Cap-and-trade: how much would the legislation tame global warming?

NCAR climate modeler Tom Wigley runs several scenarios for CEJournal to find the answer

How big an impact would the cap-and-trade legislation now being marked up in a House committee actually have on climate change, assuming that the legislation’s goal of a roughly 80 percent reduction in greenhouse gas emissions were applied globally? 

That was the question I posed to climate modeler Tom Wigley of the National Center for Atmospheric Research in an email message last week (before all of the precise details of the cap-and-trade legislation were known). Wigley kindly used a model to answer my questions, and the results have convinced me that if the complex scheme actually were to work globally — a very huge if — the impact on climate, and particularly sea level rise, would be quite significant. And this is true despite the very significant delay in reducing emissions of greenhouse gases that is almost certainly built into the Waxman-Markey legislation. So if you’ve been following the debate about a carbon tax versus cap-and-trade, you may be interested to see the numbers that Wigley came up with.

But first, some background: 

The American Clean Energy and Security Act now being shepherded through the House Committee on Energy and Commerce by Henry Waxman and Edward Markey actually contains many provisions related to clean energy, energy efficiency and incentives for industry. To tackle global warming specifically, the legislation proposes a very complex system for capping emissions of greenhouse gases, and then using market forces — the trade provision — to give industry flexibility in meeting the caps. (For a more detailed discussion of the mechanism’s complexity, go here.)

But in a compromise with Democrats from coal states, Waxman agreed to give away 85 percent of greenhouse gas emission permits in the cap-and-trade system for free until about 2020. President Obama had called for permits to be auctioned off for a price right from the get go. The goal: to immediately put a price on carbon. This is seen by many economists as essential to weaning us from fossil fuels.

So in the end, how much of a reduction in global warming would the legislation make? Tom Wigley of NCAR ran several scenarios for me: no action; an 80 percent reduction in  carbon dioxide emissions by 2050; the same scenario but adding reductions in additional greenhouse gases, and taking into account one very significant feedback phenomenon; and the delay in emissions reductions that almost certainly will arise from the free give-away of pollution permits.

Before I describe the results, some caveats and explanations:

First, why do I think it’s fair to assume that there will be little or no reduction in emissions until there is a significant cost to emitting carbon? The Europeans initially gave away their permits under a cap and trade system, and the results were less than salutary. Under the legislation, at least as I understand it, there will be very little cost imposed on carbon until at least 2020. And to my mind, no market signal = little or no incentive to reduce emissions. 

Second, the delay scenario that Wigley ran for me was based on an 80 percent reduction in carbon dioxide emissions from 2000 levels, not 2005 levels. (I don’t think this makes a big difference.) I also need to point out that the delay scenario did not include a reduction in all greenhouse gas emissions. (It only includes carbon dioxide.) I’ve asked him if he could run the model including a reduction across the board, and I will post those results once I hear back from him. 

Third, an important caveat from Wigley: “All runs are ‘best guess’ only — i.e., they use central values of all the model parameters (most importantly a climate sensitivity of 3 degrees C). This hides a lot of uncertainty, of course.”  In other words, the temperature could increase more or less than indicated by these model runs. 

So, here are the results, first in graphic form and then a summary: 

Reference case — business as usual: If we do nothing to rein in emissions, temperatures would climb 2.77 degrees C by the year 2100, and they would continue to rise steeply therafter. (For example, by 3.83 by the year 2150.)

In their chapter in the most recent IPCC assessment, Steven Schneider of Stanford and his colleagues tackled the issue of what we would risk from various temperature increases. Among their conclusions was that a temperature rise above 2 degrees C over 1990-2000 levels (we’re currently at 0.74 degrees C), “would exacerbate current key impacts,” such as more human deaths, melting of glaciers, and increases in the frequency or intensity of extreme events, Schneider says. A high confidence level was assigned to these predictions.

These are the negative impacts that Waxman and Markey hope to avoid with their legislation.

Case 1 — reduce CO2 emissions 80 percent by 2050: In this scenario, just CO2 is reduced, and the model does not include the impact of a concomitant reduction in sulfur dioxide pollution. (I’ll discuss that in the next scenario.) Again, if we assume the 80 percent cut applies globally, temperatures would rise just 1.08 degrees C. That would mean 1.69 degrees of warming avoided.

Case 2 — reduce all greenhouse gas emissions 80 percent by 2050, as in Waxman-Markey: If the 80 percent reduction in greenhouse gases were applied globally, greenhouse gases would stabilize at 450 parts per million. And by 2100, temperatures would rise by just 1.02 degrees C. That would mean 1.75 degrees of warming avoided. 

One interesting side light to this model run is that includes a reduction in emissions of sulfur dioxide, a pollutant produced by fossil fuel burning — particularly combustion of coal. Sulfur dioxide pollution forms aerosols in the atmosphere, which act like little mirrors, bouncing solar radiation back into space. In this way, they tend to counteract global warming. If we were to cut back on coal burning to reduce CO2 emissions, we would also reduce some of this shading effect. As a result, according to Wigley’s model, temperatures would rise more quickly than they would otherwise. But a little before 2100, temperatures actually start to decline once the impact of reduced greenhouse gas concentrations in the atmosphere really begin to be felt. 

Case 3 — delay reducing greenhouse gas emissions until 2020: In this scenario, there are no reductions in CO2 emissions until 2020, just as would likely be the case with Waxman-Markey. Then the model assumes a linear drop in CO2  from 2020 to 2050. (But not in all greenhouse gas emissions — again, I will update with that scenario soon.) By 2100, temperatures would rise 1.08 degrees C. That’s 1.69 degrees of avoided warming — just a little less than if there were no delay in implementing reductions in all emissions. 

In other words, if the Waxman-Markey cap-and-trade system were implemented globally just for CO2, by 2100 the reduction in global warming would be quite significant compared to the business-as-usual scenario. 

Here’s how greenhouse gas concentrations would look with the difference scenarios: 

The CO2 and temperature numbers alone don’t really show how an 80 percent reduction in emissions would impact people. That’s because a global average temperature tells us very little about what each of experiences where we live. Sea level rise is, of course, one of the most significant projected impacts of global warming, and it hits many tens of millions of people right where they live. So what impact would reducing emissions have on that? Tom Wigley helped answer that question as well. First, a graph, then a description: 

 Reference case: If we do nothing, sea level is projected to rise 32.67 centimeters by 2100.

Cases 1 through 3: With an 80 percent cut in GHG emissions, and with or without the Waxman-Markey delay, sea level would rise would clearly be much lower by 2100 — about 13 to 14 centimeters lower than if we did nothing. 

But the real impact on sea level rise actually turns up later. And in this case, there actually is a significant cost to delay: 

• If we do nothing to rein in emissions, sea level will increase by nearly 75 centimeters by the year 2200. 
• With an 80 percent cut in all greenhouse gases — and no delay — sea level rise is held to 27.77 centimeters.
• With the delay in cuts to emissions built into Waxman-Markey, sea level rises more. But most important, the gap between the delay and no-delay scenarios widens significantly over time. 
• Even so, sea level rises much less significantly with Waxman-Markey than in the business-as-usual scenario (assuming, again, it is implemented globally). 

So is the delay in reducing emissions a price worth paying to get us on the road to a carbon-free future? If you think cap-and-trade will actually work as advertised, then maybe so. But there are good reasons to question whether it will actually work. Many have argued that a simpler carbon tax would be preferable. Yale’s Environment 360 ran an overview of the issues here. Keith Kloor posted on the debate here. And Dave Roberts covered it here.

On the other hand, it looks like if anything passes — and that is a huge if just by itself — it will be cap-and-trade, not a carbon tax. So if you’re wondering what impact it might have on climate, these numbers should give you some guidance. But again, caveat emptor: these model runs hide quite a bit of uncertainty. Your mileage may vary.