Select Committee on Economic Affairs Written Evidence

Memorandum by Ms Rosemary Righter

  1.  I am an Associate Editor of The Times and former Chief Leader Writer. I write on international politics and economics, and claim no specialised knowledge of environmental questions, although as author of an anatomy of the United Nations, I do know something about the political and institutional complexities of decision-making in an area that is inherently controversial because of its direct impact on domestic policies.

  2.  My interest in management of the global environment goes back a long way, predating the vast 1992 UN Conference on Environment and Development in Rio de Janeiro. I wrote at the time, and still believe, that although that conference undoubtedly succeeded in its "consciousness-raising" goal of putting pressure on governments to act, it led to an unwelcome politicisation of the environmental debate. It also marked a departure from the careful, step-by-step, pragmatism of the admirable Montreal Protocol on the ozone layer. Rio's Agenda 21 filled nearly 800 pages and theoretically committed governments to no fewer than 150 programmes, divided into 2,400 tasks with an annual price tag of $600 billion. Oversight of this stratospherically ambitious and unrealistic agenda was then given to the UN General Assembly, in a specially created Ecosoc "Committee of the Whole". The predictable consequence was a depressingly familiar and unproductive rhetorical battle between "North" and "South". Since then, environmental negotiations have been subject to the artificial rigidities of bloc politics.

  3.  The Kyoto Protocol—with its blanket exemption for developing countries, and its reliance on emissions ceilings and targets rather than a more flexible, multidimensional approach to climate change—is the unfortunate result. Hence, also, the progressive politicisation of the work of the IPPC. I was not surprised to learn, from evidence to your committee, that IPPC scenarios have been "adjusted", under pressure from African governments, so as to factor in far higher projected rates of Sub-Saharan growth than we have reason to expect. The extent to which scientists and economists who question the IPPC's more alarmist scientific assumptions or the soundness of its economic projections are being frozen out of the "mainstream" debate is even more deeply disturbing. As one frustrated scientist recently wrote to me: "Business interests, University departments, Government laboratories and pressure groups all wish to promote findings that . . . attract research grants, support their work, or generate subscriptions. Scientists have families and mortgages, so are understandably keen that support for their jobs continues. Few are independent enough to voice facts that do not support the majority view and they are condemned if they do."

  4.  The media are influenced both by NGO pressure groups and by what they are insistently told by authority is an "overwhelming" consensus on global warming. The phrase "scientific consensus" ought to produce a tremor of doubt, since we admire scientists for their sceptical approach to received wisdom, but that is not the case with climate change. Government press releases, doubtless with the honourable intention of making a complex message simple enough to get it across and of establishing a "story line" that excites news editors, tend to present "worst case scenarios" as established scientific fact. Reporting then, in turn, contributes to the "greenhouse effect" that has come to distort political decision-making.

  5.  Thus, particularly but not solely on this side of the Atlantic, the Kyoto Protocol is unquestioningly accepted by public and politicians as a "good thing"—defective only in that its targets need to be even more ambitious than they are. The US refusal to ratify the treaty is treated as proof of its contempt for the common interest, and its insistence that this lopsided treaty will not in fact serve the common interest is dismissed as disingenuous. The public, which has very little idea of the costs of complying with Kyoto ceilings, is being told that these costs—and the costs of the far steeper emissions cuts to which the Blair Government is unilaterally committed—simply "must" be met. They are not being told that even if implemented in full, by all 39 countries on which the burden has been laid including the United States, the Kyoto treaty would have no more than a negligible impact on global warming—or that, by contrast, its impact on the British economy, and on Britain's international competitiveness, could be severely negative.

  6.  Above all, they are not being told that there is the slightest uncertainty about the scientific projections on which this policy has been based. Most people now accept the "scientific consensus" that global warming is occurring, that heavy use of fossil fuels is mainly to blame, and that the consequences will be catastrophic unless the trend can be slowed or reversed by dramatic curbs on greenhouse gas emissions. This argument moves from established fact, to plausible explanation, to the realm of guesswork—the further into the future, the wilder the guesses. By comparison with 100-year "scenarios" about global warming, long-range weather forecasting looks rock solid.

  7.  Earlier this year, a scientific conference at Exeter University, convened to provide the Government with expert advice in preparation for this summer's G8 summit, became something like a contest between which horror stories—the Vanishing Gulf Stream, Millions Dead of Malaria in the Midlands, the Parboiled Polar Bear—would do the best job of making the public's flesh creep. As spin for the Government's case that climate change is a threat greater than terrorism, this was no doubt effective. As guidance to policy-makers, it was a disgrace. Tall stories have no place at G8 summits. Scenarios such as these are what scientists know as "computer-aided story lines". They are not reliable predictions, and to base decisions on them would be not only absurd, but pernicious. For example: a shutdown in the thermohaline circulation that produces the Gulf Stream would indeed be disastrous for Europe, but it is what scientists call a "low probability high-consequence event"—in plain language, it has a more than 95% chance of not happening. Malaria could indeed make a comeback in Europe, but this is a land-use and public health issue, more than a climatic one.

  8.  It is no doubt fascinating to feel a load of worst-case assumptions through computers to see what happens. Climate change modeling involves assumptions about all sorts of things—population levels, rates of economic growth, energy efficiency and the weight of fossil fuels in future energy production—that are hard to forecast over an extended period. These assumptions, often themselves based on other assumptions, are then fed into models that project into the future their impact on the climate. Uncertainties abound. To cite only two "variables" that are understated in IPPC scenarios that concentrate on CO2 emissions, orbital variation may be a significant factor in climate change, and there is disagreement about the importance of water vapour as a factor in global warming. So long as it is made clear that these flights of fancy are in no sense forecasts of what is likely to happen, there can be no objection to such exercises. But it is quite another matter when these speculative "images of alternative futures" are treated as "the latest scientific evidence" and taken as the basis for the decisions that politicians take and taxpayers and consumers pay for. In climate change, careless talk costs livelihoods.

  9.  The IPCC has drawn up "scenarios" of mean temperature rises between 2000 and 2100 that vary between 1.5oC and 5.8oC. The difference between these two guesstimates ranges, baldly, from inherently manageable to seriously alarming. The top-end IPPC scenario, A1FI, assumes that per capita carbon emissions rise to four times current levels (they have been stable since the early 1970s) and that methane concentrations more than double (they are currently declining). Another high-end IPCC scenario, A2, not only puts the world population in 2100 at 15.1 billion, half again as high as the 10.4 billion projected by the UN, but also, reversing the historic trend, assumes more carbon-intensive energy use. Both scenarios artificially inflate the challenge of climate change.

  10.  These top-end scenarios, and the 5.8oC increase in global mean temperature, are constantly cited and are distorting policy. Thus, although few of the industrialised countries are expected to meet the Kyoto target of reducing their GHG emissions to 5.2 per cent below 1990 levels by 2012, the treaty already has "past sell-by date" stickers plastered all over it. The futility of a treaty that allows large and rapidly growing economies such as India and China unlimited emissions is increasingly evident. So is the inefficiency of imposing reductions on those countries that have already taken the "easy" steps to less carbon-intensive growth, instead of creative incentives for emissions cuts in countries where these will have the lowest marginal cost. But the proposed remedy is Kyoto-plus—more stringent curbs on emissions, applied to more countries.

  11.  It would make more sense to concede that the product is so flawed that it should never have been put on the market. For a start, allocating emissions ceilings is a form of rationing and involves, as do all government rationing schemes, such detailed regulation that the Russian economist Andrei Illarionov has likened it to the command economy. To the Prime Minister, he has described Kyoto as "an international agreement to limit economic growth and development".

  12.  Nonsense, say the EU's environmental agencies. Their models, which measure the effects of Kyoto on energy markets, show a reduction of only 0.12 per cent in EU GDP by 2010. But sectoral models seriously underestimate the impact on the economy as a whole. Macroeconomic models, which quantify the overall economic cost to the EU of meeting emissions targets, have produced estimates of GDP losses within this same period that range from 1.5 per cent to 4.8 per cent. Britain's bills will be disproportionately high, since the Government has decreed that Britain shall surpass the Kyoto target, cutting carbon emissions by 20 per cent below 1990 levels by 2010, and 60 per cent by 2050. Under Kyoto alone, the Government's estimate is that UK energy prices will rise by 6 per cent and independent experts put the figure at 10 per cent; higher energy prices will translate into slower growth, job losses, lower investment and accelerated industrial outsourcing. Energy conservation makes sense for other reasons, and if the Government were serious it would levy standard 17.5 per cent VAT on domestic utility bills. But cost-benefit analysis should still apply. The National Audit Office has already pointed out that the UK's Renewables Obligation, which compels electricity suppliers to buy quotas from wind farms and other renewable sources at nearly three times the market rate of £25 per megawatt hour, will add more than £1 billion a year to consumers' bills within five years. It is legitimate to ask whether this is value for money.

  13.  In theory, flexibility will be built in to the rationing system via tradeable emissions permits. The idea is that market forces will determine the price of carbon emissions, stimulating investment in technologies that can reduce emissions at unit costs lower than the price of permits. But as the economic forecaster David Montgomery has pointed out, for this to work efficiently all sectors must be covered, and traders must be able to predict with reasonable confidence the future value of traded permits. Neither is the case with Kyoto. EU emissions ceilings apply only to power generators and large industrial sources, and, since 13 of the 15 pre-enlargment EU countries are not on target to meet Kyoto-mandated emissions reductions, future negotiations may involve demands for relaxation, not tightening, of the targets in order to avoid penalty charges by "rolling over" excess emissions into the next target period.

  14.  Even Kyoto's supporters concede that in the industrialised world, the economic costs will outweigh the expected benefits. Emissions targets are an expensive and highly bureaucratic way to achieve next to nothing. These targets penalise economic success and reward failure. Spain would have to cut emissions by 40 per cent to comply, whereas Russia, where economic collapse has helped to reduce current emissions to 38.5 per cent below the 1990 baseline, will for the next few years stand to profit from selling emissions quotas.

  15. The bottom line is that Kyoto will not "save the planet". By 2100, it could shave a little off the anticipated increase in global temperatures. The globe will barely notice the difference. Were the worst case scenarios to materialise, in other words, the Kyoto contribution might delay Armageddon by a few years. But what Kyoto undoubtedly will do is bite a chunk out of the GDPs of industrialised nations.

  16.  We should question the claim that there is no time to lose. Observed trends, rather than computer-simulated scenarios, indicate that the probable rate of global warming is much lower than the high-end projections. We do not need to act on the basis that "the end of the world is nigh". We should go with what we know, not with inaccurate, long-range scenarios. There is time to explore other approaches to climate mitigation, and to weigh more carefully the cost-benefit relationship between drastic action to reduce emissions that exacerbate cyclical warming, and policies designed to reduce our vulnerability to the effects of climate change.

  17.  On mitigation, it is interesting to note that according to the US Energy Information Administration, the voluntary approach to emissions reduction adopted by the US has reduced its energy intensity, the amount of energy required to produce a dollar of GDP, by 15.8 per cent between 1992 and 2001, more than double the 7.5 per cent reduction achieved over the same period by the EU. Policy should maximise incentives for developing and deploying new technologies for carbon sequestration, hydrogen production, biomass, wavepower and solar energy, etc. The hybrid Prius car developed by Toyota is an example of the potential gains. Major advances in energy technology will require accelerated government and private sector investment. Kyoto would do more harm than it can conceivably do good if the effort to cap emissions were to divert attention and resources from promising innovations.

  18.  On vulnerability, we need more flexible approaches to adjusting to a warmer world. Defra estimates that, even without global warming, water scarcity will affect more than six billion people by 2080. This suggests that water conservation strategies and research into low-cost desalination plants may be more urgent than the pursuit of bald emissions targets. The new European Commission is leery of "Kyoto plus", and it is right.

  19.  One of the oddest aspects of the whole climate change debate is that, although the budgetary implications of climate mitigation are massive, finance ministries have largely abdicated what would seem to be their duty to subject the IPPC's work to rigorous economic analysis, leaving the field to environmental ministries. The OECD has been similarly, and unexpectedly, uninvolved. If there is one thing that I would hope to emerge from the Committee's report, it would be for this absurd state of affairs to be rectified.

  20.  A final point. I made some of these points in The Times, 15 February 2005. February. I expected outraged letters from environmental NGOs (and the IPPC). None came. Perhaps it is because they do not read the financial pages of newspapers; but I suspect that the reason is, rather, that there is greater awareness of the flaws in the "consensus" than they will publicly admit to. By contrast, I was overwhelmed by the response from experts, both economists and scientists, who are frustrated and disturbed by the cold-shouldering of research that does not accord with environmental fashion. There is a lot of work being done on reconciling responses to climate change with economic growth.[86] Conditions are propitious for a thorough review of policy on climate change.

8 April 2005

86   To take one example: Climate Change Policy and Economic Growth: a Way Forward to Ensure Both. Sponsors: International Council for Capital Formation (Brussels), Institute of Economic Analysis (Moscow), Istituto Bruno Leoni (Turin). Back

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