Economic impacts of climate change

By Drs. Robert & Sonia Vogl
President and Vice President,
Illinois Renewable Energy Association

For the scientific community climate change is real; a major factor in its existence is burning fossil fuels.

The national solution as embodied in the Clean Energy Plan advanced by the Obama administration is currently hung up in court awaiting resolution. With widespread resistance, Congress is unwilling to implement policies to curb emissions.

While the Paris Accord had participating nations agree on the goal of limiting their carbon emissions to keep the global temperature from rising above 1.5oC, it will take years before the world will know if the commitments are being implemented.

A paper entitled “Greenhouse Gas Emissions Targets for Limiting Global Warming to 2oC” created a global “carbon budget” detailing how much more carbon each country can release before crossing the global limit of a 2oC temperature rise. If carbon emissions remain equivalent to those of 2006 the “planet’s carbon budget would be exhausted by 2024.”

Assuming governments would initiate action to curb carbon emissions, a group of green investors set up the Carbon Tracker Initiative to determine how much carbon dioxide is in the world’s fossil fuel reserves. They concluded that 80 percent of the world’s fossil fuel reserves would have to be left in the ground to prevent uncontrollable climate change. Tar sands, oil shale and methane hydrides were not included with the reserves,

Bill McKibben, a climate activist, relied on carbon budget figures in developing a presentation used in a tour to alert the public to the numbers and their implications. His advocacy included stimulating college students to ask their schools to divest their endowments of fossil fuel investments.

The pressure to curtail carbon emissions has raised concerns of investors in firms whose earnings could be adversely affected. Warren Buffet addressed the issue in Berkshire Hathaway’s 2015 annual report under the heading of “Important Risks” that they have recognized and taken into consideration. One of the firm’s investments is in the BNSF railroad which moves large volumes of western coal. Buffet acknowledged the certainty of the loss of coal shipments for their railroad earnings as coal plants close. He mentioned another energy-related risk to earnings: the potential of energy storage developments adversely impacting the future of their renewable energy investments.

It seems to Buffet that is highly likely but not certain that climate change is a major problem for the planet. He indicated, “if there is only a 1 percent chance the planet is heading toward a truly major disaster and delay means passing a point of no return, inaction now is foolhardy.”

For Dr. James Hanson the time for action was 1988 when he declared to Congress that the greenhouse effect was already changing our climate. He continues his effort to convince our leaders of the need to address climate change. In his latest paper appearing in the journal Atmospheric Chemistry and Physics he claimed that we are headed for a much more rapid rise in sea levels than earlier projections.

While the science regarding climate change is gaining acceptance, political resistance remains and estimates of the costs rise as political turmoil rolls on, investments in renewable energy and efficiency continue to grow.

One thought on “Economic impacts of climate change

  • Mar 30, 2016 at 9:52 am

    For every dollar the government spends on energy efficiency, consumers see a savings of $5.

    When we dig down into the micro level, we can begin to see how spending on the environment — and even enforcement of existing health and safety standards — will begin to show benefits to local communities. For example, a NESCAUM study from 2011 showed that increasing the fuel economy of vehicles in the northeast United States could create up to 50,000 jobs. That same year, the United Autoworkers Union released a study showing that 155,000 jobs had already been created nationwide as a result of simply raising fuel economy standards.

    Last year, a report from the Analysis Group determined that a 9-state project in the Northeast to reduce the amount of carbon from power plants resulted in an economic benefit of $1.3 billion. Fuel economy standards in California will result in drivers saving an average of $300 by the year 2020. Consumers in Iowa are expected to see their overall utility prices drop by about $10 million due to increased wind energy production, in addition to the state receiving $360 million in property tax generation from these wind farms.

    The Pacific Coast Action Plan on Climate and Energy — a program designed to reduce emissions and tighten renewable energy standards — is expected to bring in $1 trillion to the economies of California, Washington, and Oregon in the next 30 years, money that will be used to rebuild the infrastructure in those states.

    For every $1 that states spend on energy efficiency programs, consumers see a direct savings of close to $5.

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