The Obama administration released Tuesday a new report warning that with accelerating climate change comes accelerating costs: Costs will increase by 40 percent each decade of inaction on climate change. The report fails to mention, however, that the administration’s climate policies come with much steeper price tags. Nor is there any action that will actually mitigate temperatures even if climate change were a problem.
The new report warns that inaction will result in temperatures increases that will exacerbate economic damages associated with climate change by 0.9 percent of global output or $150 billion. Let’s assume this is true. Whether it be cap-and-trade, carbon tax or Environmental Protection Agency regulations, the climate change proposals will cost that annually.
For instance, Heritage Foundation economists modeled the effects of the Boxer-Sanders carbon tax legislation. The Boxer–Sanders bill calls for a tax on CO2 emissions that starts at $20 per metric ton in 2014. This tax rate rises by 5.6 percent per year, growing to $50 per metric ton by 2030 (after adjusting for inflation). Since a carbon tax would drive up energy costs and squeeze production and consumption, it would not only result in higher taxes but also in less economic growth.
Heritage found that Boxer–Sanders would extract over $100 billion from the private sector in its very first year (2014) and over $200 billion in 2030 (after adjusting for inflation). The total revenue for the years 2014 through 2030 is nearly $3 trillion. The energy price shocks created by the Boxer–Sanders bill would reduce national income by $92 billion in 2020. This negative economic impact gets worse and cuts $146 billion from gross domestic product (GDP) in 2030.
What about the EPA’s war on coal? Heritage modeled those costs as well, finding that a phasing out of coal over the 2015-2038 time period would decrease GDP by $2.23 trillion over the entire period of the analysis.
Again, let’s assume the climate report is accurate (a big assumption) in their calculation of the costs of $150 billion for a 3 degree Celsius increase as opposed to 2 degrees. These costs would occur even with action because the climate policies would do nothing to significantly mitigate global temperatures. A high-end estimate of a $25-per-ton tax concludes that it would moderate global warming by 0.11 degrees Celsius by the end of the century – far short of the full 1 degree reduction the report says is necessary to avoid these costs.
The report is also predictably inaccurate in the actual assessment of the earth’s climate. The report warns of rising sea levels and that “the rate of increase appears to be accelerating.” Yes, sea levels are rising but a March 2014 report in Nature shows that the rate of increase has declined so much so that climatologist Judith Curry said it “makes the 21st century of sea level rise projections seem like unjustified arm waving.”
Unjustified arm waving is an apt way to describe the administration’s climate push and it’s the climate policies that will cost Americans an arm and a leg.