The climate-change money machine

Penguins by Shutterstock

Article Highlights

  • Beware politicians promising gifts.

    Tweet This

  • Ordinary people will pay more for energy, for goods made with it, and for goods complementary to it.

    Tweet This

  • Anthropogenic warming is real but small, and those assertions of imminent apocalypse are not to be taken seriously.

    Tweet This

The period of atmospheric and surface warming that began in the late 1970s ended in the mid- to late 1990s, but the climate change industry is hot. Witness a new effort by Rep. Chris Van Hollen (D-Md.) to use unsupported assertions about the hugely adverse effects of greenhouse gas emissions purportedly now looming large to justify federal auctions of "carbon" permits, with the revenue inevitably used by the political class for purposes of redistribution to favored interest groups.

Van Hollen has introduced The Healthy Climate and Family Security Act of 2014, which would impose steadily declining limits on "carbon pollution" — a classic example of the political propaganda at which the climate change industry is so practiced — by auctioning permits to the "first sellers" of oil, coal and natural gas in the U.S. market. The goal would be an 80 percent reduction in greenhouse gas (GHG) emissions below 2005 levels by 2050.

Let us begin with the central congressional "finding" (that is, bland assertion) in the Van Hollen legislation: "The warming of our planet has led to more frequent, dangerous, and expensive extreme weather events, including heat waves, storms, fires, droughts, floods, and tornadoes."

Wow. With respect to the explicit assumption about the "warming of our planet": The most recent warming period ended 15 or more years ago. More generally, global temperatures increased roughly from the middle of the 19th century (the end of the Little Ice Age) through the eruption of Krakatoa in 1883, and then from about 1910 through about 1940. They were roughly constant through the late 1970s, increased until approximately 1998 (a year with a strong El Niño), and have exhibited no trend since then. The Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report summarizes the relevant data as follows: The total increase between the 1850-1900 average and the 2003-2012 period (in short, approximately a century) was 0.78 degrees Celsius. For the period 1951-2012, the increase was 0.12 C per decade, or about 1.2 C per century.

In short, it appears to be the case that the earth has been warming in fits and starts since the end of the Little Ice Age. That more-general observation in a sense is a bit tautological — the "end of the Little Ice Age" is defined as the beginning of a warming trend — but it does highlight the underlying reality that no one knows the degree to which this longer-term warming is anthropogenic. The climate models are of little help, in that they simply do not predict the recent temperature record, although some satellite observations of slight warming at higher latitudes in cold, dry air masses in the Northern Hemisphere, and some observations of slight cooling in the lower stratosphere, are consistent with standard global warming theory. Taken as a whole, this suggests that anthropogenic warming is real but small, and those assertions of imminent apocalypse are not to be taken seriously, as the IPCC does not.

The language of the Van Hollen bill goes downhill from there, particularly in terms of the "finding" of "extreme weather events" and associated effects. The past two years have set a record for the fewest tornadoes ever in a similar period, and there has been no trend in the frequency of strong (F3 to F5) tornadoes in the United States since 1950. The number of wildfires is in a long-term decline. It has been eight years since a Category 3 or higher hurricane landed on the U.S. coast; that long a period devoid of an intense hurricane landfall has not been observed since 1900. The 2013 Atlantic hurricane season was the least active in 40 years, with zero major hurricanes. There has been no trend in the frequency or intensity of tropical cyclones, and global cyclone activity and energy are near their lowest levels since reliable measurements began by satellite in the 1970s. There is no long-term trend in sea-level increases. The record of changes in the size of the Arctic ice cover is far more ambiguous than often asserted, because the satellite measurements began at the outset of the warming period from roughly the late 1970s through the mid- to late 1990s. The Palmer Drought Severity Index shows no trend since 1895. Flooding in the United States over the last century has not been correlated with increases in GHG concentrations.

Van Hollen's willingness to make unsupported assertions about temperatures and weather is in sharp contrast with his loud silence on the effect of the proposed 80 percent GHG emissions reduction in terms of future temperatures and "extreme weather events." If we apply the climate model developed at the National Center for Atmospheric Research, used by both the Environmental Protection Agency and IPCC, the Van Hollen "carbon pollution" policy would reduce global temperatures in the year 2100 by about 0.14 degrees under the highest climate sensitivity assumption made by the IPCC. As the annual variability of our temperature measurements is about 0.11 degrees, this effect would be barely measurable, and not different from zero as a matter of statistical significance. Under the second-highest IPCC climate sensitivity assumption, the effect would be less than 0.11 degrees, and so not distinguishable from natural variability.

But the true low point of the Van Hollen argument is his assertion that the proposal will "boost the purchasing power of American consumers" by "returning the resulting (auction) revenue to everyone equally." Wow, again. Put aside the reality that there is no reason to predict that the bargaining process in Congress would yield an outcome in which the revenue would be divided equally among all Americans. It is impossible that "purchasing power" — that is, the size of the aggregate economic pie — would increase, because the proposal would make energy artificially expensive, thus distorting resource use and so reducing "purchasing power" — that is, increasing the aggregate level of real prices — unambiguously. That is what it means to implement a system transferring revenue — real resources — to the government, and the choice among the alternative ways in which government distributes the revenue is irrelevant. Ordinary people will pay more for energy, for goods made with it, and for goods complementary to it. Moreover, because different economic sectors have varying energy (or "carbon") intensities, relative prices would shift; the proposal would cause a resource reallocation process across industries and regions, the short-run effect of which would be recessionary. "Short-run" does not necessarily mean a short period of time.

Back to consumers: People are different, making decisions under vastly differing circumstances, and so consume very different baskets of goods and services. It is obvious, therefore, that some would be hurt more than others. Accordingly, it is no answer to say that the auction revenue would be returned "to everyone equally," even if that were possible politically. And "consumers" are producers also; even Van Hollen would be too embarrassed to assert that producers would be affected "equally," and so, again, the net outcome would be massive wealth redistribution, a smaller economy and net adverse effects for many or most. Van Hollen's gambit of "returning the resulting revenue to everyone equally" is fraudulent.

Beware politicians promising gifts. By taking resources from one set of pockets and returning (some of) them to others, the federal government cannot improve aggregate economic performance. In the context of climate policy, it can have only the most trivial effect. But it can reward friends and punish adversaries, the inexorable result of disingenuous environmentalism run amok.

Zycher is the John G. Searle scholar at the American Enterprise Institute.

 

 

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Benjamin
Zycher

What's new on AEI

Holder will regret his refusal to obey the Constitution
image 'Flood Wall Street' climate protesters take aim at their corporate allies
image 3 opportunities for better US-India defense ties
image Is Nicolás Maduro Latin America's new man at the United Nations?
AEI on Facebook
Events Calendar
  • 29
    MON
  • 30
    TUE
  • 01
    WED
  • 02
    THU
  • 03
    FRI
Thursday, October 02, 2014 | 9:00 a.m. – 10:30 a.m.
Campbell Brown talks teacher tenure

We welcome you to join us as Brown shares her perspective on the role of the courts in seeking educational justice and advocating for continued reform.

Event Registration is Closed
Friday, October 03, 2014 | 12:00 p.m. – 1:00 p.m.
Harnessing the power of markets to tackle global poverty: A conversation with Jacqueline Novogratz

AEI welcomes you to this Philanthropic Freedom Project event, in which Novogratz will describe her work investing in early-stage enterprises, what she has learned at the helm of Acumen, and the role entrepreneurship can play in the fight against global poverty.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.