Select Committee on Economic Affairs Written Evidence

Memorandum by Leonard G Brookes BA, PhD, Fellow of the Energy Institute[1]

1.   Preamble

  1.  The author of this paper is not in a position to make detailed calculations of the cost of action to meet current fears about climate change. He has however taken a keen interests in the subject of climate change since it first hit the scientific, and later, the public headlines, having encountered references to the phenomenon of the effect on global warmth of the so-called greenhouse layer at least four decades ago. At that time it was treated in the scientific world as no more than an interesting theory put forward in a paper published in 1896 by the Swedish scientist Svante Arrhenius who reported his ideas about the carbonic acid[2] in the atmosphere affecting the temperature on the ground. The present author feels that the interest he has taken and the reading he has done put him in apposition to offer qualitative comments that may prove helpful to the Lords' Committee.

  2.  There are at least four elements to be taken into account in any evaluation of the global warming phenomenon:

    (i)  Are we justified in fearing catastrophic effects from mankind's use of certain fuels and other relevant materials? Is the phenomenon more than just an interesting idea in other words?

    (ii)  If there is a real threat, what might be the nature and the level of the damage? Can it be costed?

    (iii)  What is the nature and the magnitude of remedial action that might be taken? Can this be costed?

    (iv)  If remedial action calls for a major diversion of resources on a global scale how does the threat of global warming stand in relation to other possible uses of the same resources—the relief of third world famine and disease for example?

2.   How real is the threat from man's activities?

  3.  There may be a significant threat that has nothing to do with man's activities—although as we shall see below some sceptics would deny even this. There have been wide fluctuations in the temperature of the Earth over its history. Evidence for this can be seen in the evaluations that have been made of ice cores taken from the frozen Arctic Lake Vostok—which embrace hundreds of thousands of years. On a much shorter scale we have historic evidence of a period of higher temperatures at the time of the Norman Conquest; and in the 19th century we had the ice fairs on the River Thames. These fluctuations could have been due to changes in the activity of the Sun and if there is a real threat today it could have the same cause.

  4.  A number of writers have expressed scepticism about the very existence of a global warming threat or at least of a man-made one or about the seriousness of the threat.[3] There also exists a European sceptics' "club" based in the UK[4]. The author will content himself first with a summary of comments in some sceptical papers published in 1999 in the Newsletter of the International Association for Energy Economics[5] that impressed him, plus extracts from a well-thought-out letter by Neville Potter, past President of the UK Institute of Energy, that appeared in the Institute's journal for July/August 1999.

  5.  Key points in the papers and letter are given below:

    (1)  There is a poor match between the periods covered by the rises in temperature which it is claimed have been observed and the period over which there has been a large increase in fuel use.

    (2)  The critics are sceptical about the ability of the mathematical models used by climatologists to take account of all the factors involved in climate modelling and prediction especially the ability to forecast changes 70 to 100 years hence. They regard the models as useful tools for education and research but would not accept their answers as a basis for national and international decision making. The models "should not be placed on a pedestal" they say. Changes made to models in an attempt to improve their predictive power over the world as a whole are questionable and in any case leave puzzling anomalies in changes region by region. Predictions by the models tend to be of larger increases in temperature than are found from either ground based or satellite based data.

    (3)  The movements in global temperature are equivocal and do not lend support to the claims of a threatening monotonic process. Signs of rising average temperature are confined to night time readings: there is little sign of rising day temperatures. Climatologists would expect to see greater rise at the poles than elsewhere but there is little sign of this in practice. Measurements taken using satellites in the twenty or so years for which they have been available show no increase in temperature.

    (4)  The greenhouse layer consists of approximately two thirds water vapour with almost all the remaining third consisting of natural sources of CO2 and other gases such as methane. CO2 from fuel use of all kinds is an insignificant 0.6 per cent of the total. All efforts to reduce CO2 emissions are concentrated on this insignificant fraction. The effect of making fuel scarcer and more expensive would manifest itself as a major cost to the economies of the world for a zero or near zero return in terms of effect on world climate.

    (5)  The letter by Neville Potter points out that all atmospheric CO2—not just that amount due to fuel consumption—is present only as a trace constituent, smaller in quantity than the rare gas Argon. This rare substance is nevertheless essential to life on Earth—as indeed is the presence of a greenhouse effect itself, without which the world would be too cold to sustain life. He deduces from the substantial amounts of fossil limestone in the Earth's crust (that do not seem to be increasing) that there was much more CO5 in the atmosphere in past ages. Given its role in sustaining life should we not be concerned about this decline? He concludes with an expression of incredulity at claims that a rare constituent of the atmosphere that is essential to life should be a major threat to mankind.

  6.  One of the authors reported a seminar held at Houston, Texas at which three convinced supporters of the global warming threat, three sceptics and one neutral engaged in public debate. One of the first group was an exceptionally strong supporter and one of the sceptics a strong opponent. (There were representatives from climatological departments on both sides of the debate.) At the end of the proceedings all participants were asked if they would now sign the Kyoto protocol. Six of the seven said they would not. Only the strong supporter remained true to his conviction. The neutral would have signed the protocol before the debate but had been convinced by a paper offered by a strong supporter (not one of the seven) that any return from Kyoto would be too small to justify the heavy cost of compliance.

  7.  The report of the George C Marshall Institute mentioned in footnote three is impressively analytical—drawing the vitally important distinction between comments and bodies that are primarily political in nature and those based on the relevant science. It is introduced by a summary and preface by Philip Stott, Emeritus Professor of Biogeography at the University of London. Stott's comments are based on what is said in the Marshall report itself. On that basis he points out that the Intergovernmental Panel on Climate Change whose work is the basis for the Kyoto protocol is often presented as a purely scientific body. In reality, while its work involves many leading experts, the IPCC is made up of government representatives. Its activities tend to be a cross between scientific peer review and intergovernmental wrangling. The Marshall working party argues that they have two main concerns about the IPCC:

    (i)  the process that produced the "Summary for Policymakers" (the SPM); and

    (ii)  the overriding emphasis on reaching a concensus—a process that misleadingly reduces the uncertainty in the science. They point out that the SPM was produced line by line at an IPCC plenary session at which the scientists present were very much in the minority. The Marshall working party concluded that the Kyoto protocol was not the way forward: the mandatory command and control economics and politics of the Protocol were not justified. This did not mean that voluntary reductions in greenhouse gases should not be pursued: there were reasons for diversifying energy technology that had nothing to do with climate change. In general they were highly critical of the categoric statements about the existence and level of climate change that were put forward to justify Kyoto action.

  8.  The foregoing makes the case for scepticism. The climatologists voicing the fears of real threats continue to speak out using more and more sophisticated arguments. The Financial Times for 19 February 2005 reports the Scripps Institution of Oceanography in California as citing changes in the salinity of the oceans as a much more important indicator than the presence of CO2 in the atmosphere.[6] The Institution claims that 90 per cent of the energy from man's release of CO2 ends up in the oceans, the reduced salinity of which is due, they say, to the melting of the Arctic and Greenland ice sheets and could lead to such chaos-theory type outcomes as the diversion of the gulf stream that saves us from a climate like Norway's. However in a Channel Four programme a few years ago researchers claimed that there was more melting in cold winters than in warmer ones. This, they said, was because the melting occurred from the bottom of the sheets due to pressure from the heavier falls of snow on top, not from the effect of a warmer atmosphere acting on the top of the sheets.[7]

  9.  The lesson the author of this paper offers is that uncertainty about a threat from man-made global warming does exist. An uncertainty factor should be applied to claims about damage from such a threat and should be taken into account in deciding upon the level of remedial action against other claims on the resources needing to be employed.

3.   What might be the nature and extent of the damage from man's use of fossil fuels?

  10.  The principal threats are usually given as:

      1.  A rise in sea levels threatening all low lying regions of the world; and other effects on the seas affecting familiar flow patterns of the oceans.

      2.  A departure from familiar ambient temperature levels with adverse effects on the local environment and on traditional farming and other activities.[8]

      3.  An increase in catastrophes like floods and hurricanes due to the deposition of additional energy into climatic systems.

  11.  Evaluation of the economic cost of damage tends to be done alongside evaluation of the cost of remedial action in studies that attempt to balance the two. The two will be taken together in the next section.

4.   How much remedial action is justified and what will it cost?

  12.  Before we proceed to examine this question we should first take a brief look at the present tendency to divide the world into the "good guys" who have supported the Kyoto protocol and the "bad guys" like the USA who have so far stood out implementing it. So far 141 countries have signed the protocol but only 35 have agreed to make carbon emission cuts under the treaty. Only two of the EU 15 countries are on track to meet their Kyoto commitments. Italy has said it will not seek further cuts in emissions after 2012.[9]

  13.  Next we should take on board the argument that if we face a real threat of damage, say, towards the end of the century, our ability to deal with it will be considerable reduced if we take action now that reduces growth rates and hence limits the resources likely to be available to us to deal with future environmental problems. Others have argued that a warmer world might be a nicer and richer one.

  14.  Now let us turn to what studies have been done to measure threats and remedial costs in economic terms. Many studies have in fact been conducted notably in the USA[10] attempting to balance the cost of remedial action against attempted evaluations of the damage done. The "Energy Journal", the organ of the International Association for Energy Economics, published a special edition devoted to this subject in 1999.[11] Two distinguished economists Ronald Sutherland, one time with the Argonne National Laboratory, Washington DC and now an independent consulting economist, and Robert L Bradley jnr, President of the Institute for Energy Research, Houston, Texas. commented on the papers in the Newsletter of the International Association for Energy Economics for the first quarter of 2000. Sutherland drew a distinction between what he called the Green Team (environmentalists and conservationists) and the economists. The former believe in what some have called the "free lunch" hypothesis (which most economists reject as misconceived), namely that improvements in energy efficiency can be made that reduce consumption with little or no damage to economic performance or even an improvement in it. They thus tend to arrive at low costs of implementing the protocol, while the latter have estimated "high" costs. It has to be acknowledged—and indeed is acknowledged by the experts—that their conclusions (despite the sophistication of their modeling techniques) depend very much on hypotheses—necessarily so at this stage because experience of the economic effects of restricting energy use on a world scale is lacking. Conclusions must be seen against such uncertainty. There was some suggestion that of the possible measures—carrots (subsidizing benign sources) and sticks (taxing carbon sources)—sticks were more effective.

  15.  Sutherland[12] offered the following useful set of comments[13] on the more important papers in the special issue:

    1.  These studies generally show that the emissions trajectory described in the Protocol is lower and the cost of mitigation higher than that required to meet the long run objectives that were considered (Weyant and Hill—Stanford University, Stanford California—who edited the set of papers and are here summarizing several papers.)

    2.  The short term US abatement costs of implementing this Protocol are likely to be substantial. Finally, the Protocol seems inconsistent with cost-effective long term strategy for stabilising concentrations. (Manne and Richels—Stanford University and the US Electric Power Research Establishment.)

    3.  It appears that the strategy behind the Kyoto protocol has no grounding in economics or environmental policy. (Nordhaus[14] and Boyer—Yale University.)

    4.  The emission reduction targets as agreed in the Kyoto Protocol are irreconcilable with economic rationality (Richard Tol—Institute for Environmental Studies, Vrije University, Amsterdam.)

    5.  From a welfare perspective the major effect of the Kyoto agreement is to produce a large wealth transfer from the Annexe 1 countries (the richer countries called upon to accept the lion's share of carbon reduction) to the non-Annexe 1 countries, while realizing none of the benefits of CO2 control (Peck and Teisburg, (The US Electric Power Research Institute and Teisburg Associates Charlottesville, Virginia.)).

  16.  Surprisingly however Sutherland concludes that the models used in the papers in the special issue of "The Energy Journal" are not necessarily the appropriate tools for assessing the costs of Kyoto: they tend to pick up long run effects rather than the shorter run effects to which Kyoto is addressed. He does however pay tribute to the Energy Modeling Forum based on Stanford University that organised the collection of papers saying that simply bringing together the best of the international modeling teams with a common purpose does contribute significant credibility to their findings. The present author hopes that this somewhat muddled conclusion does not confuse the Lords' Committee. His own view is that one would have to search far and wide before finding a more authoritative collection of experts in this field and that he would attach great weight to their findings.

  17.  The teams of modellers paid special attention to the role of emissions trading. They claimed that, if trading results in the countries able to make the best use of fuel being able to buy the right to use it from countries only able to earn lower levels of income per unit of fuel consumed, trading results in a lower cost overall of meeting Kyoto restrictions. It follows that if trading includes the developing countries (who might gain more from selling their emission rights than by using the relevant fuel) then the cost of reducing emissions is minimized. Sutherland questions the benefits claimed saying that the modelers failed to take account of the costs of operating and policing the trading system which could be quite considerable.

  18.  Sutherland further points out that the developing countries are not constrained under Kyoto to reduce their own emissions. They are thus able to sell emission permits at a low price. According to Nordhaus and Boyer, if the DCs do not reduce their emissions, global mean temperature declines by only 0.13ºC over the next century. If the DCs were constrained to reduce emissions they might not have credits to sell to other countries. In other words trading has the greatest potential to reduce costs when the policy fails to reduce the threat of global warming. Perhaps this should be seen as another example of the failure of the Kyoto machinery to deliver.

5.   How does mitigating the threat of global warming compare with other possible uses of the remedial resources?

  19.  The author offers the views of the International Red Cross and the Red Crescent on this point. Other commentators including the present author himself have commented in almost precisely similar terms. It takes only a few words to put the relative uses of the resources into perspective—see below:

    Comments in the latest report of the International Red Cross-Red Crescent contrast deaths from disasters like floods and hurricanes at thousands per annum (which might be reduced by costly anti-global warming measures) against deaths of 13 millions per annum from third world disease that could be avoided by relatively cheap medical measures if the necessary relatively modest resources were made available. (Taken from press comment on the report of the two international bodies.)

  20.  To this should be added the massive loss of life every year from recurring famine in third world countries, relief of which also would be arguably a more worthy use of the resources concerned.

6.   Conclusions

  21.  Perhaps the issues most deserving of close attention by critical analysts are (i) the validity of the origins of the pronouncements of the Kyoto authorities (see paragraph 7) and (ii) the relevance of their pronouncements to the presumed problems to be addressed (see paragraph 15).

24 February 2005

1   Before his retirement from full time work in 1980 Leonard Brookes was responsible for Economics, Forecasting and Energy Policy at the London HQ of the United Kingdom Atomic Energy Authority. He subsequently worked as a consultant to public and private bodies including the UKAEA, the CEGB, the Electricity Council, the ODA (with Maxwell Stamp Associates), the International Atomic Energy Agency, the US Electric Power Research Institute, the Commonwealth Scientific Office, and as an attached specialist on projects with a number of economic and engineering private consultancies. He is the author of many papers published in learned and specialist journals on the subject of energy economics and policy (most recently in Energy Policy for June 2004) and was editor/compiler and part author in partnership with Dr Homa Motamen-then of Imperial College-of "The Economics of Nuclear Energy" published by Associated Book Publishers in 1981. He was also, by invitation, the author of the Open University's course unit on Energy that formed part of their course on Statistical Sources. Back

2   Carbon dioxide dissolved in water produces carbonic acid. Back

3   Examples are "Climate Policy after Kyoto" by several authors writing under the auspices of a Swedish University but including non Swedes among its contributors; individual papers published in journals and, in particular, in the newsletter of the International Association for Energy Economics and summarised by the present author in this section; and a report by the George C Marshall Institute, Washington DC embracing contributions by 11 distinguished contributors and published in the UK by the body mentioned in footnote 4. Back

4   The European Science and Environment Forum. Back

5   The authors were Gerald Westbrook, ex Senior Associate of the college of Business Administration at the University of Houston (also ex Hydrocarbons and Energy Economist at Dow Hydrocarbons and Resources Inc); and Brian P Flannery, Manager Science and Strategy Development, Exxon Corp. Back

6   The level of CO2 in the atmosphere is a balance between the amount released and the amount removed due to its solubility in water. It has been argued that differences from year to year in atmospheric CO2 concentration may be due to changes in the levels of the wind from year to year that distribute CO2 over the absorbent oceans. Back

7   We should take note that melting of floating ice sheets does not result in changes in ocean levels. This is because floating ice displaces its own weight in water. Back

8   It is recognized however that there would be winners and losers. Some regions might finish up with a better climate. It has also been argued that more people in the world die from cold than from being too warm. Back

9   All this according to Alex Singleton, President of the Globalisation Institute, in a letter to the Daily Telegraph for 19 February 2005. Back

10   It is ironic that although it is the USA that is condemned for reluctance to follow the rest of the world in reducing emissions, the same country stands out for the quantity and quality of the work done there to compare costs and benefits and indeed to evaluate the likelihood, nature and extent of a real problem. Back

11   Thirteen modelling teams contributed to this volume-seven from the USA and six from other countries. Back

12   In a paper published on a different occasion, Sutherland concluded that, on a wide range of assumptions about damage from global warming and the likely cost of remedial action, the optimal course was to do nothing. Back

13   Subjected to some editing by the present author. Back

14   William Nordhaus is Professor of Economics at Yale University. The paper that he produced with his staff member Joseph Boyer is a crushing indictment of the Kyoto Protocol-the benefit to cost ratio of implementing the Protocol is very low and its cost-allowing for the emissions trading provided for-is about an order of magnitude higher than it need be. For several decades Nordhaus has been a towering figure in the world of energy economics. A few years ago he produced a paper arguing that it is unethical to expect today's citizens to make sacrifices in the interests of future societies who are likely to be much richer and able to afford measures to deal with the environmental problems they may face. Back

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