The incoming Trump administration has promised dramatic transformations on many vital domestic issues. The best gauge of this development is the fierce level of opposition his policies have generated from Democratic stalwarts. One representative screed is a New York Times Op-Ed by Professors Michael Greenstone and Cass Sunstein, who lecture the incoming president on climate change: “Donald Trump Should Know: This is What Climate Change Costs Us.”
Greenstone and Sunstein have a large stake in the game: During their years in the first Obama administration, they convened an interagency working group (IWG) drawn from various federal agencies that determined that the social cost of carbon (SCC)—or the marginal cost of the release of a ton of carbon into the atmosphere—should be estimated at about $36 per ton (as of 2015). Choose that number and there is much justification for taking major policy steps to curb the emission of carbon dioxide. Greenstone and Sunstein hoped that the working group process would draw on the “latest research in science and economics,” and establish the claimed costs by “accounting for the destruction of property from storms and floods, declining agricultural and labor productivity, elevated mortality rates and more.”
Their effort should be dismissed as a rousing failure, and as an affront to the scientific method that they purport to adopt in their studies. The first error is one of approach. The worst way to get a full exchange of views on the complex matter of global warming is to pack the IWG entirely with members from the Obama administration, all surely preselected in part because they share the president’s exaggerated concerns with the problem of global warming. The only way to get a full and accurate picture of the situation is to listen to dissenters on global warming as well as advocates, which was never done. After all, who should listen to a “denier”?
This dismissive attitude is fatal to independent inquiry. No matter how many times the president claims the science is rock-solid, the wealth of recent evidence gives rise to a very different picture that undercuts the inordinate pessimism about climate change that was in vogue about 10 years ago. The group convened in the Obama administration never examined, let alone refuted, the accumulation of evidence on the other side. Indeed, virtually all of its reports are remarkable for the refusal to address any of the data at all. Instead, the common theme is to refer to models developed by others as the solid foundation for the group’s own work, without questioning a word of what those models say.
The second major mistake in the government studies is the way in which they frame the social costs of carbon. As all champions of cost/benefit analysis understand, it is a mistake to look at costs in isolation from benefits, or benefits apart from costs. Yet that appears to be the approach taken in these reports. In dealing with various objections to its reports, the IWG noted in its July 2015 response that “some commenters felt that the SCC estimates should include the value to society of the goods and services whose production is associated with CO2 emissions.” Their evasive response has to be quoted in full to be believed: "Rigorous evaluation of benefits and costs is a core tenet of the rulemaking process. The IWG agrees that these are important issues that may be relevant to assessing the impacts of policies that reduce CO2 emissions. However, these issues are not relevant to the SCC itself. The SCC is an estimate of the net economic damages resulting from CO2 emissions, and therefore is used to estimate the benefit of reducing those emissions."
In essence, the benefits from present or future CO2 emissions are not part of the story. Yet a truly neutral account of the problem must be prepared to come to the conclusion that increased levels of CO2 emissions could be, as the Carbon Dioxide Coalition has argued, a net benefit to society when a more comprehensive investigation is made. The entire process of expanding EPA regulations and other Obama administration actions feeds off this incorrect base assumption. The most striking admission of the folly of the entire EPA project comes from EPA Chief Gina McCarthy, who has stated that she would regard a decrease of one one-hundredth of a degree as enormously beneficial, notwithstanding its major cost, because its symbolism would “trigger global action.” No cost/benefit analysis would justify wasted expenditures solely on symbolic grounds. After all, human progress on global warming will only suffer if other nations follow our false siren on CO2 emissions, while ignoring the huge pollution that envelops major population centers like Delhi and Beijing.
Unfortunately, support for regulating CO2 emissions relies unduly on a Regulatory Impact Analysis that is worth no more than the faulty assumptions built into the model. These include the EPA’s hugely complicated Clean Power Plan, temporarily enjoined by the United States Supreme Court, that relies once again on the flawed social costs of carbon estimates.
The weakness of the EPA approach is shown by the data that Greenstone and Sunstein cite to support the contention that global warming has reached dangerous levels. They refer, for example, to a Geophysical Research Letter of 2014 that notes the retreat of ice in the West Antarctic between 1992 and 2011. But that one finding has to be set in context, as is done in the 2016 State of the Climate Report prepared by the Committee for a Constructive Tomorrow (CFACT) and sent to the U.N. Climate Conference in Morocco. This more complete account notes that the mass gain in East Antarctica has been at 200 billion tons per year on average, compared to the 65 billion tons, which was offset by substantial gains in ice in West Antarctica, generating a net gain of roughly 82 billion tons per year in Antarctic ice between 2003 and 2008. The upshot: “The good news is that Antarctica is not currently contributing to sea level rise, but is taking 0.23 millimeters per year away.” Overall, the temperature over the Antarctic has been constant for the past 35 years.
No analysis that looks at the minuses can afford to ignore the larger pluses and maintain its credibility. Indeed, for what it is worth, the CFACT report notes that the ice mass in the Arctic is now about 22 percent greater than it was at its low point in 2012. This fact helps explain why there has been no recent change in the rise of sea levels, and certainly none that can be attributed to the relatively modest level of temperature increases in the past 100 years. Recent trends suggest the rate of increase in ocean levels has been decelerating over the last 18 years, during which time there has been a substantial increase in carbon dioxide levels. Yet the 102 different models used by the Intergovernmental Panel on Climate Change (IPCC) are all high in their estimates, by roughly four-fold. As documented in the 2016 CFACT report, there has been substantially no change in overall global temperature over the past 18 years, and the record highs reported are by tiny fractions of degrees that are smaller than the margin of measurement error. Yet the government’s methodology is to look at the models and ignore the data.
Just that was done by the now anachronistic 2009 EPA Endangerment Findings for Greenhouse Gases, which reported on the overall shrinkage of Arctic ice and claimed that the “elevated CO2 levels” were expected to result “in small beneficial effect[s] on crop yields.” The good news on this point seems to be that the increase in CO2 has led to about a 14 percent increase in green vegetation on earth over the past 30 years, as Matt Ridley reported in a 2016 lecture. It is the best of all possible CO2 worlds if the level of arable land increases with minor temperature changes and there are no appreciable changes in ocean levels. Put these numbers together and a revision of the SCC must be made, as it now appears that the net costs of carbon are negative. Further, the revised projections have only strengthened the lower estimates of global warming from elevated CO2 levels.
This basic conclusion is reinforced by other data, easily accessible, that addresses other concerns raised in the Greenstone and Sunstein article. For starters, there has been no recent increase in the level of storms and floods, or the damage that is said to result from them. To the contrary, the trend line has been unambiguously favorable, as the number of extreme events like floods and storms has declined steadily over the past 100 years. Indeed, the last major event in the United States was Hurricane Katrina in 2005, followed by eleven years of relative tranquility in the United States and around the world. This point is critical because one of the constant claims on global climate change is that the system-wide instability has increased these extreme events, even if overall temperature levels have remained constant.
The overall picture with respect to the SCC, then, is the exact opposite of that described by Greenstone and Sunstein, and that change in direction has a serious effect on the success of various legal challenges. Greenstone and Sunstein note that a legal decision in 2008 held that ignoring the SCC makes an administrative rule “arbitrary and capricious” and thus requires its reformulation by the applicable agency. They also reference another 2016 decision that upheld an administrative decision of the Department of Energy that explicitly took into account the SCC. But these judicial decisions have a surreal aura about them. The key statute for these cases was the Energy Policy and Conservation Act of 1975 (EPCA), which was passed in the aftermath of the 1973 Mideast Oil Embargo that followed in the wake of the 1973 Yom Kippur War. The EPCA’s chief finding was that “the fundamental reality is that this nation has entered a new era in which energy resources previously abundant will remain in short supply, retarding our economic growth and necessitating an alteration in our life’s habits and expectations.”
It was on the strength of this 41-year-old statute that the Court in 2008 required the National Highway Traffic Safety Administration to reissue its rules for the average fuel economy standards for light trucks because they failed to take into account the SCC. The ruling is wholly anachronistic today because the revolution in energy technology has obviated the entire factual premise on which the so-called CAFE (corporate average fuel economy) rules rest. Given fracking, energy is abundant. Thus, the SCC has to be reevaluated in light of evidence collected outside the EPA, and summarized above, none of which was taken into account when working within the closed universe of the current set of environmental and energy laws. At this time, it appears that virtually all the EPA rules rest on outdated science.
Greenstone and Sunstein are not alone in their refusal to deal with evidence that undermines their claims. But if the SCC looks to be negative, the Trump administration should act to eliminate the current endangerment finding for carbon dioxide, and dismantle the regulatory apparatus that rests upon its highly questionable estimation of the positive value of SCC. The sorry truth is that the EPA and the regulatory process in the Obama administration show no respect for the scientific method they claim to rely on.
*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.