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5 Mar 2008 : Column 453WH—continued
Treasury Ministers, however, have done worse. A full year after the report’s publication, and with the benefit of a cacophony of dissenting material to hand, the
Treasury published “Moving to a global low carbon economy: implementing the Stern Review”, which recommended that we proceeded as if none of the criticisms had been made. That beggars belief.
It is worth briefly examining some of Professor Stern’s many mistakes, although perhaps I will pick just one. Nick Stern has applied a discount rate of only 2.1 per cent. to his calculations, although the Treasury requires a discount rate of 3.5 per cent. for any other major project. There are some very good arguments, and some of the world’s leading economists, behind the view that the rate should be much higher than 2.1 per cent. The World Bank customarily uses a rate of 8 to 10 per cent., and 3.5 per cent. is considered historically extremely low.
This is not a trivial or academic point; it is quite fundamental. Just by using a sensible discount rate, Nick Stern’s conclusions would probably be put into reverse. In other words, he would have had to conclude not that we should be rapidly decarbonising the economy, but that we should, for now, be primarily adapting to climate change.
To arrive at his conclusion, Nick Stern had to make an extraordinary assumption: that we should value the welfare of every future generation, however far distant, to the same extent as our own. A moment’s thought shows us what a ridiculous assumption that is. If it were taken to its logical conclusion, as one of the many eminent professors whom I cited pointed out, we should start saving virtually all our income for the benefit of a future generation. Alternatively, as Ian Little, perhaps the world’s greatest post-war welfare economist, put it when I discussed the matter with him to ensure that my head was clear on the subject, we might as well start safeguarding the planet now in case the Martians decide that they have a use for it when they invade.
Gregory Barker: I find that a curious statement for a national politician to make. Is not thinking about the welfare, livelihood and liberty of future generations at the heart of the matter? Was that not the driving force behind our forefathers who fought in the second world war? If they took my hon. Friend’s line, those people would have appeased Adolf Hitler, done a deal and kept the British empire, and perhaps things would have carried on very well for a generation or two. However, it is surely incumbent on politicians in this place to think about future generations and their welfare and to act accordingly, and not to take selfish, self-interested, short-term decisions. That is the weakest point in my hon. Friend’s argument.
Mr. Tyrie: The best thing that I can do in response to that somewhat confused intervention is to move on.
Nick Stern has one powerful shot in his armoury, but for reasons that I cannot fully explain—only he can—it is not set out anywhere in the 700 pages of his review. I am talking about the thought that we are dealing not with damages that can be broadly estimated over 50 or 100 years of global warming, but the likelihood that the planet will cease to be habitable as a consequence of global warming. That might be true, but it is certainly not the view of mainstream climate scientists, who have queued up to disagree with it—most of them repudiate it. Most, including the Hadley Centre, which my hon.
Friend the Member for Shipley cited, also repudiate the view that we should implement policies on the basis of what has become known as the “Save the planet” mantra.
Mr. Christopher Chope (Christchurch) (Con): I congratulate my hon. Friend on his excellent speech. Does he accept that if it is so desperately vital that we have low-carbon economies now, we should expect to see a much larger campaign for nuclear energy than there is from people across the political spectrum? The logic is that we should convert our electricity production to nuclear immediately, but that is not what even the most enthusiastic greens go for.
Mr. Tyrie: That is an interesting point about some of the people who argue most strongly for early action on global warming. There are interesting implications for Nick Stern’s discount rate analysis regarding what we should do in the nuclear industry. However, although I have been speaking for about 22 minutes, I have got only a little way through my speech, so I shall not detain hon. Members further on that point.
Even if we accept that there is a risk that we will fall off a cliff, or that if we do not take urgent action, we might suddenly face extinction, we need to weigh that against the other, similar risks with which we are dealing. For example, a number of leading scientists have told us that nanotechnology, bioengineering, meteors and pandemics such as avian flu will imperil the planet in the next 100 years. Of course, we are already taking what most people would consider to be reasonable steps to mitigate the risk of those things. Some experts might say that the amounts that we are spending are inadequate, and others that that is a waste of money. The point is that the threat of extinction from global warming cannot be exempted from the need to weigh its risk against those that I listed and the application of a probability function. That is where the idea of the precautionary principle breaks down completely.
Take meteors, for example. Astrophysicists are able to give us a probability function for the likelihood of being hit by a meteor. It is a small risk, but not a zero risk. If we were to apply what some people think of as the precautionary principle logically, we should stop investing in everything until we find the technology that could definitely enable us to cope with the very small risk of being hit by a meteor. Of course, we need to balance that risk against all the others against which the Government are rightly trying to safeguard, using reasonable assumptions about each one and employing a probability function.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Joan Ruddock):
The hon. Gentleman has spent a great deal of time on a critique of the Stern report, but suppose that it had never been written. Does he not accept the evidence of the intergovernmental panel on climate change that there are predicted effects and that the science indicates where we are going—the sea level and temperatures have risen and we can expect them to rise further? That being so, it is within our means to tackle the effects,
whereas it is perhaps not within our means to tackle things such as meteors. Does he not believe that some action is needed?
Mr. Tyrie: I do. I was nearing the point during that intervention at which I would have said that there was some woolly thinking creeping in, but the Minister rescued herself a little.
The point is not that the science might be nonsense; rather, we should ask whether in response to the science, we should attempt to remove carbon from the atmosphere or find other ways of addressing it. That is the key question—the Stern review was set up to address that, but made a mess of it. I shall address how to come to the right answer in a moment.
The Stern cost-benefit analysis is almost certainly not correct; it is way out. Anyone who has looked at the evidence would have to conclude that there is something seriously wrong with it. We need to ask ourselves how much would it really cost to decarbonise the economy. The truth is that we simply do not know—the experts are only in the foothills of the subject. In answer to the Minister, while that controversy rages, the right Government response should be to prepare for global warming in case it happens, not to rapidly decarbonise. That means adaptation through, for example, allocating a much more sensible budget for flood and sea defences, not least, if I may say so, in my constituency, where the Government are not providing enough even to maintain existing defences. It also means more research into the best adaptive techniques, for example, in agriculture, sea defences and so on.
Mr. David Kidney (Stafford) (Lab): I disagree with the hon. Gentleman’s view of the risk and the need for urgent action on mitigation, but he has now mentioned adaptation. We are still in Sir Nicholas Stern territory, because he recommends action on adaptation. To tempt the hon. Gentleman one step beyond that, Sir Nicholas also says that retaining our forests and avoiding further deforestation is cheap. Would the hon. Gentleman take that step with Sir Nicholas?
Mr. Tyrie: I do not know. I would like to think about that, and I would need to do quite a lot of reading on the subject before coming to a view on something so technical.
Gregory Barker: For clarity, to avoid the woolly thinking of which my hon. Friend is such an enemy, am I right in thinking that he accepts the premise that climate change is to some extent man-made—
Gregory Barker: —yes, partly through the emission of carbon into the atmosphere? Does he accept that premise, but not that the way in which to deal with the problem is to reduce the amount of carbon? In other words, he does not disagree that climate change is man-made per se, but that reducing the amount of carbon is the way to deal with it. I am not clear on that and I wish to understand the terms of reference.
Mr. Tyrie:
At the beginning, I gave a list of six conditions that need to be met, among which were that we need to be clear that the planet is warming, that we are causing it, and whether removing the effect that we
might be introducing to the system can arrest or reverse the process. My personal view is that global warming is taking place and that there is, in the language of climate science, an anthropogenic signal, which might be large.
I have noted that arguments within the scientific community about the scale of that signal are now extremely vigorous. It is not true that the scale of the anthropogenic signal is settled among climate scientists. However, my hon. Friend asked for my personal view. I have read quite a lot on the subject, and my view is that the anthropogenic signal probably forms a large proportion of the increase. Nevertheless, we must bear in mind that the temperature increase was only 0.6 per cent. over the past century, with no further increase in this century, and a not yet fully explained cooling period between the late 1930s and early 1940s and the 1960s. In other words, we are back to the measurement issue that I raised a moment ago.
In addition, there is another measurement problem. Although we know pretty accurately the temperature at sea level for the past 150 years, our records are much poorer about temperature in the ocean depths and in the atmosphere, particularly in what is known as the tropical troposphere, about which a fierce debate is taking place. There are unreconciled differences in temperature readings from the tropical troposphere and sea level. Some have tried to come to a clear view about that dispute, but they have failed. The tropical troposphere has not risen in temperature by remotely as much as theory and models predict that it should have, based on what has happened at sea level.
Mr. Nigel Evans (Ribble Valley) (Con): I am grateful to my hon. Friend for giving way. I apologise for not being here at the start of the debate. It is a subject that interests me. Indeed, I was with the Minister in South Africa at the sustainability conference several years ago.
The nub of the matter is using science to establish why global warming exists, and we all agree about that. Another aspect, about which I have read, is the sun’s activity. Records show that there is far more activity on the sun, which is shown by sunspots. Indeed, not only is the earth warming but it is now thought that other climates are warming. We need to differentiate what could happen naturally and what is man-made. That is vital, and far more research needs to be done.
Mr. Tyrie: My hon. Friend has articulated in a few sentences one of the key minority dissenting views. The majority view, to which I tentatively subscribe, is that the increase is primarily anthropogenic. A serious group of people, mainly astrophysicists—I have some of their material with me—are convinced that the increase is not primarily anthropogenic but that it is caused by variations in the activity of the sun, particularly its interaction with parts of our atmosphere, especially cloud cover and the ionosphere. However, I do not want to go into the detailed science. Incidentally, most scientists who speak on the subject are from other parts of the scientific community, and have scarcely more legitimacy in commenting on the subject than we have. We need to listen to that much smaller, select group—the world’s leading climate scientists, particularly those of a certain type. I shall now do my best to make progress with my speech.
Given the uncertainties that I have flagged up and the controversies that are clearly raging on the subject, what should we do now? I shall list a few things. First, we need to get out of what I described a moment ago as the foothills of knowledge about the cost-benefit analysis. We should create a commission of our best economists to examine Professor Stern’s conclusions. The commission should include some of the leading critics of that review as well as some of its advocates.
Secondly, the Treasury needs to take a lead by creating an internal group, which should publish an annual assessment of the full cost of decarbonising measures taken during the preceding 12 months. We must have transparency. The public need to know what is being spent on decarbonising the economy.
Thirdly, the same Treasury group needs to examine critically whether the carbon trading emissions scheme, which is not a market-based scheme but a quota-based rationing scheme by another name, can be made to work. It should be borne in mind that all other attempts at quota-based controls have generated massive economic inefficiencies, and that many brought with them corruption and fraud. The European Union’s initial experiment has so far been a disaster, something that could easily have been predicted.
Fourthly, we should seriously examine introducing a carbon tax, initially at a low level, with its proceeds being allocated to reductions in general taxation elsewhere in the economy.
Fifthly, the Government should begin the process of removing all subsidies to carbon consumption still in the system. That raises some highly contentious political issues, and it can be done easily only with all-party agreement—and then only gradually. The sort of things that need to be considered include VAT on domestic fuel and power, red diesel and others. I do not advocate action now; I am saying that the Government should start examining such things. The reason is that most measures in this field distort economic activity and therefore, ceteris paribus, reduce economic growth. Removing the subsidies will increase efficiency and growth, provided that there are offsetting tax cuts elsewhere in the economy.
Sixthly, the Government should give much greater prominence to removing carbon subsidies in other countries. It is a scandal and the height of absurdity that the Germans are still subsidising their coal industry.
Seventhly, Nick Stern relied for much of his work on the political summaries of the IPCC panel. Another huge row about whether those summaries are accurate is now taking place in learned journals. Those who are interested might want to read World Economics, but there are many others. We need to find a way to include the Washington institutions and the OECD in the scrutiny of the IPCC process, to bolster the credibility of their conclusions, to ensure that their summaries are a fair reflection of the main text, and to review their methodology.
Eighthly, we need to find a more intelligent and systematic way of allocating research into global warming. I am reliably informed that such research is threatening to crowd out other important work in our universities. It is difficult for applicants to get a grant unless they can find a way of describing their research
as being related to global warming—usually on one side of the debate. We need to come to a clear view about how much we want to spend each year, and ring-fence it. We also need to ensure a balance between those challenging and supporting the orthodoxy.
Ninthly, we should act only when the world can go forward together. The UK should not try to take the lead by cutting carbon emissions faster than other countries. It would be particularly absurd if we were to impose carbon-reducing measures that resulted in the closure of British industries, only to see those same industries reopening in China.
Philip Davies: Does my hon. Friend agree that the argument is similar to the one put forward by CND in the 1980s—that if we were to get rid of our nuclear weapons, everyone else would follow? I was never persuaded by it. Does he agree that there is no real evidence to suggest that if we were to reduce our carbon emissions by 80 per cent. every other country would automatically follow suit?
Mr. Tyrie: I completely agree with my hon. Friend’s unilateralist-multilateralist analogy. Our actions must of course be multilateralist.
Tenthly, we must ensure that we do not use bogus or ropey arguments drawn in from outside the climate change debate to justify our actions. Among them is the idea that because fossil fuels are ultimately a finite resource we might as well end our dependence on them now rather than later. That, of course, is an absurd piece of economic illiteracy, and the argument could have been used at any time in the last 100 years.
Another such argument is that we should decarbonise our economy because it would make us more secure against blackmail by producers. For those old enough to remember the oil crises of 1973 and 1979—I am sorry to say that that includes me—it is an old chestnut, and we know the answer. Short-term interruptions to supply can be a major threat and need to be dealt with by a variety of measures, including stockpiling. However, long-term interruptions are exceptionally unlikely. That is because all resources cartels collapse and, in the end, all producers need to sell their product.
I should also like to throw in a few things that we definitely must avoid. First, we must do our utmost to avoid doing anything that could hurt the poorest, whether at home or abroad. As I said, it is the poorest, not the rich, who will be hit hardest by decarbonising at home.
Secondly, we must resist protectionism at all costs. A number of western leaders, including the EU industry Commissioner, Mr. Verheugen and President Sarkozy, have foolishly proposed that we consider protectionist measures to coerce China and other developing countries to introduce rapid carbon reductions, but that would be as economically suicidal as it was morally reprehensible.
Thirdly, we must avoid gesture politics as much as possible. I fear that the Climate Change Bill falls into that category, and on the basis of what I have seen so far, I do not think that I will be able to vote for it.
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