In an effort to bolster its case for combating climate change, the White House put out a report Tuesday warning that failing to act could cost the American economy as much as $150 billion a year.
The report, by the Council of Economic Advisers, reviews the current climate economics literature and concludes that delays resulting in warming of 3 degrees Celsius above preindustrial levels would increase “economic damages” by approximately 0.9 percent of global output (or about $150 billion for the U.S., based on 2014 gross domestic product data).
The report also found that mitigation costs would increase on average 40 percent for each decade that targets in any international agreement are delayed. The global community will gather next year in Paris to negotiate a deal to keep the average global temperature rise below 2 degrees Celsius, which many scientists believe is necessary to avoid the worst impacts of climate change. Already, temperatures are up nearly 1 degree.
“Confronting the possibility of climate catastrophes means taking prudent steps now to reduce the future chances of the most severe consequences of climate change,” the report concluded. “The longer the action is postponed, the greater will be the concentrations of CO2 (carbon dioxide) in the atmosphere and the greater is the risk.”
The report appears to be an effort to bolster President Obama’s climate change agenda. Central to that are new rules announced in June from the Environmental Protection Agency that mandate a 30% reduction in carbon emissions at power plants that burn fossil fuel by 2030. The EPA would set the carbon dioxide emission goals, but over the next two years states determine how they would make those cuts.
The new rules have angered many Republicans, especially those in coal-friendly states who have raised concerns that the rules will negatively impact the economy. Some of that anger is expected to be on display this week when the EPA holds public hearings on the new rules in Atlanta, Denver, Washington, D.C., and Pittsburgh.
Robert E. Rubin, former Secretary of the U.S. Treasury and now co-chairman of the Council on Foreign Relations, said in an op-ed in the Washington Post this week that it is wrong to only look at the economic cost of taking action to reduce greenhouse gas emissions.
“When it comes to the economy, much of the debate about climate change—and reducing the greenhouse gas emissions that are fueling it—is framed as a trade-off between environmental protection and economic prosperity,” Rubin wrote. “But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: What is the cost of inaction?”
Rubin noted that, by 2050, $48 billion and $68 billion worth of current property, in Louisiana and Florida, respectively, would be at risk of flooding, while increased temperatures will make it “far too hot” to work outdoors for several months each year and contribute to as many as 65,200 heat-related deaths each year.
The Council of Economic Advisers report also plays up the economic benefits of the new rules. The EPA estimates that it would generate “large positive net benefits” in the range of $27-$50 billion annually in 2020, and $49-$84 billion in 2030. Rules like this would also send a positive signal to the markets, it said.
“The private sector needs to have confidence that there will be a market for low-carbon technologies now and in the future,” the report said. “Public policies that set out a clear and ongoing mitigation path provide that confidence.”