Paying the price

For the past two weeks, leaders of the world's poorest and richest countries have been arguing about which of them should bear the biggest responsibility for protecting the world from the effects of global warming. One of the hottest topics on the table has been who should contribute the most in aid money to help those nations - often the poorest - which are already suffering from the fall-out of shifting climate patterns.

But there's one environmental economist who says he has a much simpler and fairer solution to the problem: Dr. Ross McKitrick, an economics professor at the University of Guelph in Ontario, Canada, believes carbon emissions penalties should be tied to actual temperatures measured in the Earth's atmosphere - not predicted ones. His theory goes that if global warming turns out to be a reality, penalties will increase year-on-year, providing environmental polluters with strong incentives to cut emissions. Deutsche Welle spoke to Dr. McKitrick.

Deutsche Welle: You have been called a climate skeptic. Would you agree with this?

Dr. Ross McKitrick: I think you can mainly believe the data and be skeptical of the models, or mainly believe the models and be skeptical of the data. I am in the first group. My opinion, based on the work I have done, is that much of what we hear about global warming has been overstated, and the actual effect of greenhouse gases is likely going to turn out to be small. However, I don't think policy should be based on the assumption that I am right or that someone else is right, which is why I think the policy should be based on what actually happens, not what models forecast.

Do you think scientists and environmental lobbyists have wildly exaggerated data about global warming and its consequences?

Environmentalists have grossly exaggerated this issue. So has Al Gore and some other politicians. I think scientists by and large have tried to keep things in perspective, but they often let exaggerations go unchallenged.

If some groups are guilty of scaremongering, what could be their motivation?

Some groups, like Greenpeace and the Sierra Club, have multi-million dollar budgets and large staffs. To keep the money coming they have to keep people scared. There are also big businesses that hope to cash in on carbon trading and higher energy prices. So you have to expect that such groups will favor alarmism. Some scientists truly believe there is a global warming threat, but I suspect the numbers are much smaller than groups like the IPCC claim. There haven't been many surveys of scientists, but the ones I have seen suggest the experts are not as unanimous as is often claimed.

How would linking penalties to measured temperatures work in practise?

It is very simple. We take the two major satellite systems (called UAH and RSS) and average their readings from the mid-troposphere over the tropics, which is the region the IPCC says responds rapidly to changes in greenhouse gases. Then we choose a starting value for the tax and calibrate the tax path to the satellite data. We could say that the tax will go up by $100 per degree, for instance.

Now let's say you are going to build a pulp mill with a 40-year lifetime. You need to decide what kind of emissions tax you will be paying 10 or 20 years from now. So first of all, that creates a market for accurate climate forecasting, which helps weed out the alarmism and hype mentioned above. Right now the models would say the tax will go up by $20-50 per decade, but the data says the trend is more like $10 per decade. So you have to make your decision. Over time we will get better at climate forecasting because the market will reward scientists who improve their models.

After 20 years, maybe the atmosphere does heat up quite a bit, and the emissions-intensive firms will be shutting down or re-investing, while the low-emission firms will have the advantage. But maybe the atmosphere doesn't heat up. Then the tax stays low and we avoid imposing unnecessary costs on ourselves. Either way we get the right outcome, more or less.

Should the Earth indeed get significantly warmer, by what increments do you propose penalties or taxes should be increased? What scale would they have to be on to deter major polluters and to be enough to pay for climate protection programmes, should they become necessary?

The rule could be set based on discussions about what would be the appropriate tax rates under various outcomes. We might decide that if the atmosphere heats up by 1 degree, for example, the tax should reach $100 per ton, and so forth. There has been a lot of work by economists on the social costs of CO2 emissions. I'm not thinking of the Stern Review, which I consider very flawed. But there have been many studies already and if a group of economists and scientists were asked to look at the question of the right increments I think they could come to some agreement.

Why would your proposal be more effective than other plans that are already on the table?

My proposal recognizes that we still have a lot to learn about the climate. Making fixed long term Kyoto-style commitments assumes we will never learn anything over the next few decades about the climate or the greenhouse gas issue. But that's silly. Suppose we get to 2020 and there hasn't been any warming. Surely our policy plans should be able to assimilate that kind of information. So all I am suggesting is that we clarify right from the start how the policy will be adjusted over time based on new data about the climate. My proposal also has the advantage that, in principle, everyone expects to get the outcome they want. People who believe in rapid warming will believe the emissions charge will climb quickly. People who think there's no warming expect the opposite. Under Kyoto-type proposals these groups will never agree and they just fight each other. Under my proposal they have no reason to disagree, they should equally support the plan.

If you could directly address the negotiators at Copenhagen right now in a couple of sentences, what would you say?

I would remind them that they have said they want to base policy on science, yet they have been talking about making plans that are impervious to any new scientific information we might get over the next decade. I would tell them that somewhere in the language of the treaty they need to include the provision that the stringency of any targets or policies they adopt must be tied to the measured severity of the problem. I would caution them against assuming that we know everything there is to know about the climate. It may be a big problem, but it may turn out to be a very small one too. My proposal ensures that we only incur the major costs of climate policy if it turns out to be justified to do so. I would challenge them to come up with a reason why that is not a good principle to build their agreement on.

Interview: Halida Abdalla
Editor: Sean Sinico