President Trump getting inaccurate and misleading advice about Paris Agreement on climate change
President Trump is due to make an announcement later today about whether he intends to withdraw the United States from the Paris Agreement on climate change, following many weeks of media leaks and fevered speculation.
Whatever he decides, it is clear that the President has been provided with some bogus advice about the Agreement.
It is perhaps no surprise that the usual line-up of climate change ‘sceptics’, such as Dr Bjorn Lomborg, have called on the United States to renege on the international commitments made by the Obama administration.
Dr Lomborg has been promoting inaccurate and misleading claims about the costs and benefits of the Agreement, aided by unwitting newspaper and broadcast editors who cannot detect his use of ‘alternative facts’.
However, it is perhaps more of a shock that the White House Counsel, Don McGahn, has, according to some media reports, wrongly advised the President that the Government could face legal action if it remains part of the Agreement, but does not honour the pledges made in the ‘nationally determined contribution’ submitted by the Obama administration.
One of the options available for the President is to re-classify the Agreement as a treaty that requires the support of the United States Senate.
If President Trump pursues this option, the 52 Republicans, 46 Democrats and 2 Independents in the Senate will move to centre stage.
Unfortunately, there are already signs that some Senators are embracing misinformation about the Agreement.
For instance, Ted Cruz, a Republican Senator for Texas, wrote a commentary for CNN on 31 May which contained many inaccurate and misleading claims about the Agreement.
In particular, he suggested that “the Paris Agreement could obliterate $3 trillion of GDP, 6.5 million industrial sector jobs and $7,000 in per capita household income from the American economy by 2040”.
The source he cited for these figures was a report by NERA Economic Consulting, which was published in March after being commissioned by the Center for Policy Research at the American Council for Capital Formation.
The report purports to present an analysis of the impacts on the industry sector in the United States of delivering its ‘nationally determined contribution’ to the Paris Agreement.
But the authors made several extreme assumptions that render the study virtually useless for any policy-makers who are seriously interested in the costs and benefits to the United States.
The study assumes that the United States meets its 2025 target for reducing annual emissions of greenhouse gases by 26 to 28 per cent by 2025 compared with 2005, as set out in the ‘nationally determined contribution’.
It also estimates the consequences of further cuts in annual emissions to reach 80 per cent below 2005 levels by 2050, as outlined in the ‘United States Mid-Century Strategy for Deep Decarbonization’, which was published by the Obama administration just before the Presidential election in November 2016.
The most fundamental problem with the study is revealed on pages 10 and 11 of the report, where the authors admit to making the astonishingly unrealistic assumption that every other country in the world ignores the targets in their nationally determined contributions and make no further efforts to reduce emissions.
Therefore, much of the calculated costs to the United States economy detailed in the report subsequently arise from high-carbon companies re-locating or losing business to competitors in other countries.
In addition, the study makes contradictory and inconsistent claims about impacts on employment, referring to job losses in some places, but also noting on page 12: “We represent jobs impacts are as [sic] “job-equivalents”…This does not represent a projection of the numbers of workers that may need to change jobs and/or be unemployed, as some or all of the loss in labor income could take the form of lower wages and be spread across workers who remain employed”, and stating on page 115: “The model assumes full employment in the labor market”.
Furthermore, the report states on page 6: “The impacts estimated are based on current technology costs and availability assumed in our model”. This means the study assumes no technical progress on energy sources over the next four decades, and hence, for instance, the costs of low-carbon energy do not continue to decrease.
Page 46 of the report shows that the authors additionally assume no increase in low-carbon electricity generation over the next four decades compared with the baseline scenario, and therefore no increase in economic growth or jobs in the low-carbon sector and no substitution of low-carbon energy for high-carbon energy – emissions reductions are mainly achieved by imposing very high carbon prices that reduce the consumption of coal and energy.
And the study assumes that gasoline remains the overwhelmingly primary source of energy for transport, stating in a footnote on page 49: “The model does not allow alternative fuels to come online beyond the baseline levels. In addition, for the study we did not also allow provision for alternative vehicles, e.g., electric vehicles.” Hence, emissions reductions in the transport sector are mainly achieved by imposing extremely high carbon prices to reduce the consumption of gasoline.
The study makes the unrealistic assumption that there will be no economic benefits to the United States from avoided impacts of climate change or co-benefits from reducing local air pollution from fossil fuels, which currently contributes to the premature deaths of 200,000 Americans each year, according to researchers at the Massachusetts Institute of Technology.
Finally, it should also be acknowledged that increasing numbers of economists recognise that general equilibrium models, including the one used in this study, struggle to project satisfactorily the consequences of and uncertainties around fundamental economic transformations such as the low-carbon transition.
Overall, the report by NERA Economic Consulting provides an inaccurate and misleading assessment of the cost to the United States of participating in the Paris Agreement and honouring the commitments in its nationally determined contribution. Indeed, the extreme assumptions mean this a study of the costs of attempting to achieve emissions reduction targets in some of the least cost-effective ways available.
Hopefully, other Senators will be rather more alert than Mr Cruz to the dangers of embracing such flawed and unreliable information in formulating their views about the Paris Agreement.
Bob Ward is Policy and Communications Director at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. Dr Alex Bowen is a special adviser at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.