The Davos Apocalypse

Read Time:5 Minute, 10 Second LAUDERDALE – At the World Economic Forum’s annual meeting in Davos last month,
leading participants called for a rapid shift to cleaner energy to tackle climate
change. There is something unsettling about the global power elite jetting into an
exclusive Swiss ski resort and telling the rest of the world to stop using fossil

The apocalyptic bombast is even more disturbing. According to Angel Gurría,
Secretary-General of the OECD, “our planet is warming dangerously,” and we need to
act now “to avoid catastrophe”; the United Nations climate chief, Christiana
Figueres, maintains that global warming means that “the world economy is at risk.”

Former UN Secretary-General Kofi Annan takes the prize for the most extreme
rhetoric, claiming that not curbing global warming is “a terrible gamble with the
future of the planet and with life itself.”

Yet, the rhetoric is unconvincing. Yes, global warming is real and man-made. But
creating panic and proposing unrealistic policies will not help in tackling the

Both Annan and Gurría cited Typhoon Haiyan in the Philippines last November as
evidence of increased climate-change-related damage. Never mind that the latest
report by the UN Intergovernmental Panel on Climate Change (IPCC) found that
“current datasets indicate no significant observed trends in global tropical cyclone
frequency over the past century” and reported “low confidence” that any changes in
hurricanes in recent (or future) decades had anything to do with global warming.

Annan and Gurría also neglected to note that global Accumulated Cyclone Energy, an
index for total hurricane activity, is hovering at the lowest values seen since the
1970’s. Indeed, the trend for strong hurricanes around the Philippines has declined
since 1951.

Similarly, Gurría tells us that Hurricane Sandy, which slammed into New York City in
2012, is an example of inaction on climate change, costing the United States “the
equivalent of 0.5% of its GDP” each year. In fact, the US currently is experiencing
the longest absence of intense landfall hurricanes since records began in 1900,
while the adjusted damage cost for the US during this period, including Hurricane
Sandy, has fallen slightly.

Figueres claims “that current annual losses worldwide due to extreme weather and
disasters could be a staggering 12% of annual global GDP.” But the study she cites
shows only a possible loss of 1-12% of GDP in the future, and this is estimated not
globally but within just eight carefully selected, climate-vulnerable regions or
cities. By contrast, according to the IPCC, “long-term trends in economic disaster
losses adjusted for wealth and population increases have not been attributed to
climate change.”

On the contrary, the bulk of peer-reviewed economic evidence indicates that, up to
around 2050-2070, the net global economic impact of rising temperatures is likely to
be positive. Although global warming will create costs stemming from more
heat-related deaths and water stress, they will be outweighed by the benefits from
many fewer cold-related deaths and higher agricultural productivity from higher
levels of CO2.

Global warming is a long-term problem. Most models indicate that the cost toward the
end of the century will be 1-5% of world GDP. This is not a trivial loss; but nor
does it put “the world economy at risk.” For comparison, the IPCC expects that by
the end of the century, the average person in the developing world will be
1,400-1,800% richer than today.

Such incorrect statements by leading officials reinforce wasteful policies based on
wishful thinking. Figueres sees “momentum growing toward” climate policies as
countries like China “reduce coal use.” In the real world, China accounts for almost
60% of the global increase in coal consumption from 2012 to 2014, according to the
International Energy Agency. While Figureres lauds China for dramatically increasing
its solar-power capacity in 2013, the increase in China’s reliance on coal power was
27 times greater.

Figureres’s weak grasp on the facts has led her not only to conclude that China is
“doing it right” on climate change, but also to speculate that China has succeeded
because its “political system avoids some of the legislative hurdles seen in
countries including the US.” In other words, the UN’s top climate official seems to
be suggesting that an authoritarian political system is better for the planet.

The fact remains that global wind and solar power usage in 2012 cut, at most, 275
million tons of CO2, while soaking up $60 billion in subsidies. With the electricity
worth possibly $10 billion, the average cost of cutting a ton of CO2 is about $180.
The biggest peer-reviewed estimate of the damage cost of CO2 is about $5 per ton.
This means that solar and wind power avoid about $0.03 of climate damage for every
dollar spent.

Compare this to smarter technological solutions. In the short run, the US
shale-energy revolution has replaced high-polluting coal with cheaper, cleaner
natural gas. This has cut about 300 million tons of US emissions – more than all the
world’s solar and wind power combined – and at the same time has profited Americans
by saving them $100 billion in energy costs.

In the long run, current investment in green research and development will help
drive the price of future renewable energy below that of fossil fuels, enabling a
choice that is both environmentally and economically sound. In the meantime, even
dramatic cuts in CO2 emissions will have very little impact on hurricanes 50-100
years from now. Lifting billions of people out of poverty, however, would not only
be intrinsically good; it would also make societies much more resilient in the face
of extreme weather, whether caused by global warming or not.

Unfortunately, as we saw at Davos, the global climate debate is polluted with myths
and wishful thinking. If we want to do more good at lower cost, we should start by
cleaning it up.

Bjørn Lomborg, an adjunct professor at the Copenhagen Business School, founded
and directs the Copenhagen Consensus Center. He is the author of The Skeptical
Environmentalist and Cool It, and is the editor of How Much have Global Problems
Cost the World?

Project Syndicate

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