UK economist: Arctic burp could cost as much as $220 trillion

Climate economist, Dr Chris Hope, who is one of the authors of the report in 'Nature' which warns that climate change could wipe 60 trillion dollars off the world economy discusses the research and the implications of climate change.

Transcript

EMMA ALBERICI, PRESENTER: Joining us from Cambridge is one of the authors of that report, Dr Chris Hope. Dr Hope is a leading climate economist at Cambridge University and was a specialist advisor to the House of Lords Select Committee on the Economics of Climate Change. 

Dr Chris Hope, thanks very much for joining us.

CHRIS HOPE, CLIMATE ECONOMIST: It's my pleasure. Good to be with you, Emma.

EMMA ALBERICI: Now that $60 trillion figure represents roughly the size of the global economy. Now what does that represent in terms of the impacts for the real economy?

CHRIS HOPE: The $60 trillion is the impact that this extra emission of methane, about 50 billion tonnes of it, it's the extra impact it would have over the whole time period that that methane would stay in the atmosphere and across all the countries of the world. So, methane typically stays in the atmosphere about 10 years or so and its effects would carry on probably for another 30, 40, 50 years after that. So what we're talking about is the extra impacts over that sort of time period, all discounted, brought back to a present day value and the mean value we get for that is about $60 trillion extra, which is roughly the size of the world economy in one year at the moment.

EMMA ALBERICI: So much of the discussion about the Arctic melt has so far focused on the financial benefits of things like the undiscovered oil and gas reserves as well as the lucrative potential of new shipping corridors. How do you account for that in your modelling?

CHRIS HOPE: We can look at all that as well. And all the studies that have been done of that would suggest that the benefits of better - easier shipping routes and easier access to resources might bring benefits of a few billions of dollars to countries that are around the Arctic. So, you can see when you compare that with the impacts that we're talking about, which would be tens of trillions of dollars, the impacts, the bad effects, the damage would be much, much higher, would dwarf any kind of benefit we would get from easier access to resources.

EMMA ALBERICI: What sort of damage are you referring to specifically?

CHRIS HOPE: Well, to give an example, the temperature rise that we're talking about may be getting through the two degree centigrade barrier between 15 and 35 years earlier, would mean that in parts of Africa, which at present agriculture might just be manageable, the temperatures would be possible, the rainfall is just about possible, those areas would no longer be able to have productive agriculture. It would mean that areas of Asia, particularly Bangladesh and other low-lying areas where we would at the moment already see quite devastating floods, those floods would occur more frequently and be more devastating. Those are the kinds of impacts we're talking about, and as we said in our paper, about 80 per cent of those impacts occur in the countries that are least able to withstand them, the developing countries, not the richer countries like Europe, America or Australia.

EMMA ALBERICI: Given the rate at which you say the Arctic melt will occur, is there really anything that can be done to stop or slow it significantly?

CHRIS HOPE: Yes, there are things that can be done. We - when we made our calculation of about $60 trillion worth of extra impacts, that's assuming that this extra emission of methane from the Arctic goes on top of business-as-usual emissions of all our other greenhouse gases like carbon dioxide from power plants and from motor vehicles. If we are going to make a real effort to bring those other emissions under control and maybe reduce them in the way that the scientists tell us we should, then the extra impacts from the Arctic methane would be reduced probably to under $40 trillion worth of damage. So we can certainly reduce the extra impacts by a third or more, maybe even more than that, and there are some other measures that we could perhaps take which are specific to the Arctic, specifically, trying to stop soot being released in area where it's going to land on the ice and lead to the melting of that happening more quickly.

EMMA ALBERICI: How do you rate the likelihood of this $60 trillion catastrophe that you predict?

CHRIS HOPE: It's a mean value from the models that we run. So, it's important to emphasise that it's by no means the most alarmist outcome, it's by no means the worst outcome. What we do is we look at all the possibilities that there might be for just how serious climate change could be, what the climate sensitivity might be, how vulnerable different economies are to climate change, and we run those many, many times through the model. In fact, we run the model 10,000 times to take account of all those risks. And what we find is that it's possible that we might cheat nature and the climate sensitivity might be lower than we think it is and we might just possibly get away with extra impacts of only about $10 trillion over the next 50 to 70 years. There's about a five per cent chance that the extra impacts will be as low as that. But on the other hand, there's a five per cent chance that the extra impacts could be as high as $220 trillion. So, you know, when we take account of all those ranges, all those risks and take the average of them all, we come up with the $60 trillion of extra impact.

EMMA ALBERICI: Now you've used modelling based on the 2006 Stern review of the economics of climate change. One of the main consultants to that review, the climate change economist Richard Toll has called your report alarmingly misleading and alarmist.

CHRIS HOPE: Yeah, we've had quite a lively exchange with Richard on Twitter and elsewhere. I think he has no issue with the estimates that we have of $60 trillion worth of mean extra impacts. He's come on Twitter and said he thinks that the modelling is absolutely fine and that there's no problem with that. What he has some doubts about is just how likely the 50 billion tonne release of Arctic methane is. But of course Richard is not an Arctic ice specialist, he's not a physicist, he's an economist and I think he would be the first to admit that he's not best person to comment on the likelihood of these releases. As part of our team we have Peter Wadhams who's one of the foremost Arctic ice physicists in the world and it's from him that we get the estimates of the amount and likelihood and speed of methane release that we've modelled in this paper.

EMMA ALBERICI: And of course Richard Toll isn't the only one who is criticising your report. Gavin Schmidt, the NASA climatologist, also says he has serious doubts about your work. He's pointing out that the conclusions you've reached he says are not realistic because they come from one-off surveys and poorly-calibrated remote sensing and that there've been in times in history when the Arctic was significantly warmer than it is today and that there's no evidence of methane emissions or concentrations in excess of base pre-industrial emissions.

CHRIS HOPE: Yes, Well Gavin, again, we've had discussions with and it's all part of the healthy debate. He made an erroneous assumption that what we were modelling was something which would lead to methane concentrations about 100 times higher than present day and he's now acknowledged that that was wrong. He made an error in those calculations. What we're finding in our modelling is that the extra concentrations of methane in the atmosphere never go above about five or six times the levels that we have at the present day. So his comments about it being very unlikely that we'll get up to 100 times present-day concentrations, I would entirely agree with, but that was based entirely on a mistake in his understanding of the modelling that we've done. And since then he's come back and said that he's much happier with the kinds of results that we're getting and he will look again at his criticisms.

EMMA ALBERICI: But as recently as a few hours ago he was tweeting that your figures were unrealistic.

CHRIS HOPE: This is stuff that he was doing a couple of days ago when the report first came out and that he has doubts about it could go up to a hundred times present-day levels, as we do. What we believe is that the 50 billion tonnes of methane release from the best evidence that we have is what's there, what's possible to come out from the East Siberian Sea over the next few years. We've modelled it as in our base case coming out over 10 years from 2015 to 2025. But we've also looked in the paper at what happens if that release were to only start in 2025 rather than 2015 or 2035 rather than 2015 and we've looked at what happens if it comes out of a period of 20 or 30 years rather than 10 years. In all those cases, the extra impacts that you get from the methane release comes out to be very close to the $60 trillion that we have in our base case. So we're very happy to talk to anybody about the specific details of the release, but anybody who says that there's a negligible chance of this kind of release coming out over the next 30 years or starting in 2035, I think they are showing classic signs of overconfidence.

EMMA ALBERICI: Now, this area of discussion is always of course contentious, but what I guess is no longer up for debate is the fact that we do need to mitigate the effects of climate change more generally. The Australian Government now wants to move earlier to an emissions trading scheme linked to the European system. What do you think of that?

CHRIS HOPE: Yes. I think that the scheme that Australia has at the moment of a carbon tax is far better than an emissions trading scheme, particularly when you see the problems that there are with the emissions trading scheme in Europe at the moment. The price of the permits in Europe has fallen to below five euros, certainly below 10 Australian-US dollars per tonne. It's at a much lower level than anybody who designed the scheme was thinking it would be at and politicians and policymakers in Europe are making desperate attempts to try and adjust the scheme in a way that will increase the price. Because if we want to have sensible and serious action on climate change, then we need a price on carbon dioxide emissions that is significantly higher than $10 per tonne of carbon dioxide.

EMMA ALBERICI: Is price the only flaw in the European system?

CHRIS HOPE: There are many ways in which a carbon tax is better than an emissions trading system. For instance, one obvious one is that if you have a carbon tax then everybody who is trying to make decisions knows what the price is and they can have some certainty in the planning that they're doing. And as we've seen with the European emissions trading scheme, that's a certainty that you don't have if you have a cap and trade system. The price can go all over the place. And what that means is that people can't plan effectively, they can't change the types of electricity generation that they have, they can't put in place infrastructure that might take years or decades to be fully put in place. And therefore we've seen things like in the UK, the Chancellor of the Exchequer has now put in place a carbon floor price which means that the price of emissions of CO2 in the UK is £16 per tonne whatever the European emissions trading scheme price goes down at. So, US$25 or so per tonne, roughly the sort of levels that you're seeing in Australia at the moment.

EMMA ALBERICI: But specifically on the reason it was initially conceived, has the EU system actually worked, eight years after it was launched? Has it managed to reduce carbon emissions in the European region?

CHRIS HOPE: It's very hard to say because it's very hard to work out what the emissions would've been without the emissions trading scheme, because as you know, we've been through in Europe quite a severe recession as a result of the financial crisis of 2007 onwards and so it's very hard to see what the emissions would've been. But I think most people would say that it has been nowhere near as successful at reducing emissions as we would've hoped it would be and as a sensible carbon tax at a sensible level of maybe $100 per tonne of carbon dioxide would be.

EMMA ALBERICI: And we're running out of time, but I also wanted to ask you because our Opposition conservative Coalition favours a direct action plan involving the buying of emissions reductions through a series of government grants. Is that a system you're familiar with anywhere else in the world and does it work?

CHRIS HOPE: It's a system effectively of giving subsidies to people not to emit pollution. It's a very bad system. The last thing you want to be doing is subsidising people who are doing bad things. What you want to do is use the polluter-pays principle, make sure that anybody who is emitting pollution pays for the damage that that pollution is causing. And the best estimate that we have for the damage that's being caused by carbon dioxide emissions is about $100 worth of damage for every tonne of carbon dioxide that goes into the atmosphere. That's the carbon price you should be setting and it should be set ideally as a carbon tax which is charged on every tonne of emissions and increases over time.

EMMA ALBERICI: Dr Chris Hope, we'll have to leave it there. Thanks so much for your time this evening.

CHRIS HOPE: My pleasure.

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