In today's Washington Post, Bjorn Lomborg, director the Danish think tank, the Copenhagen Consensus Center, weighs in on what to do now that the United Nations' Kyoto Protocol process for addressing climate change has fallen apart:
Two points underlie the issue of global warming: First, developing nations have no intention of letting the developed world force them to stop using carbon-emitting fuels. They are understandably wary of any policy that might curtail the domestic economic growth that is allowing their populations to clamber out of poverty. And that is precisely what drastically reducing their carbon emissions would do.
Second, even for more-developed economies, trying to force drastic cuts in carbon emissions makes no economic sense. All the major climate economic models show that to achieve the much-discussed goal of keeping temperature increases under 2 degrees Celsius, we would need a global tax on carbon emissions that would start at $102 per ton (or about 90 cents per gallon of gasoline)—and increase to $4,000 per ton (or $35.51 per gallon of gasoline) by the end of the century. In all, this would cost the world $40 trillion a year. Most mainstream calculations conclude that this is 50 times more expensive than the climate damage it seeks to prevent.
In other words, trying to force cuts in carbon emissions is a solution that will cost far more than the problem it is meant to solve. No wonder this option never gained real traction.
So what to do? Lomborg suggests spending $100 billion per year on green energy research and development with the goal of making green energy as cheap as fossil fuels. That's better than whacking the world's economy by greatly increasing the price of energy. However, the precedents for the efficacy of government energy R&D are not encouraging. So, to my mind, the real question is: Is what governments are likely to do about global warming worse than global warming? I tried to answer that question in this column:
… econometric models tell us that implementing smart policies could avoid some damage from climate change. But whether or not the benefits outweigh the costs depends entirely on the policies being optimally adopted. But will governments and international agencies be able to sustain smart policies over the next century? The tribulations of the European Union's cap-and-trade scheme and the current political jockeying over the 1,468-page Waxman-Markey climate change bill in the U.S. Congress are not promising…
Man-made global warming may simply be a negative externality for which the transaction costs are too high. In other words, any benefits achieved from trying to mitigate global warming will most likely be swamped by the costs of distributing the corporate welfare used to buy the political acquiescence of various industries. As much as one might hope to implement good public policy to deal with the problem, policy nihilism might be the only rational response to global warming.
Perhaps the Copenhagen collapse is an implicit global endorsement of global warming policy nihilism. Read the whole Lomborg op/ed here.