Abby L. Harvey
GHG Monitor
8/1/2014
Delaying action to address climate change could cost the nation billions of dollars annually, according to a report released by the White House this week. “Delaying climate policies avoids or reduces expenditures on new pollution control technologies in the near term. But this short-term advantage must be set against the disadvantages, which are the costs of delay,” the report says. These costs “will take the form of either greater damages from climate change or higher costs associated with implementing more rapid reductions in greenhouse gas emissions. In practice, delay could result in both types of costs,” the report says.
Delays could potentially cause a climate target to be missed, according to the report. For example, a widely agreed upon target is to limit the increase of the earth’s temperature to 2 degrees Celsius from preindustrial levels. To do this, the atmospheric concentration of CO2 must be kept below 450 ppm, the report says, referencing results of the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report released earlier this year. Should that target be missed, the costs incurred because of the effects of climate change could be significant, the report says. “A delay that results in warming of 3° Celsius above preindustrial levels, instead of 2°, could increase economic damages by approximately 0.9 percent of global output. To put this percentage in perspective, 0.9 percent of estimated 2014 U.S. Gross Domestic Product (GDP) is approximately $150 billion. The incremental cost of an additional degree of warming beyond 3° Celsius would be even greater. Moreover, these costs are not one-time, but are rather incurred year after year because of the permanent damage caused by increased climate change resulting from the delay,” the report says.
Another way that costs could be incurred because of delay, according to the report, is that if policy is delayed it will cost more to implement further down the road. “Taking meaningful steps now sends a signal to the market that reduces long-run costs of meeting the target. Part of this signal is that new carbon-intensive polluting facilities will be seen as bad investments; this reduces the amount of locked-in high-carbon infrastructure that is expensive to replace. Second, taking steps now to reduce CO2 emissions signals the value of developing new low- and zero-emissions technologies, so additional steps towards a zero-carbon future can be taken as policy action incentivizes the development of new technologies,” the report says.
In either case, costs increase with time the report says. “The longer the delay, the greater the cumulative emissions before action begins and the shorter the available time to meet a given target. Several recent studies examine the cost implications of delayed climate action and find that even a short delay can add substantial costs to meeting a stringent concentration target, or even make the target impossible to meet.” The report goes on to cite a 2012 study which found that delay from 2010 to 2020 to stabilize CO2 concentration levels at 450 ppm by 2100 raises mitigation cost by 50 to 700 percent.
Delay Will Also Slow Technological Progress
A lack of new low-carbon technologies is also addressed in the report. While some argue that developing policy requiring a reduction in carbon emissions before the technologies to do so have been developed and streamlined is illogical, the report suggests that without policy in place to send market signals to private sector industry, the incentive to invest in these technologies is not there. “The private sector invests in research and development, and especially in process improvements, because those technological advances reap private rewards. But low-carbon technologies and environmental technologies more generally, face a unique barrier: their benefits – the reduction in global impacts of climate change – accrue to everyone and not just to the developer or adopter of such technologies. Thus private sector investment in low-carbon technologies requires confidence that those investments, if successful, will pay off, that is, the private sector needs to have confidence that there will be a market for low-carbon technologies now and in the future. Public policies that set out a clear and ongoing mitigation path provide that confidence. Simply waiting for a technological solution, but not providing any reason for the private sector to create that solution, is not an effective policy,” the report says.
