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Social Cost of Carbon

June 8, 2021

By Paul Homewood

Ken Gregory has sent me his latest paper on the Social Cost of Carbon.

If he is correct, it upends all of the arguments for spending trillions of dollars on a non existent problem:


Social Cost (Benefit) of Carbon Dioxide from FUND

with Corrected Temperatures, Energy and CO2 Fertilization

By Ken Gregory, P.Eng. May 26, 2021


Climate policies such as carbon taxes are set by governments using social cost of carbon (SCC) values calculated by economic computer programs called integrated assessment models (IAM). FUND is the most complex of the IAMs which links emissions scenarios and models of economics, climate and impacts for 16 world regions. Unfortunately, the climate component of FUND that determines temperature is flawed as it assumes that the deep oceans are instantly in temperature equilibrium with the atmosphere, without any time delay, when the equilibrium climate sensitivity (ECS) is 1.5 °C or less. The FUND model runs too warm compared to climate models.

The ESC can only be estimated using the energy balance method that compares the climate forcings to historical temperature records. The paper Lewis & Curry 2018 presents estimates of ECS with uncertainty analysis. The analysis was deficient in that the natural climate change was not considered and no correction was applied to remove the urban heat island effect from the temperature record. Making these adjustments, the likely range of ECS based on energy balance calculations using actual historical temperatures is 0.76 – 1.39 °C with a best estimate of 1.04 °C.

The energy impact components for space heating and cooling expenditures of FUND are very flawed. The change of expenditures with temperatures does not correspond to expenditure data published for the USA states. A paper by Peter Lang and me shows that a 3 °C temperature rise would decrease energy expenditures in the USA by 0.07% of gross domestic product (GDP) but FUND projects an increase of expenditures of 0.80% of GDP with non-temperature drivers held constant. A study by Dayaratna, McKitrick and Michaels (D, M & M 2020) of the CO2 fertilization effect and the FUND agricultural component shows that the FUND CO2 fertilization effect should be increased by 30%.

I have created a modified version of FUND which incorporates a 2-box ocean climate model that is tuned to closely match the temperature profile of climate models. I have replaced the flawed space heating and cooling components with new components to match the empirical heating and cooling USA data and increased the FUND CO2 fertilization effect by 30%. The social net benefit of CO2 emissions is calculated using the ECS probability distribution. The results show the net benefits of CO2 emissions are 11.74 and 8.41 US$/tCO2 at 3% and 5% discount rate, respectively.

Agriculture dominates the SCC values which are greater than 100% of the net benefits of CO2 emissions. The mainstream media is fixated on storms and sea level rise which are insignificant. The data show that climate change with the CO2 fertilization effect is quite beneficial, so policies costing trillions of dollars to reduce CO2 emissions are misguided. See the report here.

  1. Harry Passfield permalink
    June 8, 2021 7:21 pm

    If he is correct, it upends all of the arguments for spending trillions of dollars on a non existent problem:

    No, it means they will never see the light of day in the MMS and will never gain traction with the public. In this case I’m not so much sceptical as cynical.
    We need a very high-profile champion to get this into the public conscience who, let us not forget, are busy being told that Einstein would be happy with Smart Meters! And do you know, I cannot think of ONE person who fits the bill.

  2. Broadlands permalink
    June 8, 2021 7:24 pm

    ” so policies costing trillions of dollars to reduce CO2 emissions are misguided.”

    Further misguided policies include the cost of NET-zero oxidized carbon capture and geological storage. That cost must be added to those cited. Many billions of tons of CO2 under pressure would have to be stored to affect the climate. The per-ton costs of capture, pipeline construction and transportation with final underground storage are huge. Almost any plausible amount would be in the mega-trillions. And these ventures are being heavily subsidized. Follow the money?

    • June 8, 2021 7:45 pm

      CCS is just too stupid for words. It and all the other fantastic ideas are just money making scams thought up and proposed when no adults were present, focussed fair and square on profiting from subsidies which come with few if any strings. Why do normal business with all its risks and regulations when you can steal the population blind and get awards for doing it!

      In the unstable progressive world of hyperventilation and language inflation, I am waiting for CO2 to be called the R word or the equally asinine W S term which jars a nerve uttered without pretext or justification during every singly brain numbing utterance from the vacuous pair, Dumb and Dumber currently and incredibly let loose with the keys to the White House.

      • Harry Passfield permalink
        June 8, 2021 7:52 pm

        Plus many!

    • AC Osborn permalink
      June 9, 2021 10:04 am

      A slight correction needed to “Many billions of tons of CO2 under pressure would have to be stored to affect the climate. ”
      “Many billions of tons of CO2 under pressure would have to be stored to possibly affect the climate. ”
      No guarantee at all.

  3. Paul Michaels permalink
    June 8, 2021 8:29 pm

    I couldn’t get the link to the report to work. Can someone correct it please?

    • June 8, 2021 9:45 pm

      The link works fine for me!

      It is very shocking and disturbing that the best IAM, FUND, has two major errors, the climate component which determines temperatures from the forcing, and the space heating and cooling components are wrong as they disagree with the USA data. Why doesn’t anybody check these models before we impose carbon taxes on people? See the “flawed” link in the first paragraph for temperature and the “flawed” link in the third paragraph for heating and cooling, of the summary.

      The equilibrium climate sensitivity determined in the Lewis and Curry 2018 paper should have a bold disclaimer stating that the two assumptions of ‘no natural climate change’ and ‘no urban heat island effect’ are obviously wrong, so the calculated ECS of 1.5 C using HadCrut4.5 is too high. It is wrong to ignore the huge amount of evidence for these effects when estimating ECS.

      • Chaswarnertoo permalink
        June 8, 2021 10:34 pm

        Because it’s about taxes, not ‘saving the planet’.

      • June 9, 2021 8:28 am

        Where’s the evidence that ECS exists at all?

      • Phoenix44 permalink
        June 9, 2021 9:02 am

        Because it’s about changing the world to how some people want it to be, not facts.

      • Paul Michaels permalink
        June 9, 2021 9:39 pm

        Worked fine for me two hours later, obviously fixed.

  4. MrGrimNasty permalink
    June 8, 2021 9:17 pm

    Europeans were lucky to make 40 years of age before the industrial revolution.

    Can anyone seriously entertain the notion that fossil fuels are a cost and not a benefit?

    • Phoenix44 permalink
      June 9, 2021 8:56 am

      That’s not the point. Those benefits are in the price of fossil fuels, price being information about value. Social cost is externalities – disbenefits borne by others that are not in the price.

      The proper argument against social cost is that we all benefit from fossil fuels reasonably equally and we all disbenefit from the externalities reasonably equally so we don’t need to bother with them. That’s why we have the slightly smarter Alarmists talking about Clinate Justice and the rich benefiting more.

      • MrGrimNasty permalink
        June 9, 2021 9:30 am

        Of course life expectancy is not in the price, it is a consequence of the leverage fossil fuels provide, it is the added value, very much NOT in the price.

        The ‘cost’ of carbon should be about making a fair ‘double entry’ account of the benefits as well as disbenefits blah blah……..

        Alarmists only cost the disbenefits, whilst the benefits are manifest and massive..

  5. Thomas Carr. permalink
    June 8, 2021 9:26 pm

    When ‘here’ appears as the last word in the summary it does work for me , graphs ‘n’ all. Perhaps I am looking at the wrong link.
    Harry P makes a very good point. As for Eistein’s belief in Smart meters it reminds me of the attempt to wean us off VHF in favour of the erratic DBS. Smart meter callers on the ‘phone get short shrift — politely of course.

  6. It doesn't add up... permalink
    June 8, 2021 9:42 pm

    Remember that the UK government defines the cost of carbon to be whatever is necessary to achieve a given emissions target. Social benefit or cost has nothing to do with it. The target is absolute.

    • Bob Lyman permalink
      June 10, 2021 10:41 pm

      That is precisely the situation in Canada. The national carbon dioxide taxation regime is a highly balkanized one, so that each province is affected in different ways. The federal government, however, imposes certain minimum standards, among other things setting the minimum rate per tonne of CO2 emitted that must be charged. The rate of the tax is not related to the social cost of carbon in any way. Its design rests upon two considerations, the rate of annual increase that will be politically tolerated by the public and the estimated contribution that the higher resulting energy prices will make to meeting arbitrary emission reduction targets. Then the buffoon that we have as Prime Minister decided on Earth Day 2021 to increase the arbitrary emission reduction target from 30 to 40 per cent. When climate policy is concerned, rationality usually takes a holiday.

  7. Devoncamel permalink
    June 8, 2021 10:21 pm

    The obvious question to ask any believer in the climate emergency and net zero narrative is
    ‘have you considered the possible benefits of increased CO2?’ No , I thought not.

  8. Mack permalink
    June 8, 2021 10:32 pm

    I’m with Mr Grim on this one. Look out of your windows folks and if any of you can spot a climate emergency out there, please raise your hands. On every metric known to man, humanity has never been healthier, happier, longer lived and more prosperous than they are in 2021.At the same time, the weather has been rather benign. Anyone who tells you different is either trying to pick your pocket or put you in handcuffs!

    • Phoenix44 permalink
      June 9, 2021 8:57 am

      Ah but it’s 30% more likely a rare event will happen somewhere not so far away from me. And that’s BAAAAAD.

    • mjr permalink
      June 9, 2021 9:38 pm

      “humanity has never been healthier, happier, longer lived and more prosperous than they are in 2021” you mean 2019 dont you,,,,? i dont think anyone expects life to be that good again following lockdown, mass “vaccinations” of children, vaccine passports, etc etc etc

  9. Phoenix44 permalink
    June 9, 2021 9:01 am

    This is probably true but it is entirely missing the point.

    Leftists/Progressives/Greens don’t start from facts and so become convinced they must change the world. They become convinced they must change the world and then seek out ways to justify what they want to do. Nobody ever changed the opinion of a Socialist with facts.

    • MrGrimNasty permalink
      June 9, 2021 9:31 am

      Can agree on that.

  10. MrGrimNasty permalink
    June 9, 2021 9:56 am

    As an aside.

    Last months UAH (not surface I know, but it seems to follow trend fairly well) showed a slight uptick indicating that the La Nina cooling may have peaked (or dipped!).

    But there seems to have been a renewed global cooling in the beginning of June, rather the opposite of the perception the UK weather change may have given.

    The Arctic has a very modest positive anomaly for recent times.

    Antarctica seems especially cold, but it does not seem to be driving any exceptional sea ice gains.

  11. Jack Broughton permalink
    June 12, 2021 8:57 pm

    If “climate change” was an explicit cost, as for example an income tax rise I wonder how people would react: especially to the future rises that would be needed. Democracy?

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