From Dr. Scott Denning, Colorado State University, Aug 2019
Economists estimate the total cost of decarbonizing the world economy to be about 1% of global GDP.
Academic economists estimate the total cost of saving our descendants from millennia of hellish struggle at 1% of GDP (plus or minus 1% — could actually cost anywhere from nothing to 2%).
And yes of course, millions and millions of new jobs would be created to save our kids, just as they were created in the past when our ancestors built indoor plumbing, the electrical grid, the telephone system, and interstate highways and when we ourselves built PCs, mobile phones, and the global internet.
Once we STOP burning fossil fuels we also have a longer to-do list that includes sustainable agriculture, preserving forests and biodiversity, cleaning up plastics, global inequality, and many more things.
But all of those other wonderful aspirations are threatened unless we eliminate fossil fuels from the world economy in a single human generation.
WE MUST DO THIS!
For context, the US Senate just agreed to boost the defense budget to $738 billion/yr.
Stern Review of Climate Change Economics (2006) en.wikipedia.org/wiki/Stern_Rev…Like other experts, economists argue about this number. But 1% of global GDP is a robust ballpark #. Nobody thinks it will be free and nobody thinks it will be 5% of GDP.
William Nordhaus won the 2018 Nobel Prize in Economics for this kind of work. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 was divided equally between William D. Nordhaus “for integrating climate change into long-run macroeconomic analysis” a…https://www.nobelprize.org/prizes/economic-sciences/2018/nordhaus/facts/
Preventing global catastrophe for 1% of global GDP is terribly abstract. Hard to get our heads around that! GDP = the total value of all goods and services in the world = about $85 trillion per year in 2019. 1% of that is $850 billion/yr
statisticstimes.com/economy/gross-…Wow! $850 billion/yr to prevent an imminent global catastrophe sounds like a LOT of money!
For context, the US Senate just agreed to boost the defense budget to $738 billion/yr. https://www.nbcnews.com/politics/congress/senate-gives-final-passage-budget-increasing-military-spending-deficit-trump-n1038031 But compared to preventing catastrophic climate change, the costs of failing to prevent it are VASTLY LARGER!
Burke et al (2015) estimate that unmitigated global warming will cost 20% of world GDP by 2100. (This is often considered an underestimate as total systems (food, water, habitability) could be destroyed.)
It will cost 20x more NOT to decarbonize!
kingcenter.stanford.edu/news/marshall-…To get our heads around what it will cost to prevent global catastrophe and save our kids $20 on the dollar, consider some of the other big expensive things we spend boatloads of money on.
Oil & Gas: We spent more than $2 trillion in 2017.
What percentage of the global economy consists of the oil and gas drilling sector?The oil and gas exploration and production sector currently makes up something between 2% and 3% of the global economy.https://www.investopedia.com/ask/answers/030915/what-percentage-global-economy-comprised-oil-gas-drilling-sector.asp
Compared to $850 billion/yr to prevent global catastrophe,
Brand-new cars & trucks: we spend $3.3 trillion/yr. How old is your car? 88 million new cars @ $37,500
Average New-Car Prices Up More Than 1 Percent Year-Over-Year for December 2018, Closing the Strongest Year of Growth Since 2013, According to Kelley Blue Book IRVINE, Calif. , Jan. 3, 2019 /PRNewswire/ — The analysts at Kelley Blue Book today reported the estimated average transaction price for light vehicles in the United States was $37,577 in December 2…https://finance.yahoo.com/news/average-car-prices-more-1-110000010.html
Compared to $850B/yr to prevent global catastrophe —
Brand-new smart phones: We spend $566 billion/yr – how old is your phone? [1.56 billion smartphones @ $363]
Cell phone sales worldwide 2007-2018 | StatistaHow many cell phones/smartphones were sold in 2018? This statistic shows the number of smartphones sold worldwide up to 2018. In 2018, 1.56 billion smartphones were sold worldwide.https://www.statista.com/statistics/263437/global-smartphone-sales-to-end-users-since-2007/
Why people are buying more expensive smartphones than they have in yearsThe average selling price for a smartphone is now $363.https://www.vox.com/2018/1/23/16923832/global-smartphone-prices-grew-faster-iphone-quarter
Compared to $850B/yr to prevent global catastrophe — Fossil fuels: The International Monetary Fund estimates hidden costs of fossil fuels ABOVE AND BEYOND the retail price are about $4.7 TRILLION/YR (5.5% of GDP). IMF calls these “subsidies”
Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level EstimatesThis paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, an…https://www.imf.org/en/Publications/WP/Issues/2019/05/02/Global-Fossil-Fuel-Subsidies-Remain-Large-An-Update-Based-on-Country-Level-Estimates-46509
Compared to $850B/yr to prevent global catastrophe — Roads! There are about 40 million miles of roads, which cost an average of about $1 million/mile to build. Get this — we spent more than $40 TRILLION on roads! en.wikipedia.org/wiki/List_of_c… Frequently Asked QuestionsScope & Conditions Building Transportation Infrastructure Funding, Financing & Costs Environment A safe and efficient transportation system is one of the fundamental requirements of a modern econ…https://www.artba.org/about/faq/
Compared to $850B/yr to prevent global catastrophe and $40 TRILLION on roads — don’t even get me STARTED on what we spent on indoor plumbing, water treatment, sewers, subways, rural electrification, the Cold War, the telephone system, computers, and the global internet!
In summary, our generation ABSOLUTELY has it in our budget to prevent catastrophic global climate change by completely and immediately decarbonizing the world economy.
It will cost us a little more than we spend on NEW smartphones but MUCH LESS than we spend on oil & gas.
In round numbers, preventing global catastrophe will cost LESS THAN 25% of what we currently spend on BRAND NEW CARS.
Not only is it affordable, it’s just 5% of what it will cost our kids to clean up the mess if we fail! (1% of GDP vs 20%)
Talk about a good investment!
But wait — there’s MORE!
Not only is preventing global catastrophe cheaper than oil & gas, and not only does it pay off better than 20-to-1,
doing this will create all the jobs and prosperity in the coming decades!
14/nOur grandparents’ generation didn’t go bust installing indoor plumbing, sewer, and electrical grids. Our generation didn’t go bust building computers and mobile phones and the internet.
Rather, these massive projects provided most of the jobs and prosperity in our times
For 500 years, our ancestors have spent HUGE money replacing perfectly serviceable old stuff with new stuff that was better but more expensive — candles with light bulbs, outhouses w/toilets, buggies w/cars.
These ginormous expenses generated ALL the wealth of their times!
Replacing old stuff w/more expensive new stuff is the very definition of modernity. It’s what we do.
We’re not going to stop doing that, no matter what anybody says.
17/nSome people say the modern world is built on extraction.
There’s value in a lump of coal. Somebody sells it for a profit to somebody who sets it one fire and sells the energy for a profit to somebody who makes goods & services to sell for a profit.
Maybe it’s true that we prop up our modern world with coal, and that when we either quit burning it or eventually run out, billions of our descendants will freeze and starve in the dark.
But God I sure hope not!
What a grim & hopeless view of the meaning of human history!
19/nI prefer to think that WE make the world a good place.
Our quality of life isn’t made of coal — it’s made from creativity, innovation, good ideas and hard work.
Our kids aren’t running out of those things!
Our happiness and well-being doesn’t come out fo the ground.
It comes from the sweat of our brows and the sparks in our souls!
The kids are gonna be alright.
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