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Greenhouse Guessing

By Robert J. Samuelson
Friday, November 10, 2006

It seems impossible to have an honest conversation about global warming. I say this after diligently perusing the British government's huge report released last week by Sir Nicholas Stern, former chief economist of the World Bank and now a high-ranking civil servant. The report is a masterpiece of misleading public relations.

It foresees dire consequences if global warming isn't curbed: a worldwide depression (with a drop in output of as much as 20 percent) and flooding of many coastal cities. Meanwhile, the costs of minimizing these awful outcomes are small: only 1 percent of world economic output in 2050.

No one could fail to conclude that we should conquer global warming instantly, if not sooner. Who could disagree? Well, me. Stern's headlined conclusions are intellectual fictions. They're essentially fabrications to justify an aggressive anti-global-warming agenda. The danger of that is we'd end up with the worst of both worlds: a program that harms the economy without doing much to cut greenhouse gases.

Let me throw some messy realities onto Stern's tidy picture. In the debate over global warming, there's a big gap between public rhetoric (which verges on hysteria) and public behavior (which indicates indifference). People say they're worried but don't act that way. Greenhouse emissions continue to rise despite many earnest pledges to control them. Just last week the United Nations reported that of the 41 countries it monitors (not including most developing nations), 34 had increased greenhouse emissions from 2000 to 2004. These include most of the countries committed to reducing emissions under the Kyoto Protocol.

Why is this? Here are three reasons.

First: With today's technologies, we don't know how to cut greenhouse gases in politically and economically acceptable ways. The world's 1,700 or so coal-fired power plants -- big emitters of carbon dioxide, the main greenhouse gas -- are a cheap source of electricity. The wholesale cost is 4 to 5 cents a kilowatt hour, says the World Resources Institute. By contrast, solar power costs five to six times that. Although wind is roughly competitive, it can be used only in selective spots and supplies less than 1 percent of global electricity. Nuclear energy is cost-competitive but is stymied by other concerns (safety, proliferation hazards, spent fuel).

Second: In rich democracies, policies that might curb greenhouse gases require politicians and the public to act in exceptionally "enlightened" (read: "unrealistic") ways. They have to accept "pain" now for benefits that won't materialize for decades, probably after they're dead. For example, we could adopt a steep gasoline tax and much tougher fuel economy standards for vehicles. In time, that might limit emissions (personally, I favor this on national security grounds). Absent some crisis, politicians usually won't impose -- and the public won't accept -- burdens without corresponding benefits.

Third: Even if rich countries cut emissions, it won't make much difference unless poor countries do likewise -- and so far, they've refused because that might jeopardize their economic growth and poverty-reduction efforts. Poorer countries are the fastest growing source of greenhouse gas emissions, because rapid economic growth requires energy, and present forms of energy produce gases. In 2003 China's carbon dioxide emissions were 78 percent of the U.S. level. Developing countries, in total, accounted for 37 percent of greenhouse gas emissions in 2003. By 2050 their share could be 55 percent, projects the International Energy Agency (IEA).

The notion that there's only a modest tension between suppressing greenhouse gases and sustaining economic growth is highly dubious. Stern arrives at his trivial costs -- that mere 1 percent of world gross domestic product in 2050 -- by essentially assuming them. His estimates presume that, with proper policies, technological improvements will automatically reconcile declining emissions with adequate economic growth. This is a heroic leap. To check warming, Stern wants annual emissions 25 percent below current levels by 2050. The IEA projects that economic growth by 2050 would more than double emissions. At present we can't bridge that gap.

The other great distortion in Stern's report involves global warming's effects. No one knows what these might be, because we don't know how much warming might occur, when, where or how easily people might adapt. Stern's horrific specter distills many of the most terrifying guesses, including some imagined for the 22nd century, and implies that they're imminent. The idea is to scare people while reassuring them that policies to avert calamity, if started now, would be fairly easy and inexpensive.

We need more candor. Unless we develop cost-effective technologies that break the link between carbon dioxide emissions and energy use, we can't do much. Anyone serious about global warming must focus on technological progress -- and not just assume it. Otherwise, our practical choices are all bad: costly mandates and controls that harm the economy, or costly mandates and controls that barely affect greenhouse gases. Or, possibly, both.

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