Recently I posted on the Social Cost of Carbon: Origin and Prospects, which has become a focus for the Trump transition team. An article from Bloomberg provided a good historical context and overview of that policy instrument. The discussion noted major issues with how the damages are estimated and focused on how the calculation depends greatly upon the arbitrary choice of discount rate.

Several commenters raised a quite separate problem, namely that SCC is biased by addressing only estimated damages from CO2 and not the social benefits. That is not surprising since the entire purpose of the SCC is to get a large enough dollar figure to justify imposing expensive regulations, supposedly to avoid the damages by reductions in CO2 emissions. The framers had no interest or incentive to reduce damage estimates by considering benefits.

However a normal cost/benefit analysis would only project damages net of the expected benefits, which is clearly not the case here. Let’s consider three categories of Social Benefits of Carbon which properly must be included, rather than ignored.

Social Benefits from the Energy

Climate advocates assume that burning fossil fuels provide immediate benefits, such as electrical power or horsepower, which are paid for in the purchase of the fuels and realized by the consumers. Thus the social costs pertain only to future damages not covered by the fuel market prices. This view is achieved by wearing blinders to many obvious future social benefits attributable to the reliable and affordable energy from fossil fuels.

Alex Epstein (here) is among those who demonstrate from public information sources comparisons between societies who use carbon fuels extensively and those who do not. The contrast is remarkable: Societies with fossil fuels have citizens who are healthier, live longer, have higher standards of living, and enjoy cleaner air and drinking water, to boot. Not only do healthier, more mobile people create social wealth and prosperity, carbon-based energy is heavily taxed by every society that uses it.  Those added government revenues go (at least some of it) into the social welfare of the citizenry. By almost any measure, carbon-based energy makes the difference between developed and underdeveloped populations.

Social Benefits from CO2 Fertilization

SCC excludes any consideration of the positive effects upon the biosphere from higher concentrations of CO2 in the atmosphere. It has been proven by numerous studies that plants thrive when more than 400ppm of CO2 are in the air, and greenhouse operators routinely add CO2 to double or triple the amount inside their facilities.

Yet climatists are at pains to discredit the benefits of more CO2.

A few years ago a scientist analyzed satellite imagery and discovered that the planet is greening (adding plant coverage) at a higher rate most likely due to more CO2 in the air. Climate activists are putting pressure upon these researchers to recant their findings.

A recent post Researchers Against CO2 revealed how activist scientists are trying to overturn the extensive biological evidence that plants love CO2. Field experiments are conducted claiming that plants don’t always grow bigger and faster with more CO2 when there are other limiting factors such as moisture, sunlight or soil nutrients. Their logic fails since more CO2 doesn’t cause the lack of other growth factors, and reducing CO2 will not improve those circumstances.

Another attack on CO2 benefits is the claim of ocean acidification, and I would not be surprised if SCC includes damage estimates from this source. Facts on the ground (or in this case, the oceans) do not support the claims, as reported in this post on Basics of Ocean Acidification.

Even crabs love CO2.

Social Benefits from Global Warming

Here we face the full force of billions of dollars of research studies on the damaging impacts from a few degrees of temperature increase. Over the years, everything has been shown to suffer from global warming, from A to Z. From Acne to Zika virus, and every letter in between: Bees, Civil wars, Diseases, Extinctions, Fish, etc.

Here’s the thing: Social Cost of Carbon is actually an attempt to estimate the benefits of preventing all those A to Z damages. But where are the estimates of benefits by preventing damages from global cooling?

A few researchers such as Richard Tol have looked objectively at warming scenarios, and identified clear social benefits. One study (here) concluded that an additional degree Celsius of warming by 2040 would likely result in 800,000 fewer deaths each year. Is that not a benefit to be reckoned?  Reasonable people conclude that the last 1°C of warming was a boon to civilization, and the next 1°C is likely to also be a blessing.

There are problems with this category. How do you put dollar values on saving human lives, or projected reductions in crops due to colder weather? These are the same problems bedeviling the SCC calculations.

Further, many are wary of accepting the premise that carbon-based fuels do in fact cause temperatures to rise. Certainly the poor correlation between fuel consumption and global mean temperatures (GMT) does not convince (more here). Still, the argument can be made that even if you believe in man made global warming, policy analysis must also consider the benefits from a warmer world.

Summary

Calculating future costs and benefits from using carbon-based fuels is much like going down Alice’s rabbit hole.  Things get distorted, turned upside down and sideways.  Or to change the metaphor:  Beware: this swamp has alligators.

It is not climate change forcing migrations, but rather misguided climate policies like those in Ontario. Employers pushed to the wall by energy cost increases have to plan for growth in other jurisdictions where energy is reliable and affordable. In effect, Ontario businessmen who are succeeding against world competitors from the US, China and India, will be creating jobs elsewhere, a migration of employees directly resulting from CO2 hysteria.

Ontario manufacturers fighting Queen’s Park’s energy policy Toronto Sun

Byron Nelson has spent over three decades growing his manufacturing company in Ontario, only now to regret his choice.

As he tours a group of reporters around his Leland Industries Scarborough plant where they build nuts and bolts for export to the United States and Europe, he explains he’s losing a battle with the province. His hydro bills have soared over the past year and with Ontario’s new cap-and-trade system coming into effect next month, electricity and natural gas costs will likely spike by another 20%.

That’s why Nelson — and other manufacturers in the province — are choosing to expand their businesses in the U.S. instead of at home.

“By 1995 to 2000, China had moved in and we fought China on the world trade and won,” Nelson said Tuesday during a press conference of the newly formed Coalition of Concerned Manufacturers in Ontario.

“Now our bigger problem is we’ve got to fight the province on controlling some of our hydro costs, which have totally skyrocketed. Our electricity bill has already increased 42% over the past few years. I’ve done the math and I’m looking at a cost increase that is going to take it to over $800,000 a year and with cap-and-trade, it’ll be near $1 million.”

Leland Industries plant, Scarborough Ontario

Ontario’s new cap-and-trade system will cause electricity and natural gas costs to rise even higher. Toronto Star

Jocelyn Williams Bamford — vice president of Automatic Coating Limited and spokeswoman for the Coalition of Concerned Manufacturers in Ontario — said Leland is one of many smaller and medium-sized Ontario-based manufacturers that are looking to grow and seriously considering investing outside of Ontario.

“Ontario’s energy costs are rising so quickly many manufacturers are reassessing whether it makes sense to expand production in this province,” she said Tuesday in a statement.
Bamford said manufacturers have become more competitive and have been able to reduce emissions at the same time because they have invested in new technologies.

“Higher energy costs leave us less money for investment. And, if manufacturers can’t invest in Ontario, it’s not good for the economy or for jobs in this province. Ultimately, it’s not good for the environment either,” she said.

CEO of Leland Industries Byron Nelson says the company will not invest in Ontario any more because ‘the costs are just out of sight.’ Nelson said Ontario has already lost a lot of manufacturers and will lose more because those in government “just do not understand.”

Summary

Virtue signaling is not free. Ontario politicians want to look good to UN leaders, but the result is forcing employers to migrate jobs elsewhere. Until now politicians have naively bought into alarms from the Union of Concerned Scientists. Maybe they should pay attention instead to the Coalition of Concerned Manufacturers.