Select Committee on Economic Affairs Minutes of Evidence

Examination of Witnesses (Questions 1-19)

Professor Colin Robinson

11 JANUARY 2005

  Q1Chairman: Thank you very much for coming, Professor Colin Robinson. The Committee has got your paper, for which we thank you very much, and we welcome you to the Committee. We have also got your biographical details for those who do not know you. We are delighted that you were able to come and talk to us. You are our first witness in this new study that we have started and we have got a number of questions which you know about. I am told that I have to remind you that we need to speak slowly and clearly so that the machines and recorders can hear but you would probably know that anyway. Do you want to make any sort of remark to start off with? It is absolutely up to you.

  Professor Robinson: Chairman, thank you very much for asking me. Would it be useful if I made a few summary remarks at the beginning, and there is one thing I wanted to amplify anyway, if I may?

  Q2Chairman: Yes, please do.

  Professor Robinson: I thought I would try to give an overview of what I have tried to say in this brief paper. The first point is that the prospect of severe climate change is now very influential with policy makers in all sorts of fields but perhaps particularly in energy policy, which is the area in which I am particularly interested, and if one looks at the most recent UK White Paper on Energy Policy from February 2003, you can see that the British Government is aiming for a quite drastic reduction in carbon dioxide emissions of about 60 per cent by 2050. This is really a very drastic change, based on recommendations from the Royal Commission on Environmental Pollution. I think one needs to be critical of these kinds of predictions, first of all, because, particularly in the energy field in the past, we have been quite used to alarmist predictions. These have often been about the over-rapid depletion of energy resources, running out, this kind of thing, but in this case it is an alarmist prediction of a somewhat different sort, so it seems to me that is wise to look at these predictions rather critically. First of all, one has got to look at the science on which I am obviously not qualified to comment except to say that economists do have experience of trying to build models of very complex systems which we do not understand very well, and this is certainly true of the world's climate. It does seem to be a very complex system which is not well understood and yet people try to pick out the effects on this of human intervention, which is clearly a very difficult thing to do, so I think the scientists need to be queried about this, and in particular on two things. First of all, whether this warming effect on the world's climate, which does now seem to be established, is really a trend which can be expected to continue or whether this is merely a kind of cycle in which we can expect warming to be followed by cooling, and clearly that is a very important issue for policy. The second issue for scientists is how confident they really can be about the correlation between warming and emissions of greenhouse gases. Another issue on which I commented briefly is these scenarios that have been prepared by the Intergovernmental Panel on Climate Change which are the figures that people usually quote when they talk about the warming of the earth, and people quote figures of a 1.5 to 6 per cent increase in degrees centigrade over the next 100 years or so. In the paper I raise some questions about this. I pointed to some of the criticisms which have been made of this, in particular by Professor Henderson and Ian Castles who have suggested that the rates of economic growth embodied in these scenarios are probably very much on the high side and I think certainly that is one thing which the Committee might wish to look at, whether it is so that these are very much on the high side. However, I would like to raise one other issue about these IPCC scenarios which is not so much about whether they have been well done but about whether this kind of exercise has any value at all. They are, after all, trying to paint these scenarios for about 100 years ahead. If one merely thinks back and says what would have happened if people in the early 20th century had taken a base year of 1890 and put out scenarios for the year 2000, would they actually have produced anything which was of any value to anybody in solving any problem that came up in the 21st century? I think one really has to be doubtful about the value of these long-term scenarios. It seems virtuous to take a long view but if you cannot see anything useful I am not sure that is really so. I think it is worth thinking about whether it is really helpful to use these kinds of scenarios on which this whole global warming industry seems to have grown up. It seems to me it is actually quite difficult to disturb the consensus on the warming of the earth's atmosphere because lots of people believe in it for various reasons. Lots of people have an interest in maintaining this idea now and so, as sometimes happens with established hypotheses like these, it is very difficult to disturb it. Just a couple more points, if I may, Chairman, before I finish. From an economic point of view the question which is worth asking is whether, if warming of the atmosphere is taking place, it is quite clear that that will be detrimental to world welfare. There are some scientists who argue that increased CO2 concentrations and increased warming might actually be beneficial. I think it is worth questioning that and whether that is so or not. It does seem that there are going to be winners and losers from the warming trend, and economists tend to shy away from situations where you have to compare gains to some people against losses to others. It is a very difficult thing to do and it is not absolutely clear that there is going to be a net reduction in welfare from the warming tendency. So the argument I have ended up with is there is a danger of accepting a consensus which for all sorts of reasons has developed and which is rather difficult to disturb. There is a danger, I think, of exaggerated and over-hasty action in the face of this consensus. I would put the UK Energy Policy White Paper in this category of exaggerated, quite costly and over-hasty action. It seems to me that if one is worried about the problem of warming it is best dealt with not by centralised action by governments and international institutions in the accepted sense of trying to pick winners among technologies and fuels; it is better to rely, as far as one possibly can, on markets which will adjust as we go along, although in this case they are probably going to need to be reinforced by some kind of emissions trading scheme (which has already started in the EU) which would help us to work out the answers to this difficult problem as we go along. So that is my quick summary, Chairman.

  Q3Chairman: Thank you very much. In some ways you have answered part of the first question I was going to ask you but let me just put it to you this way: if you are, as you clearly are, critical of the way the consensus has emerged and you have some doubts, could you perhaps give us a view as to why you think it has happened this way? Why do you think the international scientific consensus has emerged in this way? Presumably, you have some questions about whether it makes reasonable assumptions about economic growth? Those are the two points that I wanted to pursue further.

  Professor Robinson: If you look back at the way consensuses have formed in the past of this rather alarmist variety, they appear because when we look ahead we tend to see problems that at present do not have solutions and consequently there is a tendency to become alarmed because you cannot see the solutions to these problems. In the memorandum I put in I quoted from somebody who pointed out that the problems of 50 years hence do not have to be dealt with by today's technology; they will be dealt with by the technology we will have in 30 years' time, or whatever. I think to some extent it is a simple matter. It is very easy to become alarmed about almost anything in the future because you cannot see how these kinds of problems that appear to be emerging are going to be solved. Thinking about these things is clearly the way in which they do get solved. On the other hand, if you become too alarmist about it, you can become precipitated into this very costly centralised action to solve problems which would actually have been solved anyway through the normal processes of human ingenuity. I think that is probably the reason why one gets these alarmist ideas. On the issue of economic growth, I think the simple point is—and this goes back to what I was saying a moment ago—if you are looking at scenarios 100 years ahead I do not think it is possible to say anything reasonable about economic growth because we have no idea what will happen over this period. I am not sure that this scenario approach or any kind of projection over such a long period has any real value simply because we are in such ignorance about what is likely to happen in this period.

  Q4Chairman: Speaking as a complete layman on this subject, if it is difficult to see too far into the future most people tend to put their heads under the blankets and do nothing. You argue that it is very difficult to see what is going to happen in 50 or 100 years' time and yet you have an emerging consensus which you are challenging which is, by your view, alarmist. That is contrary to what I would have thought was normal human nature, that if they cannot understand it they will soon forget about it. However, they seem to have taken a totally different view. Can you explain that?

  Professor Robinson: I think an industry grows up around these things as it has done with the global warming consensus in that many people gain their employment through working on answers to these supposed problems. Academics obtain research grants from finding problems. I am not saying there is not a problem but there is quite a lot of self-interest in these things. May I take something totally different like the consensus that formed 40 or more years ago that nuclear power was the fuel of the future, the "too cheap to meter" type of idea that grew up then. That was very powerful and was unchallenged for many years because the scientific community benefited hugely from the idea that nuclear power was going to be the fuel of the future and it took all kinds of big changes before people changed their view about nuclear power. These consensuses once they are formed are difficult to dislodge.

  Q5Lord Layard: I wanted to ask about your remark about the trend being possibly a cycle. Perhaps I could ask three questions about the science. The first is, do you accept that there has been a big increase in the density of greenhouse gases caused by human action? Secondly, do you think the science predicts that such a change in density would lead to an increase in global temperature, other things being equal? Thirdly, if the answer to both those questions is yes, is it not reasonable to think that the change in temperature which has been observed is in fact the result of the changes in greenhouse gases caused by human action? I think I would put it to you a bit like this, is it not rather similar to how one might have thought about smoking 50 years ago? We were trying to explain the increase in lung cancer. There had been a big increase in smoking, there was microeconomic evidence that smoking would be likely to increase lung cancer, and if you see an increase in cancer and you see an increase in smoking you put the two together. Is that not a reasonable way for people to look at this?

  Professor Robinson: Obviously I am not qualified to speak on the science but clearly there has been an increase in greenhouse gas concentrations and clearly there has been a period in which the world for a number of years has been warmer than in recent times. What I am not clear about is to what extent it has been established that the greenhouse gases are responsible, because as I understand it—and this is something scientists need to be quizzed on—if you take these models which look forward they do not actually predict what has happened in the past very well. The amount of warming does not appear to be very closely correlated with the greenhouse gas emissions and, consequently, without being qualified to speak about the science, I feel suspicious about this correlation, and I think it is something on which the Committee could very usefully, if I might say so, question the scientists about: the extent to which they feel they have isolated the warming effects of these emissions, given all the other complicated things that are going on in the climate. I absolutely agree about smoking but I think it is more complicated than smoking just because of all the complications of climate. It is a very difficult, multi-variable problem, I think.

  Q6Lord Sheldon: But is it not clear that if you ignore long-term forecasts because of their uncertainty you will need to make sure that you have got short-term solutions? It is alright to say, "Look here, one is very unsure," but you need to have immediate effects that you can bring into play and without that you are faced with two lots of uncertainty, whereas you can reduce them to one if you can concentrate on the short-term forecasts which may be the solution to deal with these long-term uncertainties. What guarantee can we have that we have got some shorter-term solutions to deal with them?

  Professor Robinson: I think that historically these kinds of problems have been dealt with through decentralised types of processes and the exercise of human ingenuity or through markets, depending on how you like to put it. The problem with not just effects on the environment but effects on the global atmosphere is that in classical economic terms there is a market imperfection and the global atmosphere is not priced and you have to do something about it to make sure markets will work better than they otherwise would. I used to be a forecaster but I must admit that as time has gone on I have more and more gone off forecasting. I think what you should do is to try to avoid reliance on any kind of long-term forecast because it is likely to be so wildly inaccurate that you run the risk of doing precisely the opposite of what you really ought to be doing. I would rely upon adjusting as you go along rather than trying to make a decision now about what the situation might be like at the end of the 21st century.

  Q7Lord Skidelsky: I know you have in your paper expressed quite a lot of scepticism about the IPCC emissions scenarios on various grounds. Of course, these are story lines rather than predictions and would not an alternative approach be to develop explicit probability distributions for key outcomes? Would not that enable one to get a better handle on the problem? That is really the first question I would like to ask. Then I wonder what you would say in general—and I think we have already touched on this—about the economic forecasts on which these projections are based?

  Professor Robinson: On the question of probability distributions, my experience of scenarios arises because once upon a time I used to work in the oil industry and the oil industry of course has used scenarios for a long time. People who use scenarios explicitly avoid the use of any kind of probability on the grounds that you need to put forward all of these pictures of the future, each one of which is internally consistent, and present them and avoid making a judgment about one being more likely than the other. That is the way it is done. In that sense I think the IPCC are in line with the received wisdom about scenarios. The problem about applying probabilities, particularly with something so far ahead, is it is so difficult to know how you would do it and how you would attach any kind of subjective probability to any of these forecasts of economic growth or emissions or whatever. I think it is a very difficult thing to do and I think that is maybe another reason for avoiding these kinds of long-term forecasts if you can. On the economic forecasts themselves, since I wrote that memorandum I have had a further, more detailed look at the SRES scenarios and it is quite difficult to know to what extent the results are actually influenced by the economic forecasts. I noticed somebody who wrote a critical paper about it who said that it was not clear how the authors got from their driving forces to their results, and I also think it is actually very unclear when you begin to look at them. So I do not know how important the economic forecasts are but I think that David Henderson and Ian Castles have made a very important point about these forecasts, which is they seem to start off with an exaggerated gap between the rich countries and the poor countries and then, for reasons that are not very clear to anybody, they assume the gap almost disappears over the course of 100 years or so. Not surprisingly, therefore, the rates of economic growth they come up with for the developing world are really quite rapid compared to what has happened in the past, so I think one has got to be suspicious about them on those grounds. Clearly, you cannot rule them out, but there does not seem to be any backing for these apart from the idea that it would be nice if we had convergence.

  Q8Lord Skidelsky: Can I ask a supplementary on exactly that point. In your paper, on page 6, you go through some of the Castles/Henderson arguments and you say, "I would add, on the subject of these rapid growth rates, that it is not clear to me that the IPCC authors have considered whether they are feasible in terms of the resources—natural, human and man-made—that would have to be used to sustain them." Is that a comment on the capacity of governments to engineer these kinds of growth rates, quite apart from disagreement about the income in the base year?

  Professor Robinson: Perhaps my comment is really not very clear there. I think what I was trying to say was it is difficult to see what the back-up for these forecasts is. They do not seem to have attempted to justify them, except in terms of convergence, and it is not clear why they think there is going to be convergence. They do not seem to have attempted to look at whether it is feasible to grow this rapidly and what the implications would be, so it is really reinforcing the Castles/Henderson point that it is uncertain why they are assuming this convergence.

  Q9Lord Macdonald of Tradeston: Just to follow on, Professor Robinson, on this question of the processes of IPCC. Obviously in a technical sense the way the chapters are written and are peer reviewed might be questioned, but there is obviously something stronger behind the criticism by Henderson and Castles and indeed the way you yourself talk about the defensive reaction, the attempt to discredit and the spread of misinformation, which raises the question of whether this process is then being influenced by political factors? Is it simply that a consensus has built up behind this or can you see evidence of more political intervention or other interests at work? If the objectivity is being skewed by the politics, is there a way in which you think that this Committee or the British Government might be challenging and strengthening the processes involved by the IPCC?

  Professor Robinson: I think that once some kind of consensus has been formed people do become defensive about it and want to keep the consensus. Whether it is political effects I am not quite sure. I think, as I indicated, there is an industry around this now, with all sorts of people involved in this, and it has I suppose become self-generating, self-perpetuating, and maybe there is a case for governments becoming a bit more involved. I think David Henderson, for instance, has argued that finance ministries ought to become more involved in this and have a look at things like these economic growth assumptions. If there is going to be a bill for this it is going to be footed by various governments and their taxpayers and therefore it would seem reasonable to have the finance ministries look much more questioningly at the kind of assumptions that have been made by the IPCC and in particular these economic growth assumptions.

  Q10Lord Macdonald of Tradeston: Looking at the lead authors, for instance, and the way they have been selected, is there any suggestion that there might be a pattern behind their selection or that they are financed in ways that might influence the outcome of the judgements made by the IPCC? Where do you think the rigour should be applied in looking at this from our perspective?

  Professor Robinson: I certainly would not make any suggestion that there has been any bias in selection but I think the review process almost seems to have been internalised. The IPCC claims constantly that everything is peer reviewed and there are all these people writing these things and looking at them and so on. But when you look at the results you would not really have thought that, so there does not seem to be any outside influence entering into these forecasts and that is why it seems it would be useful to have checks from outside economists, particularly from economists in areas like the British Treasury, on what has been going on.

  Q11Lord Vallance of Tummel: Perhaps we can follow up a little on the UK's role. Professor Robinson, what do you see as the current UK role in the IPCC process, and could it be improved to produce a more robust analysis and, if so, how would you set about it?

  Professor Robinson: Obviously, individual people have had a role because there are British people among those who do the scenarios and review them. I do not think, as I understand it, that the British Government has had much of a role in the preparation of these very influential scenarios nor in the more general IPCC processes. As I have indicated, I think it has become a bit of an industry and become self-generating and it does really need to be looked at rather more fundamentally than has been done in the past.

  Q12Lord Vallance of Tummel: How would you set about doing that if you were advising?

  Professor Robinson: First of all, my own view is that this whole approach of trying to write very long-term scenarios is misguided, so I would not do that. But if you are going to do that, you really do need to have outside checks on what is being done for those who are going to be paying the bill. That is why we need some input from government departments and in particular from finance ministries. My preference would be to get away from all this speculation about the very long-term future, which I suspect is not very helpful, to try to set up a system that would help us to adapt as we go along. That means that what you do is you try to use markets as far as possible and where they are not working very well you try to reinforce them.

  Q13Lord Vallance of Tummel: Do you think that there might be a role for some institution within the UK then to set up independently and challenge this approach and take a different view altogether, in which case what sort of institution could do it? At the moment what we are talking about is government departments. Is there anything beyond that?

  Professor Robinson: Of course individual academics have already challenged it but it looks to me as if it is bouncing off rather and it probably needs greater weight to be applied, and that is why I suspect that some criticism from government departments might have more effect.

  Q14Lord Elder: I was going to ask about the view you have on the way governments take decisions on climate change issues but I think we have rather got the flavour of some of your thoughts on that, although I must say it is an interesting and new concept that governments should be being criticised for taking too long term a view, because that is not the usual criticism for governments! I understand the logic of your case on this but it seems to be that it is at least possible that the problems that future governments will be facing will be ones which, should your thinking be misguided, will have become so complex and so difficult that it will be too late to come to some sort of solution. To use a parallel with the point Lord Layard made, I know from experience, if you say to a doctor you have got a slight problem with your skin but it is alright you wear a hat and put on sun tan lotion, he will say that is all very good and that he is encouraged by that but the problem arose 40 years ago and it is far too late to do anything about it. It seems to me that by following this approach you are suggesting and going on in the hope that in 30, 50 or 70 years' time there will be new technology to deal with it and that something will turn up. But we might reach a position where governments will be faced with the awful prospect of having to admit that there is a huge problem and that it is far too late to do anything about it. I would be grateful for your comments on that please.

  Professor Robinson: I agree with you it is odd to criticise governments for taking too long term a view, and I have often been critical of governments for not looking far enough ahead, but the problem is looking this far ahead there is not anything you can see. I am not sure that looking a long time ahead is particularly virtuous. I think the point about leaving it too late is a very interesting one and that is the reason that I have suggested that if you are concerned about warming of the earth that the way to approach this is to say let's try to take out some insurance so that, even though we do not know what is going to happen, if things do go wrong that we have taken some action in time. That is why I have suggested that the best approach to this is to reinforce the normal operation of markets by some kind of scheme that will help to offset the possible effects of human action on the environment. This is where these kinds of schemes like emissions trading schemes can come in. There are problems with these too and I certainly know that, but nevertheless they do give you an opportunity to avoid making big bang decisions now and to make your decisions over a period of time during which you adjust.

  Q15Lord Skidelsky: How much effect are the new deposits going to have on climate change in the next 100 years as opposed to the effects that the old deposits are having? I know this is probably a scientific question more than anything else but what is the expected ratio of new deposits of CO2 emissions which are envisaged by these scenarios to existing deposits which have been accumulating over, I do not know, the last 100 or 200 or 300 years of polluting activity? Is there any good information about that, because it seems to me rather important in judging what we could actually do to slow down climate change?

  Professor Robinson: Insofar as it is carbon dioxide concentrations, as I understand it, and I think this probably is a question for scientists, the consensus view among scientists is that you should avoid concentrations of CO2 in the atmosphere and you should not allow them to go above 550 parts per million, which is twice the pre-industrial level. We are some way off that at the moment. I think that is the scientific consensus. I think it probably is an interesting question for climate scientists—what we can do and to what extent we are already committed. We obviously are committed already from what has happened in recent years to a substantial increase in concentrations in the atmosphere.

  Q16Lord Lawson of Blaby: Professor Robinson, you mentioned the Government's White Paper UK National Priorities in the Energy Strategy. In the climate change section of that, the first page presents in a very prominent position a graph which is used a great deal to demonstrate that there is likely to be warming, which shows from the year 1000 AD to the present, and indeed projections into the future, that the world temperature remained pretty well static until about the early 20th century when it started to rise, and this is projected to continue. You said, quite rightly, that one of your concerns was that the rise that there has been over the past 100 years may be something that should be projected in the future or it may be a cyclical phenomenon. If you look at this graph it does not look like a cyclical phenomenon. Have you made any studies of the reliability of this particular graph, which has had a very, very prominent place not merely in the Government's White Paper but in most of the climate change literature?

  Professor Robinson: I think a large part of the graph to which you are referring is a projection and consequently it would not be possible to spot any kind of cyclical effect because it is a projection that shoots up.

  Lord Lawson of Blaby: Yes, from the year 2000 to 2100 you are absolutely right, it is a projection; but from the year 1000, shortly before the Battle of Hastings, to the present day, whatever else it is, that is clearly not a projection.

  Q17Chairman: Have you got a copy?

  Professor Robinson: Yes, thank you.

  Q18Lord Lawson of Blaby: Are you aware that this, which has had a very profound influence on thinking, is explicitly stated in the Government's White Paper to be based on proxy data, whatever proxy data may be, because there are no instrumental observations, they did not begin until the late 19th century, and that for these proxy data, which it says in small writing at the bottom, that the IPCC relies entirely on a study by a Professor Mann in 1998 and this has subsequently been examined and it was found that that Mr Mann got it all wrong in a rather fundamental way. Professor McKitrick, for example, has gone into this in great detail and so I believe have others. Is this something you have studied?

  Professor Robinson: I have not studied in any detail this question about whether we are in a trend or in a cycle but if you simply cover the projection part at the end of that graph with your hand you can see (it is not all that clear) what is happening. I am merely raising the question because I think it is an important issue because if we were in the warming phase going to a cooling phase, and the Government takes action on the assumption it is warming, then we are doing precisely the wrong thing presumably. So it is quite an important issue and I was really raising it as a question that might be addressed to the scientists—what confidence they have that this is a genuine trend.

  Q19Lord Lawson of Blaby: Yes, I think that this is nevertheless something which would be useful if we knew a little bit more about how these proxy data were derived since some people are placing a great deal importance on this straight line based on these so-called proxy data. They may be absolutely right, they may be wrong, but I think we need to know something about it. You referred earlier to the point that the IPCC's fundamental assumption of world growth does not relate to the 10 variations lowest and highest but that all their estimates are based on the assumption that the developing world will by the end of this century have the same national income per head as the developed world, even allowing for the growth in the developed world. In other words, there will be complete catch-up by 2100, which is wonderful. It means that the problem of global poverty has been solved. It is the most wonderful assumption I have ever heard. Do you know what evidence there is for this assumption?

  Professor Robinson: Well, I do not think there is any. I think to be precise what they say is that the present ratio of GDP per head in the developed world to the developing is about 16:1 and it is going to go down to somewhere between 1.5:1 to 3:1. It is very substantial convergence and there does not seem to be any evidence or any back-up for this assumption. I think at one point they do talk about equity or equitable distribution of income but there seems to be almost some kind of value judgment built into this that this is what one might hope will happen. It does not seem to me to be in the category of an objective expectation of what might happen but more of a kind of hope. All these scenarios are based upon this idea.

  Lord Lawson of Blaby: You are an economist and in the economics trade—I hesitate to call it a profession—there is a considerable difference of opinion as to whether when you are making these projections you should use market exchange rates or purchasing power parity, and of course there is no dispute that the gap at the present time between the developing and the developed world in terms of market exchange rate is much greater than it is in purchasing power parity. I remember, if I may, Professor Bauer, who was a Member of this House, pointing out to me that if you took—and I hope this will not be considered in bad taste, it is meant to be a demonstration—

  Chairman: We will tell you that after.

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