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Friday, November 28, 2008

An economic analysis of the external value of CO2 shows an unambiguously high positive value: we should be encouraging, not deterring, CO2 emissions

My comment on EPA's proposed rulemaking on CO2 emissions

Emailed this afternoon to: a-and-r-Docket@epa.gov

INRE: Docket ID Number EPA-HQ-OAR-2008-0318

Comment period ends today.

An economic analysis of the external value of CO2 shows an unambiguously high positive value: we should be encouraging, not deterring, production of CO2


Missing from the debate on CO2 is a proper economic analysis of the external value of CO2: the costs and benefits of CO2 that are not captured in market prices. Virtually every economic analysis that has been done starts with the IPCC’s projections of CO2 induced global warming, then looks at the economic costs of that predicted warming. But this is not the correct form for an expected value calculation. A proper analysis of the expected external value of CO2 would look at the external value of CO2 under all the different possible climate outcomes and weight these different external values by the likelihoods of the different climate outcomes. For instance, if natural climate variation is headed in the cooling direction, then the slight warming effect of a slightly thicker blanket of greenhouse gases would be a benefit, which needs to be weighted by our best assessment of the probability that natural climate variation is headed in the cooling direction.

Even in the absence of natural cooling, a modicum of extra warming will in almost every circumstance be desirable. The historical record is clear. During the medieval warm period, when Greenland was green, civilization flourished throughout the world. Growing seasons were longer, there was more water vapor in the atmosphere, and winters, the great killer of people and animals, were milder. The only way that the IPCC is able to cast human induced warming as a threat is through its extraordinary proposition that the miniscule changes to the atmosphere effected by human activity dominate the natural sources of temperature variation. The fact that global temperature stopped rising 10 years ago, and turned sharply downward last year, proves conclusively that human changes to the atmosphere do NOT dominate the natural sources of climate variation, and if the natural sources of temperature variation still predominate, then a little bit of human caused warming will always be beneficial. Planet Earth is naturally a bit on the cold side as far as life is concerned, alternating between hundred thousand year-long ice ages and 10 to 12,000 year-long interglacial's (our current interglacial having begun 11 ½ thousand years ago). If our environment alternates between way too cold and only a little too cold, then the slight warming effect from human produced CO2 will always have a positive external value, whether it is mitigating natural cooling or adding a slight boost to the always insufficient natural warming.

Climate science and economics: the omitted variable problem
The fact of recent global cooling is not the only grounds for dismissing the IPCC’s radical claim that natural temperature variation is now dominated by the human production of CO2. When the source of this claim is examined, it is easily recognized as an old nemesis of the economics profession. Economists have been conducting statistical analyses of complex and uncontrolled environments for far longer than modern climate science has been in existence. We have had to sort through the variety of analytical mistakes and statistical legerdemain that such a science is vulnerable to. Thus it is easy for an economist to recognize that the IPCC is committing one of the classic statistical frauds: the omitted variable.

In any statistical analysis, the omission of any explanatory variable will cause the explanatory power of that variable to be misattributed to any correlated variables that are included. Economists have spent decades weeding out “advocacy statistics” that intentionally leave out explanatory variables so that effects can be misattributed to correlated variables that the “advocacy statisticians” have a vested interest in. A classic example from the field of economics is the statistical analysis of women's pay. It turns out that men on average work quite a few more hours per week than women (who on average spend more hours taking care of the home). In other words, gender is correlated to hours of work (and to other variables that legitimately influence pay). When these explanatory variables are left out, it appears that for men and women of equal qualifications, the men are getting paid more, and such studies have been used politically, with great success, to demand affirmative action for women. Yet when the omitted variables are included, it turns out that equally qualified women who work the same hours as men actually earn substantially more, exactly as we would expect in a society that maintains powerful legal inducements to female advancement in the workplace.

The IPCC is using the same trick as the feminist advocacy statisticians, but on an unprecedented scale, perpetrating the most ambitious fraud in the history of science. There are two competing theories of the small amount of late 20th century warming. The IPCC attributes this warming to the post World War II increase in human production of CO2, which as a greenhouse gas is known to have some heat trapping effect. The competing theory is based on the well documented correlation between solar activity (sunspots) and global temperature. Shaviv and Veiser studied cosmic ray and temperature signatures in the geological record going back 550 million years and found that the level of cosmic rays explains statistically about 75% of temperature variation. Similarly impressive correlations have been found on every time scale, all the way down to the decadal, starting with Christensen an Lassen’s seminal 1991 paper, “Length of the Solar Cycle: An Indicator of Solar Activity Closely Associated with Climate.” The subsequent decade and a half of studies consistently point to solar activity as the primary driver of climate. See for instance “Persistent Solar Influence on North Atlantic Climate During the Holocene,” by Bond et al, 2001 and “Strong coherence between solar variability and the monsoon in Oman between 9 and 6 kyr ago,” by Neff et al, 2001. There are hundreds of such confirmations, according to climatologist Fred singer, who amasses the evidence in his book Unstoppable Global Warming: Every 1500 Years.

Sunspot activity has little effect on the sun’s total irradiative output, but it shifts the Sun's energy spectrum strongly towards the UV and it drives the solar magnetic flux (the solar wind). Because the change in total irradiative output is so small, it has to be the UV shift or the solar wind that is driving global temperature. The precise mechanism is not yet nailed down, but the leading theory comes from Henrik Svensmark. It has long been known that a stronger solar wind shields the Earth from some of the Galactic Cosmic Radiation (GCR) that would otherwise strike our atmosphere. Svensmark theorizes that GCR ionizes the atmosphere, seeding cloud formation. Thus when the solar wind is up, it in effect blows the clouds away, letting more sun through and warming the earth.

What we know for certain is that there is SOME mechanism (beyond the variation in total irradiance) by which solar activity is driving global climate. A high degree of correlation over decades, centuries, millennia, ages, epochs and eras implies a causal relation, and that causality can only go one way. It is not global temperature that is causing solar activity.

Sami Solanki coined the term “grand maximum” to describe the level of solar activity between 1940 to 2000. Given the historical relation between solar activity and temperature, those grand maximum levels of solar activity could easily explain much or all of the small amount of late 20th century warming. What does the IPCC do with this possible explanation for 20th century warming? The only component of solar activity that is modeled by the IPCC is the tiny variation in total solar irradiance, which is pegged at its known tiny level. The UV shift and the solar wind, known to somehow between them explain 75% of all temperature variation on all time scales, are simply and completely omitted. Since CO2 was rising rapidly during the 1940-2000 period of grand maximum solar activity, omission of solar effects from the IPCC model causes the well documented warming effect of solar activity to be misattributed to CO2. The IPCC then magnifies this misattributed warming exponentially by projecting it decades into the future.

In the Spring of 2007 I submitted a comment on the 4th IPCC Draft Report that traces the omitted variable phenomenon through the fourth report. This is the greatest scientific fraud in history, and it is easily, EASILY, recognizable as fraud to anyone who is familiar with the omitted variable problem. Take away the misattributed and then multiplied warming effects, and the expected effect of CO2 on temperature becomes very modest, implying beneficial effects regardless of whether natural variation at a particular point in time is headed in the warming of the cooling direction. That beneficial effect is greater in a time like the present when natural variation is headed in the cooling direction, but because the effect is beneficial regardless of the direction of natural temperature change, the expected external value of CO2 is unambiguously positive regardless of our state of uncertainty about the direction of natural temperature change. The only possible exception is the case where the warming effects of CO2 have somehow come to dominate natural temperature variation, causing warming to feed on itself in some way never seen in the natural history of the planet. But all the prognostications about runaway CO2-caused global warming are blatant statistical fraud. Economists have been throwing this kind of trash in the garbage for many years. The adolescent field of climatology needs to learn from economics and start doing the same.


Alec Rawls
Palo Alto, CA

A more complete economic analysis

I wanted to keep my remarks to the EPA simple, but there's a lot more to be said about the value of CO2. Interestingly, a full evaluation of CO2 exhibits a repeating theme, where risk profiles are consistently lopsided, showing danger only in the cooling direction. I went over these risk factors in some detail in an earlier post:

1. From our current warm-earth conditions, additional greenhouse gases have little capacity to cause additional warming, but could have substantial capacity to mitigate cooling.

Briefly, pretty much all the heat trapping work that CO2 can do is already being done by the CO2 already in the atmosphere, and by the much more abundant water vapor, which traps most of the wavelengths of infrared that CO2 does. The warmer the Earth is, the more water vapor there is an atmosphere, and the more irrelevant additional CO2 becomes.

The situation changes dramatically as the Earth cools. A colder atmosphere does not hold as much water vapor, leaving more heat trapping work for CO2 to do. The colder the climate becomes, the more we rely on CO2 to provide the greenhouse warming that keeps the earth from becoming an ice ball. A doubling of the tiny CO2 component the atmosphere has only a tiny warming effect when the Earth is already warm, but has a magnified warming effect when the Earth turns cold. Good stuff. Sitting on what may be the brink of the next Little Ice Age, we should be trying to raise the floor on the likely cooling by pumping out CO2.

In sum, CO2 presents little downside risk (only a tiny warming effect in the event that natural variation continues in the warming direction), but a relatively large upside risk (possibly significant raising of the floor on global cooling, in the event that natural variation heads in the cooling direction).

2. Warming appears to be self-limiting. Cooling is not (at least not until we are buried under mountains of ice).

A couple different physical processes are at work here. Roy Spencer theorizes that the increasing efficiency of the rain cycle as temperatures warm constitutes a natural thermostat. The more efficient rain cycle means that precipitation more completely removes moisture from the air. These efficient cloudbursts open up a column of dry air in the sky through which the heat produced by precipitation (opposite of the cold produced by evaporation) escapes into space. The warmer the earth gets, the more efficient the rain cycle, the more heat gets vented through cloudbursts, making warming self-limiting.

In contrast , the geological record proves that cooling is not self-limiting, as the Earth regularly descends into hundred thousand year-long ice ages. One of the lopsided mechanisms at work is the albedo effect. Cooling causes increased snow cover, which reflects away more sunlight than bare ground or open ocean does. This causes more cooling, causing snow and ice to grow still further, etcetera.

What makes the albedo effect lopsided in its operation is the fact that as snow and ice descend to lower latitudes, the change in territory covered grows rapidly. Also, the lower latitudes recieve sunlight more directly than the higher latitudes do, so when sun gets reflected away from the lower latitudes, more energy is lost per square mile of snow and ice than at higher latitudes. Cooling causes snow and ice to descend towards the temperate regions, where most of the earth's landmass resides. Thus relatively direct sunlight gets bounced away from progressively larger swaths of the earth's surface, causing the marginal albedo effect to grow rapidly.

By the same token, the marginal albedo effect shrinks as the earth warms. Starting from a warm period like the present, warming causes our relatively mild ice and snow coverage to retreat towards higher latitudes. The amount of territory involved keeps getting smaller, and it only recieves sunlight at a shallow angle anyway, so that the marginal decrease in albedo keeps getting smaller.

3. Specific to this point in time, the likely direction of natural temperature variation is very lopsided in the cooling direction.

Solar activity was at “grand maximum” levels from 1940 to 2000, and ALL the geological evidence points to solar activity is the primary driver of global climate. (There is literally NO evidence that global climate change has EVER been driven by CO2, unless you go way back to before there was plant life to suck the CO2 out of the atmosphere. We know in theory that marginal changes in CO2 should have SOME warming effect, but they are apparently too small to detect.)

From this “grand maximum” level of solar activity, there was nowhere to go but down, and if the past is any guide, that meant it was going to get cold, which is just what is happening. Since 2000 solar activity has dropped off dramatically, with the transition from solar cycle 23 to solar cycle 24 now dawdling along in an extended solar minimum. Concomitantly, global temperatures stopped rising in 1998, and fell dramatically last year.

Solar cycle 24 still could fire up strong, in which case the expected global cooling could be put off, but in all likelihood it is coming. Solar activity has nowhere to go but down from its recent high levels, and all the evidence says that the result is going to be a period of global cooling.

In an expected value calculation, that boost to the likelihood of cooling gets applied as a weighting factor to the extra high value of CO2 in the event of a cooling episode. Warming is more important the cooler gets, and the amount of warming work that CO2 does increase is the cooler it gets (and the less water vapor there is in the atmosphere).

In short, all of these different lopsided risk profiles are getting multiplied together to create a super lopsided risk profile, where down side risks are tiny while upside risks are relatively huge. They still aren’t big, because CO2 effects in general are small. But in relative terms they are gigantic, implying that the positive net external value of CO2 is unambiguously positive.

Actually there aren't ANY effects that have a negative value, given that a modicum of warming is a benefit, even if natural temperature variation is already headed in the warming direction. Unless warming has somehow gotten out of control, warming is good. The more the better. We have NEVER had too much warming. Since the claim that warming HAS somehow gotten out of control are based on the most blatant statistical fraud, is no reason to get any weight to that radical idea.

Not that CO2 has to be all benefits and no costs in order for it to have been unambiguously positive value. That only requires that the benefits unambiguously outweigh the costs. The actual result is turns out to go even further. There are no costs. CO2 is nothing but benefits. And we can throw in a few more too, like the fact that CO2 is plant food. A doubling of CO2 has substantial effect positive affect on agricultural productivity. That the EPA, and governments all over the world, are looking at CO2 as a pollutant that needs to be dramatically suppressed is truly a form of madness.

Disregard for truth creates divorce from reality

That's the theme of this blog. Error theory examines the consequences of failure to think straight, which usually is driven, not by an inability to think straight, but from attempts to gain advantage by avoiding or suppressing inconvenient truths. The global warming alarmists are an extreme example. All of these trained climatologists (those who got their funding from Al Gore) have managed to convince themselves that human economic activity is such a threat to the environment that anything they can do to stop it, no matter how dishonest, is justified. Their conviction that shutting off the oil economy is necessary for saving the natural world natural world has nothing to do with global temperature, which was just a convenient pretext.

The consequence is that by not caring about the truth, they have become divorced from reality. They are committing the greatest scientific fraud in history, and pursuing a course that is utterly destructive to both mankind and the environment.

Global cooling is not just destructive to humanity, but if it proceeds very far, will dramatically shrink the planet’s living space for all of us: plants, animals and humanity. We should be doing everything we can to counter that eventuality, and one of the things we can do, which will do no harm in the event that natural variation turns in the other direction, is to keep on pumping out the CO2.

We don't need to actually subsidize CO2, but the correct tax, we are going to apply one at all, is clearly negative. We should be paying people to produce CO2, In accordance with its unambiguously positive external value.

How the IPCC’s statistical fraud raises the specter of runaway warming

Another point that I left out of my EPA comment just to keep things simple was an explication of how the IPCC's scare-mongering about runaway warming is completely a product of its statistical fraud. To be exact, when the IPCC misattributes the warming effects of solar activity to CO2, it does so by creating a large multiplier effect for temperature “forcings.”

The direct warming effects of CO2 are known from physical principles to be tiny. To translate this tiny warming effect into something that could account for late 20th century warming, the IPCC has to assume that it kicks off a feedback loop. The initial increment of warming causes additional evaporation from the oceans, building up the water vapor content of the atmosphere. Since water vapor is a greenhouse gas, the result is an additional increment of warming, which produces additional water vapor, etc. Estimated statistically, this multiplier effect is whatever it has to be to misattribute solar warming effects to CO2.

This is where the prospect of a runaway comes from. To get any significant CO2 warming effect at all, the IPCC has to concoct this fantasy of a vicious cycle of warming. But it's all nonsense. The best estimate, as Roy Spencer points to out, is that the actual water vapor feedback effect is negative. Warming produces additional water vapor, yes, but this additional water vapor increases the efficiency of the rain cycle, so that every cloudburst more efficiently pumps heat into the stratosphere, the opposite of the heat trapping effect that the IPCC envisions.

The IPCC’s counterfactual picture of feedback effects gets jettisoned if solar activity is properly included in the model. Then the warming effects of solar activity get attributed to solar activity, leaving little or no warming for the IPCC to misattribute to CO2 in the form of exaggerated feedback effects.

Good angle.

The third most important greenhouse gas is CO2, and it does not correlate well with global warming or cooling either; in fact, CO2 in the atmosphere trails warming which is clear natural evidence for its well-studied inverse solubility in water. CO2 dissolves in cold water and bubbles out of warm water. The equilibrium in seawater is very high, making seawater a great 'sink'; CO2 is 34 times more soluble in water than air is soluble in water.
Correlation is not causation to be sure. The causation has been studied, however, and while the radiation from the sun varies only in the fourth decimal place, the magnetism is awesome. As I understand it, the hypothesis of the Danish National Space Center goes as follows:
Active sun → enhanced magnetic and thermal flux = solar wind → geomagnetic shield response → less low-level clouds → less albedo (less heat reflected) → warmer climate
Quiet sun → reduced magnetic and thermal flux = reduced solar wind → geomagnetic shield drops → galactic cosmic ray flux → more low-level clouds and more snow → more albedo effect (more heat reflected) → colder climate
That is how the bulk of climate change might work, coupled with (modulated by) sunspot peak frequency there are cycles of global warming and cooling like waves in the ocean. When the waves are closely spaced, the planets warm; when the waves are spaced farther apart, the planets cool.
Check the web site of the Danish National Space Center.

Cyclicity in the Sun-Jupiter centre of gravity is likely the ultimate cause of the solar magnetic cycle. We await more on that. In addition, though the post 60s warming period is over, it has allowed that great green house gas, water vapour, to kick in with humidity, clouds, rain and snow to provide the negative feedback that scientists use to explain the 4+ billion year history of life on Earth. The planet heats and cools naturally and our gasses are the thermostat.
Thanks for the extra info Dr. Manns. The possibility that solar cycles get shorter when Jupiter pulls the solar system’s barycenter away from the sun is intriguing. If it proves out, we will actually be able to predict climate change.
I think it should be solved as soon a possible because I think CO2 emissions are not good neither for the environment nor us, because it intoxicate us with the particles it has.
I have to say the title of your piece is misleading to say the least. If emitting CO2 is good then we should be burning down the forests as the quickest way to increase emission levels. As you say correlation is not causation.
I would like to argue with the remainder in more detail but alas I don't have the time...
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