Climategate and Economics

One of the longstanding themes that I have considered is that there has been a fundamental shift of wealth creation from the East to the West. In that spirit, I will wade into an area that would not normally be the subject of an economics blog; the rather contentious subject of 'climate change', or Anthropogenic Global Warming (AGW).

Longstanding readers will know that I am an AGW skeptic, as I posted to this effect in my consideration of reform of energy markets in the UK. I return to the subject following reading an article in the Daily Telegraph, which reveals the economic outcome of climate change policy. The article is by Christopher Booker, and describes how a UK steel plant is closing due to subsidies provided by climate change policy:

The real gain to Corus from stopping production at Redcar, however, is the saving it will make on its carbon allowances, allocated by the EU under its Emissions Trading Scheme (ETS). By ceasing to emit a potential six million tonnes of CO2 a year, Corus will benefit from carbon allowances which could soon, according to European Commission projections, be worth up to £600 million over the three years before current allocations expire.

But this is only half the story. In India, Corus's owner, Tata, plans to increase steel production from 53 million tonnes to 124 million over the same period. By replacing inefficient old plants with new ones which emit only "European levels" of CO2, Tata could claim a further £600 million under the UN's Clean Development Mechanism, which is operated by the UN Framework Convention on Climate Change – the organisers of the Copenhagen conference. Under this scheme, organisations in developed countries such as Britain – ranging from electricity supply companies to the NHS – can buy the right to exceed their CO2 allocations from those in developing countries, such as India. The huge but hidden cost of these "carbon permits" will be passed on to all of us, notably through our electricity bills.

The Western world is facing an era of new competition from the rising stars of the East, and the policies that are being developed to fight 'climate change' are a catalyst to the deindustrialisation of the West. It is for this reason that I am wading into the debate, despite the likelihood that I will lose readers that are 'believers'.

I would expect that, as most of my readers are well informed, they will be aware of the 'climategate' scandal, in which emails have been hacked from the Climate Research Unit (CRU). The emails suggest that there has been manipulation of climate research data, a corruption of the academic journal system, and attempts to hide the data used in climate modelling from critics. For those that have not taken a particular interest in the debate over AGW, these may have been a revelation. For those of us who have followed the debate, the hacked emails are simply confirmation of what we already believed; the 'science' has been fixed.

For those in the AGW camp, there have been attempts to minimise the fallout from climategate, with suggestions that, whilst not a good exemplar of science, the incident does not change the underlying reality of AGW. The problem that this argument faces is that climategate has revealed to the world that the evidence for AGW has been the subject of manipulation, and that the science just does not stack up. Of particular importance in this debate is the problem of the (in)famous 'hockey stick' chart of global temperature, and the removal from the chart of the medieval warm period. This is a critical part of the debate. The hockey stick chart shows an unprecedented rise in global temperature over the last century, but the medieval warm period shows that the world temperature was at the same temperature in the medieval period.

The unprecedented warming on the hockey stick chart has been presented as the 'smoking gun' of AGW, and much of the veracity of the AGW argument must rest on this chart. The trouble is that this chart is at the heart of the data manipulation, and this has been revealed by the tireless efforts of Steve McIntyre. A summary of some of the work can be found in an article in the UK's Daily Mail newspaper, which shows how data that contradicts AGW has been hidden. The full details of McIntyre's studies can be found on the Climate Audit website, and I would recommend a long browse if you wish to understand the full argument (it is not an easy read, but worthwhile).

The climategate emails have had further repercussions, such as the publication of a paper by the Russian Institute of Economic Analysis. In the paper, they investigate the use of data by the CRU in climate models, and have found that the CRU cherry picked data in Russia such that they excluded any information which might contradict the AGW thesis. A translation of the paper is provided here, and I would again recommend reading it. It is easy to follow, and the analysis is very clear and convincing.

As one analyst in the Wall Street Journal has suggested, climategate is just the tip of the iceberg, and the full impact has yet to be felt. In particular, the refusal of the AGW proponents to share data, and the destruction of data has become an issue. The following is a quote from the article:

Which leaves researchers free to withhold information selectively from critics, as when CRU director Phil Jones told Australian scientist Warwick Hughes in a 2005 email: "Why should I make the data available to you, when your aim is to try and find something wrong with it."

An interesting question. Often, when independents obtain raw temperature data or computer codes, they do uncover flaws, thus advancing climate science—the "sunlight" now shining on CRU's data and codes is doing just that. That's what motivated Competitive Enterprise Institute scholar Christopher Horner to request a slew of information from NASA's Goddard Institute for Space Studies, which has already corrected its temperature records thanks to Mr. McIntyre's probing. Mr. Horner told us he wants "an entire accounting of rolling, relevant data, adjustments, codes, annotations and of course internal discussion about the frequent revisions."

Two years later, the requests are unmet. A NASA spokesman said "We're clearly late, but we are working on it." Probably wise, considering Mr. Horner is set to sue, and two U.S. senators have asked NASA's Inspector General to investigate.

There is also the question of the way in which research that contradicts the 'consensus' has been excluded from academic journals. Patrick Michaels, a former Professor of Environmental Sciences writes of the way in which the views of skeptical scientists have been excluded from the literature, saying:

The result of all this is that our refereed literature has been inestimably damaged, and reputations have been trashed. Mr. Wigley repeatedly tells news reporters not to listen to "skeptics" (or even nonskeptics like me), because they didn't publish enough in the peer-reviewed literature—even as he and his friends sought to make it difficult or impossible to do so.

Again, I would recommend reading the article in full, as it highlights the many manipulations of the journal system. As if this were not bad enough, there has been the doctoring of climate change articles on the Wikipedia website, with William Connolley acting as a gatekeeper on the site to prevent any skeptical arguments appearing, for example preventing the medieval warm period from appearing (see here and here):

All told, Connolley created or rewrote 5,428 unique Wikipedia articles. His control over Wikipedia was greater still, however, through the role he obtained at Wikipedia as a website administrator, which allowed him to act with virtual impunity. When Connolley didn’t like the subject of a certain article, he removed it — more than 500 articles of various descriptions disappeared at his hand. When he disapproved of the arguments that others were making, he often had them barred — over 2,000 Wikipedia contributors who ran afoul of him found themselves blocked from making further contributions. Acolytes whose writing conformed to Connolley’s global warming views, in contrast, were rewarded with Wikipedia’s blessings. In these ways, Connolley turned Wikipedia into the missionary wing of the global warming movement.

At this stage, you may note that the medieval warm period really is at the heart of the debate. The problem for the AGW proponents is that it just will not disappear. However, as the hockey stick chart's credibility collapses, the AGW proponents are now seeking to shift attention away from the problem. This is from the Financial Times:

Myles Allen, head of climate dynamics at Oxford University, explains: “The reason the hockey stick will only ever play a peripheral role in understanding current climate change is that we don’t know what the drivers of climate were before 1900. For instance, we don’t know what the sun was doing back in 1100.” Cautious scientists prefer to restrict the case for climate change to what we know from instrumental data: temperatures have been rising over the past 120 years; carbon dioxide levels have been increasing; and scientists have established that adding carbon dioxide to the atmosphere causes warming.

It is all rather convenient, is it not? As the credibility of the hockey stick dissolves, the focus shifts to the instrumental readings. However, if the medieval warm period took place before industrialisation, then there is no reason why there should be concern about warming in this century (if there has been any warming).

If you doubt the dogmatism and unreasoned thinking of the AGW proponents, you may wish to read an article which serves to highlight how the thinking of these so called 'scientists' can not be moved. It is not a skeptical article, but shows how data that contradicts the AGW thesis is rejected. A couple of extracts follow:

Some 3,000 scientific robots that are plying the ocean have sent home a puzzling message. These diving instruments suggest that the oceans have not warmed up at all over the past four or five years. That could mean global warming has taken a breather. Or it could mean scientists aren't quite understanding what their robots are telling them.

[and]

One possibility is that the sea has, in fact, warmed and expanded — and scientists are somehow misinterpreting the data from the diving buoys.

But if the aquatic robots are actually telling the right story, that raises a new question: Where is the extra heat all going?

Kevin Trenberth at the National Center for Atmospheric Research says it's probably going back out into space. The Earth has a number of natural thermostats, including clouds, which can either trap heat and turn up the temperature, or reflect sunlight and help cool the planet.

Somewhere, the obvious answer has been lost; the buoys are telling the story accurately, and there has just been no warming.

It is impossible in one short post to fully detail the many and sometimes complex arguments against the AGW thesis. I have instead (I hope) aimed to identify the problem that the 'scientific consensus' is actually based upon fraud and manipulation. I can not prove that AGW does not exist, and can not in a short article present as much detail as would be ideal. What I hope to do is shift some views in light of the economic impacts of the legislation and policy that is being enacted. The article by Christopher Booker just highlights one example of the consequences of the fraud.

The consequences go far further. As the West moves to ever more expensive forms of energy generation, the cost of manufacturing will increase. In my article on energy reform (also read the notes section), I showed why wind farms are an absolutely useless and horrendously expensive method of generating electricity. There are ever more proposals and resource being poured into these kinds of projects. It is resource which, in an increasingly competitive world, that can not be wasted. The West can not afford to follow this path.

I have consistently argued that the West is facing an economic crisis resultant from competition from the East, and that the financial crisis was just a symptom of a deeper problem. In order to face the increased competition, the Western world must become leaner and more competitive. There may have been a time when we could have afforded the senseless cost of the fraud of AGW, but that time is not now.

I can only hope that the revelations of climategate will finally see a bright light finally shine on the fraud of AGW.