J.D. Alt: Climate Mitigation and Confusion About “Cost”: Who Benefits?

By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally posted at New Economic Perspectives.

Even the most progressive proponents of climate change mitigation frame their argument with the proposition that the “cost” of mitigation today is far less than what the “cost” of climate change will be down the road if we fail to act now. While it sounds compelling, this argument perpetrates a deep confusion about what “cost” means when applied to the idea of inventing, designing and building the carbon-neutral infrastructure and energy systems that climate mitigation will require. This confusion, in turn, makes it more difficult for the political process to make rational decisions.

To illustrate, we need look no further than the recent United Nations IPCC report which, for the first time, not only details the potential catastrophe of climate change by the end of this century, but projects a “cost” for preventing that catastrophe from unfolding. This “cost” is calculated as a percentage of annual global GDP.

Right off the bat, the confusion begins. In some reporting, the IPCC’s projected “cost” of climate mitigation is described as a .06% reduction in global GDP annually. Other analysis state that the “cost” will equal .06% of annual global GDP. Obviously, there’s a significant difference. Reducing GDP means the world will produce less goods and services, employing fewer people to do less stuff—a dire prediction given the current high levels of unemployment world-wide. Saying the “cost” will equal some percentage of global GDP, on the other hand, means that GDP won’t decline, but that some percentage of the goods and services produced by the GDP will be directed towards climate change mitigation. Some of the media explainers—Bloomberg News, for example (whom you’d expect to know better)—included both meanings in a single pair of sentences: Headline: “Climate Protection May Cut World GDP 4% by 2030, UN Says”—and the article’s opening line: “The cost of holding rising temperatures to safe levels may reach 4 percent of economic output by 2030, according to a draft United Nations report.”

Confusion seems to reign even within the IPCC. A post on the website Real Climate, which is managed by climate scientists themselves, frames it this way: “The IPCC represents the costs (of climate change mitigation) as consumption losses as compared to a hypothetical ‘business-as-usual’ case.” But the IPCC report itself contains a summary chart showing global “Annual Investment Flows 2010-2029” increasing (according to my math, adding up the median projected global numbers) by a potential net gain of approximately $510 billion per year. So how can the “investment flow” increase by $510 billion annually while the world GDP decreases (consumption losses) by 4% between now and 2030?

But the confusion runs even deeper. Even if we accept the fact that the world will have to spend an additional $510 billion annually (instead of being forced to spend $510 billion less), we are led by semantic and political logic to believe we will be “losing” $510 billion every year as a global society. After all, that’s what “cost” means, right?—something you lose, something you no longer have because you’ve paid it out. So our minds resist. We don’t want to have to incur that $510 billion “cost”. We’d rather save the money and take our chances that maybe all these IPCC predictions will prove to be wrong, or that our kids, when they grow up, will figure out a great way to make everything okay again.

The forces aligned against mitigation exploit this confusion at every opportunity. A 4% reduction  in global GDP by 2030 proves that climate mitigation “destroys jobs”—a favorite refrain. $510 billion that we have to spend on goods and services for climate mitigation means that much less is available to spend on the goods and services we’re buying today—money “lost” to a cause we’re not 100% sure is even necessary. The more we can convince ourselves we’re “not sure”, the more iffy it becomes to incur that “cost”—hence the strident effort to counter every new climate report with the opinion of some scientist somewhere that seems to refute the scientific evidence.

Then there is this confusion, as expressed by Robert J. Samuelson recently in the Washington Post: “Carbon capture and storage—pumping carbon dioxide emissions from power plants underground—has been discussed for years. So far, it’s not commercially viable.” (Emphasis mine.) So we implicitly assume—as Mr. Samuelson demonstrates—that the infrastructure and carbon-neutral energy systems we’re going to need have to be “commercially viable.” In other words, their development must be market-driven. If the “market” isn’t willing to pay for it, there can’t be any justification for creating it. No doubt the IPCC’s “Changes in Annual Investment Flows” includes a substantial number of electric vehicles and the nation-wide network of public charging stations that will make them convenient and desirable. Until those items become “commercially viable”, however, there’s no reason to expect them to be built because no business is willing to incur the “costs” without the promise of a substantial reward. While Tesla and others have started the inevitable transition, the IPCC report makes clear there isn’t time for the long evolution that radical technology change typically requires. So, we are pretty much left with only the option of prayer—which has the virtue of not “costing” a cent.

If we came to our senses, however, and removed our soot coated “cost goggles”, we’d see the most obvious and simple thing: The $510 billion the IPCC suggests must be spent annually to invent and build carbon-zero infrastructure and energy systems—that money gets paid to somebody in exchange for the doing and the inventing and the building. Who would that be that it gets paid to? Well, it might be you if you got busy and positioned yourself as someone who could usefully contribute in some way to the effort. To say that the “cost” of climate mitigation is .06% of global GDP annually is no different than saying the “cost” of pizza is .06% of global GDP. “Cost”—by the simple logic of accounting—is actually something we, the people, get paid—just like people get paid to make pizza.

This, of course, reveals the ACTUAL point of contention amidst all the confusion: Into whose pockets is the .06% of annual GDP for climate mitigation going to be directed? If you look at the IPCC’s chart of “Changes in Annual Investment Flows” it becomes clear what the strident complaining and foot-dragging is really all about—and understandable with regard to where it’s coming from (see below): Those projected negative investment flows happen to be in the cash-generating business empire owned by Charles and David Koch. That simple fact pretty much sums up the whole American political scene about global warming.


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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. bmeisen

    Many thanks, in particular for IPCC’s chart. Again the cannard of lower GDP = unemployment, poverty, starvation, armegeddon. A substantial part of the US housing stock derserves replacement, 2 or 3 supplementary transport systems would have to be built, agricultural monoculture would be replaced by sustainable, more labor-intensive models.

    My region is dominated by an airport. Requests for public support for expansion are generally accompanied by arguments that the airport is the region’s largest employer and that the economic future of the region depends on the growth of the airport. There is virtually no public discussion of the sustainability of the business model that currently dominates avaition: burning Jet-8 to safely propel 500 tons at 500 mph over great distances. There is currently no alternative technology available or even remotely available to sustain the economic relevance of this model. (Recently Airbus formally announced that they are developing electric propulsion systems involving batteries – LOL.)

    Aviation as we know it will not exist in 20 years, given IPCC’s projections. Some of the jobs at the airport will be needed to maintain flight service for the super-rich and super-powerful who are privileged to continue to fly while the rest of us stay at home or ride the rails over great distances. A bridge over the Baring Straight anyone?

  2. allcoppedout

    Why would anyone now believe cost systems cost anything? It is surely obvious accounting now serves a small, thieving class and its professional lackeys. There is no costing going on, just money-funnelling.

    How can going green be a cost? We have vastly greater unemployment than we claim, so what cost is there in training these people up to do green work? They are otherwise “dreadful” welfare burdens, dragging us down. Get a jawb! You’d think even the dumbest duck would catch on. Having otherwise unemployed and under-employed peeps doing work is a good thing. Going green is a good thing, except maybe for whatever species likes eating crispy-fried planet.

    There will be folk thinking I’m just a simple lubber here. They need to get out more and do some science. It often is simple, stupid. Intercoursing the fractional integration functions of the shock-wave of a bee’s fart of institutional data that just happens, like the last 1002 that crossed your desk, to suit the issuing institution’s porpoise and it’s idea of the price of fish, ain’t clever. Noticing your boss is s very fat porpoise is the key to understanding where the missing fish have ended-up.

    If we were costing going green for real it would be treated as capacity building, something needed and not a “cost”. It can only be a cost in a wuckfit system. Going green is a cost in the system we run because we are wuckfit. It’s a cost because some cheating, criminal, planet burning and poisoning shits not only won’t do their bit, but will also keep using fossil fuels that are “cheap”. Yet where in the discussion is the “comparative cost arising because of cheating turds factor” of our supposedly intelligent “costers”. We’re being had because we won’t call a spade a spade. Sure, I might approach all this from the perspective of Wittgenstein’s ‘language-in-use’ metaphor, but we are beyond prissy. Alligators are snapping arse. It’s not a good time to bend over and search for the plug to the swamp we’ve created. Calling going green a “cost” is as dumb as deciding not to put oil in your car engine because it is a “cost”.

    There are ways past the green problem. The stupid economics and accounting systems, fit only for a world with a few million people in it, need to be abandoned. The real costs are sunk in the revolting professionals who maintain their bloated livelihoods by preventing a simple, honest and transparent world accounting and agreement system people we can all understand and use.

    Of course, I agree with JD – I think it’s time to use plain language. It’s a Koch-up.

  3. James Levy

    How many extra people is this phenomenon going to kill? That’s my question. What’s a reasonable, grounded estimate of the cost in human lives. Because if this is going to lead to starvation, disease, and the deaths of millions, then no amount of money that didn’t also lead to that many deaths is too great to spend to avoid this catastrophe.

    One of the most chilling things I ever read was a quote Mike Davis included in his book, “Dead Cities.” It was from an internal AEC document from the 1950s discussing the people who lived in and around St. George, Utah, where the fallout from the Nevada nuke tests was from time to time falling. It maintained that these farmers, ranchers, and miners (Mormon and Native American) were “a low-use segment of the population.” When we start doing cost to benefit analysis that allows for mass murder, we’ve gone off the ethical rails.

  4. Jackrabbit

    I thought the term “climate change mitigation” meant taking steps to reduce the impact of climate change (like building sea walls) rather than reducing greenhouse gases.

    1. Vatch

      I think you are correct. “Mitigation” means finding ways to live with climate change that has already occurred. It is not the same as prevention. In addition to your example, finding ways to treat and manage the spread of tropical diseases would be be a form of climate change mitigation.

      I did an internet search hoping to find links that would support our view of mitigation. I was very surprised to find that nearly all the sites that I found seemed to define “mitigation” as “prevention”. This is like the corruption of the meaning of “learning curve”. Initially, a steep learning curve meant that something was easy to learn. A person descends a learning curve, so the steeper the curve, the easier it is to learn the topic. Somehow, people got the mistaken idea that one ascends a learning curve, so a steep learning curve is now considered a sign of great difficulty by many people.

      1. Vatch

        Thanks for the lesson; I guess I was wrong. I looked up “mitigation” in a very old climate change book, and it said:

        A human intervention to reduce the sources or enhance the sinks of greenhouse gases.

        I still think I’m right about the phrase “learning curve”, though. :-)

  5. Thor's Hammer

    Would anybody care to calculate the “cost” of not putting the Koch brothers in cells with no “climate mitigation” (air conditioning) and throwing away the keys? At least 500 billion $ by my reckoning.

    1. allcoppedout

      Several trillion $ if one considers the effects actually jailing them as a moral deterrent on others. A rope and a tree is more fitting.

        1. F. Beard

          Many conservatives have adopted Charles Koch’s ideas, uttering his pet phrases about liberty and economic freedom and cronyism and advocating for low taxes, little regulation and a government kept as small as possible. But he also says things many conservatives would never dare say: Cut subsidies. Cut defense spending substantially. Read more here: http://www.kansas.com/2012/10/14/2528663/koch-relentless-in-pursuing-his.html#storylink=cpy

          No mention of the government-backed counterfeiting cartel for the rich, the banking system. Koch likely doesn’t question the lie that people can be worthy of the public’s credit which should be used only for the general welfare which easily allows welfare for the poor but never welfare for the rich.

          Still, he’s better than conservatives who are beneath contempt.

          1. skippy

            “No mention of the government-backed counterfeiting cartel for the rich, the banking system.” – beardo

            Berado translation – Lucifer [Ebivbal Gv’bermeant] made me do it.

            Skippy… Naw it was just some crazy ideology he believed in, back up by some serious megalomania.

  6. susan the other

    The Kochs sponsor a lot of “nature” stuff on PBS. Pretty cynical. And their political stooges (Marco Rubio yesterday) claim that spending money on Green will take money away from an economy already sputtering out. The Kochs have bought many years this way, obstructing significant change, to maintain their profits. What is hard to believe is that people believe them. So I have wondered if it is just theater so the government can claim that (as LBJ used to say, “the votes just aren’t there yet” when in fact everyone is concerned and wants something done. I’ve never met a person who says we shouldn’t bother addressing GW because it is a hoax, or because it isn’t cost effective, or because we’re all gonna die anyway. But you see stories referencing these attitudes as if they were a political force to contend with. I think it is fabricated for the most part – just because it so irrational. And the purpose is to buy political time, so there is no groundswell demanding climate mitigation which would actually stimulate an economy which is terrified of “wage” inflation. Because our government kleptocracy is in deep debt and must still keep American corporations on life support. The Fed is the “agent” of the oligarchy and the oligarchy stands to lose much of its wealth if the dollar dives. The oligarchy stands to lose its power. So instead of a New Deal for the planet, we have what appears to be an unjustifiable and even inexplicable depression – world wide. Which itself mitigates global warming because factories have shut down and etc. Mitigates it in behalf of the oligarchs. I think we should let the dollar dive and create a legitimate economy based on the sound principles of maintaining the environment. And I think everybody else thinks so too.

    1. allcoppedout

      Geeze, that’s hard core Skippy. No ideology glasses need be worn to spot the rubber-masked aliens at Koch Shop!

    2. allcoppedout

      I think pretty much everyone across the world thinks this given chance to discuss the facts.

  7. Conelrad

    Two points for consideration:

    1) the issue of GDP itself, since this metric lumps “bads” and “goods” indiscriminately. [See, for instance, Herman Daly’s recent “Dear Paul Krugman: Is GDP Growth Making Us Richer or Poorer? (Please Clarify.)” at http://www.yesmagazine.org/new-economy/dear-paul-krugman-is-gdp-growth-making-us-richer-or-poorer?utm_source=YTW&utm_medium=Email&utm_campaign=20140509.

    2) the fact that “[t]he problem of climate change involves a fundamental failure of markets … ,” in the words of Sir Nicholas Stern. Isn’t the First Law of Holes that “[i]f you find yourself in a hole, stop digging”? When it comes to global warming, is it possible The Market is a “hole”?

  8. Banger

    Climate change and environmental degradation (which goes beyond climate) are as much the issue of our time as WWII was an issue in the 40s. When the U.S. mobilized for war the economy pulled right out of the Depression why is that? By investing in this moral equivalent of war we gain in every major way both measurable and immeasurable. Imagine if the American political system had replied to the attack on Pearl Harbor by saying it was too expensive fight the Japanese? That is what we are doing right now and that is how fatuous the argument of the POS politicians like Rubio make–the man is not only a traitor to his country but to every country in the world.

    However dangerous the Axis powers were in WWII the energy companies and their stooges in both political parties are hundreds of times more dangerous.

  9. digi_owl

    Given the last few years i am no longer fully convinced that GDP measures the actual production capacity of a nation.

    I keep getting the sinking feeling that if we take one widget, and pass it around like a hot potato, with each passing being a percentage increase in the debt of the receiver, we could pretty much create permanent GDP growth.

  10. Ernesto Lyon

    A lot of people see an income stream, small to very large, from fossil fuels. Anywhere from the Saudi oil sheiks, the Koch Brothers, down to the little old lady in Pennsylvania who gets a couple hundred a year from mineral rights (there are a lot of them). All those people pay the cost of averting climate change.

    They hold the world hostage. There are two ways to treat hostage takers – pay their ransom, or kill them. Asking them politely to return the hostage doesn’t usually work.

    1. jrs

      Really I’m not sure the little old lady can’t be reasoned with (or her ransom at least easily paid – ie ALL she really wants is an income). She may well support addressing global warming, profiting off if now is just the comprimises one makes it a messed up world. The Saudi sheiks, the Kochs, yea well those are another matter.

  11. Rosario

    The only definition of “economy” that matters for our survivability:

    Careful management of available resources.

    Capitalist methods and mechanisms are a distraction, and have never existed to suit the above definition. Rather they ensure the “careful management of capital”. We must realize that focusing on how capital flows and pools (GDP, whatever) around the world will not solve ecological problems.

  12. Glen

    Exactly! Excellent post.

    Now explain why the amount of money we give to support the people and industries causing climate change dwarf’s what we’re spending to fix it. We could have thousands of Solyndra “scandals” before we even come close to amount of money given to the current losers we support with tax breaks and giveaways.

  13. JCC

    It’s too bad that GDP wasn’t the primary measure of our economy back in the late 19th and early 20th centuries. If it had been we might have avoided the “costs” of building out our road, auto/truck/bus building and gas/diesel supply infrastructure, our airline/airport infrastructure, and our pipeline and bunker oil burning shipping infrastructure… then we wouldn’t be in this mess to start with :)

  14. Fiver

    I have real problems with this IPCC venture into economics.

    For starters, only a small minority of economists have ever entertained the idea of an economy that does not continuously ‘grow’. The growth assumptions in the model to my mind are as silly as the population projections even by 2050, and yet they dutifully extend them for another 50 years. On that basis alone, I’d pay no attention whatever to the report, because it is so blatantly obvious we are politically so inept we’ve completely failed to handle our existing population properly, let alone what the further out projections realistically portend.

    We have a window within which we must act or risk runaway change we can no longer rely on. The problem is, the IPCC reports have been written by a politicized group with big fossil fuel national producers (and interests) and big consumer countries preventing the adoption of any but the lowest common denominators to achieve ‘consensus’ views. Doing so places the ‘window’ for full transformation further out than it is likely to really be, given we are already seeing significant second and third order effects and feedback loops that were not anticipated even a few years ago. Further out, when that means adding on a decade or more, of course, is something not undertaken today, or tomorrow, but by someone else in some other time. That can that must not be kicked.

    Now, I think we’ve got no more than 15 to 20 years to get out that window – that’s what we HAVE to do, that is, bring the numbers in below runaway and keep them there. That is not, however, ALL we’ll need to do, as CC in itself is only 1 of a number of global ecosystem imbalances of critical dimension we’ve caused – the oceans are dying, the forests savaged, fresh water polluted from a host of idiotic practices, including fracking, pesticides/herbicides, immense amounts of fertilizer, species die-off due to human enroachment at a crushingly fast pace destroying entire local or regional life-cycles and food-chains, so many toxins and drugs in the mix we’ve no idea what we’ve ultimately wrought.

    Those things all MUST be done as well, and within similar time-frames, so really, it’s time we saw this for what it is: humanity as is, is a threat to everything on this planet, most certainly including ourselves, and the only way to avert a global horror show is to jettison this high-energy, high-consumption, deadly waste, ‘must grow’ permanent carnival for something viable without simply writing off most of humanity.

    What we cannot do is settle for bromides and insignificant gestures (eg.,carbon cap and trade) when what is needed is a two-decade, inter-generational commitment unlike anything we’ve previously seen in peacetime – an all-out effort on all fronts simultaneously in the full knowledge that the days of infinite claims on this planet are over, and our material lives will reflect it. This can be done technically, it can be done within the time-frame prescribed, and it can give the world the chance it needs to regenerate, and its peoples to flourish in peace – because it’s the only way forward that will work.

  15. washunate

    There’s no layperson confusion about what cost means. I don’t get this ongoing attempt to overthink environmental policy or focus on specific Safe Villains for Team Blue to attack like the Koch brothers. It is like all public policy today, from law to medicine to banking to agriculture to media to education. The kleptocracy is bipartisan.

    The American people are not confused about who benefits from our present arrangement. Rather, the uncertainty is how to organize the citizenry to reclaim power from the psychopaths.

    For example, sensible environmental policy will require us to decrease financialization and corporate welfare rather than bailing out the mismanaged, criminal, incompetent polluters. But of course, to oppose the bailout of GM is to commit the Liberal Sin of supporting the destruction of American Manufacturing – A Global Force for Good.

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