What is “spontaneous decarbonization”? In order to estimate the costs of reducing carbon dioxide levels, among other things, IEA estimated carbon dioxide emissions over time, technological change, and improvements in energy efficiency. Improvements in technology and energy efficiency reduce the amount of energy (and carbon dioxide emissions) required to produce the same amount of work. For example, from 1990 through 2000, the U.S. used 1.6% less carbon dioxide per dollar of GDP per year. That’s a pretty impressive improvement.

By improving our energy efficiency through technological innovation, the economy of the U.S. has experienced some “spontaneous decarbonization.” You can call this spontaneous decarbonization because it happened without programs like cap-and-trade or a carbon tax.

Why do estimates of the rate of spontaneous decarbonization matter? Cost estimates such as IEA’s and the IPCC’s (the U.N.’s Intergovernmental Panel on Climate Change) assume that the vast majority of future carbon dioxide reductions come from spontaneous decarbonization and not programs like cap-and-trade. In an article in Nature , Roger Pielke Jr., Tom Wigley, and Christopher Green calculate that in the IPCC’s reference scenario, 77% of the carbon dioxide reductions needed to stabilize atmospheric carbon dioxide levels at 500 parts per million would come from spontaneous decarbonization of the economy.  Only the remaining 23% would require explicit policies such as carbon taxes or cap-and-trade.

What if estimates of the rate of spontaneous decarbonization are wrong? Roger Pielke Jr., at the Center for Science and Technology Research at the University of Colorado, Boulder, calculates that if we don’t assume there will be spontaneous decarbonization, reducing carbon dioxide concentrations in half will cost between $255 and $545 trillion. This is far more than IEA’s estimate of $45 trillion.

An Unpredictable Future. If one looks at the decarbonization of the U.S. economy, it seems safe to project sponteanous decarbonization into the future. But this might not be the case everywhere in the world or for the world as a whole. According to Pielke Jr., Wigley, and Green:

the IPCC assumptions for decarbonization in the near term (2000-2010) are already inconsistent with the recent evolution of the global economy (Fig. 2). All scenarios predict decreases in energy intensity, and in most cases carbon intensity, during 2000 to 2010. But in recent years, global energy intensity and carbon intensity have both increased, reversing the trend of previous decades.

Figure 2 above is from Pielke Jr., Wigley, and Green’s paper in Nature. It shows that the observations from 2000-2005 buck the global trend of lower energy intensity per unit of GDP.

Will this continue into the future? No one knows. If it does, it will cost far more than IEA’s estimate of $45 trillion to cut carbon dioxide levels in half. Because the future is unpredictable, we should pay close attention to Pielke Jr, Wigley, and Green’s conclusion:

There is no question about whether technological innovation is necessary—it is. The question is, to what degree should policy focus directly on motivating such innovation? The IPCC plays a risky game in assuming that spontaneous advances in technological innovation will carry most of the burden of achieving future emissions reductions, rather than focusing on creating the conditions for such innovations to occur.

In her weekly radio address on Saturday, U.S. Senator Barbara Boxer (D-CA) urged support for the carbon “cap and trade” bill (S. 2191, the Lieberman-Warner Climate Security Act), on which the Senate begins debate today.  She urges support, not only on the basis that it’s needed to save the Earth as we know it from the evils of carbon dioxide, but because it “will create millions of jobs” and “put us on the path to energy independence.” 

 Senator Boxer’s claims mirror the common refrains of those who support government intervention to limit greenhouse gas emissions. In the first part of the refrain, proponents exaggerate the state of knowledge about our complex climate system and the nature of the problem: “…the overwhelming majority of scientists say that the earth is in peril if we don’t act now…40 percent of God’s creatures could face extinction…unchecked global warming will lead to severe conflict and war as droughts, floods and rising sea levels create huge numbers of desperate refugees.”

As the refrain continues, proponents proclaim that taxing economic activity via a cap on greenhouse gas emissions will actually create jobs, rather than harm the economy.  And finally, the refrain ends with the assertion that increasing the cost of using America’s most abundant energy source (coal) will actually increase our energy independence, not our foreign dependence.

Of course, the problem with this refrain is that it ranges from the hyperbolic to the absurd. For example, while many scientists are indeed concerned about the atmospheric concentrations of greenhouse gasses, the Earth’s climate system is complex and not completely understood and the critical role of features of the system (i.e. clouds) remain a mystery.

The claims of economic growth and energy independence, however, strain credulity. Proponents of Lieberman-Warner act as if this Bill should have been considered as part of an economic stimulus plan. Consider, however, that two federal agencies, the EPA and EIA, and a host of think tanks and academic institutions, have examined the economic ramifications of S.2191. While these models are all different in terms of assumptions and methodology, they are all the same in one respect: all clearly argue that S.2191 increases the cost of consuming energy — whether it is in the form of electricity, natural gas, gasoline, or diesel – and thus, results in lower economic growth and job loss. The fact that cap-and-trade mandates cost should surprise no one – such proposals only work if they impose significant cost; it is the increase in cost of using energy that brings about the change in behavior the authors of such mandates are seeking. 

Similarly, the energy independence argument runs counter to common sense: this bill creates huge disincentives to the use of the United State’s most abundant energy resource (coal) and, of course, does nothing to open America’s vast store of petroleum and natural gas resources which are currently off-limits to production. In fact, a portion of this bill, the “low carbon fuel standard” actually threatens the use of oil from our number one supplier – Canada.

Supporters of Lieberman-Warner would have one believe that up is down; that we can have our cake and eat it too; that increasing the cost of something makes it cheaper. Do not be fooled, however.  This bill would increase the cost of using our most prevalent forms of energy: coal, natural gas and petroleum. These cost increases will be felt by every consumer of energy in this country – families, farmers, small businesses, and manufacturers – and will result in lower economic growth and fewer jobs.