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Leonardo DiCaprio’s Wasted His Money On This Climate Report

Huzzah and celebrations because Leonardo DiCaprio has turned his river of money from the movies into a climate change report which shows us all how to save the planet and ourselves. Jubilations, eh?

There is, of course, ever such the slightest problem with such an exercise. They’ve gone off and looked at the world in a granular fashion, looking at regional electricity grids and plotting out how they might develop and all that. Sadly this very approach doesn’t work, it’s the planning delusion. We simply cannot gather enough information to be able to plan – nor forecast – at that level of detail. Another way of saying much the same is that there are too many confounding factors. Or, a third, that it all depends so much upon your starting assumptions that the result is entirely driven by those starting assumptions.

However, there’s one specific mistake here:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The proposed energy transition outlined in the climate model is estimated to cost approximately $1.7 trillion per year. This sounds like a lot, but it pales in comparison to the vast subsidies that governments currently provide to prop up the polluting fossil fuels largely responsible for climate change, estimated at more than $5 trillion a year – $10 million a minute, every day, according to the IMF. The research tells us that we could be creating the clean energy future we so desperately need for one-third of the cost.[/perfectpullquote]

That is to misunderstand what the IMF has said about subsidies:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]This paper provides a comprehensive, updated picture of energy subsidies at the global and regional levels. It focuses on the broad notion of post-tax energy subsidies, which arise when consumer prices are below supply costs plus a tax to reflect environmental damage and an additional tax applied to all consumption goods to raise government revenues. Post-tax energy subsidies are dramatically higher than previously estimated, and are projected to remain high. These subsidies primarily reflect under-pricing from a domestic (rather than global) perspective, so even unilateral price reform is in countries’ own interests. The potential fiscal, environmental and welfare impacts of energy subsidy reform are substantial.[/perfectpullquote]

The IMF’s not in fact counting subsidies to fossil fuel use at all. The alternative numbers from the International Energy Authority are more useful here, about $500 billion a year or so globally. Almost all in oil producers these days, Saudi, Iran, Russia etc. We’ve pretty much no such subsidies.

The IMF’s counting a very, very, wide meaning of subsidies to energy use. For example, household energy pays 5% VAT in the UK. Regular VAT is 20%. In the IMF’s counting that’s a subsidy. Note that it’s not fossil fuel use subsidised even then, it’s household energy use.

That is, there isn’t that $5 trillion there to be repurposed to pay for the windmills. Nice try but no cigar Leo.

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2 years ago

The EU alone recovers in gasoline taxes at the pump an amount equivalent to all fossil fuel subsidies (including coal) paid world-wide. I’ve had this out with the otherwise numerate Bjorn Lomborg and he hasn’t had the fortitude to reply

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