TCS Daily

Not So Stern Review

By Hans H.J. Labohm - July 19, 2006 12:00 AM

Sir Nicholas Stern leads the Stern Review on the Economics of Climate Change, reporting to the United Kingdom's Chancellor of the Exchequer and to the Prime Minister. His report will be published in Autumn 2006. In the journal World Economics, Stern recently published an article setting out some of the issues under consideration. It was based on his lecture, "What is the Economics of Climate Change?" delivered at the Oxford Institute for Economic Policy (OXONIA).

Stern's article was fiercely criticized by Ian Byatt et al, all outstanding economists, in the same issue of World Economics. The authors argued, among other things, that the first fruits of the Stern Review constitute a false start: they do not provide a sound basis for the further work of the review team. According to Byatt and Co., the treatment of the issues has to be more inclusive, more informed and less dominated and constrained by questionable or mistaken assumptions. They point out that Stern and his team paint a somber and even dramatic picture of future climate change, from which far-reaching inferences are drawn for economic policy. But in their opinion the judgments of the Stern team are too confident and unqualified. Regarding the scientific aspects, they give insufficient weight to the pervasive uncertainties which still surround projections of climate change.

Commenting on the response from his nine economist-critics, again in the same issue of World Economics, Stern observed that Byatt and his co-authors largely focus on the science of climate change and some well-known criticisms of IPCC (Intergovernmental Panel on Climate Change) projections. But he believes that they are wrong. Stern argues on a number of details Byatt et al's note is misguided. However, he does not want to burden the reader with a point-by-point account. Instead, his reply limits itself to a couple of "empirical scientific observations" which, according to the author, should lead to the conclusion that the overwhelming body of evidence leaves no doubt that the threat of climate change is real and serious. Counter-arguments or hypotheses have been undermined and discredited as new evidence has come in. Increasingly, apparent inconsistencies in the evidence are being reconciled.

However, it is difficult to see how Stern's few "observations" can be qualified as "overwhelming evidence". More seriously, these observations are based on cherry-picking, which is probably due to the fact that Stern and his team are not familiar with the vast body of scientific literature in which the anthropogenic effect on climate change is challenged.

Take, for instance, his reference to the putative reduction of the Greenland ice sheet. Various recent studies on this issue contradict each other. But whatever study proves to be right, it should be remembered that between 1920-1930 Greenland experienced a similar warming as the one during the last decade. Furthermore, it is true that some glaciers in Europe are retreating, although this process started many decades before the CO2 accumulation in the atmosphere became significant. On the other hand, there are growing glaciers, for example in New Zealand and Antarctica.

Stern also points out that some have claimed that the observed warming could be due to increasing urbanization. He adds that that is not now seriously considered. He does not specify who is not seriously considering that claim and why. Anyhow, it is not the view of Jos de Laat and Ahilleas Maurellis, who in Geophysical Research Letters have presented solid evidence that the urban heat island effect is substantial.

Furthermore Stern notes that one remaining controversy is the attribution of current weather events to human-induced climate change. The world has been experiencing more extreme weather events -- heat waves, droughts (e.g. in the Horn of Africa at present), floods and storms (e.g. Hurricane Katrina). He suggests that there is a human fingerprint in all this. However, he and his team do not seem familiar with the thorough statistical analyses of the Canadian meteorologist Khandekar which do not indicate the suspected increase in extreme weather events.

Perhaps more importantly, Stern does not seem to have the faintest idea of the limits of modeling in predicting the future, in this case that of climate. He should have been suspicious! After all he is an economist, and certainly witnessed the demise of modeling in his own discipline in the 1970s. Even the "father" of man-made global warming hype, the American climatologist Jim Hanson, once observed: "The forcings that drive long-term climate change are not known with an accuracy sufficient to define future climate change." (Though in his more recent alarming statements he seems to have forgotten what he once said.)

What is wrong with climate modeling and the belief that it offers reliable predictions? In a recent paper, criticizing current climate modeling, Robert Essenhigh posited: "Numerical solutions are well known to be of limited and, commonly, arguable value, particularly where the prediction is outside the range of experimental validation, or where agreement between the prediction and experiment is obtained by curve-fitting, using parameter-value selection and adjustment which does not correspond to true model validation. In particular, predictions are often arguable or erroneous if the model is not first prevalidated against appropriate suites of independent and controllable experiments covering the full range of full-scale operating conditions, which is impossible to carry out in the case of atmospheric studies."

In plain language: if models do not match reality, how on earth could one distinguish a human fingerprint from natural factors and how could they provide a solid base for predictions?

All in all, the Stern team has so far produced sloppy science, which does not augur well for Britain's future climate policy. Britain's competitors, on the other hand, will be delighted to see how the UK is about to shoot itself in the foot, by burdening its industry with all kinds of extra constraints based on dubious science.

As a well-respected economist, Stern is of course not personally responsible for the flawed views which he presented on the scientific aspects of the climate issue. These are based on the advice he has received from his team. As a fellow-economist I could only recommend he take some advice from scientists who are less narrow-minded and have not espoused the man-made global warming paradigm.

The author is a TCS Daily contributing writer.



Full Speed a-Stern.
Below is a submission I sent to the Stern Committee, which they received and acknowledged.

The note has proven correct so far (re Mann's bogus hockey stick, McIntyre and McKitrick, etc.), and yet it is clear that they ignored it.

As I said at the time: " Full Speed a-Stern!" The Stern Committee was simply another waste of time and money.

Best regards, Allan

-----Original Message-----
From: Call for Evidence, SternReview
Sent: Wednesday, October 19, 2005 3:59 AM
To: Allan MacRae
Subject: Your submission of evidence to the Stern Review on the economics of climate change has been received. Many thanks.

-----Original Message-----
From: Allan MacRae
Sent: 14 October 2005 12:26
Subject: Call for Evidence - Response

To the Stern Committee

Please acknowledge by email receipt of the following documents (including 4 attachments).

The current scientific basis of the Kyoto Protocol is deeply flawed - its greatest weaknesses include excessive reliance on:

1) The IPCC 2001 Summary for Policymakers (SPM) report, which is now in disrepute. The cornerstone of that IPCC report is the "hockey stick" curve" produced by Mann Bradley and Hughes in 1998 (often called MBH98) and two subsequent papers by Mann et al. This work by Mann et al concluded that the 20th century was the warmest in the past 1000 years and the 1990's was the warmest decade, and this warming was primarily due to humankind.

It is highly probable that none of this is true. Canadians Ross McKitrick and Steve McIntyre have demonstrated the flawed science behind Mann's hockey stick and have shown, among other fatal deficiencies, that any random number data fed into the MBH98 computer code produces a hockey stick shaped graph.

The US House Energy Committee has launched a federal investigation of the Mann hockey stick fiasco and the work of IPCC 2001. See

2) Climate computer models that greatly exaggerate the impact on global temperatures of increased atmospheric CO2 levels.

The following email exchange with Lord May of the Royal Society summarizes this situation:

-----Original Message-----
From: Allan MacRae
Sent: Wednesday, June 08, 2005 5:40 AM
To: 'May, Robert'
Subject: RE: To the Officers of The Royal Society, London SW1

Dear Lord May, Thank you for your response - I have read your joint statement on climate change at

This statement is materially inaccurate on at least two counts:

1. The underlying physics is incorrect - the correct physics is as outlined by Veizer (in the paper previously sent to you, and in an earlier paper by Veizer and Shaviv) and is the opposite of that assumed by the IPCC and your Royal Society. The primary driver of Earth's climate is solar and celestial, which drives the water cycle, which in turn drives the CO2 cycle. In summary, CO2 is not the driver, but the result.

2. Even if the IPCC's physics was correct, which it is not, the IPCC's climate computer models vastly exaggerate the amount of warming. A hypothetical doubling of atmospheric CO2 from pre-industrial levels (an event which is highly unlikely to occur due to human activity) would cause warming of less than 1 degree C.

The Kyoto Protocol and other such CO2 abatement schemes are massive wastes of scarce global resources that should be used to alleviate real problems, not squandered on fictitious ones.

Respectfully yours, Allan MacRae

Attached in pdf format for use of the Stern Committee as you see fit are the following:

1. A Public Comment in response to the announcement in the Canada Gazette, Part 1, July 16, 2005 regarding proposed "LFE regulations" for Large Final Emitters of Greenhouse Gases.

2. A paper published by Dr. Sallie Baliunas, Harvard University astrophysicist, Dr. Tim Patterson, Carleton University Paleoclimatologist and me in 2002 which provides an alternative view of the science of global warming - this paper still remains valid today, although it does not include new insights such as those provided by Dr. Jan Veizer of University of Ottawa and colleagues.

3. A 2003 paper by Veizer and Shaviv.

4. A 2005 paper by Veizer.

In conclusion, even if the mandate of your committee is not to examine the flawed scientific basis of climate change as presented by the IPCC, you should include in your economic analyses a scenario in which humanmade global warming does not exceed 1 degree C - this will largely eliminate the errors of IPCC 2001 SPM and the climate computer models.

A further suggestion for your committee is to conduct a full life-cycle energy audit of alternative energy technologies such as fuel ethanol produced from corn and land-based wind power. You may be surprised to learn that some of these energy technologies produce less energy in their entire operating lifetime than is consumed in their fabrication, construction, tie-in, operation and decommissioning.

Respectfully yours,
Allan M.R. MacRae

2nd submission to the Stern Committee.
Below is my 2nd submission to the Stern Committee.

Supporting spreadsheets and commentary have been excluded here but were submitted to Stern.

Note that I did not examine the worst case scenario, which would have been a 4% Capacity Credit, as projected for the German grid in year 2020. I expect this case would have projected wind power costs twice as expensive as Case W2 (Capacity Credit 8%).

One can argue about various elements of my analysis, but generally the issue of Capacity Credit has been ignored in many justifications of wind power.

Simply put, you need almost 100% full backup of conventional power plants for most/all wind power projects - thus you "double-up" on capital costs and you only save the variable operating cost of natural gas when the wind is blowing.

Furthermore, wind power causes major destablization of the overall power grid - wind power output varies as the cube of the wind speed, so a doubling of wind speed increases the wind power output to 8 times its previous level. The rest of the power grid cannot easily compensate for these variations, unless the percentage of wind power installed is miniscule.

Finally there is the bird kill - wind power projects continue to kill vast numbers of birds,including rare condors and eagles.

I liked the appearance of the first wind farms I saw. However, since then I have heard their low-frequency noise, become aware of their cost-inefficiency and their high toll of bird kill.

This industry needs a new slogan:

"Wind power - it doesn't just blow; it sucks!"

Regards, Allan

From: Allan MacRae
Sent: Monday, December 05, 2005 4:26 PM
To: ''
Subject: Call for Evidence by the Stern Committee - Information on Costs of Generating Electricity in Western Europe - Gas Turbine versus Onshore Wind Power

To the Stern Committee
2nd Submission

Please acknowledge by email receipt of the following documents (including 2 attachments).

Cost of Generating Electricity in Western Europe - Combined Cycle Gas Turbine versus Onshore Wind Power

Below is an analysis of the cost of wind power in Germany and the UK, based on the following reports:

Sources of information:

Royal Academy of Engineering "The Costs of Generating Electricity" March 2004, UK

E.On Netz Wind Power Report 2005, Germany

Wind Power and the UK Wind Resource, Oxford University 2005


1. Assuming E.On's Capacity Factor (18.4% - Case W1), the Capital Cost of Wind is 15 times Gas (Case G), Operating and Maintenance (excluding natural gas) is 7 times, Overhead is 4 times, and Total Electricity Cost (including natural gas) is 3 times.

2. Assuming E.On's Capacity Credit (8% - Case W2), the Capital Cost of Wind is 34 times Gas (Case G), Operating and Maintenance (excluding natural gas) is 15 times, Overhead is 10 times, and Total Electricity Cost (including natural gas) is 7 times.

3. Assuming Oxford's Capacity Factor (27% - Case W3), the Capital Cost of Wind is 10 times Gas (Case G), Operating and Maintenance (excluding natural gas) is 4.5 times, Overhead is 3 times, and Total Electricity Cost (including natural gas) is 2 times.

4. It appears that onshore wind power in Germany is uneconomic (Cases W1 and W2). Better wind resources exist in onshore Britain, so wind power will in the UK be less uneconomic than in Germany (Case W3). An accurate evaluation of the long term Capacity Credit in the UK is needed to complete this assessment - it seems unlikely that this will be much better than that in Germany at 8%
(Case W2), decreasing to 4% by 2020 as more wind power is added to the German grid.

This analysis does not reflect the latest sharp increases in UK spot gas prices, nor does it address the inflationary pressures that will result in future capital costs increases if energy prices stay this high.

I believe that the E.On Netz report is by far the most informative and accurate of the three reports.

With respect, the two UK reports may seriously underestimate backup and grid operability issues of wind power.

Yours truly,
Allan M.R. MacRae

For more on the Wegman report, see this and nearby posts:


The Australian, 19 July 2006,20867,19835476-31478,00.html

The UN panel from which governments get their information is deeply flawed, writes Economics editor Alan Wood

AT lunchtime on Monday, John Howard and Victoria's Steve Bracks were on their feet talking about energy, climate change and the environment. While their approaches were notably different, there is one thing on which they both agree: the UN's Intergovernmental Panel on Climate Change is the font of all scientific wisdom on global warming.

In fact it has become quite fashionable of late to assert the global warming debate is over and an overwhelming scientific consensus prevails. This is simply untrue.

As acknowledged in an Australian Bureau of Agriculture and Resource Economics report on climate change scenarios, also released on Monday, there are still considerable scientific uncertainties surrounding the nature and extent of future climate change.

A report released in the US on Friday has torn apart one of the main props used by the IPCC to illustrate the need for urgent action on climate change. The report raises serious questions about the IPCC process and the findings on which world governments rely in forming their climate change policies. First, some background.

In telling the global warming story the IPCC, since 2001, has relied very, very heavily on what has become known as the "hockey stick". It is based on a 1999 paper, the principal author of which was paleoclimatologist Michael Mann.

Before the publication of his paper the generally accepted view of the past 1000 years was that there was a period of elevated temperatures known as the Medieval Warm Period, which was followed by the Little Ice Age, and then a new period of global warming.

Mann's hockey stick eliminated the Medieval Warm Period, flattening the fluctuations in global temperatures over most of the past millennium (the shaft of the hockey stick) until we get to the 20th century, where the rate of global warming takes off in a sharp upward surge (the blade of the hockey stick).

This is the basis for the IPCC claim, now widely accepted, that the 20th century was the warmest in the past 1000 years, the 1990s were the warmest decade in the past millennium, and 1998 was the warmest year in the past 1000 years. Scary stuff!

Two Canadians, Steve McIntyre, an engineer, and Ross McKitrick, an economist, challenged Mann's work in 2003. They argued his technique produced hockey sticks from just about any set of data. Mann responded in a notably less than scientific manner by withholding adverse statistical results and important data, and discouraging the publication of criticism of his work.

A Wall Street Journal report of the controversy last year attracted the attention of the US House Committee on Energy and Commerce. It wrote to Mann and his co-authors, as well as to the IPCC, demanding relevant information and then approached independent US statisticians for advice on assessing the data provided.

Leading US statistician Edward Wegman, of George Mason University, who is chairman of the US National Academy of Sciences' committee on applied and theoretical statistics, agreed to assemble a group of statisticians to assess the Mann data. Their report was released last Friday and supported McKitrick and McIntyre's criticisms of the hockey stick, finding Mann's statistical work flawed and unable to support the claims of the hottest century, decade and year of the past millennium.

Yet the IPCC used the hockey stick in its publications, media releases, press conferences - where senior IPCC figures sat with the chart as a backdrop - and, for a time, incorporated it into the IPCC's logo.

It is important to understand that this is a debate about the use of statistics. Mann did no original scientific work, using available data and manipulating it in a new way.

However, it destroys the idea of an alarming escalation in global temperatures and, as the Wall Street Journal remarked on Friday, brings the present temperature rise within the range of natural historical variation.

There remains plenty of room for argument about the projections of future temperature rises and their implications, based on what are still primitive climate change models. But there is no escaping the damage done to the IPCC's reputation. It has relied heavily on a badly flawed piece of work, produced by what Wegman discovered was a small, insular group of paleoclimatologists who incestuously peer review, reinforce and defend each others' work.

Significantly, former commonwealth statistician Ian Castles and his colleague David Henderson, former head of the Organisation for Economic Co-operation and Development's economics department, have also exposed statistical and analytical flaws in the economic scenarios underlying the IPCC's climate change projections. As with McIntyre and McKitrick's criticism of the hockey stick, the IPCC establishment initially tried to ignore, then discredit, their work.

However, last year a House of Lords committee looking at the economics of climate change praised their work and said that without them the debate on emissions scenarios would not have taken place.

The Lords committee also expressed concerns that the IPCC was an increasingly politicised body that tried to suppress dissent. It warned of a risk it was becoming a knowledge monopoly, "in some respects unwilling to listen to those who do not pursue the consensus line".

In an article last week in Canadian newspaper the National Post, McIntyre and McKitrick say the IPCC's lead author, who selected Mann's hockey stick for prominent display, was none other than Mann himself. They quote eminent US climate science academic Kurt Cuffey as saying the IPCC's use of the hockey stick sent "a very misleading message".

They ask a pertinent question.

If the IPCC process isn't fixed, and there is no evidence the IPCC intends to do anything about it, how do we know it won't send out another very misleading message in its upcoming Fourth Assessment report?

Copyright 2006, The Australian

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