Blogs & Comment

Fun with numbers

The science of climate change is, for better or worse, largely dependent on computer models, projections and assumptions. That means data can be skewed to serve just about any ideological stance. Consider the case of a studyfrom the Massachusetts Institute of Technology on the costs of a cap-and-trade system.
Different interpretations of the study have been bandied about for at least the past month, and the issue is particularly important in light of the debates in the U.S. last week over the draft Waxman-Markey energy and climate bill. America’s cap-and-trade proposal also has a particular relevance for Canada since policy-makers here will likely follow suit with whatever is decided down south.
Republicans claimedthe MIT study, originally published back in 2007, showed a cap-and-trade system would cost a family of four more than $3,000 per year. John Reilly, an MIT professor and one of the authors of the study, wrote a letterearlier this month to House Republican leader John Boehner to express dismay that his report was being misrepresented. The average cost per family of four is $340 per year between 2015 and 2050, according to Reilly:

This $340 includes the direct effects of higher energy prices, the cost of measures to reduce energy use such as adding insulation to homes, the higher price of goods that are produced using energy, and impacts on wages and returns on capital.

The Republicans’ inflated figure, on the other hand, includes revenue collected from industry through the auction of permitsrevenue that will be returned to the public under the proposed legislation.
But the latest development comes from a Weekly Standard articlein which Reilly explained to the author that the actual cost is closer to $800 per household:

I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others.)

The Environmental Protection Agency may have cleared the air (or further obscured things, depending on your viewpoint) with an analysisof the proposed cap-and-trade system in the Waxman-Markey bill. Its report finds cap-and-trade will have a relatively modest impact on the U.S. consumer. The bill will only cost households between $98 and $140 annually from 2010 to 2050, provided the bulk of revenues are returned. (The importance of how that is done can’t be overlooked, of course.)
But such widely diverging analyses are probably doing little to help the public, likely already bewildered by the complexities of cap-and-trade legislation. And as the U.S. inches closer to a decision, expect similar partisan debates about cost up here. Just recall how former Liberal leader Stphane Dions Green Shift plan was trashed by the Conservatives as a tax on everything.
Ultimately, the numbers may mean little, at least in the American context. The New York Timesquotes Karlyn Bowman, a fellow from the American Enterprise Institute, who astutely points out:

“Americans draw their conclusions about issues based on their values, not in terms of numbers the way social scientists and journalists do.”