## Sunday, October 09, 2005

### Kyoto counter: costs and benefits

Abstract: The main point of this article is to say a few words supporting the number 150 billion dollars a year for the Kyoto protocol (Nicholas Stern wants much more, about 400 billion dollars a year, 1% of GDP) for the expected negligible 0.07 Celsius degree decrease of temperature in the next 50 years, both used in the Kyoto counter in the sidebar.
A week ago, we correctly predicted that the JunkScience Kyoto counter would show the first saved millikelvin this week. Ladies and Gentlemen, open the bottles, the moment has arrived. ;-)

Many people have doubts about these numbers. Some people may go so far that they hypothesize that no one has even attempted to calculate how much the Kyoto would cost and how much it would affect the climate. Let me say that it would be a truly bizarre idea if some bureaucrats would propose to terrorize virtually every company in this world and they would not even attempt to calculate the costs and benefits of their proposed new policy.

Fortunately, the reality may be bad but not that bad. The official green IPCC climate panel of the United Nations has, of course, tried their best to evaluate all these numbers. The Kyoto counter in the corner uses a rather conservative estimate for the costs (150 billion USD per year) based on the official numbers and a pretty optimistic efficiency (1 saved millikelvin for 100 billion USD and more than 1 millikelvin per year) based on the official climate models. If you don't like the numbers in the Kyoto counter, send your hate mail to the IPCC.

Of course, the detailed digits only have an entertainment value. You should only believe that the costs displayed in the counter are correct plus minus tens of percent, much like the temperature difference. The qualitative conclusion is of course independent of these details: Kyoto was a madness.

Economic estimates

Many economists tried to calculate the costs of the Kyoto protocol and there are hundreds of articles in various national newspapers that estimate the Kyoto costs. (For example, Canada itself could pay CAD \$21 billion per year according to its government.) These numbers may also be found on the website of IPCC. For example, the Kyoto planners were planning that countries like Canada, Australia, and the U.S. would have to sacrifice something between 1 and 2 percent of GDP (let us hope that it is cummulative for a couple of years) in 2010. For the U.S., it is about 600 billion of 2005 U.S. dollars.

The U.S. are one fifth of the world's economy. The American national spending would of course be relatively higher than this fraction - a "punishment" for America was obviously one of the main goals of Kyoto. But still, the world would pay one or several trillions USD between 2001 or so and 2010, and the figure 150 billion USD per year is obtained by the method of fractions. I claim that it is not a controversial figure at all and everyone who has studied the question will agree that this is a fair approximate estimate.

The most megalomanic plans of the Kyoto green brains wanted to stabilize the CO2 concentration at 450 ppm (now it's 380 ppm and 450 ppm will be surpassed by 2040) which was counted to imply a 3.5 percent GDP reduction in every year around 2050. Let me hope that this huge number was only meant as a cummulative difference from the reduced growth, not the actual growth reduction that would be paid annually every year around 2050. The latter would definitely send the whole world into a huge recession very quickly because 3.5 percent is essentially the world's annual GDP growth. ;-)

Of course that the reality of the benefits and costs will be smaller because Kyoto will gradually evaporate - and it is already evaporating. Tony Blair already believes that this approach is not promising. Moreover, many countries may want to leave Kyoto and join the Asia-Pacific partnership that requires no mandatory caps, just a co-operation in the development of new technologies. It is not meant to kill Kyoto, of course - just to complement it - which in practice means that it is a peaceful way to bury Kyoto. :-)

An important disclaimer: in a previous article about the Kyoto, I mistakenly copied the figure from an incorrect article of Reuters that claimed that the official estimates of Kyoto costs would be 18 quadrillions. (You can't always trust Reuters but in reality, Reuters got this absurd estimate of costs from a wrong graph of the IPCC themselves.) As Willie Soon has pointed out to me - because he always cares about the data being correct on all sides - the official figure by IPCC, after their typos were corrected, was smaller by a factor of 1000 i.e. merely 18 trillion dollars (hundreds of wars in Iraq or 15,000 LHC colliders). ;-) These numbers sound like infinity, but they are not and one must be careful about the orders of magnitude.

The temperature reduction

Richard Lindzen would probably guess that because the climate sensitivity on CO2 is smaller than IPCC thinks, the temperature difference induced by the reduced CO2 concentrations is smaller by a factor of 5 or so. If I publicly believed him, the temperature difference in the counter would have to be reduced even more.

But again, it is not controversial at all that the "saved" temperature in 2050 induced by the action of Kyoto policies per one year is at most one or two millikelvins, not much more. The expected "global warming" by 2050 will be about 300 millikelvins, which is 6 millikelvins per year, and you can easily see that Kyoto can't eliminate more than 10-20 percent of this expected increase simply because some CO2 is already in the atmosphere and some CO2 will be added anyway.

If you wanted to stop warming - assuming that the warming due to CO2 exists - by the Kyoto-like approach by 2050, you would have to reduce your expected GDPs in 2050 by 50 percent or so. This also implies that most of the readers would have to sacrifice half of their pensions etc. for the great project of cooling down the planet. It would indeed mean to pay hundreds of trillions this century (thousands of wars in Iraq or tens of thousands of superconducting supercolliders).

In the paragraphs above I was assuming that the sensitivity of the climate on the CO2 concentrations is what the alarmists believe, for the sake of the argument. The real dependence on the CO2 concentrations is probably much smaller which makes both the expected temperature increase as well as the temperature decrease induced by Kyoto much smaller, while it makes the cost of 1 negative millikelvin much higher than our 100 billion USD.

The hockey stick graph in the IPCC report

The graphs of IPCC from 2001 are fun and you should look at some of them. The last graph (9-1b) of the "synthesis report" is the infamous hockey stick in its best edition. It's a striking picture by Mann, Bradley, Hughes located at the most prominent place of the report except for the title page (namely the last page), including a weird extrapolation to 2100. As discussed many times, their work was totally flawed. Even Mann's alarmist colleagues admit that the natural variations in the past have been much higher than Mann et al. argued, see some spaghetti graphs here. Those who claim that the hockey stick graph was not crucial for the Kyoto paradigm are simply unrealistic. Without the flawed picture, the scientific justification would be weaker than tea.

1. I have seen many meantioning of the Kyoto Protocol costs. But I am still wondering what exactly is the cost. Where does the money go and how are they spent?

Most of the "cost" arguments are about heavy taxations which would encourage conservation. It seems to me, the taxations cost tax payers but it also benefits governments in providing more tax revenue. And the tax revenue in turn will be used on public projects and services that benefit tax payers. So, I do not see that as a cost to the collect society. It's merely money moving from one pocket to another pocket.

Another "cost" argument is that jobs are lost to third country due to stricter regulations etc. It would be a cost to industrial countries, but benefits developing countries. So, again, to the collective humanity, it is NOT a net cost. It is merely moving money from some one's pocket to some other's pocket. Not a net cost.

The only net cost that is real must be physically associated with research and development of technology, or manufacturing and installation of material or devices that help reduce CO2, or things to that nature.

The problem is, all such economical activities involves manufacturing of materials and equipments, and transport them. They all cost extra energy. And the extra energy must come from burning more fossil fuels. Therefore they all help to get more CO2 emitted, not less.

On the other side, better energy efficiency must also save money in saving the amount of money needed to purchase the energy. And it saves CO2 emission.

So my opinion is, the amount of money, or the scale of the economy, is roughly in proportion to the amount of energy spend, hence proportion to the fossil fuels burned and CO2 emitted. More monetary cost would mean more fossil fuel burned and more CO2 emission. Less monetary cost would mean less fuel spent and less CO2.

So, if at the end of day, it cost extra money to get Kyoto implemented, what it means the CO2 net emission will actually be more, not less. And if it actually saves money instead of cost money, then the CO2 emission will be less.

I simply do not see how it could be a possibility where it actually costs the humanity trillions of dollars more, and at the same time utilizes less energy and utilizes less fossil fuel. The two are proportional, not inverse proportional.

Quantoken

2. Dear Quantoken

what is a cost? What an interesting question. Cost is something that you must pay - i.e. difference of your wealth (the number of laptops, for example) and capacity to accumulate your health that decreases as a result of your being forced to buy or do something. Where does it go?

Of course that these trillions would go to a "parallel brane", more precisely an "eternal black hole". There is no "conservation law for money". The money is just lost. (I am talking about the real wealth, not just some numerical value of something that can be renormalized.)

The companies and individuals must restrict their behavior, they must buy more expensive technologies for the same thing which means that they have less money for other things. The producers of other things don't sell enough things, so that they have less money, too etc. And so on. The result is that the production decreases, products become less available (and potentially more expensive). An average person will just be able to buy less stuff for his salary.

This is called "economics". The only material difference is that the producers of CO2-related cheap products are replaced by producers of CO2-related expensive products who otherwise make the same profit because they also have bigger expenses.

The idea that throwing money on Kyoto is expected to create a "web" is completely ridiculous. CERN has always been made out of smart people who needed to do active things and communicated etc. which led to the web. Kyoto is an enterprise of not-so-smart people who want to reduce activity, not increase, and therefore you may expect that they will be destroying things like web instead of inventing them.

Your idea to increase taxation just in order to make everyone poorer which would reduce energy consumption is really cute. Did you invent it yourself? Do you have doubts that this is a path to universal poverty? Why don't you directly shoot people - or at least order abortions - and bomb the factories which will also reduce CO2 emissions?

Best
LM