uncertain damage decades and even centuries into the future , much of which was hard to monetise, such as species extinctions; loss of natural systems including coral reefs; human conflict; mass migration; and sea level rise which wiped out islands and coastal communities.
Instead, the previous instalment of the IPCC report, published last month, calculated a range of costs of 0.2 to 2% of income from milder climate change up to 2 degrees above present levels, which it described as an incomplete, lower estimate.
The implication was that the risk of open-ended costs from failing to cut greenhouse gas emissions in the near term exceeded the more certain costs of cutting emissions.
The report rejected the notion, sometimes used by critics of climate action, that higher temperatures would lead to fewer cold-related deaths, arguing that mortality would be greater from more severe heat waves and other impacts.
“The rise in minimum temperatures may have contributed to a decline in deaths associated with cold spells, however the influence of seasonal factors other than temperature on winter mortality suggests that the impacts on health of more frequent heat extremes greatly outweigh benefits of fewer cold days.”
More tangible were the present day benefits from curbing reliance on fossil fuels, which were described as “co-benefits” of climate action.
Burning coal produces smoke which can cause heart and lung disease, while burning gasoline produces ozone contributes to chronic obstructive pulmonary disease, while both can exacerbate asthma.
The latest IPCC report found estimates of large benefits globally from “stringent (carbon) mitigation efforts” which also reduced reliance on fossil fuels.
“The vast majority of these co-benefits would accrue in urban households of the developing world,” the IPCC report said, given laxer air quality laws. It quoted one piece of research estimating 0.7 to 4.7 million annually fewer premature deaths as a result of lower outdoor air pollution globally, and another finding of 0.5 million avoided deaths annually, as a result of less smoke and ozone, both in 2030.
It also found an energy security benefit for fossil fuel importers.
“In stringent mitigation scenarios, global energy trade would be 10-70% lower by 2050 and 40-74% by 2100 than in the reference case. At the same time mitigation leads to much lower extraction rates for fossil resources.”
By the same token, fossil fuel exporters would lose out.
“Most mitigation scenarios are associated with reduced revenues from coal and oil trade for major exporters,” it said.
Regarding the risks for the world’s poorest people from higher energy prices, as a result of switch away from easily accessible fossil fuels, the report was vaguer.
“Regulators need to pay attention that the distributive impacts of higher prices for low carbon electricity (fuel) do not become a burden on low income rural households. The success of energy access programmes will be measured against affordability and reliability criteria for the poor.”
In balance, these indirect co-benefits of curbing reliance on fossil fuels added to higher direct benefits from urgent action in avoiding climate change.
As these co-benefits benefits were more immediate and local than avoiding uncertain long-run climate change, however, the IPCC report concluded that they may more pull with policymakers.
“In many societies the presence of multiple objectives may make it easier for governments to sustain the political support needed for mitigation.”
“Co-benefits estimates are particularly important for policymakers because most of the climate benefits are realized decades into the future while most co-benefits, such as improvement in air quality, are realized immediately.”