Abbott is right: Paris climate treaty fails to fight global warming

Most signatories to the Paris Agreement are failing to meet their emissions reduction obligations.

Political language on climate change often amounts to empty puffery: bold promises that are not going to be delivered and aspirational rhetoric that proves impossible to achieve.

It is therefore remarkable that Tony Abbott has acknowledged Australia would not have signed the Paris Agreement if he had known in 2015 that the US would withdraw, and that trying to reach national targets would damage the Australian economy.

Internationally, very few politicians have admitted the inherent failings of the Paris treaty, but the truth is that it was always oversold.

This begins with the treaty itself, which includes the fiction that pledges under the agreement will somehow keep the planet’s temperature rises to 2C or even 1.5C.

The 1.5C target is a fantasy. Studies show that achieving it would require nothing less than the entire planet abandoning the use of every fossil fuel by February 7, 2021. Given our reliance on fossil fuels, that would mean we stop cooling and heating our homes, stop all air travel, and the world’s farmers stop making half the world’s food, produced with fertiliser almost exclusively made from fossil fuels. The list goes on.

As for the less stringent 2C target, keeping the global temperature rise below that requires a reduction in emissions during this century of almost 6000 billion tonnes. The UN body that oversees the Paris Agreement has estimated that even if every single country (including the US) were to achieve every national promise by 2030, the total greenhouse gas cut would be equivalent to just 60 billion tonnes of CO2.

This means that even if completely successful, with the US rejoining tomorrow and every nation doing every single thing promised, the Paris treaty makes 1 per cent of progress towards the “easier” target of 2C.

Not only is the treaty not binding, but even binding agreements such as the Kyoto Protocol did not hinder countries such as Canada from promising to cut emissions by 6 per cent and instead increasing them by 24 per cent.

In Paris, many governments made vows they have not lived up to because they are finding — like Australia — that there are costs to doing so. In fact, research last year in Nature found that “no major advanced industrialised country is on track to meet its pledges”.

Few nations are forthcoming about their failures, but we know the EU vowed to cut emissions to 40 per cent below its 1990 level by 2030, but as of last year had enacted policies that would reduce them by 19 per cent. Even including “pledged” policies, the EU will make it to less than 30 per cent. And the Nature study says, “Japan promised cuts in emissions to match those of its peers, but meeting the goals will cost more than the country is willing to pay.”

It would be wrong to imagine that the US was on track before Donald Trump quit the Paris Agreement. Barack Obama promised to cut US emissions to 18 per cent below 1990 levels by 2025 but never backed this with sufficient legislation, introducing policies that were set to achieve at most a 7 per cent reduction. And poorer nations remain on target only because they promised so little.

While politicians enjoy rhetoric about saving the planet, very few are willing to implement policies that will achieve meaningful temperature cuts. Why? Because the costs of doing so through carbon cuts are high and the benefits quite small.

That doesn’t fit with what many people believe: we often are told global warming is catastrophically costly and that solutions are cheap or beneficial. It pays to look at the evidence. The best estimates show global warming has roughly a zero net cost to humanity.

The most pessimistic study finds a cost of 0.3 per cent of gross domestic product, while the most optimistic suggests a net benefit of 2.3 per cent.

We usually hear only about the (real) problems of global warming, such as increased heatwaves, cooling costs and heat deaths. But we rarely hear that global warming will reduce extreme cold, heating costs, and the number of deaths caused by the cold (which right now outweigh heat deaths by seven to one).

As global warming progresses, the adverse effects generally will increase while the positive effects will diminish, making a net negative for humanity. But the outcome is not the doomsday suggested by Hollywood. The UN Intergovernmental Panel on Climate Change has found that without any climate policy, the impacts in about a half-century will be equivalent to a loss of 0.2 per cent to 2 per cent of global GDP. That is similar to one recession across the next five decades: a problem but by no means the end of the world.

If we don’t act, the damage will reach 3 per cent to 4 per cent early next century — a significant impact, but still nowhere near catastrophic in a world where climate models expect the average inhabitant to be 500 per cent richer.

This means climate policy can create, at most, benefits worth 3 per cent to 4 per cent of global GDP in 100 years. Any realistic policy will achieve only a fraction of this.

The Paris treaty, fully implemented, would achieve one-hundredth of the reduction to 2C (a level at which there are still significant impacts), and hence achieve benefits worth perhaps only one-tenth of 1 per cent of global GDP 100 years from now.

The policy costs, often downplayed, can be vast. The EU is widely lauded by environmentalists for its bold carbon cut promises. Taking into account the total cost to the economy, the EU’s bill for cutting 20 per cent by 2020 runs to about €209 billion ($328.5bn). Its much more ambitious policy of cutting emissions by 40 per cent by 2030 will likely cost €574bn a year.

Yet the benefit will be vanishingly small: my peer-reviewed, published analysis shows the EU’s Paris promises for 2030, in the most optimistic circumstances, fully achieved and adhered to throughout this entire century, would reduce global temperatures by 0.053C by 2100.

A peer-reviewed study has shown each dollar spent on EU climate policies will generate a total long-term climate benefit of 3c. Looking further ahead, the EU has promised an 80 per cent reduction by 2050.

The biggest study from Stanford University’s Energy Modelling Forum has used the world’s top models to show that the average expected cost to the EU if all policies were perfectly co-ordinated and perfectly efficiently implemented would be €2.9 trillion a year — or 11.9 per cent of the EU’s total GDP by 2050.

That is more than all the 28 EU states spend on education, recreation, health, housing, environment, police and defence. Moreover, climate policies are rarely perfectly designed and effectively implemented.

Typically, in real life that means doubling their cost, meaning the EU’s plan of cutting 80 per cent could reach a fantastical one-quarter of the entire EU GDP.

Unsurprisingly, it is not a good idea to pay 12 per cent to 25 per cent of GDP in the decades ahead to avoid a fraction of a 3 per cent to 4 per cent GDP loss in 100 years.

Carbon cuts pledged in the Paris Agreement put the cart before the horse. Green energy is not yet ready to compete with fossil fuels, so forcing economies to switch means slowing them down.

More than $100bn will be spent this year alone on subsidies for solar and wind energy, yet this technology will meet less than 1 per cent of the globe’s energy needs.

Even by 2040, and even with carbon being taxed, the International Energy Agency estimates that average coal still will be cheaper than average solar and wind energy.

The Australian Competition & Consumer Commission’s recent report outlines with refreshing clarity how well-intentioned climate change policies have hurt energy customers.

The ACCC finds that state governments’ “excessively generous” subsidies for solar photovoltaic systems have pushed up prices for “all electricity users”. The subsidies “outweighed, by many multiples, the value” of the PV energy.

The Paris Agreement is not the right answer but a solution is needed. The US’s decision to leave the treaty without implementing an alternative climate policy is a poor one. On the sidelines of the Paris treaty came the real opportunity: philanthropist Bill Gates announced the creation of a green energy innovation fund backed by private individuals and about 20 governments, including Australia, that will double global green energy research and development.

This should be only the beginning. Nobel laureates for the project Copenhagen Consensus on Climate found we shouldn’t just double R&D but make a sixfold increase, to reach at least $100bn a year. This would still be far cheaper than the proposed Paris cuts and it would actually have the prospect of making a significant impact on temperature rises. It would do so without choking economic growth, which continues to lift hundreds of millions out of poverty.

Australia should put the ambition to innovate green energy sources at the heart of its climate policy. This should not be about subsidising existing inefficient solar panels and wind turbines but, rather, about investing in feasible technological breakthroughs that could help solar, wind, fusion, fission, artificial biomass and other promising technologies to achieve required breakthroughs.

We don’t need all of them to work; just a few would solve the ­climate problem, while making low-cost, plentiful energy for the entire world.

The knowledge that the Paris Agreement should not have been signed is perhaps startling, but it’s time to learn from the treaty’s failings and to ensure future policy decisions are grounded in economic reality.

Fixing climate change requires boosting innovation so green energy eventually will become so cheap it will outcompete fossil fuels — not making fossil fuels so expensive that everyone suffers.

Bjorn Lomborg is director of the Copenhagen Consensus Centre and a visiting professor at the Copenhagen Business School.