The US government says climate change is uncertain and addressing it will hurt the US economy. In contrast, the UK government says addressing climate change will cost 1% of global GDP every year, but that not addressing it will cost up to 20% each year. A Tufts University report estimates the cost of climate change to be $20 trillion, but an older Yale study says Russia’s GDP may actually increase 11% due to climate change. Economists are all over the map when it comes to climate change and the economy.
Climate change will increasingly affect nearly every industry on every part of the globe in at least three ways: directly (i.e. drought, sea level rise), through increased regulations, and through market perception that climate change is a problem. Technologies that address climate change may collectively be the mother of all disruptive innovation, displacing old dogs. Much of the $2 trillion energy industry will need to be figuratively (and literally) rewired. In the auto industry Chinese upstart Chery may use the fuel cell to leapfrog current internal combustion engine technology and ultimately rival Toyota for global dominance. In the airline industry financially weak companies may falter under onerous carbon taxes (possibly giving an opportunity for AeroVironment), and in the building industry, companies could launch new businesses just to deal with retrofitting building, road and rail foundations damaged by changes in the permafrost. Companies like Exxon may find themselves chronically and ultimately possibly terminally weighed down by lawsuits in the US and the EU. The list of opportunities…and pitfalls, is long.
The position of this blog is that science has spoken, now it is time for the rest of us to act, and to act fast. Government has a role, but the comparative efficiency of business makes it better prepared both for mitigation (stopping emissions), and adaptation (dealing with certain inevitability).
Unlike most economic analysis, everything pertaining to climate change starts with science. The problem is that the science is complex, transcends many disciplines, and is frequently ambiguous and uncertain. However, as a growing number of highly qualified scientists predict fewer than ten years before significant irreversible change occurs, we have to act.
Following is a working list of scientific highlights:
Humans are a relatively new phenomenon – Humans in any form have been on the scene for just 4 million years, or less than 1% the age of the 4.6 billion year-old Earth. Civilization has been around a scant 6000 years or 0.00013% the age of the Earth. We need to keep in mind that the Earth and its climate have evolved dramatically without our help.
Humans have survived in a very narrow temperature range – The current average temperature is 59°F. Fifty-five million years ago during the Eocene, a temperature 9°F to 14°F warmer had sea levels at least 70 ft higher. 18,000 years ago a temperature 9°F colder had seas 300 ft lower.
Our planet has many moving parts, all striving to be in equilibrium – Earth is an intricate structure of interrelated but very different components, including the atmosphere, biosphere, cryosphere, geosphere, the hydrosphere and magnetosphere. All are key players in the climate. When one component is altered, the others respond, typically at varying speeds over thousands of years, in search of equilibrium. This causes climate to change.
The greenhouse effect is natural – The greenhouse effect is a natural phenomenon where gasses in the atmosphere allow a certain amount of solar heat to enter but keep a larger amount of infrared heat from getting out. The greenhouse effect also takes place on Venus and Mars. On Earth greenhouse gasses including carbon dioxide and methane total much less than 1% of atmospheric gasses. However, this very small amount creates a life sustaining greenhouse blanket. Without the greenhouse effect, the Earth would be about 60°F colder.
The carbon cycle is also natural and essential – The carbon cycle is a biochemical process which transfers carbon among four reservoirs: the atmosphere, biosphere, geosphere and hydrosphere. Using sunlight for energy, carbon dioxide is photosynthesized into oxygen and sugar glucose, a basic energy source for most organisms.
Carbon dioxide and temperature levels vary together – Atmospheric carbon dioxide and temperature levels over the 800,000 years prior to the industrial revolution closely correlate. Carbon dioxide ranged between 180 and 280 parts per million (ppm) and temperature between 38°F and 58°F. Carbon dioxide is now at 380 ppm. Will temperature follow?
Natural forces have kept the Earth out of equilibrium for billions of years – These forces can be cyclical or one-offs; extraterrestrial or terrestrial. Cyclical forces include the relationship between the Earth and Sun (causing climate change every 100,000, 41,000 and 23,000 years), sunspot frequency, shifting tectonic plates, cosmic dust, volcanoes and even an asteroid like the one that wiped out the dinosaurs 65 million years ago.
Anthropogenic (aka – human) forces are new to the mix – The burning of fossil fuels transfers extra carbon from the geosphere to the atmosphere and in doing so thickens the greenhouse blanket. In the 1990's, carbon dioxide levels in the atmosphere increased to about 1% per year. They are now rising at a rate of 2.5% per year. Carbon dioxide has moved from a high of 280 ppm prior to the industrial revolution to 380 ppm today, to a projected 550 ppm by 2050. We are in an area where humans have never been before.
Feedbacks should not be underestimated – Feedbacks are the Earth’s natural response to natural and anthropogenic forces. Positive feedbacks amplify, Negative ones moderate. An example of a positive feedback includes the melting of highly reflective ice into highly absorptive dark water, which in turn hastens melting. Another is the melting of Canadian and Siberian permafrost and release of methane which had been frozen for 12,000 years. Methane is 23 times as powerful as carbon dioxide. Many scientists are concerned that we have significantly underestimated the roll of feedbacks.
Most change is gradual, but it can be abrupt – During the Younger Dryas 12,000 years ago, naturally warming air crossed a tipping point following a glacial period, which caused an ice damn supporting a large lake over what is now Canada to collapse. This collapse inundating the North Atlantic, changing the freshwater/saltwater mix, causing a major slowdown of a key ocean current. The climate result was a temperature drop of 20°F in about a decade.
This is a working list so that we can start thinking about developing economic and business strategies. We are in this together. If you have ideas, please share them. Next week we will outline the geopolitics of climate change.