Climate Change and Pascal’s Wager

by Jason Peters on July 25, 2012 · 16 comments <span>Print this article</span> Print this article

in Culture, High & Low


Rock Island, IL

I remember the summer of 1988. The golf course I worked on (and on which, when all was said and done, I would work a dozen seasons) suffered considerably from an uncommon heat, as did all of us on the crew. (The mama’s boys in the pro shop weathered 1988 just fine.) Tuesdays and Thursdays weren’t busy mowing days for us, so I spent most of them with my head in a hole about eighteen inches deep—and sometimes deeper.

I learned most of my plumbing doing subterranean irrigation repair.

Bill McKibben was paying attention in 1988 and hard at work on The End of Nature, one of the first books on global warming written for a popular audience.

Having lived (and worked) through 1988, I was drawn to the book. I read it with horror but also with skepticism. Skepticism is necessary.

Twenty-four years after that attention-getting summer, McKibben has a sobering piece in Rolling Stone on the current state of climate science. And if what he has to say is true, the news on global warming (Wes Jackson calls it “rapid global climate change”) is worse than grim. I’m going to quote at length, because I’m sure too few people will read McKibben’s article.

McKibben begins thus:

June broke or tied 3,215 high-temperature records across the United States. That followed the warmest May on record for the Northern Hemisphere – the 327th consecutive month in which the temperature of the entire globe exceeded the 20th-century average, the odds of which occurring by simple chance were 3.7 x 10-99, a number considerably larger than the number of stars in the universe.

He draws our attention to three numbers. The first is 2° Celcius. “The official position of planet Earth at the moment is that we can’t raise the temperature more than two degrees Celsius – it’s become the bottomest of bottom lines. Two degrees”:

scientists estimate that humans can pour roughly 565 more gigatons of carbon dioxide into the atmosphere by midcentury and still have some reasonable hope of staying below two degrees. (“Reasonable,” in this case, means four chances in five, or somewhat worse odds than playing Russian roulette with a six-shooter.)

But the problem is that we’re nearer 565 gigatons–the second number McKibben wishes to bring to our attention–than we think:

study after study predicts that carbon emissions will keep growing by roughly three percent a year – and at that rate, we’ll blow through our 565-gigaton allowance [not by midcentury but] in 16 years, around the time today’s preschoolers will be graduating from high school. “The new data provide further evidence that the door to a two-degree trajectory is about to close,” said Fatih Birol, the IEA’s chief economist. In fact, he continued, “When I look at this data, the trend is perfectly in line with a temperature increase of about six degrees.” That’s almost 11 degrees Fahrenheit, which would create a planet straight out of science fiction.

But science fiction is complicated by the third number McKibben draws our attention to: 2,795 Gigatons, a number that

describes the amount of carbon already contained in the proven coal and oil and gas reserves of the fossil-fuel companies, and the countries (think Venezuela or Kuwait) that act like fossil-fuel companies. In short, it’s the fossil fuel we’re currently planning to burn. And the key point is that this new number – 2,795 – is higher than 565. Five times higher.

I repeat for emphasis: it’s fossil fuel we’re currently planning to burn, which means we’ll burn it, which means its carbon is as good as launched into the atmosphere. And it exceeds our allotted limit by five times.

Five times means five times more, not five times less, than we should burn.

The Carbon Tracker Initiative – led by James Leaton, an environmentalist who served as an adviser at the accounting giant PricewaterhouseCoopers – combed through proprietary databases to figure out how much oil, gas and coal the world’s major energy companies hold in reserve. . . . If you burned everything in the inventories of Russia’s Lukoil and America’s ExxonMobil, for instance, which lead the list of oil and gas companies, each would release more than 40 gigatons of carbon dioxide into the atmosphere.

Which, says McKibben, is why 2,795 gigatons is “such a big deal,” offering then an analogy for you hard drinkers:

Think of two degrees Celsius as the legal drinking limit – equivalent to the 0.08 blood-alcohol level below which you might get away with driving home. The 565 gigatons is how many drinks you could have and still stay below that limit – the six beers, say, you might consume in an evening. And the 2,795 gigatons? That’s the three 12-packs the fossil-fuel industry has on the table, already opened and ready to pour.

How bad is it? We’re screwed. We won’t run out of oil and coal fast enough.

We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We’d have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain.

Here McKibben is especially prescient. Yes, the fossil fuel is still in the ground—technically.

But it’s already economically aboveground – it’s figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. It explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value. It’s why they’ve worked so hard these past years to figure out how to unlock the oil in Canada’s tar sands, or how to drill miles beneath the sea, or how to frack the Appalachians.

Frack Appalachia!

If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn’t pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today’s market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you’d be writing off $20 trillion in assets. The numbers aren’t exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won’t necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater. You can have a healthy fossil-fuel balance sheet, or a relatively healthy planet – but now that we know the numbers, it looks like you can’t have both. Do the math: 2,795 is five times 565. That’s how the story ends.

And now what?

According to the Carbon Tracker report, if Exxon burns its current reserves, it would use up more than seven percent of the available atmospheric space between us and the risk of two degrees. BP is just behind, followed by the Russian firm Gazprom, then Chevron, ConocoPhillips and Shell, each of which would fill between three and four percent. Taken together, just these six firms, of the 200 listed in the Carbon Tracker report, would use up more than a quarter of the remaining two-degree budget. Severstal, the Russian mining giant, leads the list of coal companies, followed by firms like BHP Billiton and Peabody.

McKibben points out the obvious consequence: this industry, and this industry alone, holds the power to change the physics and chemistry of our planet, and they’re planning to use that power.

They’re clearly cognizant of global warming – they employ some of the world’s best scientists, after all, and they’re bidding on all those oil leases made possible by the staggering melt of Arctic ice. And yet they relentlessly search for more hydrocarbons – in early March, Exxon CEO Rex Tillerson told Wall Street analysts that the company plans to spend $37 billion a year through 2016 (about $100 million a day) searching for yet more oil and gas.

Rex Tillerson, says McKibben, is the most “reckless man on the planet.”

Late last month, on the same day the Colorado fires reached their height, he told a New York audience that global warming is real, but dismissed it as an “engineering problem” that has “engineering solutions.” Such as? “Changes to weather patterns that move crop-production areas around – we’ll adapt to that.” This in a week when Kentucky farmers were reporting that corn kernels were “aborting” in record heat, threatening a spike in global food prices. “The fear factor that people want to throw out there to say, ‘We just have to stop this,’ I do not accept,” Tillerson said. Of course not – if he did accept it, he’d have to keep his reserves in the ground. Which would cost him money. It’s not an engineering problem, in other words – it’s a greed problem.

And, as we say on the Porch, it’s also a problem of limits.

But to say that we’ll adapt to “changes to weather patterns that move crop-production areas around” is to make a frigid diagnosis that can only come from the mouth of someone who doesn’t have to adapt. Tillerson won’t have to move his farm or his family or his productive operations somewhere else. He’ll merely prescribe the easy migration of others while he himself labors under the difficult task of getting his pork ribs at his local Fairway.

By way of remedy McKibben would have the oil, gas, and coal industries do as all of us do: pay to have their garbage hauled away:

Much of that profit stems from a single historical accident: Alone among businesses, the fossil-fuel industry is allowed to dump its main waste, carbon dioxide, for free. Nobody else gets that break – if you own a restaurant, you have to pay someone to cart away your trash, since piling it in the street would breed rats. But the fossil-fuel industry is different, and for sound historical reasons: Until a quarter-century ago, almost no one knew that CO2 was dangerous. But now that we understand that carbon is heating the planet and acidifying the oceans, its price becomes the central issue.

If you put a price on carbon, through a direct tax or other methods, it would enlist markets in the fight against global warming. Once Exxon has to pay for the damage its carbon is doing to the atmosphere, the price of its products would rise. Consumers would get a strong signal to use less fossil fuel – every time they stopped at the pump, they’d be reminded that you don’t need a semimilitary vehicle to go to the grocery store. The economic playing field would now be a level one for nonpolluting energy sources. And you could do it all without bankrupting citizens – a so-called “fee-and-dividend” scheme would put a hefty tax on coal and gas and oil, then simply divide up the proceeds, sending everyone in the country a check each month for their share of the added costs of carbon. By switching to cleaner energy sources, most people would actually come out ahead.

There’s only one problem: Putting a price on carbon would reduce the profitability of the fossil-fuel industry. After all, the answer to the question “How high should the price of carbon be?” is “High enough to keep those carbon reserves that would take us past two degrees safely in the ground.” The higher the price on carbon, the more of those reserves would be worthless. The fight, in the end, is about whether the industry will succeed in its fight to keep its special pollution break alive past the point of climate catastrophe, or whether, in the economists’ parlance, we’ll make them internalize those externalities.

I’ve done a lot of outdoor manual labor this summer. Little of it has involved subterranean plumbing, but all of it has been in weather less comfortable than that of 1988, when I was half as old as I am now. But if, even now, I hold on to an element of skepticism, as I always do, I must also suggest that it might be time for a wager of the sort Pascal proffered. What’s the harm? What do we lose by getting behind McKibben? Total collapse?

Crazy people have been right about unthinkable shit. Read Night if you doubt this.

{ 16 comments… read them below or add one }

avatar HappyAcres July 25, 2012 at 7:15 am

The harm comes in further empowering a vast central planning apparatus of The State.

avatar David Smith July 25, 2012 at 9:39 am

One of the huge problems with this discussion is that it becomes polarized between the “conservative” position of develop-industrialize-use-it-up, (along with many on the Christian Right with the predominating eschatological position of premillenial-dispensationalism, “It’s all gonna burn anyway!”) and the Gaia-worshiping, tree-hugging types who want us to go live in trees (or just die).

While I believe man-made global warming is highly questionable, I still think it is ultimately rational, enlightened self-interest – indeed, conservative – in the truest sense to find ways to reduce our dependence on petroleum, and not just in our vehicles! For crying out loud, I remember hearing/reading that our fruits and vegetables are less nutritious due to the use of chemical/petroleum based fertilizers (the plant version of a candy diet?), not to mention all of the pesticides used in our vast industrialized monoculture farms. And just how cheap will all that food and produce from Chile or even California be at Wal Mart when the price of a gallon of gas goes up to $10.00?

And I’m not even going to get into the violation of property rights that have gone on in WV and the rest of the coal belt, and the – again – so-called conservative unqualified support for the Canada pipeline. What if I’m a rancher or farmer who doesn’t want to sell off my property or yield it to eminent domain?

It seems to me there are indeed excellent and ultimately conservative reasons to reduce the use and dependence on oil that have nothing to do with either of the two extremes, but I’m afraid they get lost in the huge kerfuffle between Leftist, meddling, tyrannical Democrats and statist, corporatist – and also tyrannical – Republicans.

Incidentally, I believe the outdoor writer John Gierach wrote in one of his essays that Democrats want to take your guns while Republicans want to take your land. That’s for another discussion, but it came to mind here anyway.

avatar Dianne July 25, 2012 at 11:09 am

To HappyAcres: You bet I fear “empowering a vast central planning apparatus of The State.” I fear the vast central planning it has practiced for decades making sure that the system favors and subsidizes the fossil fuel companies’ reckless, calamitous greed. In other words, I fear the vast apparatus of the fossil fuel industry, which pretty much IS the government where these matters are concerned, for all practical purposes.

avatar Gabe Ruth July 25, 2012 at 12:03 pm

Excellent article, especially the analogy to trash hauling.

One quibble: I know this is Rolling Stone, but the context free very large numbers in the first quote are distractingly meaningless, and will serve as an excuse for the skeptical to accuse McKibben of trying to alarm the gullible. The repeated reference to how we’ve raised global temperatures by .8° already is also meaningless without further context, which shouldn’t be too hard to explain.

avatar Mrs. Reeves July 25, 2012 at 3:40 pm

I’m going to come right out and say that I am skeptical to the point of disbelief about anthropomorphic climate change. But, for the sake of argument, let us assume that humanity has the ability to radically change the heat of our planet with disastrous consequences. I have two comments.
1) No, it is not fair nor right for all industries and private citizens to pay for waste-removal except energy producers (minus the Nuclear industry). I would agree that they should be required to pay some kind of waste-management-fee. Should it be high enough to “keep the carbon in the ground”? How many people are going to be unable to heat their houses or drive their cars or afford their produce? Even with a fee-and-dividend scheme that Mr. McKibben suggests, the costs will skyrocket to the point that only the super-rich could afford any kind of energy! Right now, just over 1/4th of our family’s income goes to paying for energy (transportation & housing). And that’s with driving fuel efficient cars, using energy star appliances, setting our thermostat just beyond the range of comfortable, turning off lights, etc. How is that profitable to any one?
2) Even if you got the majority of American energy companies to submit to these regulations, even if you convinced the majority of first-world citizens and companies that they must suffer great set-backs to save the planet, how on earth are you going to stop carbon-dioxide belching cook-fires in second- and third-world nations? And how are you going to get China or India or Indonesia to give up the cheap, abundant, energy of fossil fuels? How are you going to get nations that see climate change hobbling their competition to accept the same bondage?
That’s all.

avatar tradition/revolution July 26, 2012 at 8:03 am

‘There’s only one problem: Putting a price on carbon would reduce the profitability of the fossil-fuel industry.’

Not to mention any politician who proposed implementing sufficient controls of that sort would be out on his ass faster than you can say ‘Jimmy Carter.’ Democracy doesn’t seem to be particularly well-suited to far-sighted solutions.

avatar E. Sutherland July 26, 2012 at 8:07 am

I was a skeptic of anthropomorphic climate change most of my life. However, about halfway through college I was inspired by my physics professor to research climate change for myself. I went back to the raw data from NASA and other sources and came to the conclusion that the climate was definitely changing, BUT there’s no proof of what’s causing it. We say it’s “human caused” because there’s no other explanation. Until we find another cause–or confirm that it IS human caused (with something better than a correlation argument)–I think we have to go with the best guess we have and assume climate change is our fault. That said, the planet is more resilient than McKibben would probably like us to think. For instance it’s well known that all types of plant growth flourish in a high carbon and warm environments (think greenhouses). So the spike in CO2 will likely be offset (in part at least) by increased plant growth. His statistics about US temperatures and Northern hemisphere records are also meaningless since all that really matters is the global average. Last year Russia had a horrible drought and we had a mild summer (with the exception of Texas and some of the South). This year we have a drought and maybe Russia is booming growing season. who knows.

avatar JAppleseed v2.0 July 27, 2012 at 9:56 am

I am not sure that I understand the statement that energy companies alone don’t pay for the disposal of their waste, or the economic model that follows.
If I can switch to a business that most of us understand better than energy, Budweiser does not pay for “their waste” which I flush after my rather short-term lease. The tax model proposed sounds like the more I drink, the more Budweiser should pay me. Let’s all raise a glass to that!
Both energy and brewing companies pay for their waste by-products created in providing their primary product to us, the consumers. Our consumption, both in quantity and quality, is of our own choosing. The after effects likewise are our responsibility.

avatar Justin Case July 28, 2012 at 9:01 am

McKibben blaming Exxon, BP, Chevron etc… for global warming is laughable. Exxon doesn’t force anyone to buy their products. If the finger should be pointed at anyone, it should be pointed at all of us who expect plentiful and inexpensive fossil fuels and complain bitterly and cast about for villains if they are not readily available. Get real!

avatar Brian Volck July 28, 2012 at 6:24 pm

Mrs. Reeves and E Sutherland:

Please correct me if I’m wrong, but isn’t the relevant adjective “anthropogenic” rather than “anthropomorphic?”

avatar RiverC July 31, 2012 at 8:50 pm

Cry wolf.

avatar wufnik August 12, 2012 at 12:23 pm

Excellent post, Jason. And the comments are yet another sad display of why nothing will get done about it.

avatar Peter B. Nelson August 16, 2012 at 10:52 am

Pascal’s wager works when the stakes are low and the rewards high, like the lottery, whereas global warming proposals remain unimplemented precisely because they are so decidedly high-stakes. Quite apart from the direct burden of punitive fuel taxes, consider the very grave indirect burdens.

One example: remember when fossil fuels helped America “feed the world?” Well, imagine what happens to the poorest fifth of the world’s population if/when industrial farmers abruptly cease fertilizing and have no surplus crop for the world market? Mass starvation, that’s what. Inevitable, perhaps? But Pascal’s wager ain’t in it. Don’t trivialize.

avatar Mark C August 16, 2012 at 10:19 pm

@Peter. The more likely mass starvation scenario is when global warming causes much of the middle latitude farm belts to fail, thus jeopardizing the food supply not only the undeveloped world but the developed world as well. Combined with the effects of disease and inundation of the much of the poorest people’s living and crop growing areas the danger appears much more heavily weighted to global warming. Pascal’s wager applies here.

avatar Peter B. Nelson August 17, 2012 at 10:05 am

Marc, thanks for your response. There are multiple mass starvation scenarios and worse besides, right, so let’s agree to agree on that, and speak of Pascal; among other things a founder of probability studies, especially as applied to gambling. His “wager” is a clever way of explaining that at low or no cost the best bet is the one with the highest potential reward. So, if you can solve global warming for five bucks, then Pascal’s wager’s in it. But you can’t, so it ain’t, see?

A stated precondition of Pascal’s wager is a small or trivial burden. Invoking Pascal’s wager to imply there is no burden when there is in fact a grave burden trivializes something exceedingly non-trivial, and wins no converts. Some burdens can be justified, but denying them is not the same thing as justifying them, and worse: is self defeating. By analogy: sandbagging a house otherwise doomed to the flood is clearly justified, but recruiting volunteers with the promise that sandbagging is effortless will result in most of them deserting as soon as the heavy burden is felt, and losing the house.

avatar Pelon August 27, 2012 at 10:03 am

Your comment, Peter, is self defeating in the sense that I actually had to read it five times before I gave up; btw nice of you to use two words twice in the same sentence.

Good logic is easy to follow, easier still when stated simply. Tends to be a more reliable tool out in the real world to boot.

I for one would rather make a high probability bet (as in chance of winning not high reward) when it comes to the starvation of millions or billions, rather than losing bet not so cleverly crafted.

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