(Investor’s Business Daily, March 19) – The Environmental Protection Agency and other government agencies say fossil fuel and carbon dioxide emissions cause “dangerous global warming.” Their latest strategy for advancing this thesis involves estimating the “social cost of carbon” — monetized damages associated with alleged climate risks.
The agencies assume Earth’s climate is highly sensitive to CO2, then hypothesize almost every carbon cost, including the impact on agriculture, forestry, water resources, coastal cities, ecosystems, wildlife and human health.
But as a new Management Information Services report explains, they ignore the most obvious and enormous benefits of using fossil fuel and emitting carbon dioxide.
Had they followed federal laws and basic benefit-cost analysis rules, they would have found that hydrocarbon and carbon dioxide benefits outweigh the cost by at as much as 500-to-1!
Federal agencies are required to “assess both the costs and benefits” of a proposed regulation and adopt it “only upon a reasoned determination that the benefits … justify its costs.” The OMB recently said benefit-cost calculations should help determine whether a regulation is worth implementing at all.
By addressing only the supposed impact and monetary cost of carbon-based fuel — while ignoring its most significant, well-documented benefits — government analyses and regulatory proposals violate the law.
The methodology for the developing social cost of carbon estimates is so flexible, so devoid of rigorous standards, that it could produce almost any estimate an agency might desire.
It let agencies set the cost at $22 per ton of carbon dioxide emitted in 2010, and three years later arbitrarily increase it to $36 — each time with little publicity, debate or public input.
They’re using the $36 formula to justify proposed standards for microwave ovens, cellphone chargers and laptops; costly, job-killing rules for cars and coal-fired power plants; and ultimately standards for factories, refineries, hospitals and apartment buildings.
Each time they proclaim unacceptable damages from “carbon,” and enormous benefits from their regulations. Now environmentalists want an even higher number: $43/ton.
Social costs of carbon calculations rely on computer models that supposedly combine climate processes, economic growth and feedback between the climate and global economy. However, only limited, speculative research links climate impact to economic damages.
Even the agencies admit the exercise is subject to ” simplifying assumptions and judgments, reflecting the various modelers’ best attempts to synthesize the available scientific and economic research characterizing these relationships.” (Emphasis added.)
Each model uses a different approach to translate global warming into damages. Worse, transforming economic damages over time into a single value requires “judgments” about how to discount them, and officials have been highly selective in choosing which research to utilize.
Literally trillions of dollars are at stake.
The process is highly detrimental to American lives, jobs, living standards, health and welfare. It lets officials exaggerate the supposed benefits of rules, minimize their costs and ignore the value of energy, facilities and activities being regulated. It’s being imposed to prevent “dangerous man-made climate change” that thousands of scientists say is hypothetical.
Fossil fuel facilitated industrial revolutions, launched the modern world and ensures livelihoods, living standards, health and longevity. Over the past 200 years, largely because of hydrocarbon energy, human population increased eightfold, average incomes rose 11-fold and global life expectancy more than doubled.
Concurrently, human CO2 emissions increased 2,800-fold, to 8.4 billion tons/year — and atmospheric concentration rose from 320 ppm CO2 to nearly 400 ppm. Carbon dioxide facilitates plant growth and enhances agricultural productivity. It is the basis of all life on earth.
Hydrocarbons provide 81% of world energy. Most important, the positive relationship between fossil fuel, economic growth and CO2 emissions is strong — supporting $70 trillion per year in gross domestic product.
Under accepted benefit-cost analyses, proposed regulations would pass muster if the rules’ benefits exceed their cost by a 2:1 or 3:1 ratio. But employing the government’s own carbon “cost” figures demonstrates that the ratios are dramatically reversed.
The benefits of using carbon-based fuel outweigh hypothesized “social carbon costs” by orders of magnitude: from 50-to-1 (using the inflated 2013 costs of carbon of $36/ton of CO2) to 500-to-1 (using the arbitrary 2010 $22/ton estimate). Any cost estimate is lost in the “statistical noise” of carbon and CO2 benefits.
If the world is serious about economic growth, living standards and affordable energy, fossil fuel is essential. Restrictions on hydrocarbon energy and faulty carbon cost analyses will only undermine progress in these areas.
Roger Bezdek, an energy analyst, is president of Management Information Services Inc.
Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow.
