Select Committee on Economic Affairs Minutes of Evidence

Examination of Witnesses (Questions 182-199)

Professor Bjorn Lomborg


  Q182Chairman: We are most grateful to you for coming along too. I know you were sitting through the previous session, so you know exactly how we proceed. Is there something you want to say at the beginning?

  Professor Lomborg: I thought it might be good to give away the bottom line. Global warming is happening and it will have a serious impact. However, trying to do too much to avoid global warming will also be costly, so the real dilemma and the crux of the decision that we have to make as individual nations and as a globe is to decide how far should we go along. Unfortunately, the problem is it is going to be fairly costly to do fairly little for people far into the future if we decide to go far in the mitigation part; whereas that money could otherwise be spent on many other things that would probably do more good.

  Q183Chairman: You have answered the question I was going to ask you which was whether you share the view of scientists who say we are witnessing human-induced global warming. To some extent you share their view but you are sceptical as to whether it is quite as extreme as some people make out.

  Professor Lomborg: There are several issues on the science part. I do not doubt the fundamental idea that if you put out more carbon in the atmosphere, all other things being equal, it will get warmer. There are still a lot of uncertainties but my argument is in general if there are a lot of people who spend a large amount of their professional time looking at that their arguments and models are probably better than our intuition as to what will happen. The climate models that we have are the best we have and the best understanding that we have right now. However, there are two important qualifications. One is the climate sensitivity which tells us how much is climate is going to warm up if we double the amount of carbon in the atmosphere. That has pretty much remained constant, the uncertainty that we have on that parameter, since the mid-1970s, so in that sense we have not become any smarter since the 1970s. It is still somewhere between 1.5 and 4.5 degrees Centigrade increase. The second part is what is going to happen over 100 years. I totally agree with Dr Pachauri. We have to make assumptions about what will happen because we do make decisions that will last so long. On the other hand, we also have to ask which of these scenarios is more likely. There, I think the IPCC has chosen a somewhat timid way of saying that they are all likely, but some clearly are more likely than others.

  Q184Chairman: Would you take the view that the difference between the one range of options and the other range of options presents very significant, different policy decisions to be made following which one you take?

  Professor Lomborg: They certainly indicate that the damage will hit differently. If we are in the low end, up to about three degrees Centigrade increase. It will primarily hit the Third World. Whereas if we go beyond three degrees it will also start having an impact on the First World. One of the things that complicates the decision and what we can do is the final parameter, namely the marginal idea, because obviously it does not do very much good to say, "There are going to be huge damages", if what we can do about those damages is very slight. Dr Pachauri was mentioning that hundreds of millions of people are dependent on rain-fed agriculture, so clearly we should do something if global warming could seriously affect that rain-fed agriculture. Surely that is not the argument. It could only be the argument that we should do something if we could indeed change their fortune. We have to look at what is the marginal impact of what we can do. Even if we are going to have a situation where we will impact on the high end of the temperature scale, we still have to look at how much change can we do with political initiatives.

  Q185Lord MacDonald of Tradeston: Where would you put climate change in that list of, say, the top ten priorities? I know you have attempted through the Copenhagen consensus to ask a whole range of scientists what their priorities were. How were they ranked and where would you think climate change sits in them?

  Professor Lomborg: The important part about ranking issues is it does not make sense to rank problems. Probably the biggest problem we have in the world is that we all die but we do not know how to solve it. You have to rank solutions. You have to rank what can we do something about. There we have a group of eminent economists including Nobel laureates to try to set prices on costs and benefits of different things that we can do to do good in the world. They found the top outcomes were dealing with HIV AIDS, with malnutrition, with free trade and malaria. At the bottom where they came in with bad proposals were proposals like Kyoto and proposals that would go even further. It is important to say this does not mean that they did not feel that some step towards dealing with global warming would be relevant but not nearly as far as Kyoto.

  Q186Lord Sheldon: You say in some of your writings that the growth rate suggested is about 1 per cent a year and your suggestion is that it is about 0.6 per cent a year. Is this limited to the difference between the IPCC and yourself?

  Professor Lomborg: No. The IPCC is now running its scenario assumptions so it is no longer relevant to talk about the 1 per cent of the 0.85 per cent CO2 equivalent increase per year. It is mostly in presentations, for instance, in Scientific America. Lately, you saw the study that showed that we are getting more and more heatwaves in Europe. That was also run on a 1 per cent increase and it is empirically unlikely that we are seeing that kind of increase. We are probably seeing an increase of 0.6 per cent. It matters in that it tells us that we are getting too many troubles too soon, but it is not relevant for the IPCC work now.

  Q187Lord Sheldon: The difference between you could possibly be narrowed over a period of time through different arguments and papers being presented, could it not?

  Professor Lomborg: Yes. I argue that it should be, and it has been in many of the simulation runs in the sense that they are now running with the scenario outcomes which differ very widely but also have some of the ones in the low range. I am pointing out that there is a sense of a reference term that is used of 1 per cent carbon equivalent increase and that is an unrealistic assumption. It simply gives us a sense that things are going faster than they really are. That is sometimes used in public communication but not by the IPCC any more.

  Q188Lord Lamont of Lerwick: Accepting that it is a question of costs and benefits and concentrating on solutions, not just entering into a lot of Domesday scenarios, could you briefly say what you think the main categories of damage, if there is such a thing as climate change, were? You have referred to rain-fed agriculture. Presumably there are some benefits as well in other parts of the world?

  Professor Lomborg: Yes. One of the impacts demonstrated by the IPCC is sea level rise, which will happen everywhere, which will be in the order of 30 to 50 centimetres by the medium estimates of the different models. That is a significant amount and that will mean that we will have to take more care of our coast lines. It should however be realised that over the last century sea levels rose somewhere between 10 and 25 centimetres, so it is not something that we are unused to having to deal with. It will mean general temperature increases although they will be spatially distributed and different, but that will especially harm the Third World or tropical countries that are already in warm areas; whereas for many temperate countries it will be both a boon and a problem. One of the good ways of showing that is for instance in Britain, where we know that if we get higher temperatures it will mean that we will get more heat deaths. It is estimated that Britain will probably get 2,000 more heat deaths with global warming in about 2050. On the other hand, you have to realise it means we will have fewer cold deaths. Since cold deaths vastly outweigh heat deaths, it is estimated that there will be perhaps 20,000 fewer cold deaths. You need to have these things in perspective. The bottom line is that there will be problems, especially for Third World countries at what I see as realistic temperature increases of two to three degrees warming. It will be a mixed bag for most developed countries.

  Q189Lord Lawson of Blaby: You were listening to Dr Pachauri's evidence. There is obviously a huge measure of agreement in this area but are there any points of disagreement that you would have with him or any observations of that kind which you would like to bring to the Committee's attention?

  Professor Lomborg: It is probably mainly on the question of cost, where Dr Pachauri argues from what is known as the bottom up part of economics, where they are telling us there are a lot of free lunches around. There are a lot of things we can do at no cost. Most practical economists, certainly macro-economists, would tend to dispute that and say it is unlikely that there are 10 dollar bills lying around that companies routinely neglect to pick up. It was very clear in some of his examples that he was saying, for instance, when he saw the car waiting it had been cooled for him when he arrived, so it had been wasting energy on his account for those two hours. On the other hand, I think he probably found it rather nice that it was cooled when he finally entered the car. The driver could have saved that money and that amount of emissions had he turned off the air conditioning but it would also have been a less pleasant car to get into. There are those trade-offs and if we want to do good things it will typically cost money. I would agree with Dr Pachauri that we need to make sure that we cost externalities but likewise we should be careful not to count them twice. If we want to put cost on externalities, we should also be encouraging extra implementation of renewable energy, for instance.

  Q190Lord Sheppard of Didgemere: You have made your thinking on scenario planning quite clear, but can you explain in a little more detail? In your books you criticise the IPCC method of construction. Can you then move on to the probability theory and talk to us about which of those scenarios you think are the most likely?

  Professor Lomborg: Yes. As I briefly mentioned, I think there is a problem in the fact that IPCC has declined to say that some scenarios are more likely than others. It means that we are basically faced with a huge variety of different outcomes, and apart from the fact of climate sensitivity, which also has uncertainty, we simply have a vast range of temperature outcomes that could go from only "slightly troublesome" to "dramatically problematic". What I tried to argue is that it really comes down to the issue of saying, "How much is it likely that renewables will gain in price efficiency over the century?" There are good reasons to believe, as the models have also shown, that since we have seen dramatic decreases in the cost of renewables on account of about 50 per cent per decade over the last 30 years, it seems likely that even if that continued at the rate of about 30 per cent, you would see that renewables, and especially solar energy-which will be the long-term power source if we are getting into renewable solar panels—will become competitive around the mid-century. If that is the case, then it is very unlikely that we would continue to use massive amounts of fossil fuels by the end of this century. Then we have an outcome which is the A1-T, the transition scenario, which I find the more likely one, from the UN climate panel, which is also right in the middle of most of the scenarios that the UN has, and which gives a temperature increase of 2.5 degrees. It seems much more likely that we will end up in a range of about 2-3 degrees, which is where the majority of the scenarios are. It does not mean that it is the very lowest, but it also does mean the high end of 5.8 degrees simply is a combination of assumptions that seem fairly unlikely to happen.

  Q191Chairman: What role would you have for nuclear in all of that? How do you see nuclear developing in those future scenarios?

  Professor Lomborg: It is important to say that I am arguing for what we should be doing, but I do not know what China is going to do, as you have just mentioned. I do not know their mind. I think, bottom line, what we have seen so far with nuclear is that it is a more expensive way of producing energy, which seems to indicate that it is not a good long-term solution, and that the majority of the expansion that we are going to see in world energy requirements will be in the third world, and then we might also have security concerns over the waste materials from nuclear processes.

  Q192Lord Sheppard of Didgemere: The previous speaker did not say much about how he and his colleagues were talking to users in a particular industry. In your dialogues in your home country and other parts of Scandinavia, have you had much dialogue with businesses? Do we know what their 10 or 20 or 30-year thinking is on use of energy?

  Professor Lomborg: No, I am sorry, I do not know very much about it.

  Q193Lord Skidelsky: Can I probe you a bit further on policy on global warming? In your book you suggest that the damage from uncontrolled emissions would be in the order of 5 trillion, and the costs of control would be in the same order of magnitude, perhaps a little less. Are those numbers still in the right ball-park?

  Professor Lomborg: Yes.

  Q194Lord Skidelsky: If they are, what are the implications for policy? I can think of perhaps three. One is reducing the damage by controlling emissions; the second might be trying to compensate people for damage without controlling emissions; and the third might be to do nothing or very little and leave it to market forces and technology that is still unknown to just reduce the level of emissions. Is that the range of options you would be interested in considering? Have I left anything out?

  Professor Lomborg: It is important to clarify that I do not do these models myself. This is perhaps the most respected global cost-benefit model developed by Professor Nordhaus with Yale University, and the scale of the magnitude is about right. The total cost discounted to today's money, so in essence what we would have to pay to cover all damages that will come at any future time, would be about $5 trillion. What you have to then say is that if we went on to control it, in the sense of an extended Kyoto—of course it depends on what we actually do, but if we did an extended Kyoto, which would basically freeze the levels at about 1990 levels for the entire world, which does not seem like an absolutely impossible follow-up—certainly some musings from the EU have been on that kind of a solution for the world after 2012—if we were to choose that kind of outcome, the total cost would run somewhere between $8-9 trillion, so in essence $3-4 trillion more. It is important to say it is not $5 trillion versus $4 trillion, because then it sounds like you should pick the 4 trillion. It is $5 trillion and the four more. It is important to say when you are talking about cost-benefit analysis that you are not looking at the distribution between people; and that is an important issue, which you rightly raise. That is one of the reasons why many people would argue that it would be immoral for us to say, "well, it is going to be very costly for us to do something now, like carbon emissions; it is going to be a problem for people in the Third World especially, but that is 100 years from now and it is not us, so why do we not just keep the money?" In cost-benefit terms that would be a rational outcome but we might not feel that to be a morally correct outcome. But then the argument is: should we then try to compensate these people directly? I do not see that there is any way that we can reasonably do that. Should we then try to help them in some way? I think most people would be inclined to say "yes"; and the question then becomes: should we help them through the way we limit damage, that is by limiting our carbon emissions, which is a fairly inefficient way of helping them; or should we rather be helping them in general in the sense that we help people in those areas with the top priorities from the Copenhagen Consensus, saying we deal with HIV/AIDS, malaria, micro-nutrient deficiencies, and free trade, enabling these countries to get much richer in the long term?

  Q195Lord Skidelsky: And they are less dependent on those factors which might—

  Professor Lomborg: Yes, yes. At the Copenhagen Consensus one of our participants, Tom Schelling, put it very eloquently. He said, as you also mentioned earlier, that it is likely by the UN scenarios in 2100 that the poor countries will be much richer than they are now, probably even richer than we are now; so when we are talking about helping Bangladesh in 2100 we are really talking about helping a rather affluent Netherlands, and we have to remember that. His idea, his thought experiment, was to say: "Imagine I was a rich Chinese or a rich Bolivian or rich Congolese in 2100, looking back on 2005 and saying, `how odd, they cared so fairly much for me and spent so much money on helping me rather little, now that I am so rich too, and cared so fairly little for my grandfather and my great-grandfather, who needed the help so much more and whom they could have helped much more'." That encapsulates the real dilemma: should we help people in a hundred years from now inefficiently or should we help people now efficiently, and thereby also their descendants, and make them a much more resilient society better able to deal with the problems that they will have no matter what?

  Q196Lord Layard: Is it not the case that we know pretty well what the costs will be, but we do not really know what the damage would be? It may be the average damage that is applied, but we are talking about extreme uncertainty when we come to the damage. For example, we know that if the Indian monsoon is plus 10 per cent, you get major flooding, and if it is minus 10 per cent you get a lot of drought. We really do not know how the spread of the monsoon will be affected by this. We are talking about 1 billion people. To have the discussion in terms of expected values, when at one end it would be catastrophic for a whole continent and might lead to mass migrations, which would have a big impact on all kinds of people—this is the problem. I do not have a view, but I can see the danger of conducting this discussion in terms of expected value when we know the costs but we do not know the damage.

  Professor Lomborg: You are absolutely right that we have to be more explicit, but I think you will find it gives much the same impact—although Tol, who comes after me, will probably give you much better information on the expected damages. The bottom line here is to say that if we are in a world where, if we put out carbon dioxide for a sufficiently long time, the monsoon will fail or the Gulf Stream will turn or the West Antarctic ice sheet will slip, then the real question here again is not to say would we rather not have that—of course we would not—but the real policy issue is, would we then want to do Kyoto, which would probably postpone the collapse of the Gulf Stream or the stopping of the monsoon or the slipping of the West Antarctic ice sheet for six years? It is really a question of asking how much you are willing to spend to postpone those problems, rather than to avoid them. Of course, as you move further along and say you are willing to make very, very strong changes in your emissions, then you can also actually change the outcome of these. Mostly, and certainly when we are talking about realistic cuts in carbon emissions over the coming decade, I would say we are only talking about postponement. No matter what damages lie ahead, it is really just a question of how much it is worth for us, if those damages were to happen, to postpone them for some years.

  Q197Lord Layard: Am I right in thinking that the reason why the oft-quoted fact that Kyoto will make almost no difference in 2040 is because of the very long lags between the greenhouse gas build-up and the temperature effect? In which case, is it correct that the Kyoto agreement will have much more effect after 2040 than it would before, and is it misleading just to focus on the 2040 vision? Equally, if you had the follow-up to Kyoto, is it right that we should be got into this fatalistic mood that we have got into by this statement that Kyoto will have no effect by 2040 if similar things to Kyoto could have a big effect further on? We must agree that we have to look further on as well, precisely because of these lags.

  Professor Lomborg: It is in fact not true that—it depends what you think and how you define "big effect", but in 2040 it will have no measurable effect, but still in 2100 it will postpone global warming for about six years. No, it will not have a major impact, nor if you look in the very long-term. This is assuming that in 2012 you just keep the promises that you have already made, but you make no new ones. Basically, if Kyoto is just defined as the 2008-12, it will have absolutely no effect whatsoever. So we are assuming at least that we keep those promises for the rest of the century.

  Q198Lord Layard: The statement on Kyoto is that after 2012 we abandon Kyoto and go on to the growth path we would be on anyway.

  Professor Lomborg: Then it would have no effect whatsoever. You would not be able to measure it. My statement is that if you keep Kyoto for the rest of the century-that is the Kyoto requirements, namely 5.2 per cent below 1990 levels for the rest of the century-it will postpone global warming for six years. Of course, if you do more it will have a great impact. There is no doubt that you can achieve more. What is regularly forgotten in that discussion though is that you cannot say, "Kyoto is going to cost perhaps $150 billion a year and it is not going to do very much good, but we are going to do much, much more later on". Then of course the cost will also rise, and you need, if you are going to compare the two, to compare like with like.

  Q199Lord Vallance of Tummel: If you had the power personally to determine the next round of international negotiations post-Kyoto, what would you prescribe?

  Professor Lomborg: The problem with much of the discussion around climate change is that we tend to think about what we should do over the next 10 years, whereas the real discussion is to make sure that we deal with climate change over a 50-year or 100-year period. There are two versions of this. Firstly, it will be exceedingly difficult to get the developing countries in on cutting emissions. It will get exceedingly difficult to keep those promises as we get more and more loopholes. We are basically asking a lot of nations to do what is not in their individual interests but only perhaps in their collective interest, so it is a very, very difficult treaty to go through. We have already seen this for Kyoto, just for the European Union. I predict that several countries will not make the cut when we come to 2008 and it will be a very hard bargain just to get there, and there has certainly been a lot of political will. In that sense, it would make much more sense, instead of trying to get countries to do what is essentially not in their own private interests, to get them to invest in research and development, especially of renewables, to make sure that renewables get cheaper a little sooner, so that by 2050 renewables actually will be cheaper. Then, of course, you do not have to convince any countries to take over renewables because it will be cheaper than using fossil fuels, and then obviously they will want to do so. The second thing is that it is probably likely that investment in renewables—although it is very hard to show with economic models—will be much more efficient than, for instance, doing Kyoto. Just if we could move forward a few years to the time when we shift over to renewables around mid-century, it would have a greater impact on the climate than if we all did Kyoto. It would probably be much, much cheaper. Just to give you an example, the US spends about $200 million on renewables research and development. If they increased that effort tenfold it would still just be about 1 per cent of the cost of Kyoto, and it would probably do much, much more good. Again, it is about making sure that we make the long-term interests more in line with what we want, namely for people to switch over to renewables, but not to try to cut right now, which is expensive and does fairly little good.

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