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The Cost of Climate Change — Do We Need a Carbon Tax?

by Axios | Updated on 10.15.18

There's $500 trillion of wealth on planet Earth, give or take: Maybe $230 trillion in land and property, $200 trillion in debt and $70 trillion in equity.

The big picture: All of that wealth comes, ultimately, from the planet, and the climate. Specifically, it has come from a stable climate. William Nordhaus points out in his 2013 book "The Climate Casino" that “the last 7,000 years have been the most stable climatic period in more than 100,000 years.” The last 7,000 years have also seen the rise of civilization and the creation of that $500 trillion in wealth. This is not a coincidence.

  • Nordhaus won the Nobel Prize this week, in an announcement that coincided with the release of a hugely important UN Intergovernmental Panel on Climate Change report on what will happen to the world when it gets 1.5°C, or 2.7°F, warmer than preindustrial levels.

The report puts the cost of a 1.5°C increase at $54 trillion, in today's money.

  • You think $54 trillion is a lot? That number comes from research that also says that a 2.0°C increase will cause $69 trillion of damage, and a 3.7°C increase will cause a stunning $551 trillion in damage.
  • $551 trillion is more than all the wealth currently existing in the world, which gives an indication of just how much richer humanity could become if we don't first destroy our planet.
  • We'll be environmentally richer, too. While it's hard to put a dollar value on that, the value of environmental benefits has been rising steadily over time and will continue to do so. Already, we regret environmental destruction in the past and would happily give up a small fraction of our current wealth to undo it.

Where things stand: Human civilization has reached the very end of reaping the dividends from a stable climate. Compared to recent decades, the world in 2100 will have a 13% reduction in crop yields (and those crops will also be less nutritious); it will also have 2.8 billion more people at risk from drought in any given month.

Preventing extreme global warming will be neither cheap nor easy. Just for starters, we will need to spend about $2.4 trillion per year on energy investment between now and 2035, overwhelmingly targeted at renewables.

  • Looking forward to 2050, the required average annual investment rises to $3.5 trillion, including massive new investment in electricity transmission, distribution and storage.
  • That's more than double our current energy investment, most of which is still focused on fossil fuels.
  • Such investment pays noncash dividends. Improved air quality on the 1.5°C pathway, for instance, would lead to more than 100 million avoided premature deaths over the 21st century, over and above the number of lives saved by keeping global warming to 2°C, according to the IPCC report.

The bottom line: Both Nordhaus and the IPCC report make clear that we will have to tax carbon. That incentivizes investment in alternatives, while deliberately making our current carbon-heavy lives less sustainable.

  • It's hard to get to 1.5°C with a carbon tax alone. The lowest figure for doing that in the IPCC report is $135 per ton in 2030, rising to $690 in 2100; the highest estimate is $5,500 per ton in 2030 and $27,000 per ton in 2100.
  • More realistically, a carbon tax of about $25 per ton in 2030 could be combined with tough regulation of energy usage and efficiency, including a ban on new coal-fired power plants.

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(73)
  • Chickie
    Voted Yes
    10/15/2018
    ···

    Since a majority of large industrial companies will take advantage of all the deregulation’s #45 and his administration have created, a Carbon Tax is a must. Although #45 has conceded that Global Warming may be a reality, he still denies that humans are to blame for the dire state of Global Warming. To admit that state of Global Warming is due to humans, would be an admittance that many of #45’s Executive Orders contributed to the quickening speed of the state of the Earth’s time clock. In addition to the carbon tax, I honestly feel for each imposition of the carbon tax #45 should also be debited from his personal bank accounts. Of course, given the recent case filed by the state of NY against #45 for tax cheating, he may find his bank accounts may be a bit anorexic.

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  • Riley
    10/15/2018
    ···

    No new taxes! Why punish us for using something we all need in today's society? Let's be honest the taxes collected would be spent on something irrelevant to carbon emissions anyway. Carbon tax is a scam

    Like (6)
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  • Jeffrey
    Voted No
    10/15/2018
    ···

    Nothing but a wealth distribution scam.

    Like (4)
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  • Vanguard
    Voted Maybe
    last Friday
    ···

    What we need is a carbon dividend rather than a tax so it incentives the people to cooperate by giving the people cooperate more money. It will help the clean energy industries start developing more quickly making them stronger and more capable of holding their own in the national and global markets. This definitely needed in order to protect the environment and people's health.

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  • Brian
    Voted Yes
    10/15/2018
    ···

    This is a relatively simple and less-government-spending way to work towards sustainability and responsible use of fossil fuels. It can be pre-growth if implemented reasonably, and there is no reason not to do it. The US can show leadership in climate balance by taking action with a carbon tax.

    Like (11)
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  • Joseph
    Voted No
    10/15/2018
    ···

    No carbon tax. Taxes are already to high creating more is not going to make us more business friendly.

    Like (4)
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  • Richard
    10/16/2018
    ···

    Do not believe the UN on this. The surface temperature of the earth runs between -40 F to 120 F, except for volcanoes and geysers. Wien’s displacement law says that peak wavelengths for that temperature range are between 9 and 12 micrometers. CO2 absorbs heat between 15 and 20 micrometers, with some small blips between 2 and 6 micrometers, so CO2 is not much of a “greenhouse” gas. But water absorbs much heat at those temperatures. Water vapor averages about 2.5% (0.02500) of the atmosphere. CO2 is 0.011% (0.00011). Hence, 227 times as much water as CO2. Note the large day-to-night temperature changes when it is cloudless and very dry. Earth temperature correlates perfectly with sunspots, not with CO2. Very large temperature changes such as ice ages go with earth axis precession and earth orbit eccentricity changes. See studies by Milankovitch. Antarctica ice is getting deeper, not melting. In historic times Southern Greenland was very green, not like now. Plants like the recent increase in CO2. Scientists don’t vote. They do research. Many objected to being included in the number of “yeas” about CO2 causing warming. See as an example “25 NASA Scientists Question the Sanity of Global Warmists.” Politicians allocate research money for their pet theory. Computer projections used to create the CO2 panic have been very inaccurate. Investors are making a bundle on windmills. Hundreds of these can be replaced by a single power plant.

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  • Deborah
    Voted Maybe
    10/16/2018
    ···

    Restrip mining coal qould be very bad for wv not to mention the us and eventually the world Why not take those areas and hire the workers retrain them to take care of solar energy items and wind. We need to have our state reduce carbon foot print so my grandchildren will be able to enjoy this world as we have then they can continue to work on alterntive energy sources. Trumpites will say yes to whatever he tells them to do you and manchin have both been following right as he commands wake up quit being sheep and do what the voters tell u not the big monies and the obvious most horrible president ever if u want a legacy it should be taking him out of office! If u do not seperate yourselves and choose to continue to be a trumpite then u can jump off the cliff with him! It takes strength hard word honesty and putting the people first to have a legacy worth remembering I have yet to see it from either of you so 2018 is al most here then 2020 is coming....

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  • Robert j.
    Voted Yes
    10/15/2018
    ···

    Carbon tax will speed up transition to renewables and increase investment. Its time has come.

    Like (9)
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  • Andy1
    Voted Yes
    10/15/2018
    ···

    We cannot afford not to. Global climate catastrophe will be far more expensive than the cost of ANY mitigating measure we try, and we need to try ALL of them at this point

    Like (7)
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  • Kodiwodi
    Voted Yes
    10/15/2018
    ···

    Yes. Immediately. Without loopholes and exceptions. As one small step in saving the planet.

    Like (5)
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  • TylerJones
    Voted Yes
    10/15/2018
    ···

    The costs of climate change will be devastating to my and future generations. We urgently need a carbon tax as well as other proactive measures to prevent the worst of climate change.

    Like (5)
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  • Austyboy18
    Voted Yes
    10/15/2018
    ···

    If you pollute the air you should pay for the destruction you’re causing. We should put those tax dollars into renewable energy and cleaning up pollution.

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  • Heather
    Voted Yes
    10/15/2018
    ···

    It is time to make our earth, our collective home, a priority. The only action that will make people care about this is to hit them in the pocket. Any start is a good start. We have a long way to go to right this damage.

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  • HumanMawile
    Voted Yes
    10/15/2018
    ···

    A carbon tax is the least we can do. Money doesn’t matter if we all die or change the world so dramatically that going outside is hazardous unprotected. It’s already going to suck. The question y’all have to answer is “how much worse are we willing to make it?”

    Like (4)
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  • Alexzander
    Voted Yes
    10/15/2018
    ···

    I feel that taxing people on their carbon footprint might help people to reduce how much carbon they emit by driving gasoline powered vehicals and maybe riding the bus or riding their bikes to places instead of a bunch of cars.

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  • Jamie
    Voted Yes
    10/15/2018
    ···

    Corporations get money while destroying the planet, but everyone has to deal with climate change and pollution hurting every living thing on this planet. They need to pay for the damage they are doing or change their ways.

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  • DEGUp
    Voted No
    10/15/2018
    ···

    How does a guy who counts debt as wealth get a Nobel prize?! Debt is borrowing against other wealth to eventually create value. What a sham. We will have to adapt to whatever change occurs, whether we’ve guessed right or not. It will be best if our governments don’t choose the winners and losers, instead leaving it to the ingenuity of individuals who will best know what they need.

    Like (3)
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  • Brian
    Voted Yes
    10/15/2018
    ···

    You pollute you pay pure and simple

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  • cjsmellie
    Voted Yes
    10/15/2018
    ···

    Our scientists have spoken we should be moving towards a greener future, this tax can be used to deter waste and increase proper research

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  • Manuel
    Voted Yes
    10/15/2018
    ···

    Based on the recent UN global warming report, the world has to do something. However, let’s be clear the whole world needs to do something. The US can lead the way by initiating a carbon tax to incentivize a more rapid evolution from fossil fuels, but that’s only half the solution. In today’s global economy, that would put companies operating out of the US at a disadvantage, and we have clearly seen that in today’s world they just move operations to another country. A part of this solution has to be trade tariffs against countries that don’t meet a common environmental standard. We have to use our purchasing power to either force other countries to the standard, or quit enabling them. Moreover, in the past the common environmental standard, hasn’t been common. Less developed nations get a pass, or at least a lower bar. I understand that to get buy in, that may be required, but again be very wary of enabling the problems I just fore mentioned to exist. Companies will serve their bottom line, if there’s a cheaper place to do business they’ll find it.

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  • Damon
    Voted No
    10/15/2018
    ···

    More taxes will not impede corporate environmental policy.

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  • Candace
    Voted Yes
    10/16/2018
    ···

    All polluters have to pay for their damage to repair what they do. That includes us.

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