The Paris agreement: a costly and damaging failure?

John Kane-Berman on why the targets are both hugely expensive and probably unrealisable

The US will shortly be part of the Paris agreement once again. It will therefore be committed to helping keep the rise in the planet’s temperature by the end of this century to no more than 2 degrees Celsius above the levels prior to the industrial revolution. Better still, the rise will be kept at no more than 1.5 degrees.

“A cry for survival comes from the planet itself,” declared Joe Biden in his inaugural address last month. Last week he said that “climate change” was an “existential threat” to humanity. The secretary general of the United Nations (UN), Antonio Gutteres, says the world is headed for a rise of more than 3% this century and that more countries must declare states of emergency until carbon neutrality is reached. Thirty-eight have already declared states of climate emergency.

The next conference of Paris signatories, due to be held in Glasgow in November this year, will probably see demands for countries that have signed up to the Paris accord to commit themselves to more aggressive carbon cuts than the ones they have already promised.

These vary from country to country, as Paris signatories, numbering almost 200, are free to determine their own commitments and timetables, and there can be a big disparity between promises that politicians make in the global spotlight at conferences around the world and the policies they implement back home. The UN’s Intergovernmental Panel on Climate Change (IPCC) has no powers to enforce compliance.

Nor does the IPCC even know the cost of compliance. Two years ago it said that meeting the 1.5 degree target would require the industrial sector to cut carbon emissions by between 67% and 91% by 2050. It conceded that draconian emissions reductions would lead to higher food and energy prices, the latter delaying the transition from biomass (wood and dung) to clean cooking and so damaging the health of people in poorer countries.

But the IPCC also admitted to “knowledge gaps” about the impact this massive contraction in industrial output would have on growth, living standards, and poverty reduction. In the view of Rupert Darwall in a paper published last year by the Global Warming Policy Foundation (GWPF), the IPCC’s attitude is “You must do 1.5 whatever the cost.” “Net zero,” he said, “is being driven by fanatics and zealots who put little value on human welfare.”       

Last year, Bjorn Lomborg of the Copenhagen Business School and the Hoover Institute at Stanford put forward some estimates in a paper published in the peer-reviewed journal Technological Forecasting and Social Change. Since there were no official estimates of the costs of the Paris agreement, he made use of peer-reviewed estimates used for the US, the EU, China, and Mexico, which between them make up around 80% of promised reductions in CO2 emissions.

Extrapolating these for the whole planet, he arrived at an annual cost of between $1 and $2 trillion in lost GDP, the latter being the more likely figure. This would be the cost of reducing emissions by just 1% of the quantity needed to limit the rise in global temperatures to 2 degrees Celsius. The cumulative cost of achieving this target would amount to $250 trillion, or 5.4% of future global GDP.

Dr Lomborg’s cost-benefit analysis showed that for every dollar spent on cutting carbon the claimed benefits to human welfare arising from the Paris agreement would be only 11 cents. The costs of climate policies accordingly outweighed their climate benefits.

China alone accounts for 52% of all global coal consumption, and 29% of carbon emissions. Last year Xi Jinping promised to halt his country’s rise in carbon emissions by 2030 and to reach “carbon neutrality” by 2060. Achieving the latter target would mean complete decarbonisation of China’s electricity supply by 2060. Yet despite having publicly cancelled the construction of a number of coal-fired power plants, China is still building hundreds of coal-fired power stations both at home and in 25 other countries as part of its Belt and Road Initiative.

Many of these are being built in Asian countries, with others among the 1 250 new coal and gas power plants planned for, or under construction in, Africa.  

John Kerry, President Biden’s special climate envoy, said China’s plans to build coal-fired power stations at home and abroad would “kill the efforts to deal with climate”.

Last month the GWPF announced that President Xi had been chosen as “the greatest climate hypocrite of the year” for 2020. He had smoothly paraded “concern” for the climate while all the time building hundreds of coal-fired power-stations in China and around the world as fast as he possibly could.

India, having denounced Western “carbon imperialism”, also has plans to expand its use of coal. According to GWPF Samizdat, that country intends to invest $55 billion in clean coal over the next decade. A recent Bloomberg newsletter said India’s plans include coal-gasification projects. Indian officials say that coal will remain the country’s dominant energy source for decades. Japan is planning additional coal-burning power plants at home and abroad over the next five years.

According to The Economist, which thinks it is “time to make coal history”, the consumption of coal in the US and Europe has dropped, while some Asian countries are slowing construction. This, however, is supposedly not enough. The magazine acknowledges that “coal powered the West’s development,” and that the growth in China’s coal-fired generating capacity between 2000 and 2012 helped “drive a 200% increase in Chinese GDP per person.”

Yet, says the magazine, Europe and America cannot be “bystanders” as Asia continues to build new coal plants. If politicians in Europe and America “are serious about fighting global warming they must work harder to depress coal everywhere”. The goal for Asia should be to “stop new coal-fired plants being built and to retire existing ones”.

It will be interesting to see whether this is an issue on which President Biden and the EU are willing to confront China.

Mr Gutteres has called for coal-fired electricity to be eliminated worldwide by 2040; he says the OECD, a group of mainly richer countries, is on track to get to zero by 2030.

Right now, it seems unlikely that China, India, and other poorer countries will comply with what they are being told to do. It is very hard to believe that they would value compliance with Paris as more important than continuing the pursuit of rising prosperity through cheap, and reliable, energy.    

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply.