Climate Change: Defining the Problem Correctly

by Bruce Everett

Successful negotiations in any area require a clear definition of the problem, a plan for its solution, and an understanding of the interests of the parties involved. Climate negotiations are sorely lacking in all three areas.

Despite claims to the contrary, climate science is not settled. Activists tend to present the issue as an argument over whether climate change is “real,” with scientists and thoughtful people answering a resounding “yes,” while a handful of anti-science Luddites and self-interested oil companies say “no.” The problem is actually far more difficult and nuanced. Everyone agrees that the climate is changing (as it has done for eons) and that CO2 emissions enhance atmospheric warming. The climate system, however, is extraordinarily complex, involving not just greenhouse gases, but other parameters such as clouds, oceans, vegetation, solar cycles, cosmic rays, and volcanoes plus multiple intricate feedback loops among these variables. The impact of a single variable cannot be determined without understanding the other variables and their interactions.

As a result, the possible impacts of greenhouse gas emissions span a wide range from severe to negligible, and we have no idea how to assign probabilities to these various outcomes. The scary climate scenarios rely on computer programs which, hampered by our limited understanding of the climate system, have at present zero predictive capability. When the link between human emissions and atmospheric warming is embellished by words like “extreme,” “unsustainable,” “catastrophic,” “abrupt,” “irreversible,” or “weapon of mass destruction,” the argument shifts away from science into the realm of opinion and speculation.

Opinion polls show that most Americans believe that (a) the Earth has warmed, (b) human beings are partly to blame, but (c) global warming will not present a serious threat in their lifetimes. Fewer than twenty percent of Americans think climate change should be the government’s top priority. In other words, climate activists have made the case for climate change, but not for catastrophic climate change.

What to do? Certainly we want to take reasonable precautions to avoid disaster, even if the risks are low. The problem with climate policy is the high cost of carbon mitigation. Fossil fuels are woven deeply into the fabric of modern industrial economies, and the cost and performance differentials between hydrocarbons and their zero-carbon alternatives are very high. Oil has no viable alternatives in transportation, and renewable energy is uncompetitive with fossil fuels for power generation. Given this wide gap, there is no carbon tax high enough to allow meaningful reductions in carbon emissions without sacrificing healthy economic growth. A massive reduction in U.S. greenhouse gas emissions would require a substantial loss of living standard through coercive central planning. The American public will never agree.

Elected officials in the Western democracies keep trying to square this circle with climate policies that look good on paper, but offer little benefit. Subsidies, renewable portfolio standards, feed-in tariffs, and loan guarantees have cost American and European consumers billions of dollars with negligible effects on global carbon emissions. The worst example was the Kyoto Protocol—an expensive cap-and-trade system with loopholes and accounting gimmicks that allowed the European Union to meet its obligations without reducing greenhouse gas emissions at all. Politicians may like this approach, but the rest of us shouldn’t.

There are 190 signatories to the UN Framework Convention on Climate Change, but China alone holds the key. When the Convention was signed in 1992, U.S. CO2 emissions were 5.5 billion metric tonnes (mt) per year—about a quarter of the world total. U.S. emissions, however, have not increased much since, and the Energy Information Administration projects minimal growth through 2040, when the United States will represent less than thirteen percent of the global total. Chinese emissions, on the other hand, have increased from 2.5 billion mt per year in 1992 to 9 billion today with a projected growth to nearly 15 billion by 2040—a third of the world total—resulting from China’s massive reliance on cheap domestic coal.

Unfortunately for climate activists, the Chinese leadership has only two objectives: staying in power and enhancing China’s geopolitical position. Achieving these goals requires a single-minded focus on economic growth to bring the Chinese population out of poverty and to provide the resources for a superpower-quality military. Climate change may be low on America’s priority list, but it’s not on China’s list at all. Chinese engagement in climate change negotiations serves only to encourage the West to hobble their economies with high energy costs and to offer China real economic benefits in return for vague promises.

The purpose of negotiations is not agreement per se, but a workable solution to a defined problem. A good start would be to see the climate issue and the Chinese government as they really are, not as we’d like them to be.

About the Author

Bruce Everett has over forty years of experience in the international energy industry. He received a BA from Princeton University in 1969 and a PhD from The Fletcher School in 1980. Between 1974 and 1980, he served in the Federal Energy Administration and the U.S. Department of Energy in the Office of International Affairs. He joined ExxonMobil Corporation in 1980 and held a variety of executive positions all over the world in corporate planning, oil, natural gas, coal, business development and government relations. Since retiring from ExxonMobil in 2002, he has taught oil market economics as Adjunct Associate Professor of International Business at the Fletcher School.

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