A plane drops red fire retardant in Deer Park, California, the US, September 27 2020. Picture: REUTERS/ADREES LATIF
A plane drops red fire retardant in Deer Park, California, the US, September 27 2020. Picture: REUTERS/ADREES LATIF

Hours after being inaugurated as president, Joe Biden recommitted the US to the Paris climate agreement, saying climate change is “an existential threat to our communities, economy, national security and environment”. To combat it, he wants to spend $500bn each year on climate policies, or $1,500 per US citizen.

Let’s get real. Climate change is a man-made problem but Biden’s climate alarmism is almost entirely wrong. Asking people to spend $1,500 every year is unsustainable when surveys show a majority are unwilling to spend even $24 a year. Policies such as Paris will fix little at a high cost. Biden is right to highlight the problem, but he needs a smarter way forward.

The climate alarm is poorly founded. Take hurricanes. In 2020, you undoubtedly heard that global warming made hurricanes “record setting”. Actually, 2020 was above-average in the North Atlantic partly because of the natural La Niña phenomenon, and record setting in that satellites could spot more storms. When measured by total hurricane damage potential, the 2020 North Atlantic was not even in the top 10. Almost everywhere else on the planet, hurricanes were far below average. Globally, 2020 ranked as one of the weakest hurricanes years in the 40-year satellite record.

We say 2020 was big on hurricanes because we read carefully curated stories where and when they hit, but we didn’t read stories about the many more places and times they did not. This dynamic is why widespread climate alarm diverges from the decades of climate-economic research that shows the total effect of climate change is negative but manageable. The UN Climate Panel, the gold standard of climate science, tells us the total effect of climate change in the 2070s will be equivalent to an average income reduction of 0.2%-2%. Since the UN also expects everyone to be 3.63 times richer, global warming means we will be 3.56 times as rich. That is a problem, but not Biden’s existential threat.

Rejoining the Paris agreement will solve little at a high cost. By the UN’s estimates, if all nations live up to all their promises (including Barack Obama’s promises for the US), it will cut so little it will reduce global temperatures by less than 0.05°C by 2100. Paris is costly because it forces economies to use less or more expensive energy. Across many studies the drag to the economies is $1-trillion-$2-trillion in lost GDP every year after 2030. While achieving good, each dollar of cost will deliver about 11c of long-run climate benefits.

While politicians also talk about job benefits, economic research shows green spending will predictably increase green jobs. But because subsidies will be paid by higher taxes on the rest of the economy, an equal number of jobs will disappear elsewhere. Many rich countries are now promising to make their economies carbon-neutral by 2050. There is one nation that has done an independent cost estimate of net-zero, namely New Zealand. It found the average best-case cost is 16% of GDP. This translates to more than $5-trillion a year by mid-century for the US and similarly exorbitant costs for other nations. Such costs make these policies unsustainable in the long run.

Moreover, rich countries can achieve little by themselves. Imagine if all Organisation for Economic Co-operation and Development countries stopped all their CO₂ emissions today and never bounced back. This would be utterly devastating — Covid-19 lockdowns reduced emissions by less than 10%. Yet this would reduce global warming by the end of the century by 0.4°C. This is because three-quarters of 21st-century emissions will come from the rest of the world — especially China, India, Africa and Latin America. They are unlikely to accept slower economic growth to tackle a 2% problem 50 years from now.

Fortunately, there is a much smarter way forward: investing a lot more in green energy research & development. As Bill Gates says: “We’re short about two dozen great innovations” to fix climate. If we could innovate the price of green energy below fossil fuels, it wouldn’t just be rich, well-meaning people cutting a bit of emissions. Everyone would switch, eventually fixing climate change.

The cost would be much lower, the policies much more likely to be implemented — and, fortunately, it is one of the promises Biden has made. At the sidelines of the Paris Summit, more than 20 countries committed to double their clean energy R&D investment until 2020. Most countries have not delivered, but doing so would be a much more effective, cheaper and more sustainable strategy.

• Lomborg is president of the Copenhagen Consensus and visiting fellow at the Hoover Institution, Stanford University. His new book is titled ‘False Alarm’.

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