- Cost of '20/20/20' Policy will be in the region of €210 billion annually
- Benefits add up to just €7 billion
- Raising the target to 30% would cost €450 billion a year
The Copenhagen Consensus Center has released new research revealing that the European Union’s official ‘20/20/20 policy’ will cost hundreds of billions of Euros but yield only tiny benefits.
The policy aims to cut 2020 greenhouse gas emissions 20% under 1990 levels and ensure there is 20% renewable energy by 2020.
Prominent climate change economist Professor Richard Tol undertook a cost-benefit analysis, using some of the best economic models, of both the 20/20/20 target and of a tougher 30% target that has been advocated by the European Commission.
The EU recently stated that it would cost just €48 billion a year to meet its emissions target.
Professor Tol’s research shows this figure to be implausibly optimistic. Using the average of the best-regarded economic models, he shows that the net cost to Europe will be in the region of €210 billion annually. This corresponds to 1.3% of GDP.
Professor Tol assessed the net economic benefits of this policy by working out the cost of the overall damage that it will allow us to avoid. Using the conventional estimate that 1 tonne of carbon dioxide is likely to cause about $7 of damage, he found that the total benefits of the EU policy add up to just €7 billion. In other words, for every Euro it costs, the EU policy is likely to generate just three cents worth of benefits.
Running the 20/20/20 policy through the RICE climate-economic model shows that by the end of this century it will reduce temperature rises by only about 0.05oC – a reduction that may well be too small to measure.
Toughening the target simply makes the policy even more wrong-headed.
Tol examined the European Commission’s recent call for increasing the carbon-reduction target to 30% below 1990 levels. He calculates that this would cost Europe roughly €450 billion a year. This corresponds to 2.9% of GDP.
“The EU could do much better for the world, for the climate, and for itself,” said Bjørn Lomborg, director of the Copenhagen Consensus Center.
“European leaders should not abandon their commitment to taking action on climate change. But instead of wasting hundreds of billions of Euros on a pointless emissions policy, they should be investing in research and development of green energy alternatives. The reason it costs so much to reduce carbon emissions is that the green alternatives aren’t close to being ready to replace oil and other fossil fuels.”
Opinion articles by Bjørn Lomborg about the research:
Jyllands-Posten (Danish)
The Telegraph (English)
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