In my recent post here I wrote about a ZDF story on an Expert Assessment Report, led by Prof. Dr. Kai Konrad of the Max Planck Institute and a team of finance researchers, on Europe’s and Germany’s climate policy. The report is titled:
Note: The report itself is not a product of the Max Planck Institute, as some have mistakenly believed. The lead author is Dr. Kai Konrad of the Max Plank Institute, who is also vice chairman of the Finance Ministry’s Scientific Advisory Board, the actual producer of the assessment report. The members of the Scientific Advisory Board participating in the expert assessment are listed below at the end of this post.
You’ll recall the assessment report was so damning that the Finance Ministry took it down from its website. When you read the following summary and conclusion you’ll see how it completely contradicts the government’s current policy, which is to prevent CO2 emissions and to subsidise alternative energy. This is a finding that was embarrassing for the government.
Note that the authors of the assessment report take the position that CO2 is bad for the climate, i.e. the more CO2 that is produced, the worse the climate will become. They are finance experts after all, and not climate experts – obviously.
I’ve translated the all-important Part 4, Summary and Conclusion (bold print is my emphasis), which is as follows:
4. Summary and Conclusion
Economic and political action on global warming can be categorised under two kinds of measures: 1) measures that aim to slow down global warming (prevention) and 2) measures that aim to react to global warming (adaptation).
With adaptation measures, the beneficiary and the cost-bearer are the same. Decisions concerning many adaptation measures can thus be decided by the private economy. In the cases where this is not possible, the extent of adaptation measures can be handled by the local, regional or national politics.
But when it comes to measures for preventing CO2 emissions, the circle of beneficiary and the cost bearer splits apart. A meaningful reduction in emissions through uncoordinated, single country initiatives cannot be achieved. Effective emissions reduction with respect to global climate protection can be accomplished only through global coordination. In the past, global coordination has proven to be difficult and hardly successful. Despite various international attempts and considerable use of resources on the part of some countries, a worldwide climate policy has not been reached.
The theory of international public good offers an economic explanation as to why the international climate policy has not reached its ambitious goals up to now. That’s why suspicions that the current efforts will not lead to any success are being confirmed.
This assessment yields the following results:
• The uncoordinated, single-country go-it-alone approach leads to unachievable emissions reductions. Many polluters hardly participate in avoiding emissions. It has to be expected that only the more populated, economically strongest, environmentally aware and climatically threatened countries will make any notable efforts to undertake emissions reductions.
• Efforts by single countries to act as a leader in climate protection and to influence climate policy by imposing emissions reductions on itself can cause other countries to slack off in their own climate-policy efforts rather than intensifying them. As a result, taking a leadership role in climate policy leads to, as a rule, higher costs in that country without assuring any decisive improvement in the global climate.
• Special efforts and leadership initiatives made by individual countries also do not necessarily improve the situation for a global climate agreement, but rather can actually imperil an agreement. Diminishment of remaining benefits arising from worldwide climate agreements make the realisation of an agreement more improbable.
• Also unfavourable are agreements among groups nations of the international community of nations. Such agreements greatly burden the participating countries economically, and serve to benefit the countries that do not participate. Despite the high costs, the positive climate effects of such group-nation agreements can end up being very small. Moreover, coalitions of nations can actually worsen the chances of an international worldwide climate treaty.
However, in no way do these arguments speak against continuing international negotiations. Effective international climate agreements are urgently needed. The arguments listed above do, however, speak against going it alone nationally, taking a leadership role, in preventing CO2 emissions.
When it comes to implementing measures for adaptation to climate change, there are no problems like those listed above. Measures for adapting to climate change do not have the problems that measures for prevention have. Adapting to climatically related environmental changes do not have the “free-rider” problem, where one incurs the costs and the other reaps the benefits. The circle of beneficiary and cost-bearer are mutual when it comes to adaptation measures. The strategy of adaptation thus offers opportunities for a unilateral, cost-effective national climate policy in a wide variety of impact areas (e.g. against flooding or storm damage). At the same time, such a policy augments the chances of an international emissions limitation.
• The adaptation strategy leads to an immediate climate cost reduction in one’s own country, independent of international agreements.
• If a country invests in national adaptation measures, it also improves its bargaining strength in negotiations for a climate treaty.
• When all countries take up adaptation strategies, it results in – when compared to an ideal, worldwide combination of both instruments – a strain that in the end favours adaptation instead of prevention. The economic-political result would be worse than the one from a non-existing prosperity-maximizing world government, but better than the result that would arise from foregoing an adaptation strategy.
• Without adaptation measures, more prevention measures would have to be undertaken due to reasons of precaution and in view of the uncertainty of climate impacts from irreversible CO2 emissions. Adaptation buys governments time to more precisely research climate impacts.
The way for some especially motivated industrial countries to use comprehensive unilateral early contributions and subsides for alternative energy is misguided with regards to a timely, binding and adequately scaled climate policy. Even worse, it is to be feared that this policy not only has been and is very expensive for Germany and Europe, but also that it is an obstacle to reaching an effective worldwide climate policy. In view of the fact that emissions reduction is an internationally public good and in view of strategy effects, the Advisory Board recommends options for adaptation to climate change be examined and pursued more vigorously by single countries than in the past. The strategy of adaptation does not only ensure immediate adaptation to climate change, but also increases the chances for an effective international agreement to reducing emissions.
Directory of members of the Scientific Advisory Board at the Federal Ministry of Finance
Prof. Dr. Clemens Fuest (chairman)
Prof. Dr. Kai A. Konrad (vice chairman)
Prof. Dr. Dieter Brümmerhoff
Prof. Dr. Thiess Büttner
Prof. Dr. Werner Ehrlicher
Prof. Dr. Lars P. Feld
Prof. Dr. Lutz Fischer
Prof. Dr. Heinz Grossekettler
Prof. Dr. Günter Hedtkamp
Prof. Dr. Klaus-Dirk Henke
Prof. Dr. Johanna Hey
Prof. Dr. Bernd Friedrich Huber
Prof. Dr. Wolfgang Kitterer
Prof. Dr. Gerold Krause-Junk
Prof. Dr. Alois Oberhauser
Prof. Dr. Rolf Peffekoven
Prof. Dr. Dieter Pohmer
Prof. Dr. Helga Pollak
Prof. Dr. Wolfram F. Richter
Prof. Dr. Ulrich Schreiber
Prof. Dr. Hartmut Söhn
Prof. Dr. Christoph Spengel
Prof. Dr. Klaus Stern
Prof. Dr. Marcel Thum
Prof. Dr. Alfons Weichenrieder
Prof. Dr. Dietmar Wellisch
Prof. Dr. Wolfgang Wiegard
Prof. Dr. Berthold Wigger
Prof. Dr. Horst Zimmermann