False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet

by Bjørn Lomborg

Denying Bangladesh this benefit in the name of reducing the impact of climate change is fantastically arrogant: for every 23¢ of global climate damage that we could avoid, we are asking Bangladesh to forego $100 of prosperity and development.

It turns out that the theoretical cost to lift everyone on the planet out of extreme poverty would be less than $100 billion per year.33 Compare this to our current trajectory: we’ve committed to spending $1 trillion to $2 trillion a year just on the almost entirely ineffective Paris Agreement. Every month the cost will be the same as the amount that could lift everyone from extreme poverty. This strikes me as obscene.

As rich countries commit to going carbon neutral, the costs will escalate to tens of trillions of dollars per year, to make a small temperature change in a century’s time. Just a couple of days of these new, higher costs could transform the world by ending extreme poverty entirely.

It comes down to this: when we see a malnourished child or a town hit by a hurricane and seriously suggest that we should make lives better by cutting a ton of carbon dioxide, we are not actually trying to do good, but rather imposing our own priorities on people who have little power to assert their own. It has become too easy to believe that policies aimed at cutting carbon are the answer to everything. They’re not, and we need to stop campaigning for and enacting policies that will have the world’s poorest paying for our mistakes.

The net impact of climate change will actually be beneficial, because carbon dioxide fertilization drives down food prices more than temperature drives them up. In total, global warming will mean eleven million fewer starving in 2050. Trying to limit climate change by cutting carbon dioxide will no longer solve a problem, but actually prevent a benefit. Of course, aggressive climate action will still increase prices and drive more people into hunger. Under these more realistic assumptions, climate policy is no longer a solution and will in total cause seventy-seven million more people to starve

The reason a market works in the first place is that prices are supposed to deliver all the information we need. When you sit down in a restaurant to order wild-caught salmon, you don’t need to know whether this is the right season for salmon fishing in Alaska, whether the seas have been rough or the trip to the harbor was particularly difficult, or whether the chef is having financial problems. You simply look at the price and make your choice based on that, which should already incorporate all these factors into one number.

Instead, economists point out that we can correct the market failure with relative ease by putting a cost on the carbon dioxide that is emitted to make sure the price of any product or service, including the fish we are ordering at a restaurant, incorporates the climate damage it will cause. This is essentially what a carbon tax does. It forces you to take into account the climate disbenefits that your purchase is responsible for, so you can weigh these against the benefit.

Nonetheless, the impact on temperature of this intense emissions reduction resulting from the optimal carbon tax, as seen on the right-hand side, is rather small. It reduces the temperature in 2100 from 7.4°F to 6.3°F. This is because the planet’s climate has a huge amount of inertia built in, which translates even fairly dramatic reductions in emissions into rather small temperature changes. Even as we reduce our annual emissions, the total amount of carbon dioxide increases, just more slowly. Remember the metaphor of the bathtub? Even if we pour in less water, the water level still increases.

Thus, the damage to GDP ends up 0.4 percent less than that in our scenario with no climate change policy. A realistic, moderate and increasing carbon tax policy can definitely make a net benefit for society worth $18 trillion, or 0.4 percent of GDP.

Compared to the $140 trillion, or 3 percent, loss from doing nothing, doing too much is far worse. In an attempt to ameliorate climate change, we will end up avoiding more of the climate damage costs, but saddle the world with climate policies so expensive that the total costs almost triple. The cure is much worse than the disease.

The Western world was reliant on slaughtering whales for quality lighting, yet we never did hunt whales to extinction. Why? We found alternative technologies. First, kerosene from petroleum replaced whale oil as a source of lighting. And we didn’t run out of kerosene, either: electricity supplanted it because it was a superior way to light our planet.

Along came a determined scientist, Norman Borlaug. Instead of handwringing, he aggressively helped innovate new, better varieties of wheat, rice, and maize. These new dwarf plants differed from existing varieties because less energy was used in the stalk and more energy went into the grains themselves. As a result, grain yields increased spectacularly, food prices dropped, and Borlaug’s “green revolution” probably saved a billion people from starvation.

By 1980, India had seen a 47 percent increase in grain production, while its population increased 34 percent. Calories available began to increase, not decrease. Today, India produces 328 percent as much grain as it did in 1967, when observers thought it couldn’t produce any more. India is now even the largest exporter of rice in the world. Innovation breaks through impossibilities.

The fracking innovation was not intended as climate policy, but simply as a way to make the United States more energy independent and richer. But it also turned out to have a huge climate change benefit, because gas became cheaper than coal. Crucially, gas emits about half the carbon dioxide of coal. Making gas cheaper than coal has shifted a large part of US electricity production from coal to gas. This is the main reason why the United States has seen the largest reduction in carbon dioxide emissions of any nation over the past decade.

The experts concluded that globally, we need to spend $100 billion on green energy innovation each year. This would still be much less than what solar and wind energy are costing us in subsidies today, and it would likely substantially bring forward the day when low- or zero-carbon-dioxide energy sources can take over the world.

The economists calculated that for each dollar spent on green energy R&D, we could avoid about $11 of long-term climate change damages. This is a great deal. Moreover, besides helping to find a breakthrough green energy source, this R&D will likely generate many other innovations that can be useful for humanity, such as better batteries for cell phones and cheaper power for space exploration.

The frustrating thing is that almost everyone agrees that we should be investing much more in green innovation. It’s not a controversial idea. Yet, this spending never seems to be actually allocated. That’s because constant scaremongering and green energy industry lobbying lead to scarce resources instead being poured into rolling out more and more of today’s inefficient solar panel and wind turbine technology.

To achieve more green energy research and development, we need to spend our money directly on it, rather than relying on indirect industry support and a prayer that it works. Globally, in 2020 taxpayers will pay $141 billion to subsidize inefficient solar and wind energy. This will buy us just $6 billion in actual R&D. Instead, we should spend $100 billion directly on research and development. It will get us $94 billion more for green R&D, and it would still leave us with $41 billion to improve the world in many other ways.

That is why we shouldn’t focus our R&D just on the currently most fashionable and glamorous ideas for the future. Instead we should research a lot of ideas. Research and development is cheap, and a sixfold increase in spending for the world really could allow us to research a wealth of different possible solutions.

The problem with all of these ideas are capacity and cost. If we exclude pumped water storage, all of the other many different solutions in existence today can store just twenty seconds of the world’s electricity consumption.

While utility-scale solar panels can produce power when the sun is shining at as low as 3.2¢ per kilowatt-hour, adding adequate storage more than triples the cost to at least 10.2¢ per kilowatt-hour.

Perhaps surprisingly, nuclear energy is also very safe. Under normal operating conditions, it emits less radioactivity than coal (yes, there is actually radioactivity in mined coal that is released when it is burned).

Although we think of the terrible disasters of Fukushima and Chernobyl, nuclear energy has one of the lowest death risks of any form of energy; in fact, it kills about two thousand times fewer people than coal power, because of coal’s massive pollution.

One 2017 study suggests that had we been able to stick to one or just a few designs for nuclear power plants, ensuring that costs would continue to fall, nuclear energy today could cost-effectively replace all coal and most gas power, and reduce global carbon emissions by one-fourth.

Imagine if innovation could drive down the cost of air capture to, say, $5 a ton by midcentury. Avoiding the emissions from a gallon of gasoline would then cost just 5¢, which it’s plausible to imagine most people being willing to pay. If we can achieve that low cost, we could eliminate practically all of the world’s emissions from the atmosphere for just 0.2 percent of global GDP.

Craig Venter, the geneticist who led the first draft sequencing of the human genome, argues for research into algae that can be grown on the ocean surface to produce oil. Because the algae convert sunlight and carbon dioxide into oil, burning it will be carbon dioxide neutral.

When we invest in innovation, most ideas fail. We don’t need a lot of technologies to power the world. We don’t need many ways to cut carbon dioxide emissions to zero. We just need one (or more realistically, a few).

Imagine if innovation could revolutionize the cost of nuclear power down to 1¢ per kilowatt-hour. Not only would the entire world switch to this much cheaper alternative and essentially solve global warming, but also it would be an incredible boon for humanity, providing more energy, with cleaner air, at almost zero cost.

Over the next five to ten years, R&D spending globally should increase a further three times to get close to the $100 billion annually identified by the Nobel laureates. With a sixfold increase in our budget, we could help fund so much more. We could dramatically improve humanity’s chances of innovating down the price of future solutions to help address or entirely fix climate change.

Finding ways to produce green energy cheaper than fossil fuels, or finding very cheap ways to avoid the environmental impact of fossil fuels, would transform the fight against climate change. It would eliminate the tension that exists right now between the twin goals of growth and reducing emissions. Through innovation, we could solve the problem of fossil fuels in the old-fashioned and proven way—by making the alternatives cheaper and better.

Some of future warming comes from past carbon emissions, which we have no control over today. And neither carbon taxes nor innovation will entirely eradicate future emissions, at least not in the short to middle term.

To the contrary, if we are to deal effectively with climate change, we need to put adaptation at the heart of our policy response, right alongside a carbon tax and innovation.

“Coastal defense” in many cases will mean dikes (a long wall or embankment built to prevent flooding), but softer approaches like artificial nourishment (meaning adding sand to beaches) can be even more effective in dealing with the impacts of rising sea levels and storm surges. In a 2019 overview of nineteen studies, dikes on average reduce damages by $40 for each dollar spent, whereas artificial nourishment can avoid $111 of damages for every dollar spent.

As well as providing a buffer against tidal storm surges, mangroves provide critical habitat to sustain local fisheries. Planting (or reestablishing) mangrove forests, as is being done in Indonesia and elsewhere, is several times cheaper than building flood protection infrastructure. The benefits of mangrove preservation and restoration are worth up to ten times the cost, including not just avoided losses from coastal flooding, but also the benefits associated with fisheries, forestry, and recreation.

People talk about rising sea levels in apocalyptic terms, but the truth is that there are proven and cost-effective ways we can defend coastlines to ensure that more people and possessions are protected.

Holland has shown the way by giving “room for the river,” a program that allows some floodplains to be flooded so the flood waters don’t destroy cities, and that deepens and widens rivers so there is room for more water, making them flood less. The floodplains can even be turned into parks.

In the last three decades of the last century, about fifteen thousand people died in Bangladesh each year because of hurricanes. In the 2010s, thanks to widespread adaptation, the average number is just twelve dead.

For river flooding, warning systems can reduce damage costs by four times the cost of the warning. For heavy precipitation, preparing communities through training and emergency management can return $30 on every dollar spent.

But there is an amazingly simple adaptation that can make Las Vegas and other cities cooler. Heat is caused by black roofs and black roads, so we should make roofs and roads lighter in color. Heat is exacerbated by an absence of parks and water features, so we should create more greenery and oases.

If we increase parks and water features significantly, models show, high temperatures three days into a hot-weather spell can be decreased by as much as 14°F, providing an oasis of coolness. And analysis from London indicates that painting asphalt and black buildings white, and thus changing the entire city’s reflectivity, could decrease the temperature three days into a heat wave by a whopping 18°F.31

Too often, however, the media treats cool roofs and light-colored pavements as quirky oddities rather than serious policies. The media pays far more attention to “green roofs” with gardens, water, mosses and plants, presumably because these urban oases seem much more charming. Unfortunately, green roofs are a poor deal in regards to the climate: their benefits are no greater than simple cool roofs, but they triple the cost.

After a 2010 heat wave killed more than thirteen hundred people, the Indian city of Ahmedabad enacted a Heat Action Plan that included training health care staff, distributing water, and painting roofs with white reflective paint to make homes up to 9°F cooler. A similar heat wave in 2015 claimed fewer than twenty lives.

But there is still a lot of publicly funded adaptation that can reduce climate damages, including better coastal and river protection, early-warning systems for disasters, fire-proofing communities, and taking steps to cool cities. Most of these are very cost-effective investments with considerable returns to society.

Perhaps the most remarkable fact about adaptation is that most of its benefits can be realized fairly cheaply within just a few days or a few years. Compare this speed to the delayed impact of worldwide carbon taxes. Adaptive actions can typically deliver much more protection much faster and at a lower cost than any realistic carbon-reduction climate policy.

The idea is that if you can increase the number of sea salt particles in the air over the oceans, the resulting clouds will end up with more tiny water droplets. Fewer larger droplets mean darker clouds (as we know from anytime it is about to rain), while many smaller droplets make clouds whiter. If we can make more ocean clouds whiter, they will reflect more solar energy back into space, thus cooling the planet.

Stephen Salter has designed a fleet of remote-controlled, wind-powered catamarans that could mimic the ocean’s natural wave action and put more sea salt particles into the atmosphere. This fleet would disperse seawater mist about a hundred feet into the air, introducing more sea salt particulates and helping clouds become slightly brighter—just enough to keep temperatures down.

Research for Copenhagen Consensus shows that just $9 billion spent building nineteen hundred seawater-spraying boats could prevent all of the temperature increase projected in this century. This is a tantalizing possibility when we consider the $60 trillion in damages in the twenty-first century that would come from unmitigated global warming.

The third key argument for exploring this technology is that it would allow us to change the global average temperature very quickly. Any standard fossil-fuel-cutting policy will take decades to implement and half a century to have any noticeable climate impact. Instead, just like Mount Pinatubo, geoengineering can literally reduce temperatures in a matter of weeks.

The other is identical except the world has started using stratospheric aerosol injection, following the concept of Mount Pinatubo. In the vast majority of places people live, the second scenario is better than the first: only a few places, less than 0.4 percent of the planet’s inhabited surfaces, have more extreme weather. Most people experience less extreme weather, including lower temperatures and lower extreme temperatures, along with less extreme precipitation and less risk of flooding or drought.

Moreover, it is unreasonable to argue that using geoengineering will just give us an excuse to keep emitting carbon. Should we ban coronary bypass surgery or cholesterol-lowering drugs because they let people get away with bad behavior like eating too many french fries? In my experience, nobody eats french fries just because they know that if it comes to it, they have an option down the line to get a bypass.