Politics & Policy

The Cost of Carbon Denial

Each ton of carbon we use creates thousands of dollars of wealth.

For the past several years, those seeking to strangle the world economy by denying it access to carbon have tried to gain support for their initiatives by inventing a concept called “the social cost of carbon.” According to this notion, the use of carbon imposes a cost on society through global warming, and therefore regulations to restrict the use of carbon create benefits that can be measured in dollar terms. Pursuant to this strategy, the Environmental Protection Agency in 2010 hired a crowd of consultants to generate estimates that would be useful for the cause. This they dutifully did, producing a set of very precise computer calculations of the cost of carbon — ranging from $11 to $221 per ton of carbon dioxide — which were assembled into an interagency report sent to the White House in May 2013.

No doubt gratified by the freedom of choice thus provided, the Obama administration’s Office of Management and Budget picked a number, and proceeded to set the social cost at $38 per ton of carbon dioxide, or $139.33 per ton of carbon, so that henceforth federal regulators could use that figure to demonstrate the economic value of their restrictions.

#ad#It would be useless to dispute these nonsensical calculations, as they are all entirely fake, produced by mercenary charlatans using phony computer models, imaginary data, and arbitrary assumptions. However, straightforward hard data do exist to demonstrate the very real damage that the carbon deniers — aptly so labeled, both because of their wish to deny humanity access to carbon, the key element of life, and because of their willingness to remain in denial as to the brutal regressive effects of their prescriptions — would inflict on the economy.

Let us therefore examine the graph below, which shows the relationship between global GDP per capita and carbon use from 1800 to today. It can be seen that the relationship is directly linear, with GDP per capita and carbon use both increasing by a factor of ten between 1910 and 2010. What is even more important, however, is the simple fact that the carbon-use benefits shown are enormous. Consider this: Just in the past 55 years — well within living memory — in line with a fourfold increase in carbon use, the average global GDP per capita has quadrupled. That is an economic miracle that has lifted billions of people out of hopeless poverty — and not just in the Third World. (When I was a lad, you could generally distinguish Europeans from Americans just by glancing at their teeth.)

To claim that this came at a comparable “social cost,” one would have to show that there has been a climatic catastrophe. Has there? How much better was the weather in the 1950s than it is today? If you don’t know, there are plenty of people who were around then whom you can ask. But I’ll save you the trouble. The answer is: Not at all. So there was no climatic social cost to the carbon-driven miracle of the 20th century, but there would have been economic cost of genocidal dimensions had carbon deniers been around and able to prevent it.

This graph, however, does not tell the whole story. If we want to assess the economic cost of carbon denial in dollar terms, we need to compare not per capita output, but absolute GDP to carbon utilization. This is presented in the graph below.

Here, you can see that the relationship between GDP and carbon is not merely linear, but quadratic, with total economic output rising as roughly the square of carbon use. For example, since 1975, carbon use has doubled, causing a quadrupling of global GDP. Furthermore, if we take the ratio of current global GDP ($60 trillion) to carbon use (9 billion tons) and divide it out, we find that, at present, each ton of carbon used produces about $6,700 of global GDP.

So each ton of carbon denied to the world economy destroys about $6,700 worth of wealth. That is the difference between life and death for a Third World family. Seven tons denied corresponds to a loss of $47,000, or a good American job. Since 2007, the combination of high oil prices and a depressed economy has reduced the United States’ use of carbon in the form of oil by about 130 million tons per year. At a rate of $6,700 per ton, this corresponds to a GDP loss of $870 billion, equivalent to losing 8.7 million jobs, at $100,000 per year each. Were we to implement the program of the Kyoto treaty, and constrict global carbon use to 1990 levels, we would cut global GDP by $30 trillion per year, destroying an amount of wealth equal to the livelihood of half of the world’s population.

Such are the costs of carbon denial.

— Robert Zubrin is president of Pioneer Energy and the author of Energy Victory. His latest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo Scientists, and the Fatal Cult of Antihumanism, was published in 2012 by Encounter Books.

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