We Can’t Wait: The Cost of Delaying Action to Stem Climate Change
From severe storms to sea level rise, the United States is already experiencing the impacts of climate change, prompting more policymakers to realize the urgent need to reduce greenhouse gas emissions. But some are still claiming uncertainty about the underlying science of climate change, saying it would be better to wait for more data, analysis and time to act. Many of these climate skeptics ground their arguments in pseudo-science, contradicting the fact that at this point there is no doubt that climate change is real, that it is being caused by our activities, and that it is harming the planet and threatening our livelihoods.
But we do face significant uncertainty about the timing, magnitude, and full consequences of the enormously complex phenomenon of climate change. That uncertainty, however, is an argument for doing more and doing it sooner, not for delaying action further.
Acting now to put in place policies that reduce carbon emissions is like taking out an insurance policy — you pay less today to insure against the possibility of incurring larger costs in the future, either in terms of the increasing expense of dealing with climate change or in terms of even larger, less anticipated tail risks associated with climate change.
This week, the Council of Economic Advisers released a report detailing the costs of delaying action to mitigate the greenhouse gas emissions that drive climate change. Our report finds that the costs of achieving a fixed climate change goal would be 40 percent larger if we waited a decade to take action. And those costs could grow exponentially with a longer wait. That’s because, if we delay action in achieving a fixed set of climate goals, then we have to incur greater upfront costs to make up for the years in which additional carbon pollution was released into the atmosphere. Perhaps even more importantly, delay means losing years of research in effective carbon-reducing technologies, along with bigger investments in older, carbon-intensive technologies, meaning that we would have to adopt more stringent and therefore more costly measures in the future to make up for lost time.
Even worse, the climate targets that are within reach today may become unrealistic if we delay. Instead of higher mitigation costs, the next generation will pay the price through persistent additional economic damages caused by higher temperatures, more acidic oceans, and increasingly severe storms, droughts, and wildfires all resulting from higher greenhouse gas emissions. The report finds that if delay led to stabilizing global temperatures at 3° Celsius above pre-industrial levels instead of 2° Celsius, global output would decline by nearly 1 percent. This is analogous to the United States losing approximately $150 billion of economic output each year.
Even these estimated additional costs are based on best guesses. There is uncertainty and the ultimate costs of inaction could be higher or lower. But this uncertainty should be seen as additional motivation for action, just as when you buy insurance, especially since the costs in the worst-case scenario are enormous.
Higher temperatures increase our risk of hitting climatological “tipping points,” like the potential thawing of Arctic permafrost and the subsequent release of huge amounts of methane, a particularly potent greenhouse gas, which would accelerate global warming. The very worst climatological consequences include the possible melting of the Western Antarctic and Greenland ice sheets, large rises in sea levels, extinction events, and widespread disruption of food and water supplies that could spur a global refugee crisis.
The United States is already acting to reduce carbon emissions. While many thought that emissions would inexorably rise, since 2006 they have fallen in the energy sector by nearly 9 percent. Moreover, while the recession played a role, our analysis at the Council of Economic Advisers finds that half of these emissions reductions were the result of increased efficiency. As economic growth resumed from 2010 to 2013, emissions kept falling by 4.3 percent over those years as a result of phenomenal growth in alternative energy sources. Clean energy research and investment in the American Recovery and Reinvestment Act totaling $90 billion and the President’s vehicle fuel economy standards have also played an important role in this trend. And the President’s Clean Power Plan will help reduce carbon dioxide emissions by 30 percent below 2005 levels and improve air quality in our communities.
All of these actions have substantial net benefits based on our best understanding of the economics and science of climate change. And rather than waiting to address these challenges in the future, taking action today will also save us substantial sums. The United States cannot solve climate change alone. But we are well-positioned to lead the way — and the sooner we act, the sooner the world will join us.
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Jason Furman is the Chairman of the Council of Economic Advisers and John Podesta is Counselor to the President.