Climate Battle Plan Shifts to Bottom Line

The smoke stacks at American Electric Power's (AEP) Mountaineer coal power plant in New Haven, West Virginia, October 30, 2009. In cooperation with AEP, the French company Alstom unveiled the world's largest carbon capture facility at a coal plant, so called 'clean coal,' which will store around 100,000 metric tonnes of carbon dioxide a year 2,1 kilometers (7,200 feet) underground.
Ben Geman
July 29, 2014, 2 a.m.

Demo­crats hope to shift the polit­ics of cli­mate change by high­light­ing what they say are the massive costs of fail­ing to curb green­house-gas emis­sions.

The mes­saging push—in the form of a new White House re­port and a Sen­ate hear­ing Tues­day—con­tra­dicts claims by the GOP that ro­bust policies to cut car­bon di­ox­ide will hobble the eco­nomy.

Demo­crats in­sist that a much great­er fin­an­cial risk lies in ig­nor­ing the dev­ast­at­ing im­pact of un­checked glob­al warm­ing. “Delay­ing ac­tion will in­crease the cost,” said Jason Fur­man, chair­man of the White House Coun­cil of Eco­nom­ic Ad­visers.

The CEA re­port re­leased Tues­day at­tempts to es­tim­ate the long-term ex­pense of avoid­ing steps to curb glob­al emis­sions.

It ar­rives as the En­vir­on­ment­al Pro­tec­tion Agency is craft­ing rules to cut emis­sions from coal-fired power plants, a plan that ad­min­is­tra­tion of­fi­cials hope will provide lever­age to win con­ces­sions from China and oth­er na­tions in in­ter­na­tion­al cli­mate talks.

One scen­ario that CEA modeled would al­low glob­al car­bon emis­sions to ac­cu­mu­late enough to boost tem­per­at­ures by 3 de­grees Celsi­us above pre-in­dus­tri­al levels, rather than lim­it­ing the rise to 2 de­grees, which is the tar­get of in­ter­na­tion­al ne­go­ti­ations.

That one-de­gree dif­fer­ence would in­crease an­nu­al cli­mate-re­lated glob­al eco­nom­ic dam­ages—from coastal flood­ing, heat-re­lated ill­ness, and oth­er harm—by an amount equi­val­ent to roughly 1 per­cent of glob­al eco­nom­ic out­put, the re­port con­cludes.

“To put this per­cent­age in per­spect­ive, 0.9 per­cent of es­tim­ated 2014 U.S. Gross Do­mest­ic Product is ap­prox­im­ately $150 bil­lion. The in­cre­ment­al cost of an ad­di­tion­al de­gree of warm­ing bey­ond 3° Celsi­us would be even great­er. Moreover, these costs are not one-time, but are rather in­curred year after year, be­cause of the per­man­ent dam­age caused by in­creased cli­mate change res­ult­ing from the delay,” the re­port states.

Fur­man told re­port­ers that the es­tim­ates are con­ser­vat­ive.

The CEA re­port ex­plores a second way in which delay­ing ac­tion causes eco­nom­ic dam­ages mount. When poli­cy­makers even­tu­ally do at­tempt to stave off run­away tem­per­at­ure in­creases, the most cost-ef­fect­ive op­tions won’t be avail­able any­more, the au­thors say.

“Delays mean that the tar­get will be met in a less ef­fi­cient man­ner. We will lose the op­por­tun­ity to make in­vest­ments that are con­sist­ent with low car­bon emis­sions,” Fur­man said.

Costs of curb­ing emis­sions in­crease by 40 per­cent for each dec­ade of delay, ac­cord­ing to the re­port, which is based on an ana­lys­is of ex­ist­ing stud­ies.

Fur­man said that un­cer­tainty about the tim­ing, mag­nitude, and con­sequences of cli­mate change is not a jus­ti­fic­a­tion to put off emis­sions cuts.

In­deed, the re­port also says cut­ting emis­sions is a form of “cli­mate in­sur­ance” against the “most severe and ir­re­vers­ible” po­ten­tial con­sequences, such as tem­per­at­ure rises on the high end of sci­entif­ic es­tim­ates if emis­sions con­tin­ue un­checked.

The re­port is aimed at bol­ster­ing the case for the big EPA rules and oth­er ex­ec­ut­ive steps. On Tues­day the En­ergy De­part­ment is rolling out ini­ti­at­ives to help cut leaks of the po­tent green­house gas meth­ane from nat­ur­al-gas dis­tri­bu­tion and trans­mis­sion lines.

Cap­it­ol Hill Demo­crats are sim­il­arly try­ing to put op­pon­ents of curb­ing emis­sions on the de­fens­ive.

A Sen­ate Budget Com­mit­tee hear­ing Tues­day will ex­plore how “fail­ing to mit­ig­ate the risks as­so­ci­ated with cli­mate change will af­fect the U.S. fed­er­al budget.”

At the same time that Demo­crats are fo­cus­ing on the fin­an­cial fal­lout of cli­mate change, private-sec­tor cli­mate ad­voc­ates have stepped up their own ef­forts to stress the eco­nom­ic risks as well.

Last month, an ini­ti­at­ive called “Risky Busi­ness”—led by former New York City May­or Mi­chael Bloomberg, former Treas­ury Sec­ret­ary Henry Paulson Jr., and bil­lion­aire cli­mate act­iv­ist Tom Stey­er—pro­duced an ana­lys­is of re­gion­al eco­nom­ic vul­ner­ab­il­it­ies to cli­mate change.

More re­cently, former Clin­ton-era Treas­ury Sec­ret­ary Robert Ru­bin, who works with the Bloomberg-Paulson-Stey­er group, penned a Wash­ing­ton Post op-ed late last week that calls on fed­er­al budget plan­ners to be­gin reck­on­ing more deeply with glob­al warm­ing.

“Fu­ture fed­er­al spend­ing to deal with cli­mate change is likely to be enorm­ous and should be in­cluded in fisc­al pro­jec­tions, wheth­er in ex­ist­ing es­tim­ates or in an ad­di­tion­al es­tim­ate that in­cludes cli­mate change,” Ru­bin writes.

But Alabama Sen. Jeff Ses­sions, the top Re­pub­lic­an on the Sen­ate Budget Com­mit­tee, isn’t buy­ing the ar­gu­ments on the long-term costs of fail­ing to im­ple­ment policies such as car­bon curbs on power plants.

“In­ac­tion costs may be real, but cer­tainly they are dis­tant and some­what un­cer­tain. But the costs of ac­tion are cer­tain right now. They are real and im­me­di­ate,” Ses­sions said at the out­set of the Budget Com­mit­tee hear­ing Tues­day.

“It’s not enough just to say the danger is great, there­fore we are free to de­mand the na­tion spend whatever is ne­ces­sary, whatever the cost to be a lead­er in the world on these is­sues,” he ad­ded, warn­ing of reg­u­la­tions that res­ult in high­er power prices and act as a drag on the eco­nomy.

EPA es­tim­ates that its plan to cut emis­sions from ex­ist­ing power plants will im­pose com­pli­ance costs of up to $8.8 bil­lion per year in 2030, but the agency’s ana­lys­is also finds that pub­lic health and cli­mate be­ne­fits would far out­weigh those costs.

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