Climate change report urges cut in costs

Avoiding a global temperature increase of more than 2 degrees Celsius, which scientists regard as the safe limit, will be prohibitively expensive, while a far less ambitious target would produce a more costefficient result for the world economy, according to a new study.

The report, published today by the Copenhagen Consensus , a group of economists brought together by a Danish academic, Bjorn Lomborg, is at odds with the prevailing view that large sums should be spent over the next decade to ward off climate change.

Mr Lomborg, long known as a climate change sceptic, told the Financial Times last week he now believed questions over the science ” have been answered pretty unequivocally ” and that an agreement at the next UN climate change meeting in Copenhagen in December would be crucial.

However, he believes the measures being considered are unnecessarily costly.

The report, by Richard Tol, an environmental economist, says a less ambitious plan would fare better on a cost-benefit basis than a big, early investment. “Coming up with overambitious targets is not credible,” says Mr Tol. “It signals that it’s just a gimmick to win voters, that it’s not for real.”

The cost of stabilising atmospheric carbon dioxide at 450 parts per million – the level thought necessary to avoid the worst effects of climate change – would be 12.9 per cent of global gross domestic product, Mr Tol says. That would require a tax of $68 per tonne of CO 2 worldwide, from 2010.

However, that scenario would cost $50 over the course of the century for every dollar saved, Mr Tol argues. By contrast, a much lower worldwide CO 2 tax of 50 cents per tonne would cost only 66 cents for every dollar saved, but under this scenario concentration would stabilise at 850ppm – a level scientists say would have catastrophic effects on climate.

Dimitri Zenghelis, who contributed to the UK’s influential 2006 Stern Review on the costs of climate change, agreed that keeping CO 2 concentrations at 450ppm without overshooting could be expensive. But he said a target any higher than 500ppm would be dangerous.

“Tol downweighs future impacts and overstates the lack of affordable options to bring emissions down,” said Mr Zenghelis.
Mr Tol’s report excluded the uncertainty of the effects of climate change, which economists such as Mr Zenghelis argue is one of the most important reasons to invest heavily immediately.

Early emissions cuts would be cheaper or even have a negative cost, Mr Zenghelis said, and would be easier than removing carbon-intensive infrastructure later, or removing carbon from the air.