“We must act today because the cost of doing so tomorrow will be greater than it is now, and the scale of the issue we will face will have increased.” This is the view of Professor Richard Murphy FCA.
Stick within his own assumptions here.
OK, so, more emissions make climate change worse. We would like to reduce emissions early then. As the Stern Review – and all economics on the subject – points out, there are costs to reducing emissions. Nordhaus even gained the Nobel for exploring this.
Now, imagine – no, just imagine – that the costs of reducing emissions decline over time even as the costs of not reducing emissions rise over time. That makes life complicated for we have to look for that sweet spot, that optimal moment to reduce emissions, or perhaps the optimal rate at which to do so.
Just to invent numbers, the cost of not reducing emissions in 2020 is 100, of delaying until 2030 is 150. But the cost of reducing emissions in 2020 is 100 and in 2030 it’s 50. Or 10. Or 90.
The 50/10/90 difference changes the optimal moment or amount of emissions reduction.
So, our question is whether our imagine about emissions reductions costing less over time is true. Which, of course, it is. Try replacing oil with solar at 1980 prices. Try again at 2020 prices. This even before we get to the Nordhaus point about the capital cycle.
Murphy’s claim – at best – needs a lot more calculation and support than he’s offering. At worst it’s simply wrong.