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Kevin VS Marshall's avatar

As the GB News article notes, Miatta Fahnbulleh was formerly head of the New Economics Foundation, which, amongst other things, opposed the still-to-be-approved Rosebank oil field.

Opposition to this based on economic grounds demonstrates a lack of understanding of economics. Or at least economics post the marginalist revolution of the 1870s. To understand the marginal climate impact (and thus any economic impact), we need some figures.

In a climate impact assessment, it is estimated that the oil from the Rosebank oil field could emit 250 million tonnes of CO2. That is 0.25 GtCO2. What is the impact on global emissions?

2021 IPCC AR6 WG3 SPM tells us

"Historical cumulative net CO2 emissions from 1850 to 2019 were 2400 ± 240 GtCO2" at the 68% confidence interval. The Rosebank emissions would at most increase cumulative emissions by 0.01%.

But how much would Rosebank affect global average temperatures? Figure SPM.2 from AR6 WG1 SPM gives an indication. Those 2400 GTCO2 of CO2 emissions accounted for, at most half, of the 1C of warming from 1850 to 2019, if the negative impact of aerosols (mostly from the burning of fossil fuels) is taken into account. The marginal economic "climate" benefit of stopping Rosebank is zero, unless you deal with numbers much less than 1% of any statistical significance levels.

On the other hand, the economic benefits of approving Rosebank are highly significant to the people of the Shetland Islands. More generally, UK production of oil and gas mostly benefits the UK economy. But the benefits of costly UK climate policies on climate are global.

Looking at climate policy costs alone, failing to allow new oil and gas production is an opportunity cost borne by the UK as a whole. The marginal climate benefits of such policies are highly insignificant. The British share of such benefits is likely much less than 1% of this highly insignificant amount.

Economic theory has yet to work through this logic. It means that even the most rigorous analysis of the economics of climate change (such as that of 2018 Nobel Laureate William Nordhaus) is rendered useless. Cutting emissions by the UK will always impose costs greatly in excess of any benefits.

https://www.aeaweb.org/articles?id=10.1257/pol.20170046

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