Joint Committee on the Draft Climate Change Bill Minutes of Evidence

Examination of Witnesses (Questions 40-52)


16 MAY 2007

  Q40  Mr Chaytor: But if your argument is there is no need to cut back on carbon dioxide emissions because human beings are sufficiently adaptable to cope with a temperature rise of up to four degrees, then there is no argument whatsoever for a carbon tax.

  Lord Lawson of Blaby: No, there is no argument for a carbon tax except for the fact that you have got to have taxation and, bluntly, chancellors of the exchequer have to finance public expenditure and up to a certain point, if a carbon tax is more acceptable to the public than some other forms of taxation, then it is perfectly reasonable for there to be a carbon tax, but in my judgment there is no necessity to put on a carbon tax.

  Q41  Mr Chaytor: So your solution then or your response to the IPPC reports and to Stern is to do nothing because of your confidence in human beings' ability to adapt?

  Lord Lawson of Blaby: I think I would go further than that, but not a lot further. I think the situation should be watched very, very carefully and insofar as there is a role for government in helping people to deal with the adverse effects of a rise in temperature, like, say, the building of sea defences, then it is sensible it do that. It does not take an awful long time to do it compared with the 100 year or the 200 year horizons of these reports. It is also worth pointing out, talking about these reports, that there are great benefits from warming. Indeed, the IPPC reports themselves say that with a temperature rise of up to three degrees centigrade globally agriculture will be improved, there will be no disadvantage, it will be an advantage, and in fact the picture is much more disparate than that because there are some advantages and some disadvantages, and if you adopt the approach that I am advocating you pocket all the advantages and then you mitigate the disadvantages. That seems to me a more sensible way to approach the issue. Another way of approaching it is that all these problems of possible droughts in some parts of world, so you need better water resource management, possible increases in malaria (although that is contested by malaria experts), and so on, are problems now. They are not problems that have not appeared, they are problems which afflict the poor in the world now, and therefore if you go and try to deal with these you will be helping with a problem which is a very acute, serious problem, irrespective of whether there is any further warming or not. Incidentally over this century as a whole, the 21st century so far, there has been virtually no further global warming. It does not feel like that here because we are very conscious that there has been some slight further warming in the northern hemisphere and a continuation of the trend of the last quarter of the 20th century, but in the southern hemisphere there has been a slight cooling over the first few years of this century, which none of the models have predicted and none of the models can explain. Nobody knows why that is so, but it means that the average of the northern and southern hemisphere is for this century so far little change, so it is a hugely uncertain area.

  Q42  Mr Chaytor: But if we accept that human beings can adapt to certain consequences of climate change like sea defences, are you confident that nation states can adapt to the increase in the large-scale migration of people as a result of desertification or conflicts over water supply?

  Lord Lawson of Blaby: I do not accept there will be conflicts because of changes in the climate. There is a real danger of conflicts, I am not complacent about the world, I think there are huge dangers of conflicts in various parts of the world, in the Middle East and in many other parts of the world, but I think the idea that climate change will be the main source of conflict in the world or indeed the sorts of conflict where there is going to be this very gentle warming, I do not accept that at all. I think, incidentally, that there is ample experience to show that there is a crying need for improved water resource management as of now, irrespective of what may happen in the future, and that is perfectly practicable.

  Q43  David Howarth: I am not too sure your solution of sea defences for small islands works because of the effect on water supply in small islands. The Dutch example depends on the Rhine being behind them rather than all around them. Just supposing that sea level rises threaten the very existence of a small island nation, would that be an acceptable cost?

  Lord Lawson of Blaby: I think that if you are suggesting that if there is some small island where sea levels are rising (and there is no sign of this in the present time, sea levels have been infinitesimally rising for the past 100 years but there is no sign of acceleration) and if there were to be a risk to some small island nation and you had to say are we going to re-settle that population or are we going to try and enable them to stay living on this small island at the cost of a huge burden for the rest of the world, including the whole of the developing countries of the world, I think it would be nuts, it would be crazy. You cannot justify that decision at all, but, anyhow, I think you have to start from where we are. There is no way—and the Chinese have made this absolutely clear—in which they are going to agree to cutting back on their huge, rapid industrialisation programme with one new coal-fired power station being built every five days and the other things they have in mind. According to the International Energy Agency (and other developing countries like India are following a rather similar path) this year China is likely to overtake the United States as the biggest single emitter of carbon dioxide, even though, incidentally, its economy is only one-sixth the size of that of the United States but because it is very energy intensive and it specialises in energy-intensive manufacturing industries. That is the IEA's forecast. The IEA's further forecast is that in 50 years' time the Chinese will be emitting as much as the whole of the rest of the world put together, and they are not prepared, very understandably, to hold back on this rapid programme. After all, China until about 500 or 600 years ago, was the greatest economic power in the world. They went wrong economically and they made a number of foolish mistakes and they fell back and they say, "Now is our chance to catch up again and do what we are capable of doing. We are not responsible for all the concentrations of carbon dioxide there are in the atmosphere. If you are concerned about them, you, the West, deal with them. If you want now to do something about it, fine, you do it, but we are not going to be part of it," so the whole thing does not add up.

  Q44  David Howarth: It sounds very familiar, but can I just come back to the point at the start which is not about who is going to do what in terms of prediction of political science but as a matter of ethics and a matter of justice. How big an island and what size of population of island would you be prepared to relocate in order to save costs on other people?

  Lord Lawson of Blaby: I think I have made my position very clear. That is not a sensible question.

  Q45  David Howarth: May I say that is not an answer, sensible or not! Just one final point on a different matter, right at the start you were talking about discount rates and I was not clear whether the point you were making was about the pure time preference point or it was about the future generations being richer point and the two interacted. Could I just ask you specifically about the pure time discount point which is the point about whether we should value people in the future as to be of roughly equal value to ourselves, regardless of whether they are rich or poor, just as people. Do you agree or disagree with Stern's view of pure time discount? I should add, before you step in, that at least one of the economists you mention, Partha Dasgupta, agrees fully with Stern's view on the pure time discount even though he might disagree about the wealth point.

  Lord Lawson of Blaby: Conventional welfare economics is a very shady and dubious aspect of economics, it is highly subjective, as is everybody who is engaged in it, but conventionally, following on from Ramsey many years ago, it divides the discount rate into two things, the delta and the eta. One is a pure time discount and the other is a composite, which I think is a very unsatisfactory composite because it is meant to measure two things at the same time, what is called risk aversion, which you understand, and inequality aversion—different people having different incomes et cetera—and these are two quite separate things, and I think that is a major flaw in it. There is an interesting piece on this in the current issue of World Economics by Beckerman and Hepburn on this whole area which, if I may respectfully commend it to you, it is well worth reading. So we can form views on pure time preference, we can form views on what our risk aversion is, and we can form views on what our inequality aversion is and, you know, it is all very well if you add everything together you get an overall rate of discount which is applied, but I do not think it is for Stern I must say, to tell the whole of the world what they should feel about these things. Different societies and indeed different cultures at different forms of development may have different views on how risk averse they wish to be and how inequality averse they wish to be. As to how we should think about future generations, I do not think it is a central issue, it is only a small part of the overall problem, but if you look at how we do actually behave as people, I think probably we do give instinctively greater weight to the welfare of our children than we do to the welfare of generations yet unborn. I am not saying we should do that but I think that is how human beings are and I think in the same way we tend to give greater weight (maybe we should not) to looking after the citizens of our own country than we do, say, to looking after the citizens of China. That is what people are like. You can preach as much as you like about how people should be but I do not think it is going to change human nature much and I do not think it is terribly realistic to say the approach which Sir Nicholas Stern takes is correct. As you said, Dasgupta agrees with the delta but disagrees with the eta and other economists disagree with the delta but may be prepared to agree with the eta component. There is certainly no agreed economic position on this and the majority of economists I have read who have pronounced on this are extremely dubious about the Stern analysis. They may agree that climate change is a problem but they disagree with his analysis.

  Q46  Chairman: Professor Henderson, would you like to add anything to Lord Lawson's comments?

  Professor Henderson: Not specifically on this, Lord Chairman.

  Q47  Ms Barlow: Lord Lawson, you have spoken at some length about rising sea levels but in terms of a rise of four degrees, the only other mention you have made is of better water management. Studies have estimated that up to 20 per cent of all species could be eradicated in terms of the effects of climate change. You have said this is a moral issue. What about the effect on biodiversity and from an economic issue have you factored into your analysis the economic effects of incredible changes in agriculture and horticulture as a result of this rise?

  Lord Lawson of Blaby: As I said, talking about agriculture, even the IPPC—which I think gives a grossly false impression of reality because in explicit terms they do not allow for any changes or improvements in adaptive capacity, which I believe is a completely absurd assumption, there always have been changes as a result, as I say, of a combination of greater wealth and development of technology, even on that basis they say that up to three degrees centigrade agriculture will benefit net from the change of temperature and it probably would at even higher than that. As for the biodiversity point and species, what they actually say is that a lot of the species already in danger may be in greater danger. These are species already in danger. I am not sufficiently knowledgeable about how great the danger is. It is interesting that one of the things that people are concerned about is polar bears and polar bears have been around for millennia during which the change in the world's temperature has been quite considerable and they have survived, so I think that there is a huge amount of alarmism in this. Everybody is aware of alarmism. Alarmism has always existed and you have to aim off for it. You remember Malthus 200 years ago saying that there was going to be war, pestilence and famine, very much like the IPPC/Stern Review, because there was no way in which food production could grow as fast as the population was rising. There was the famous limits to growth thing. We were all going to be in a terrible mess. The Club of Rome in the 1960s—I remember that very well—saying that the world was going to run out of raw materials and it would no longer be able to grow. There would be no more economic growth, it was going to come to a halt within 10 or 15 years. We are now told it is the consequences of economic growth going on and on and on which is going to cause all the problems because of carbon dioxide emissions. Then again in about 1970 scientists said that there was going to be a new Ice Age because at that period there had been some cooling in the world, and even James Lovelock, who is now one of the extreme alarmists about global warming, was predicting then that at any moment we were going to plunge into a new Ice Age. And of course the media love those scare stories, they love these alarms, and they are given huge amounts of publicity. The is true with medical scares, we read them all the time, there is a huge amount, that is the nature of the world in which we live. If you are a sophisticated legislator, which I am sure you are, you have to discount this.

  Q48  Lord Whitty: You seem to be saying that at three per cent the world becomes a better place and at four per cent we can live with it with a bit of adaptation and sea defences, but actually from a business as usual case we are looking at about 1,000 ppm by the end of the century and the implied temperature rise for that is very substantial and we have not had that level of carbon concentration for roughly 50 million years when the world was much hotter and a very different sort of place. Is there a point in your scale where the trade-off changes? If we can survive at four per cent, can we survive at six per cent or Helsinki becoming as warm as Singapore and Singapore presumably going up another 22 degrees? Either you accept the causal relationship between carbon concentration and temperature and if you do not accept that then that is one point, but if you do, then is there a point on the temperature scale at which in economic terms the investment in adaptation ceases to be the best way to deal with it and you have to invest in mitigation? If so, what is that point approximately?

  Lord Lawson of Blaby: I think that the point really is this: that of course carbon concentrations in the atmosphere have been rising substantially and are set to rise substantially but those are not the only determinant by a long chalk of the temperature of the globe. First of all, carbon dioxide is not the most important greenhouse gas by a long way. The most important greenhouse gas is water vapour, whether in the form of clouds or water droplets in the atmosphere. That is the biggest single greenhouse gas. Carbon dioxide is only a small part of the total greenhouse gas picture, so it is extremely complex and extremely difficult, and nobody, not even the IPPC, thinks that anyhow that is the sole cause of the modest rise in temperature that we have had. They accept that there are natural forces at work too but they think probably it was the greater part, over 50 per cent, but it is all inevitably uncertain. Other people think it is less but very few scientists think it is zero per cent. However, it is very difficult to decide how much of this modest warming that we have had is due to that. So it is not simply a question of carbon dioxide concentrations in the atmosphere. It is a question of what effect they are having, which we should obviously be monitoring and watching very carefully. I have to say I do not have the confidence that you have, Lord Whitty, to be able to know what the world is going to be like in 100 years' time or 200 years' time.

  Q49  Lord Whitty: But you have said that effectively—never mind the cause for a moment of global warming—even it was totally natural causes that four per cent is liveable with by investing in adaptation rather than attempting any serious mitigation, but there must be a point on the temperature scale at which the opposite becomes true, at which the cost of adaptation is so huge, directly and indirectly, that mitigation becomes—

  Lord Lawson of Blaby: There are all sorts of things that are going to happen some time. One day the sun is going to burn itself out and that is going to be the end of it.

  Q50  Lord Whitty: Probably not in the next 100 years though.

  Lord Lawson of Blaby: No, but I find it difficult to say with confidence what is going to happen over the next 100 years. We do not know what is going to happen in the development of technology, whether it is technology in renewables or the development of technology in adaptation. How man is likely to adapt given greater wealth, given better technology, we cannot say. We do not know what is going to happen to sea levels. There are all sorts of projections but, as I say, so far there is no sign of any great rise in sea levels. However, we have got to watch all these things and we should take the sensible steps at the time to deal with them. I am not dogmatic about this but I do think that rushing into what is in the Climate Change Bill would produce great damage to this country, if it were taken seriously. I suspect it is just posturing, incidentally, it is very fashionable, very trendy, and I suspect it will never actually happen, but I am afraid that it might. There is an outside chance that it might and if it did it would be very damaging.

  Q51  Chairman: You can see that the clock has beaten you and there is a division. Because we are inquorate, would you write to the Committee with your final statement. If we could receive it in writing we can include it in evidence.

  Professor Henderson: I have already made an offer to the Clerk to put in a note on one or two other questions that may come up.

  Q52  Chairman: Thank you very much indeed. Sorry but, as I say the clock beat us, not for the first time. Thank you both very much indeed.

  Lord Lawson of Blaby: Thank you.

  The Committee suspended from 3.02 pm to 3.12 pm for a division in the House of Commons

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