As Australian climate policy debate turns again to estimates of the cost of action, everybody should keep in mind that the tools behind these estimates are *terrible*. Even good faith use can mislead the user and everyone else.
Key weaknesses include:
1. No/poor inclusion of innovation (subject of the retweeted report).
2. Direly dated tech cost assumptions - eg see archaic solar PV capital costs still baked in to many leading economic models (read whole thread, latest IEA costs still way above market)
1. No/poor inclusion of innovation (subject of the retweeted report).
2. Direly dated tech cost assumptions - eg see archaic solar PV capital costs still baked in to many leading economic models (read whole thread, latest IEA costs still way above market)
3. Missing climate damages - lots left out or bumbled in the models. Is the value of the Great Barrier Reef just the output of tourism? Would temp extremes that wld make outdoors work fatal in MENA/India really cause loss of just a smidge of GDP? google.com.au/amp/s/amp.theg…
4. Ignoring climate altogether - Integrated Assessment Models are bad, but at least they include some climate damages and try to optimise versus mitigation costs. Most 🇦🇺 modelling ignores climate damage/benefits completely - there’s nothing to compare mitigation costs to.
4.A. Models that exclude climate impacts may be useful to inform choices between policies towards a goal but are useless for choosing goals. Ask eg Brian Fisher, he’ll agree. (though I would say the models are so bad they’re also not much good on policy choices)
5. Discount rates are too high. This sounds arcane, but this input assumption probably has a bigger impact on the output than anything else. High discount rates + bad tech costs + bad innovation = recs to leave abatement for later + very high unfeasible-looking carbon prices
6. Business As Usual emissions are way overestimated, so the task for any target looks way bigger. Forecast error has made a big contribution to the dysfunction of 🇦🇺 target setting and policy processes. Better than it used to be, but the latest forecasts will also be wrong 
I have not exhausted the topic but do need to go do the shopping. Suffice it to say: leaders, journos and stakeholders should not put much weight on modeled estimates of the costs or benefits of climate action. @PhillipCoorey @vanOnselenP @PeterHartcherAO @murpharoo @latingle
