Scientific American: Is climate change a problem?
Bjorn Lomborg: Yes, it's a problem and it's man-made because of the burning of fossil fuels. We need to fix it but we need to fix it smartly.
BL: I don't agree with that assessment, already then I pointed out that it was a real problem. But for both books, it was the United Nations Intergovernmental Panel on Climate Change, which has thousands of scientists and experts determining what is the best knowledge we have of this problem. They have spent 17 years poring over data and are telling us that it is mankind that is the cause.
SA: What are sound estimates of the damage from climate change?
BL: Impact estimates range from a couple percentage points plus or a couple percentage points minus global gross domestic product [, or GDP]. There is a pretty big diversity in the estimates. The most likely estimate, if you look at Richard Tol and Gary Yohe's overview of all the peer-reviewed studies, is probably around 1 percent damage. Around 1 percent of our future GDP will be lost to climate change.
SA: What should be done about the problem?
BL: Basically, we need to stop burning fossil fuels before the end of the century. We need to find a way to deal with climate change within this century. Most people seem to say that means that we need to cut emissions right now. But cutting very much right now is a very expensive way of doing no good. Cuts like those in the Kyoto Protocol cost $180 billion annually and only postpone global warming by seven days at the end of the century. It's a very expensive way of doing very little. We need to cut the cost of cutting carbon dioxide. That is, we need to invent solutions, invest in research and development of noncarbon-emitting energy technologies like solar power and wind, carbon capture and storage as well as, most likely, fusion and fission.
SA: Where do cost estimates of the Kyoto Protocol, like $180 billion, come from?
BL: $180 billion is the average of all the macroeconomic energy models out of Stanford Energy Forum, the biggest collection of peer-reviewed published studies. It ranges from about $50 billion up to $450 billion. I take the average, which is probably a reasonable indicator. Since we never got the full Kyoto Protocol [with U.S. participation], it's very unclear what the actual cost would be. But $180 billion assumes that politicians worldwide are smart about how they are dealing with it. If they're not—like insisting that reductions happen inside their own country [instead of in whatever country they can happen most cheaply]—it could be much more expensive.
SA: Should this be viewed as an insurance or risk management problem?
BL: It's not an insurance question. You are not going to get your money back if climate change happens like you would if your house burns down. It could be a risk reduction policy. If there's a huge risk, it means that intuitively we should be buying more carbon cuts, but the ones that we have actually identified are not big risks. The last couple of predictions of big risks have been pretty poor. If you look back, we've had many predictions of these kinds of risks and they've all been wrong. The West Antarctic ice sheet collapsing was put to rest in 2001 IPCC report. El Niños getting much worse after 1998 was also wrong. We were worried about the Gulf Stream stopping and that was wrong. Now we worry about Greenland. Perhaps we should be a little more careful before we accept these as risks. But what if there is something lurking out there that could be bad? Well, that goes both ways. It could also happen that if we don't keep on pounding out CO2 emissions it could be bad. Unless we have good information that tells us this will be a problem, then it's really not an argument for going either way.
For the catastrophic outcomes out there now, there is not a very good sense of whether these are even plausible or just theoretical. And theoretical risks are present for anything that spans a century. If we don't do something about HIV / AIDS we could theoretically have regime collapse across sub-Saharan Africa, with widespread terrorism, armed with both nuclear and easily accessible biological weapons. You can throw in risks in any scenario. I'm skeptical of this argument when it only focuses on climate change and not on other issues that also have huge uncertainties.
SA: Don't we have some responsibility to preserve the well-being of future generations?
BL: Yes, but we also have responsibilities to the present generations. If you look at what we actually do, we care about the future a little but not a lot. We do save some things, but not everything. If you look at actual behavior it implies the discount rate [a measure of how much goods in the future are worth today] should be around 4 or 5 percent. If you argue that we should be worrying more about future generations, then you should lower this discount rate, which has the benign effect of making doing something about climate change more affordable. But it should be consistently applied across all issues. If you do the same for HIV / AIDS or malaria, not only will you save lives today, which is what is counted in a cost–benefit analysis, but you will also make societies much, much richer in the future and save many more lives way into the future.
SA: What is an appropriate policy then?
BL: Negotiations for the successor to the Kyoto Protocol will conclude in Copenhagen in 2009. We should spend 0.05 percent of world GDP on research and development into noncarbon-emitting energy technologies. That would be 10 times what we spend today.
SA: Isn't that already happening?
BL: Well, it would be 10 times more than what we do now. Moreover, our present policies are more focused on cutting emissions right now than making better choices available later. We are buying lots of inefficient solar panels but I want us to focus on making them much cheaper and more efficient later. In Denmark we put up lots of windmills in the 1970s and 1980s and 1990s. They were hugely inefficient. So we cut down all the inefficient windmills, about 10,000 of them, and replaced them with efficient ones. Maybe we should predominantly have put up the efficient ones. Yes, you need some demonstration models but the focus should be on making better windmills. Only once they are efficient should you buy a lot of them. It's the same thing with solar panels.
Of course, you can make solar panels efficient now by simply taxing coal, but that would result in enormous cost to the economy. We spend roughly 4 percent of GDP on energy. If solar panels are 10 times as expensive as fossil fuels, you spend 40 percent more on solar panels and go carbon neutral but it would have huge cost to the economy.
This is a nonlinear process. As long as solar panels or other technologies are more expensive, it doesn't matter whether they are 10 times more expensive or twice as expensive. It really only matters when it becomes cheaper than fossil fuels. When should you buy all the solar panels? When they are most efficient and cost the least. So spend a lot on research and development.
SA: You are arguing for spending on problems like malaria or HIV / AIDS rather than climate change because of your cost–benefit analysis. But can't we do both?
BL: This is not a zero-sum game, but it is a finite game. You can only spend money once. The money that Richard Branson offered as a prize for climate change is not money that he can also offer for malaria. As long as you don't have enough money to do everything, spending on climate is a fairly poor way of helping in the world.
SA: What about the fact that spending on global warming can also have a positive impact on other problems, such as malaria?
BL: Of course, that should be included. That is a good argument, but you have to quantify and qualify it. Spending on climate change is going to reduce incidence of malaria, that's true. But the Kyoto Protocol will reduce malaria by 0.2 percent in 100 years, whereas we know how to avoid 100 percent right now. So it seems like a very, very minor impact. It really has to be qualified and couched. When you do that, a lot of the benefits that people claim, while true, are small and / or could be obtained much better by other, more practical strategies. It turns out that for every person you can save from dying from malaria through Kyoto, the same resources spent on malaria directly could have saved 36,000 people.
SA: Why should people trust your analysis rather than say the Stern Review or the IPCC?
BL: In his review, Stern very clearly skewed both his cost and benefit analyses compared to all peer-reviewed published studies. He underestimated the cost of doing something and dramatically overestimated the benefits. He has been hugely criticized [for that] in the peer-reviewed economic literature. We shouldn't trust Stern simply because it was a political report that, not surprisingly, came out in support of the exact government policy of Britain, which asked for the review.
We should definitely trust the IPCC on its first working group [which assesses the physical science of climate change]. But we should be curious why the other working groups didn't want to engage in a cost–benefit analysis. At least cynically, you could argue that's perhaps because it was not very favorable for them. The U.N. climate panel now says we should reduce greenhouse gas emissionsin the cheapest possible way. Of course, you cannot disagree with that. Anyone would accept that to whatever extent you should do something you should do it cheaper rather than more expensive. But the real question still remains to what extent should this be the place where we invest most or many of our resources—and here it's not surprising that the U.N. climate panel will tell you: Please spend money in our area. Just like if you ask a malaria expert, should we do something about malaria, he or she is likely to say: Yes, please spend lots of money in my area. That's why we need cost–benefit analyses—to compare the efficiency of spending on climate with spending on all the other areas. There, unfortunately, it turns out that the present-day solutions for climate change are pretty poor compared to all the other things where we can do lots of good in the world.
SA: How do you view your erstwhile companions on this side of the climate change argument?
BL: This debate has a very curious air about it. It essentially means that you end up with friends that you don't particularly like and you alienate a lot of people you really would like to be friends with. In this debate, people keep pulling arguments apart and just use what fits themselves. Publishing Cool It, I had a lot of people write me and say, "What do you mean climate change is real?" So at least I'm pissing off as many people on one side as on the other. All you can do it seems to me is make your argument powerful, persuasive and keep repeating it—and making sure that people hear the whole argument. I'm not saying we shouldn't do anything about climate change, I'm saying we should do the smart things about climate change. I'm not saying that there is a zero-sum game, but whatever money there is we should have a conversation about how best to spend it. And it turns out that with any reasonable amount of money, we can spend it much better on HIV, malaria, malnutrition and all these other issues than we can on traditional ways of dealing with climate change.