Climate Change Tornado Chart

In his column in today's Washington Post, Robert Samuelson considers some of the implications from last week's MIT Coal Study presentation, which we both attended. He makes an interesting point about the inverse relationship between the efficacy of measures to address climate change and their political acceptability. Even if you disagree with his examples of solar power as weak but popular and a "hefty tax on energy" as effective but unpopular, they highlight the need for a consistent set of tools to facilitate the policy debates these matters require. Well-to-wheels analysis provides a good framework for comparing the energy and emissions consequences of different technologies, but it isn't well-suited to comparing strategies and doesn't always yield a compelling visual output. What we need is the climate change equivalent of the "tornado diagram."

When I was in Texaco's corporate planning department, one of our key tools for comparing project proposals was net present value (NPV) analysis, based on the probabilities associated with different inputs and outcomes. This method provided the expected NPV of the project, as well as a pretty clear picture of how risky it was, relative to other, similar projects. The two standard visual tools that accompanied this analysis were an S-curve, showing NPV as a function of probability, and a tornado diagram, which displayed in descending horizontal bars the objective ranking and magnitude of the risk factors inherent in the project. These charts, along with the numbers behind them, provided the basis for some great qualitative and quantitative discussions, and they had a large influence on which projects got funded.

The great thing about this kind of tool is the way in which it can bring the counter-intuitive to light. For most of the oil and gas or refining projects I was involved with, the top risk factors on the tornado diagram usually related to construction cost estimates and start-up timing. But occasionally, some other factor that no one had given much credence jumped off the page in a way that would have been much harder to convey conversationally, or numerically alone.

Imagine such a tornado diagram for climate policy, showing the ranking and magnitude of the cost/benefit relationships for a wide array of strategies, such as cap-and-trade, carbon taxes, and the various incentives for biofuels, wind and solar power, and advanced vehicles. Perhaps a carbon tax is the most effective measure we could employ to get greenhouse gas emissions under control. Seeing it ranked against the other options might serve to emphasize that point. But it's possible that some other strategy that is less appreciated or understood could be nearly as effective, and much more palatable. Being able to show, rather than just tell, people that would be really useful. The right visual tool, conveying a lot of information clearly and concisely, could help decision makers reach agreement on which measures are worth their financial and political costs, and which are not.