Our latest interactive spreadsheet “Cost to Mitigate CO2” is an attempt to present the financial implications of precipitously moving to a fossil fuel free world. We have provided only three variables - how many parts per million of increased atmospheric CO2 correspond to one degree centigrade higher global average temperature, how many gigatons of CO2 emissions correspond to a one ppm greater concentration of atmospheric CO2, and how much it costs (US$) to avoid emitting one ton of CO2.

Our default assumptions are probably the best case, that is, the least expensive case. We assume that 15 gigatons of CO2 emissions will increase atmospheric CO2 by 1.0 part per million, that for every 50 parts per million of increased atmospheric CO2 there will be a 1.0 degree increase in global average temperature, and that a ton of CO2 emissions can be avoided via an expense of $25 - i.e., for 25 billion dollars, we can avoid emitting one gigaton of CO2. And using these assumptions, it would cost 19 trillion dollars to lower the projected temperature of the planet by 1.0 degree centigrade.

The point of this exercise isn’t to suggest that CO2 is actually the culprit, causing the global climate to teeter on the tipping point of runaway catastrophic warming. Our position has always been the following - if there is climate change, and if the climate change is something to be alarmed about, we would be better off reforesting the tropics, refilling our aquifers, and investing in global prosperity to provide ourselves the wealth to adapt, than try to eliminate fossil fuel use. But let’s return to the numbers.

First of all, the cost of $25 per ton to mitigate CO2 is probably significantly understated. Using our example, 15 gigatons of CO2 emissions represents about 50% of total anthropogenic CO2 emissions, which in-turn represents about 50% of all energy production (some anthropogenic CO2 comes from deforestation). The cost to produce 50% of all energy, 250 quadrillion BTUs of energy, from non-fossil fuel sources, can be roughly estimated as follows:

Assuming fossil fuel use will be offset by electricity use, to replace 250 quadrillion BTUs of heat energy we will need to generate 8,350 gigawatt-years of electricity. Using our cheapest known alternative electricity, we will have to deploy wind generators at a cost of $2.5 million per megawatt at full output. With a yield of 35% (the percentage of time there is viable wind), this equates to a cost for wind generated electricity of $7.1 million per constant megawatt, or 7.1 billion per constant gigawatt. Which is to say that using wind energy, we could eliminate annual CO2 emissions of 15 gigatons for a cost of 8,350 gigawatt-years times $7.1 billion, or about $60 trillion dollars. Using this example, therefore, it will not cost $19 trillion, or $25 per ton, to reduce projected global average temperature by 1.0 degree centigrade, but $60 trillion, or $78 per ton (ref. “Wind Energy Update“).

There’s much more, however. What is the service life of a wind generator? Wouldn’t these CO2 emissions be avoided for that entire period? Can’t this cost be amortized over the service life of the wind generator? If so, how much would the annual expenditure have to be to make this transition? And how much expenditure for conventional energy would this new energy offset?

If you expressed 250 quadrillion BTUs of energy in terms of barrels of oil, you would be looking at roughly 50 billion barrels of oil, which at $50 per barrel represents an annual global expenditure of $2.5 trillion per year. Can this $2.5 trillion per year pay for the amortized installation cost, maintenance, and systematic replacement of a $60 trillion windfarm? The answer is no. Even if these units had service lives of 30 years, just paying back the installation cost, with zero interest, would be $2.0 trillion per year. With interest, on a 30 year term, at 5%, an installation cost of $60 trillion would require payments $3.6 trillion per year.

There’s more. One might correctly argue that 250 quadrillion BTUs of fossil fuel energy would not require a one-to-one substitution of electricity, since much of that fossil fuel is used to create electricity at efficiencies of 60% or less, or burned in vehicles at efficiencies of 30% or less. The electric age will usher in a far more efficient use of energy.

This is true, but to consider this also requires us to consider the projected future energy consumption in the world. Energy is essential for economic growth. There are going to eventually be not quite 10.0 billion people living on earth. Currently in the U.S., each person consumes about 350 million BTUs of energy per year. In the European Union each person consumes about 250 million BTUs of energy per year. If there were 10 billion people on earth, each consuming on average only 100 million BTUs of energy per year, we would still have to double energy production on the planet, from 500 quadrillion BTUs per year to 1,000 quadrillion BTUs per year. Sure, population will probably top out at 8.0 billion - run the numbers. The point remains inescapable - energy production worldwide is going to need to increase significantly. And there is plenty of fossil fuel to fill this energy demand until we have perfected truly advanced means of generating energy such as fusion power (read “Fossil Fuel Reality“).

The imperative to dramatically curtail fossil fuel use rests on the precautionary principle. Maybe the earth’s climate isn’t going to catastrophically tip because of CO2 emissions, but we should do it anyway just in case. But there are two sides to this argument. Our position is we should use those trillions to build roads, hospitals, power plants, reforestation, aquifer replenishment, and medical (and other scientific) research. We should nurture free trade, free markets, and entrepreneurship. We should deliver to humanity the universal prosperity that is the destiny of our generation. Then by sometime between 2025 and 2050, we will have created economic abundance, we will have advanced technology, and we will be well positioned to handle whatever the climate may throw at us.

Ring-tailed Lemur (Lemur catta) (Photo: EcoWorld)