Skip to content

What’s Going On At The AEI? (Or The Perils Of Policy Analysis In An Echo Chamber)

Benjamin Zycher, American Enterprise Institute

The American Enterprise Institute — which as an institution takes no positions on policy issues — on September 6 hosted an event on how “carbon” pricing (both explicit and implicit) can be used to implement more effectively the 2015 Paris interna­tional agreement to reduce greenhouse gas (GHG) emissions. With the exception of one presenta­tion, this panel discussion was not useful in terms of advancing the policy debate, largely because the pan­elists were chosen so as to present a uniform policy view. The event provided little in terms of valuable information for the attendees and viewers and did a disservice to the American Enterprise Institute.

Because all the panelists are supporters of inter­national climate policy generally and of the Paris agreement in particular, the common and explicit assumption was that the agreement must be strength­ened (that is, made more costly), ostensibly so as to limit warming to 2°C or less by the end of the century. None of the panelists made a distinction between nat­ural and anthropogenic warming, nor was the purely political rather than scientific genesis of that goal addressed at the event.

There appeared to be considerable confusion among the panelists about the actual impact of the Paris accord (0.7°C), even if implemented immedi­ately and enforced strictly throughout this century. The obvious political difficulties of “strengthening” the Paris emissions limits were shunted aside. The panelists seemed not to understand that under the lower Intergovernmental Panel on Climate Change (IPCC) GHG concentration scenarios in the latest assessment report (AR5)—those most consistent with the historical trends—the 2°C limit is very likely to be met without any climate policies at all.

Accordingly, they seemingly did not grasp the implications of the shift begun in the Paris accord from the 2°C limit to a 1.5°C limit, a tacit admission by the United Nations Framework Convention on Climate Change (UNFCCC) that the 2°C limit, again, will be achieved even without international climate policies. Accordingly, that shift is a transpar­ent effort to move the goalposts. Nor did the pan­elists seem to understand the implications of the higher GHG concentration scenarios used by the IPCC in AR5. Under those scenarios, the reductions in GHG emissions required to reach the 2°C limit will be impossible to achieve.

The “insurance” argument in favor of international climate policy is far weaker than commonly assumed, in part because it ignores the trivial amount of such insurance yielded by plausible emissions reduc­tions, in part because it ignores the potential bene­fits of anthropogenic warming, and in part because it ignores the likely adverse consequences of govern­ment policies to increase energy costs. Such policies would be likely to impoverish additional tens or hun­dreds of millions of people around the globe, and the implications of an effective international climate pol­icy to drive up energy costs—an international gov­ernment tax cartel — are not salutary in terms of the economic growth needed to move massive numbers of people out of poverty. Nor are they likely to prove consistent with the preservation of individual free­dom in the face of an expansion of the coercive and confiscatory power of states acting both individually and collectively.

Other central points are as follows. The purported administrative ease of a carbon tax is an illusion. The individual emissions-reduction promises made at Paris are unenforceable and can be “met” without any change whatever in underlying emissions behavior. Notwithstanding several assertions by members of the panel, government revenues from a carbon tax are not a social benefit of GHG policies; instead, they are a wealth transfer. The “co-benefits” of GHG policies in terms of reduced emissions of conventional pol­lutants are a deeply problematic policy justification in the US context. At an international level, in par­ticular for the developing economies, the co-benefits argument for GHG policies might (or might not) be efficient narrowly in terms of improved life expectan­cies, but the September 6 panel failed even to ask the fundamental question of whether that benefit might be outweighed by the adverse life expectancy effect of higher energy costs and the attendant reduction in national and per capita incomes.

Expansion of unconventional electricity (wind and solar) generation as a tool for implementation of the Paris GHG limits is likely to yield perverse outcomes. Wind and solar generation technologies inflict their own set of serious environmental prob­lems, including a likely increase in the emission of conventional pollutants and GHG as an atten­dant effect of the up-and-down cycling of backup fossil units used to avoid blackouts in the face of the unreliability of wind and solar power. And the higher costs of unconventional power simply are incontrovertible.

Full post