Roper: Climate Plan’s Costs Are Real. Savings, Not So Much

YouTube video clip of Bill Murray in film “Caddyshack”

By Rob Roper

Listening to the presentation to the Climate Council on the cost savings they are claiming will be associated with the Climate Action Plan (CAP), I was reminded of the classic scene from Caddyshack where Bill Murray’s character tells the story of his compensation for a round with Dalai Lama: “Oh, there won’t be any money,” says the Lama, “But when you die, on your deathbed you will receive total consciousness.”

The reason for my cinematic flashback is that the “savings” being promised by the Climate Council if we spend the multiple tens of billions of dollars necessary to implement their programs are largely based on something called “The Social Cost of Carbon.” What is this? Well, like Murray’s caddying fee, there won’t be money.

The Social Cost of Carbon is a made-up calculation that attempts to affix a price to the negative economic impacts of releasing a ton of CO2 into the atmosphere by burning fossil fuels. It is highly subjective. Under the last three administrations it has been officially pegged at $43 a ton (Obama) $3–$5 a ton (Trump), and $51 a ton (Biden). There are as many calculations as there are organizations interested in such things.

According to an explanation provided by Stanford University, “When calculating the social cost of carbon, the main components are what happens to the climate and how these changes affect economic outcomes, including changes in agricultural productivity, damages caused by sea level rise, and decline in human health and labor productivity…. For example, many studies now show very clearly that our productivity at work declines quickly as the temperature gets hot.”

Perhaps you see the problem here: in order to realize the “savings” promised by the Climate Action Plan that come from the Social Cost of Carbon, the plan would actually have to stop temperatures from increasing, stop sea levels from rising, etc. And we know for a fact that the Vermont Climate Action Plan won’t do this. Ergo, the plan doesn’t actually realize any such savings.

Referring again to the Stanford example, if rising temperatures account for a loss in labor productivity and temperatures still go up despite our “investment”, which they will, we won’t see any savings on labor productivity. Such “savings” should not be counted in an honest cost/benefit analysis – but they are. And this is dishonest.

Now, the case can be made that some actions being pushed or mandated under the CAP could result in some savings over time. Installing solar panels on your roof may, depending upon an individual’s situation, over the lifetime of the panels reduce one’s overall electric bill. (Whether or not it’s government’s role in a free country to mandate such decisions is another argument for another day). But even by the Climate Council’s own generous math, savings from these types of activities add up to less than the costs of the programs.

That’s where the Social Cost of Carbon comes in! Calculated by the Climate Council at $146/ton (because why not?) it adds like a giant dollop of whipped cream on top of the brussels sprouts over $6 billion in “savings” to the overall calculation. And the total savings being promised by the CAP over a thirty-year period: $6.4 billion. Nice coincidence!

The up-front costs of the CAP are very real. Big subsidies for electric vehicles, charging stations, weatherizing homes, expanding wind and solar, and a big new state bureaucracy to manage it all that will have to be paid for with high taxes on things like home heating fuel, gasoline and diesel. We can put numbers to this, and they are very big numbers that will have to be paid for now and in the very near future.

But even in a best-case scenario, any savings form this “investment”, real or imaginary, won’t show up until the back end of the plan near 2050, if they show up at all. Cost estimates for implementing new government programs such as those prescribed in the CAP rarely come in under budget, and with labor, supply chain issues, and inflation in play it is a safe bet that the cost estimates put forward in the CAP are lowballs, perhaps very low.

So, when you hear advocates saying that the Climate Action Plan will “save Vermonter’s money” this is what they’re basing their claims on – a made up number attached to a fuzzy concept called the Social Cost of Carbon. Bill Murray seemed happy with his ethereal return on investment. Personally, I’d rather see actual cash.

The author is a member of the Ethan Allen Institute board of directors. He lives in Stowe.

Categories: Commentary

7 replies »

    • Whereas oil and gas are designed to enhance the well-boing of the poor – like Exxon Mobil, Chevron, the Saudi Royal family, etc.

      Good point, and I am glad to see that someone has the courage to stick up for the Saudis as they are much-maligned these days.

      • You would be riding your bicycle to work, that is if you have to work, even in winter if it wasn’t for those companies. Except, you would have an uncovered seat and no tires because plastic for the seat cover and tires use petroleum byproducts. If you are a trustfunder who moved here to save the planet, transportation and heating fuel doesn’t concern you, your virtue signaling will get you points with the climate colt. Your collection of motorcycles would sit idle with no fuel, your life would continue to be miserable and the new normal will eventually get to you too. You will eventually arrive at the Karma Cafe. You will be treated to a dish from the menu but you won’t be able to chose what it is! You don’t understand that petroleum is the energy that moves the world and supplies the products you use every day. I don’t want to live in your world and free Americans don’t have to.

      • I prefer (when pressed) to enrich the elite with the lowest bid, right now it is those you have mentioned. An electric car (which may not be chargeable during this winter’s predicted blackouts) is more environmentally damaging when ALL impacts are factored in. Solar panels may break even on your electric bill when they’re finally paid off just about the time they’re spent and need disposal…currently with no plan in place for how to do it. The manufacture (not assembly) is environmentally prohibitive in most of the developed world. The green new deal is only green for the newest breed of industrialists who stand to profit from the new mandates. Same game, different players, new era.

      • Guzziman: Your persistent citation of false dichotomies is telling. For one thing, Sukey Watson could, more likely, be referencing the nine thousand or so relatively small American businesses that extract the majority of fossil fuels in the U.S. …. those fracking for natural gas and actual oil extraction that not only make us energy independent but take power away from the world’s totalitarian culprits, China, Russia, and Saudi Arabia for example. Never mind the prospect of using our local, short-term profit sources to fund a vibrant cost-effective economy and, at the same time, the alternative energy sources other than the quixotic solar and wind industries referenced here. Hydrogen, new generation nuclear fission, even nuclear fusion. Where is consideration for Hydro Quebec’s green, sustainable, and inexpensive power available to us. These energy technologies are victim to your myopic vision. Correct me if I’m wrong – but you always seem to see the worst in everything.

  1. Look to Europe right now and see how their “green energy” is working out for them. Appears in France, Germany, Britian, et al, the citizens are ready to burn down the EU government to keep warm.