The Social Benefit Of Carbon

Cross-posted from Watts Up With That, where I publish my scientific work.

After my recent post on the futility of the US cutting down on CO2 emissions, I got to thinking about what is called the “social cost of carbon”. (In passing, even the name is a lie. It’s actually the supposed cost of carbon DIOXIDE, not carbon … salesmanship and “framing” applied to what should be science. But I digress …)

According to the Environmental Defense Fund the “social cost of carbon” is:

… the dollar value of the total damages from emitting one ton of carbon dioxide into the atmosphere. The current central estimate of the social cost of carbon is roughly $40 per ton.

Now, for me, discussing the “social cost of carbon” is a dereliction of scientific duty because it is only half of an analysis.

A real analysis is where you draw a vertical line down the middle of a sheet of paper. At the top of one side of the paper you write “Costs”, and under that heading, you list the costs of whatever you are analyzing … and at the top of the other side of the paper you write “Benefits” and beneath, you list those benefits. This is what is called a “cost/benefit analysis”, and only considering only the “Costs” column and ignoring the “Benefits” column constitutes scientific malfeasance.

Instead of just looking at the “social cost of carbon”, we also need to look at the “social benefit of carbon”, which following the previous definition would be:

… the dollar value of the total benefits from emitting one ton of carbon dioxide into the atmosphere.

Now, the carbon emissions are coming from the use of fossil fuels. This set me to wondering about the historical changes in the mix of different fuels that power our planetary economy. So as is my wont, I got the data and I graphed it up. Figure 1 shows the changes in the mix of the fuels that the world uses to give us our amazing standard of living.

Figure 1: Global Total Primary Energy Consumption, 1965-2017.

First a word about units used to measure energy. The units of energy in Figure 1 are “million tonnes of oil equivalent”, abbreviated Mtoe. (“Tonnes” means metric tons of 1,000 kilograms, which are about 2200 pounds.).

An “Mtoe” is the amount of a given energy source, be it coal, natural gas, solar, or hydroelectric, that has the same amount of energy as a million tonnes of oil. There are other variants of this measure, such as billion tonnes of oil equivalent (Btoe), thousand or “kilo” tonnes of oil equivalent (Ktoe), and barrels of oil equivalent (BOE). One BOE is equivalent to 1,682 kilowatt-hours of energy. For these types of conversions from one unit to another I use the wonderful UnitJuggler.

Now that we understand the units, see that red thread up at the top of Figure 1 above? That’s solar energy.

Plus wind energy.

Plus biofuels energy from ethanol and biodiesel.

Plus geothermal energy.

Plus tidal energy.

Plus biomass energy.

Plus wave energy.

In short, that red line is the sum of every kind of renewable energy we use commercially, and after years of subsidies, it’s grown all the way up to being two and a half percent of the total energy we use.

Be still, my beating heart …

And sadly, this has been at a huge cost to the taxpayer. Not only does the renewable energy itself cost more than either fossil fuels or nuclear energy, but the subsidies are also horrendous. Figure 2 shows a part of what the US taxpayer has been shelling out for the privilege of using unreliable, weak, intermittent renewable energy …

Figure 2. Average US subsidies on various fuel sources.

Figure 2 shows the subsidy per barrel of oil equivalent energy (BOE). For energy from oil and coal, the subsidy is trivially small. For nuclear, it’s larger, but still reasonable, since nuclear energy is dispatchable reliable baseline power.

But the subsidy for intermittent, unreliable renewable energy is huge. For comparison with the renewable subsidy, today’s price for a barrel of West Texas Intermediate (WTI) crude oil is $51.15. Plus the $0.26 per barrel subsidy on oil, we’re paying $51.41 per barrel … which means that the subsidy alone on renewable energy is over half of the cost of an equivalent amount of oil!

And that’s just the Federal subsidies. In addition, states like California have costly “Cap And Trade” programs, “carbon taxes”, and “renewable mandates” that are all extra costs tacked on to the price of renewable energy.

And even with that huge Federal subsidy, plus all of the other coercive measures used to push the renewable dream year after year, after immense amounts of money spent decade after decade, after all of that, renewable energy is STILL less than three percent of the global energy usage.

And as we’ve seen in France, folks are getting fed up with paying this exorbitant subsidy for an economically uncompetitive form of energy …

One thing that these figures make abundantly clear is that renewable energy ain’t gonna save us. For the foreseeable future, the world will continue to be powered mostly by fossil fuels, and all the subsidies, and all the carbon taxes, and all the “renewable mandates”, and all the US Resolutions and the wishful thinking won’t change that.

While looking at the graphs above, I fell to considering how energy is inextricably linked to economic development. Energy is what drives the great economic engine of the planet, the engine that has lifted us out of the ugly, short, brutal lives of our predecessors and has insulated us from the vagaries of the weather.

So … how well does historical energy use correlate with the global Gross Domestic Product, which is the global sum of all of the goods and services produced annually? Figure 3 shows that relationship.

Figure 3. Scatterplot, global energy use versus global gross domestic product. Energy use source as in Figure 1. As noted on the vertical axis, all prices are in constant (inflation-adjusted) current US$.

As you can see, the global Gross Domestic Product (GDP) is a simple linear function of how much energy we use. You could think of the economy as a giant machine that turns energy into goods and services. We harvest energy in one of a hundred forms, including human labor, and we use that energy to make steel and build houses and create medicines and catch fish and grow food and manufacture automobiles and engage in all forms of creation of wealth. The relationship is clear—how wealthy we are is simply a function of how much energy we can command.

Now, every year the world is needing to feed and house and clothe and transport an increasing number of people. It’s not optional. The population is going up. Not only that, but poor people want to have reasonably comfortable lives like those of us in the industrialized world. There are only two ways that we will be able to take care of all of their needs.

The two ways are first, to use more energy … and second, to use it all more efficiently. Regarding efficiency, Figure 4 shows the increase over time in the GDP per barrel of oil equivalent energy used.

Figure 4. Change over time in the amount of goods and services (constant 2016 dollars) that we get from using energy. As noted on the vertical axis, all prices are in constant (inflation-adjusted) current US$.

Now, this is interesting. Back in 1965, for every barrel of oil equivalent energy that we used, we got about fifty dollars worth of goods and services.

And today, about fifty years later, we’re getting about five hundred dollars worth of goods and services out of the exact same amount of energy. This is good news—we’re getting more and more goods and services out of each unit of energy that we use. Thanks to the joys of competition and the fact that energy costs money, we’re constantly finding new and inventive ways to produce more with less energy.

With that relationship between energy and GDP as prologue, let me follow another train of thought. Fossil fuels are hydrocarbons, so-called because they are compounds of hydrogen and carbon. When they are burned, you get energy from two sources—the hydrogen and the carbon. When you burn hydrogen, you get water plus energy. When you burn carbon, you get carbon dioxide plus energy.

This means that the amount of carbon dioxide produced is a direct and simple function of the amount of energy used. Given the same mix of energy sources, more CO2 produced means more energy used, and vice versa. Figure 5 shows that relationship

Figure 5. Tonnes of CO2 emitted per tonnes of oil equivalent energy used.

(Yes, I know that it’s strange that we get more than one tonne of CO2 from burning one tonne of oil. The reason is that the oxygen in the carbon dioxide comes from the air. Before burning, the molecular weight of the carbon is 12 … after burning, the molecular weight of the CO2 is 44. Because of that, we get more than a tonne of CO2 out of burning a tonne of oil. We now return you to your previously scheduled programming …)

And this brings us to the final relationship. We know that both GDP and CO2 emissions are functions of the amount of energy used. This, of course, means that we can take a look at the relationship between GDP and CO2. To make the relationship clear and understandable, I’ve added CO2 to Figure 3, which showed GDP versus Energy Use.

Figure 6. Scatterplot, global energy use and concomitant CO2 emissions versus global gross domestic product. Energy use source as in Figure 1. As noted on the vertical axis, all prices are in constant (inflation-adjusted) current US$.

As in Figure 3, Figure 6 again shows that for each additional tonne of oil equivalent energy use, we get $5,740 in additional goods and services.

It also shows that for each additional tonne of CO2 produced from that energy use, we get $4,380 in additional goods and services.

And this brings me back to the question of cost/benefit analyses and the idea of the “social benefit of carbon”. As noted above, people put the “social cost of carbon” (actually carbon dioxide) at “roughly $40 per ton”.

Now, remember that corresponding to the “social cost of carbon”, the “social benefit of carbon” is:

… the dollar value of the total benefits from emitting one ton of carbon dioxide into the atmosphere.

As Figure 6 shows, the benefit that we get from emitting that additional tonne of carbon dioxide into the atmosphere is an increase in goods and services of $4,380 … which dwarfs the assumed social cost of carbon of $40. When we do an actual cost/benefit analysis, the result is almost all benefit.


FOOTNOTE: Let me add one other much smaller aspect of the question of the social benefit of carbon. This involves the “greening” of the planet due to the increased atmospheric carbon dioxide. Greenhouse owners routinely release CO2 inside their greenhouses to improve plant growth. Figure 7 shows plant growth at ambient (AMB) CO2 levels, as well as at the current level plus 150, 300, and 450 ppmv.

Figure 7. Plant growth under differing levels of CO2.

Now, the best estimate is that to date, the increasing levels of atmospheric CO2 have increased global plant growth by about 10%.

To see how much difference that 10% makes to the human agricultural production, I turn to that marvelous site, the Food and Agricultural Organization (FAO) dataset, available here. It says that the total of all commercially-raised fruit, vegetable, and fiber production in 2016 was about US$4.6 trillion. If we assume that it increased by 7% due to the increased plant growth from CO2, that is a benefit of about US$460 billion dollars.

And dividing that by the 33.5 billion tonnes of CO2 emitted in 2016 gives us a net benefit of about $14 per tonne of CO2 … and I note that this does NOT include the value of the 10% growth in things like forest production of timber, or the increase in oceanic production of plankton and associated marine growth, or the increase in meat and dairy production due to increased pasture growth, or the increase in home-garden vegetables (which make up a surprising amount of world food production).

It also doesn’t include the benefits of the decreased cost of water used to produce fruits, fibers, and vegetables. Plants have pores in their skin through which they take in CO2. The less CO2 the air contains, the wider those pores must open. The problem is that water escapes through the pores, and the wider the pores open, the more water the plant uses, and thus the more water the plant needs to stay healthy. So when CO2 levels go up, water use goes down … another social benefit of CO2.

My conclusion? The reason that alarmists talk about the “social cost of carbon” and never talk about the “social benefits of carbon” is that the assumed possible costs of engaging in activities that emit CO2 are in measured in tens of dollars per tonne of CO2. Not only that, but those are predicted future costs, which will be valid only if the “CO2 Roolz The Temperature” theory is correct.

But the social benefits of engaging in activities that emit carbon dioxide, as we’ve seen above, are measured in thousands of dollars per tonne of CO2 … and those are real measurable benefits that don’t depend on alarmist doomcasts of future claimed catastrophes.


Here, a bit of rain again, a good day for writing. The cat just came in, he’s not happy about the rain, but the forest plants are loving it.

My wish for all of you is for days of rain when you need water, days of sun when you need to recharge your mental batteries, and the wisdom to know that the weather doesn’t give a damn which one you might want on any given day …

w.

PS—Misunderstandings are the bane of the intarwebs. In the interest of clarity, when you comment please quote the exact words that you are discussing, so we can all be clear about both your subject and who you are addressing.

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20 thoughts on “The Social Benefit Of Carbon

  1. What an astonishing revelation Willis. Thank you.
    Enlightened primary, secondary and tertiary education curricula should be pleased to include these facts in their materials, so that maturing generations can appreciate what beneficial times they can live in.
    Alas, it’s a tragic loss to humanity that this isn’t currently happening. Mistreatment of children?

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  2. When you are talking about GDP over time, is this in inflation adjusted dollars?

    When you list CO2 per ton used, is that for all of the energy used? or is it corrected to remove the renewables,nuclear,and hydro components?

    If it is (inflation adjusted and polluting sources only), then I note that what we have should be a compound curve, where each ton of oil-equivalent used produces more GDP and less pollution than the previous ton. If that’s the case, that’s a _very_ important thing to note.

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  3. Thanks, David. Good questions. The answers in order.

    1) Inflation adjusted dollars.

    2) Regarding CO2, per the source:

    Notes: The carbon emissions above reflect only those through consumption of oil, gas and coal for combustion related activities, and are based on ‘Default CO2 Emissions Factors for
    Combustion’ listed by the IPCC in its Guidelines for National Greenhouse Gas Inventories (2006).

    3) Figure 4 shows how each barrel “of oil-equivalent used produces more GDP”.

    I did NOT include the graph showing the same thing for CO2. However, it’s true, we are getting more and more GDP for less and less CO2/$ of GDP.

    w.

    Liked by 1 person

        • What if we modify or enhance figure six with a theoretical line showing the modeled response of global average temperature to the tons of CO2 emitted?

          As I understand the theory, the temperature rises and responds to a DOUBLING of greenhouse gasses in the atmosphere. So a ton added in 1975 (and assuming it was not reabsorbed into the ocean or forests) has less impact than a ton added in 1985, or 1995, or 2005 … So I would expect the linearly rising emmission line to compare to a ever lessening upward curve of temperatures. Do I misconstrue?

          On the other hand the ton contributes to the economy or GDP in, (I think, arguably) a more linear fashion not just in the graph, but from inference. Once the fuel is invested in extracting and refining ore to metal, the metal is recycled in the economy — doesn’t have to be extracted again. The fuel costs of maintaining the leveled road is negligable compared to cutting thru the mountains and building the bridges. Spent a ton on “Carbon” and get a ton’s worth of immediate gains, which value degrades rather slowly.

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  4. I enjoyed reading this over on WUWT, Willis. Excellent!

    The benefits of fossil fuel use have been discussed here and there in dribs and drabs and even some fairly serious runs at the topic. But this article was a one-stop shopping bonanza.

    What I liked specifically about your post is that the data sources are solid.They could be argued but it would all be nitpicking, not sources ripe for a major shoot down. Standardizing on energy units made for tidy comparisons. I also liked the progression of your exposition. Your points flowed naturally with no jarring whutwuzdats to be found. And your conclusions stand on two solid legs.

    I must have read your post after you added the clarification about constant dollars, because I was shocked to see the question about the dollar figures asked twice in comments. I literally went “hunh?!” Then again, maybe I got it from the graph, as there were few comments at the time I read the post. I don’t know. 🤷‍♂️

    As far as readability, I am thinking of creating the “Willis Scale” for numerical-based presentations. The scale of measure would be from zero to “Willis” and articles would be measured, for example, as 0.65 of a Willis or higher or lower, depending on how much head-scratching occurs while reading the article. A “Full Willis” leaves even people who hate numbers and figures with nothing to puzzle out.

    This one is a full Willis, but don’t let it go to your head 😜. Comments will let you know when you’re producing a 0.87 or 0.94 of a Willis. You always give it your best and my experience has been that you usually correct any shortfalls promptly to bring things up to a Full Willis. 👍
    .
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    Rain and storms here in Florida, clearing out for next week. I never worried much about wind until the reality of trailer living hit home. Fifty to seventy mph gusts might loosen some shingles on our house as a worst case, but those winds would be downright dangerous in the trailer. I now am prepared to pack up the dogs and the missus and head to the cement block clubhouse if things on radar look dicey.

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    • Thanks for your kind words, amigo. I do my best to write for the numerically-averse … glad to hear it’s working.

      Regarding the winds, do you know why a Florida divorce is like a hurricane?

      Because someone’s going to lose a trailer …

      w.

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  5. Willis, would it be beneficial to breakdown the renewable category into more specific components? A vast amount of the renewable category produces CO2 in quantity through the burning wood and dung as fuel. I was reminded of a graph in a post on Jo’s site from Ridley a while back. Wind and solar only garner respect when bundled with all “so called” renewables as a group. My 2 cents.

    http://joannenova.com.au/2017/05/matt-ridley-wind-power-makes-0-of-world-energy/

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  6. Hi Willis,

    Boy howdy do I have comments for you. I will do my best to be concise.

    “Now, for me, discussing the “social cost of carbon” is a dereliction of scientific duty because it is only half of an analysis.”

    This is just before you suggest a cost benefit analysis of carbon costs and you create your own Figure 1.

    I cannot confirm where you received this data. I went to BP statistical review of World Energy 2018 and could not find any data before early 90’s. Please provide me with where you obtained this data.

    And what I can find does not match

    Source: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html

    Figure 2.

    I cannot replicate this data with your source as well. But I found a very nice graph depicting a decrease in overall estimated tax expenditures. I could not with a cursory glance find anything in this document about oil or coal. So can you send me where you got your data?

    I’m sorry. Apparently I cannot paste in the graphs I have found. But I have all of my references cited.
    https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

    “One thing that these figures make abundantly clear is that renewable energy ain’t gonna save us. For the foreseeable future, the world will continue to be powered mostly by fossil fuels, and all the subsidies, and all the carbon taxes, and all the “renewable mandates”, and all the US Resolutions and the wishful thinking won’t change that”

    Where does this come from? I see no evidence suggesting renewable resources combined with nuclear energy cannot replace fossil fuels in the near future.

    I wish I had more time to critique this, but I think this is a good starting point. And I will end my comment by addressing your premise. In order to get a true cost benefit analysis, you also have to consider the health benefits that arise from cleaner air. You have not discussed any comparison of using renewable resources alone and compare to fossil fuels.

    And I am sorry. What is going on in Figure 7? How did you measure C02 levels, how long did you allow to grow, etc… Were they given the same about of time? Did you even do this.

    Willis, I admire your passion, but there are several holes in your analysis that need to be filled. This is not a true cost benefit analysis.

    Here is some commentary on the social cost of climate change.
    https://www.scientificamerican.com/article/should-the-social-cost-of-carbon-be-higher/

    I very much look forward to your response.

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    • Thanks, Cody. First, I did not say I was doing a cost-benefit analysis. I said that other people had done the cost analysis, and as the title says, I’m doing a benefit analysis.

      Second, all of the data is from the spreadsheet that accompanies the BP Statistical Review of World Energy. It contains data starting in 1965.

      Third, I said nothing about “renewable resources combined with nuclear energy”. Nuclear could indeed replace fossil fuels. Renewables cannot.

      You close by saying “This is not a true cost benefit analysis” … never said it was.

      My best to you,

      w.

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  7. You are right. You did not say you are doing a cost benefit analysis. However, you did suggest that only looking at one side of the line is not a beneficial way to understand the whole situation. You can make that argument for a benefit analysis as well. All should exist within the context of cost and benefit. I also believe that if you look at other sources, you will see that they have created a cost benefit analysis and that is indeed cost effective to mitigate climate change.

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  8. Sorry for posting twice. For some reason I could not continue on my last comment. I just went back to the BP site, and again found nothing earlier to 1997. Can you give me the page number on the PDF. Or better, email me the data you created the graph from? Because looking at the data BP generated I see the exact opposite of what you have shown. Also, you are right. I added in the detail about nuclear because I was curious of your thoughts. It seems we agree nuclear is a good option, and also has a positive impact on the environment, why not switch completely to nuclear (however I think solar panels on rooftops are a nice way to get some extra energy, I don’t necessarily think they will 100% fix our energy problems.)

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  9. This must be wrong, because saving the planet.

    But what Willis is saying is that the direct benefit of additional CO2 in reduced plant water use and increased plant growth is about the same as the “social cost of carbon.” Saving the planet indeed.

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  10. Willis – is it OK to put a cat amongst the pigeons here? Given that it looks reasonable that natural processes are increasing the CO2 in the atmosphere (by outgassing of the slightly-warmer oceans) a lot more than human emissions, could we get the benefits of that CO2 without the air pollution that is the result of the mostly less-than-perfect burn that is normally used? I’ve been digging in the foundations of physics for a while now and wrote https://revolution-green.com/energy-perpetual-motion/ as a result. At the moment, this can only be demonstrated to be practical at a low and almost-useless power output, but it seems possible that it should be able to be improved once we realise it is actually possible at all, rather than simply accepting the axiom that perpetual motion is absolutely impossible and that only a crackpot would attempt it. I can’t see any errors in either the logic or the experimental data. The best way to find out if there’s an error is to tell people about it and see what they find.

    Our lifestyle depends on having cheap energy. In poor countries, it’s the cost of energy relative to the income that’s the big differentiator – the energy costs may seem equivalent in dollar value, but they can earn so much less in dollar equivalents that even a small amount of energy is a major expense. If we can cheaply recycle the energy we already have in the ambient temperatures, that could be better than burning fuels. It looks to be logically possible, too. Just somewhat difficult technically. I’m working on that….

    Feel free to delete this comment if you think it’s too far off-topic.

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