APPENDIX
GOVERNMENT RESPONSE TO THE SECOND REPORT OF THE LORDS
ECONOMIC AFFAIRS SELECT COMMITTEE, SESSION 2005-06
Introduction
Response to paragraph 2 of the Report
1. We welcome the Government's recognition
of the central role of economics in considering climate change.
But we believe that the Chancellor needs to broaden the scope
of the Government's interests, and the Treasury's interests in
particular, in aspects of the climate change debate that we feel
have not yet been given sufficient emphasis
(paragraph 2).
We disagree. The Government has adopted a coherent
approach to the development of climate change policy. This approach
has drawn on the scientific evidence base on climate change to
inform Government action. The economics of climate change has
also been central, and Treasury has since the outset played an
integral role in the development of UK climate change policy.
The Chancellor recognised that the debate on the economics of
climate change would benefit from the clarity of an independent
review, and that is why he announced a review of the economics
of climate change to be led by Nick Stern. The review will look
at the medium to long term economic implications of climate change
and assess approaches to tackle the issue.
Response to paragraphs 2 and 3 of the report
2. We are concerned that the links between
projected economic change in the world economy and climate change
have not been as rigorously explored as they should have been
by the IPCC. We believe the complex interactions between world
economic growth and climate change need additional scrutiny at
the international level, and that the UK Government has a role
to play in ensuring that this happens. We are also concerned that
clearer messages should be conveyed to the public about the likely
costs and benefits of climate change control, who will bear those
costs and benefits, and when (paragraph 2).
3. We are not convinced that there is sufficient
public awareness of the economics of climate change. Any public
misperception on these issues could threaten the political feasibility
of getting plans of action put into effect. If climate change
is as serious as most scientists claim, and as the Government
accepts, then it is important to convey the complementary message
that the action to tackle it will also have to be serious and
potentially life-changing. It is better to be honest now than
to shield the public from the economic realities inherent in the
more pessimistic forecasts (paragraph 3).
The Intergovernmental Panel on Climate Change's (IPCC)
role is to assess the available scientific literature including
the socio-economic literature. It does this rigorously, following
procedures agreed internationally including a two stage, fully
documented peer review process. There is nothing comparable internationally
with this level of scrutiny and the UK Government was instrumental
in setting it up.
This Committee has devoted considerable attention
to the critique of the links between projected economic change
in the world economy and climate change in the IPCC scenarios.
The Government notes that most commentators have reached the conclusion
that any change in the emissions projected by the scenarios—which
reflect uncertainties in the future projections of economic growth—is
likely to translate into a very small effect on projected temperature.
Overall, the IPCC's emissions scenarios cover a very wide range
and the most reasonable expectation about future global emissions,
in the absence of further mitigation action, is likely to be included
within the envelope.
Assumptions about global economic growth in the IPCC
scenarios have been commented on widely. The IPCC is currently
assessing these scenarios in the light of the literature now available.
The Government fully supports the continuous improvement of the
IPCC scenario work, including addressing the complex issues that
have been raised in relation to socio-economic scenarios. To strengthen
understanding of the implications of economic growth on climate
change, Nick Stern's review will examine the prospects for global
growth and in particular the implications this has for energy
demand and emissions.
At all stages, the Government has openly consulted
on cost implications of climate change policies and sought stakeholder
views on their validity. New policies are accompanied by an open
and consultative Regulatory Impact Assessment (RIA) process. There
are other sources of cost information such as the forthcoming
Climate Change Programme Review (CCPR) and accompanying evaluations.
The Government does not underestimate the long-term
challenge of shifting to a low-carbon economy. The Energy White
Paper acknowledges that securing our objectives is a "massive
challenge". The costs of a low-carbon economy are covered
by modelling work for the White Paper, and the estimates are broadly
in line with the broader literature. An updated review of this
modelling literature by the Imperial College London Centre for
Energy Policy and Technology (ICEPT) has recently confirmed that
these longer-term estimates remain fairly central.[1]
The publication of the Stern review next year will
provide an opportunity to present the argument to the public on
costs of action and inaction.
The uncertain science of climate change
Response to paragraph 18 of the Report
4. The scientific context is one of uncertainty,
although as the science progresses these uncertainties might be
expected to diminish and be resolved, one way or the other. Hence
it is important that the Government continues to take a leading
role in supporting climate science, and encourages a dispassionate
evidence-based approach to debate and decision making (paragraph
18).
Whilst uncertainties exist, it should be recognised
that the consensus on the reality of climate change, its causes
and effects, is growing ever stronger, as witnessed by the IPCC's
Third Assessment Report, The Exeter conference on "Avoiding
Dangerous Climate Change" and more recently the Joint Science
Academies' Statement of June 2005. The remaining uncertainties
are about the magnitude and timing of future climate change.
We agree completely that it is important that the
Government continues to take a leading role in supporting climate
science. Defra (Global Atmosphere Division) funds a substantial—and
dispassionate—research programme at the Met Office's Hadley
Centre, a centre of world-renown. Its value is currently £11
million per annum; this funds about 70 staff and substantial use
of the powerful supercomputer necessary for modelling climate.
Whilst Defra help officials identify priority work areas and the
type of information which government needs, Hadley Centre scientists
are independent and objective. They are encouraged to publish
their findings in peer reviewed journals, and have an impressive
publication record. Hadley Centre model output is subject to stringent
scrutiny both internally (all versions of the models are validated
against real-world observations) and externally; their work frequently
features in international model intercomparison exercises. An
independent, international Science Review Group provides independent
scrutiny of Hadley Centre's work, as well as major five-yearly
reviews of not only the programme but also how well it meets Government's
needs.
Defra's climate research is only part of a larger
UK research activity coordinated with the Research Councils via
the Global Environmental Change Committee. Many National Environment
Research Council (NERC) scientists collaborate with Hadley scientists;
indeed many of the publications mentioned above are co-authored.
Likewise the Defra-funded work at the Hadley Centre relies greatly
on the MOD-funded components of the Hadley Centre's work. In addition
to the work of the Hadley Centre, significantly more government
money is used to fund a wide range of climate science projects
through the NERC.
Response to paragraph 24 of the Report
5. We do not believe that today's scientists
are "crying wolf" about climate change: they may turn
out to have been wrong in some respects, but arguments on which
they base their case are better researched than in earlier cases.
That said, we have sought to highlight some pressing issues which
we believe deserve a further response from the scientific community
in order to enhance understanding and resolve current controversies
(paragraph 24).
The Committee has highlighted the "hockey stick"
debate as an example of controversy. This is just one example
of normal debate in a dynamic science. Another recent example
is the apparent discrepancy between surface and tropospheric temperature
trends which has recently been resolved by more robust analysis
of tropical satellite and balloon-borne data.
Defra funds Hadley Centre scientists to investigate
these and other issues which rightly receive attention from the
media and experts. Mann et al's original work on the "hockey
stick" has now been re-analysed and replicated by their peers
for some years and has not been discredited. It is just one of
numerous strands of evidence that make up the emerging picture
of historic climate change. Contrary to some reports, the "hockey
stick" diagram was not crucial to the IPCC's Third Assessment
Report conclusions. The Met Office considers that it is still
most likely that the 1990s was the warmest decade in the last
1000 years and that more than 50% of warming in recent decades
is attributable to anthropogenic sources of greenhouse gases.
The future impacts of the enhanced greenhouse effect
Response to paragraphs 27 and 47 of the Report
6. Whatever the validity of temperature projections,
the science of measuring impacts remains speculative. Many of
the adverse effects of warming can be offset by adaptation and
we believe that the economic and social returns from investing
in adaptation should be properly weighed against the cost of mitigation
(paragraph 27).
7. The issue of adaptation verses mitigation
is clearly one of balance. Most adaptation expenditures would
be local, while mitigation requires action on a global scale.
Few would suggest doing nothing by way of mitigation, and few
would suggest no adaptation expenditures at all. But the policy
literature seems to us to be overly focussed on mitigation. We
therefore urge the Government to ensure that greater efforts are
made to understand the relative costs and benefits of adaptation
compared to those of mitigation (paragraph 47).
The science of measuring impacts is far from
speculative. Present day monitoring networks and phenological
techniques have allowed us to monitor changes in the world around
us as a result of changing weather patterns. Future impacts of
climate change are undoubtedly more difficult to predict due to
the sheer complexity of the impacts, their interactions with each
other and the need to take account of the future socio-economic
context. Future impacts on the natural world can be modelled using
fundamental underlying physical principles, with the incorporation
of as many of the feedback systems in the models as possible.
Socio-economic impacts are more difficult to predict and need
to take into account a range of largely unpredictable parameters
(e.g. population and economic growth) through the use of socio-economic
scenarios. Defra has commissioned research to improve the understanding
of the impacts of climate change at both the global and local
level and is actively encouraging the development of research
in this complex area. Such work is required to underpin the development
of adaptation strategies and the foregoing should indicate that
the assessment of adaptation needs is a complex issue.
Adaptation alone will never be enough to tackle the
predicted impacts of climate change. What is needed is a means
to deal with the root cause of the problem, as well as addressing
that damage to which we are already committed. This realisation
is what motivates the Government's twin track approach. To continue
to adapt in the face of rising emissions is a futile course of
action. There are thresholds within the climate and physical systems,
tipping points, that we must strive to avoid meeting and exceeding.
Our "Avoiding Dangerous Climate Change" conference in
February 2005 made this clear. The relative balance between adaptation
and mitigation is a question of timing, as well as costs. Adaptation
is principally used to address that change to which we are already
committed, while mitigation is a longer-term course to avoid increasing
further future damage. The costs of adaptation will increase as
climate change becomes more severe.
Since 1997, the UK Government has supported the work
of the UK Climate Impacts Programme. This has sought to support
a stakeholder led approach to improved understanding of climate
impacts and action on adaptation. The Programme has provided a
range of tools for the assessment of adaptation options, including
a risk uncertainty and decision-making framework for climate change
adaptation. As part of this work, during 2004, the Programme provided
guidance on costing the impacts of climate change as well as on
costing alternative adaptation options. This was produced as a
set of CD-ROM tools as well as publications, and training workshops
on the use of the methodology were held across the UK. The evaluation
tool provides the means to carry out the types of assessments
requested by the Committee. The work is in line with Treasury
Green Book guidance.
The UK Government fully supports the use of cost
benefit analysis to evaluate adaptation options. In making this
methodology available we have enabled local decision makers the
opportunity to appraise potential projects using a consistent
cost benefit analysis framework.
Finally, an ongoing Defra-funded project will provide
an improved estimate of the net costs that climate change will
impose upon the UK through a number of key impacts. It will provide
first estimates of gross sectoral costs of climate impacts at
regional and national level over a number of future time periods
and under a range of climate change and socio-economic scenarios.
As far as possible, the costs of indicative adaptation measures
will also be quantified, such that residual costs of climate change
can be estimated. The project is expected to report in March 2006.
Response to paragraph 32 of the Report
8. We noted evidence from Professor Paul Reiter
of the Institut Pasteur in Paris, which strongly disputed the
IPCC's arguments on the likely spread of malaria as a result of
warming (paragraph 32).
This is unconvincing. Professor Paul Reiter's evidence
does not accurately represent the current scientific debate on
the potential impacts of climate change on health in general,
or malaria in particular. He appears to have been quite selective
in the references and reports that he has criticised, focusing
on those that are neither very recent nor reflective of the current
state of knowledge, now or when they were published.
The IPCC's Third Assessment Report (2001) noted that
malaria is caused by four distinct species of Plasmodium
parasite, transmitted between individuals by mosquitoes. Malaria
is undergoing a global resurgence because of a variety of factors,
including socio-economic and policy changes, and variation in
malaria transmission is also associated with changes in temperature,
rainfall and humidity as well as the level of immunity. An estimated
40% of the total world population currently lives in areas with
malaria. Other areas may become at risk as a result of climate
change if, for example, malaria control programs have broken down
or if transmission currently is limited mainly by temperature.
The Report also indicated that there was currently insufficient
scientific evidence to conclude that climate change was a cause
of the reported increases in highland malaria in East Africa in
the 1980-90s.
The effect of changes in climate on actual human
disease will depend not only on the physical impact of climate
change on potential disease transmission, but also on many social,
economic and environmental factors that will vary between populations.
The distribution and seasonal transmission of malaria
is affected by climate, as both mosquito and parasite are sensitive
to temperature and water availability. Climate change per se
would be expected to have the following effects on malaria (Kovats
et al., 2001):
- increase its distribution where
it is currently limited by temperature—epidemic malaria
may become present in new areas
- decrease its distribution where it becomes too
dry for mosquitoes to be sufficiently abundant for transmission.
- increase or decrease the months of transmission
in areas with "stable" malaria, some areas may change
from unstable to stable malaria, and vice versa.
- increase the risk of localised outbreaks (that
is, local transmission in areas where disease is eradicated but
vectors are still present such as in Europe or the US).
All statements made by the IPCC in the assessment
reports have been constructed very carefully. In this case, the
reports have been very clear about the levels of confidence associated
with each statement, about the difference between potential impacts
of climate change on disease transmission and the actual human
health impacts experienced, and about the importance of socio-economic
and policy changes alongside climate change in determining future
global incidence of malaria.
On human health effects generally, the IPCC stated
that "overall, climate change is projected to increase threats
to human health, particularly in lower income populations predominantly
within tropical/subtropical countries" (Synthesis Report,
2001).
The accuracy and reliability of global malaria models,
as well as the underlying science represented by such models,
continue to improve, and the IPCC's Fourth Assessment Report (due
in 2007) will have a much larger number of published studies from
which to draw conclusions.
Response to paragraph 37 of the Report
9. We draw attention to the fact that, if extreme
events are indeed to be considered the most important impacts
from climate change, there is uncertainty and controversy about
the underlying data required to substantiate this claim (paragraph
37).
Extreme events, by definition, involve very substantial
costs, as we have seen in recent natural catastrophes. It is therefore
fully understandable that scientists and policy makers alike are
keen to gain a better understanding of the impacts that climate
change will have on the frequency or the nature of such events.
On the other hand extreme events happen infrequently, and instrumental
climate observational records are short, sparse or non-existent
in many parts of the world. Hence there are uncertainties about
whether or not frequencies or other characteristics of some types
of extremes are changing; the IPCC tabulated what is known, and
what is not, very clearly. Data requirements are specified in
the action plan of the Global Climate Observing System; full implementation
of this plan will contribute strongly to improving our understanding
on how extremes are changing. The Hadley Centre is also developing
further the treatment of extreme events in its climate models.
Response to paragraph 39 of the Report
10. How catastrophic threats such as disintegration
of Antarctic ice caps should influence decision-making depends
on the scale of the effects, their probability of occurrence,
and when they might occur. The scale of these events is clearly
very large (paragraph 39).
Responding to low risk, large-impact events such
as those listed is clearly a risk assessment exercise. The first
stage is to quantify the likelihood of such events happening;
the Defra research programme is used pro-actively for such work.
For instance, it commissioned an assessment of the risk of collapse
of the West Antarctic Ice Sheet, and the Hadley Centre research
programme includes assessment of the weakening of the North Atlantic
thermohaline circulation under future climates.
The continuous monitoring of the natural environment
for signs of change, including the onset of major shifts in the
climate system, is a vital contribution to risk assessment that
deserves stronger support mechanisms than those currently in place.
At present many observations are made of the natural
environment for a variety of reasons, e.g. for weather forecasting,
and these are often useful for monitoring climate. However they
do not provide all the information that is needed and it is now
recognised that new monitoring systems are needed specifically
for climate purposes. The piloting of the global observing system
of ocean buoys (called Argo), initiated by the US and supported
by the UK and many other nations through research funding, is
a good example. The Global Environmental Change Committee (GECC)
sub-group on Observations is tasked with reviewing and making
recommendations on the UK's participation in and contribution
to observational networks.
Response to paragraph 40 of the Report
11. If cataclysmic events which threaten the
viability of existing societies are even remote possibilities,
it is important that policy makers construct frameworks for analysing
and debating probability and risks, since the threats associated
with such "doomsday" scenarios are fundamental elements
in driving the international discourse (paragraph 40).
The first step in analysing and debating probability
and risk is to develop scientific understanding and gather information
so that this can be done meaningfully. This has long been recognised,
for instance it was the motivation for commissioning the study
of the West Antarctic Ice Sheet referred to above (response to
paragraph 39). It has also been recognised in IPCC circles; the
Third Assessment Report (TAR) contains many quantified statements
of the likelihood of the events it discusses. More recently there
have been new methods developed to try to quantify more rigorously
the uncertainties involved in climate, for instance the probabilistic
prediction methodologies used by the Hadley Centre and by Oxford
University in the project climateprediction.net.
Scientific evidence (notably the evidence reviewed
by the IPCC) can then inform a public debate on probability and
risks. This process is illustrated for example by the Government's
response to the Royal Commission on Environmental Pollution report
Energy—the Changing Climate (June 2000) and conclusions
of the European Union Environment Council on levels of climate
change to be avoided. The Government's work on the Social Cost
of Carbon has also investigated the possibility of extending the
economic framework to cover risks of this type, but it appears
likely from this work that economic valuation will for the foreseeable
future remain within the context of an assessment of physical
risk.
Response to paragraph 41 of the Report
12. We think it important that the IPCC moves
towards clearer judgements on the probabilities of the projected
global temperature increases (paragraph 41).
The Government agrees that there could be benefits
associated with moving towards probabilistic approaches to emissions
projections, concentrations and temperature increases. The potential
benefits of probabilistic approaches are currently being considered
by the IPCC, and in a recent submission to the IPCC on emissions
scenarios Defra has argued that "the IPCC should consider
a wide range of scenarios and approaches to scenario building.
This should range from the traditional "what if" approaches
to more probabilistic approaches."
The Hadley Centre (Murphy et al.) published
a paper on this subject in Nature in 2004, and suggested other
modelling centres might adopt their approach. Other climate modellers
are now working on probabilistic predictions, so it is likely
that they will feature in future IPCC assessments.
Response to paragraph 43 of the Report
13. We are clear that fuller consideration
needs to be given to the literature on the positive effects of
warming (paragraph 43).
The distribution of positive or negative effects
of warming depends on geography/climate as well as on the impact
sector. In some regions and in some sectors there are likely to
be some initial benefits as well as costs associated to climate
change. For instance the IPCC TAR showed that a global mean temperature
increase of up to 1C may be beneficial for some regions and sectors.
On the other hand, our work during 2005 on climate change and
Africa has identified the huge potential losses facing African
nations as a result of expected climate impacts, and the challenge
that any level of climate change poses to our collective ability
to meet development goals. Apart from all this, any positive impacts
of climate change are likely to be transient as the relative importance
of negative impacts is likely to increase over time as temperature
rises.
The key analytical issue is therefore to identify
for each region/sector the expected changes (both positive and
negative) and the level of warming at which negative impact prevail
over positive impact (if indeed the sectoral/regional impact happen
to be initially positive). This combined with scenarios of temperature
increase can indicate the most likely timing of the switch between
from positive to negative. The IPCC TAR observed that above 2C
of increase in Global mean Temperature (GMT) the vast majority
of market impacts were predicted to be negative and most regions
of the world would suffer adverse effects. A recent survey of
impact studies for the Organisation for Economic Co-operation
and Development (OECD) found that beyond 3 to 4C of increase in
GMT all impact study tend to show negative and increasing
impacts. More recently, an expert review of the impacts literature
presented at the Exeter conference (February 2005) showed that
up to 1C increase in global mean temperature is likely to be associated
with damages in developing countries and with some benefits in
developed countries, but beyond this point net damage is likely
to increase in all areas. All these thresholds are well within
the range of temperature increases for 2100 from the IPCC scenarios.
Furthermore, recent probabilistic approaches to climate sensitivity
(the degree of warming associated with a doubling of CO2
concentrations above pre-industrial levels) have pointed to a
much wider range than the one used by the IPCC in its scenarios,
particularly in relation to the probability of high values. In
simple terms, the world may be warming much more quickly than
previously thought, which means that any positive impacts of climate
change may be more short-lived.
Work within the UK has identified potential benefits
in the agriculture sector, due to lengthened growing season and
altered temperature regimes, but such work also needs to take
into account changing water resource availability and factors
such as changing soil nutrient status. The 2005 Royal Society
"Food crops in a changing climate" meeting identified
that benefits previously identified as a result of carbon dioxide
fertilisation are not as great as previously thought, as a result
of large scale field experiments. Defra sponsored work is also
underway on potential effects (both positive and negative) on
tourism in the north-west of England. Finally, the ongoing research
project on the costs of climate change in the UK mentioned in
the response to paragraph 27 is aiming to assess costs net of
any beneficial effects.
Response to paragraph 44 of the Report
14. We conclude that there are weaknesses in
the way the scientific community, and the IPCC in particular,
treats the impacts of climate change. We call for a more balanced
approach and look to the Government to take an active role in
securing that balance of research and appraisal (paragraph 44).
It is accepted that the science of impacts is a less
mature subject than climate science and that methods and approaches
are still being developed. Nevertheless major advances have been
made since the Third Assessment Report as was apparent from the
papers presented at the Exeter Conference on "Avoiding Dangerous
Anthropogenic Climate Change".
The UK does take a balanced approach to the costs
and benefits of climate change and will continue to do so. Science
must not be politicised. The UK Government strongly supports balance
in the IPCC assessment process and has contributed to the development
of the procedures which help ensure this.
Forecasting greenhouse emissions and temperature
change
Response to paragraph 60 of the Report
15. Serious questions have been raised about
the IPCC emissions scenarios, and a reappraisal of the scenarios
exercise is urgently needed (paragraph 60).
IPCC's emissions scenarios cover a very wide range
and the most reasonable expectations about future outcome of global
emissions in the absence of further mitigation action are likely
to be included within the envelope. As already identified in responding
to paragraph 2, the Government is well aware of the controversy
that has been generated about these scenarios and notes that the
authors responsible for them have responded in the literature,
and that the IPCC is currently assessing these scenarios in the
light of the literature now available.
While it is generally acknowledged that the nature
of the questions raised on the IPCC scenarios do not alter the
nature of the climate change policy debate, the Government agrees
that the questions raised on the emission scenarios deserved serious
and thorough attention. It is therefore with satisfaction that
the Government observes that IPCC Working Group III (Mitigation
of Climate Change) is fully engaged with the debate on exchange
rates and projections of economic growth, which has also been
addressed by two recent workshops on scenarios. In the IPCC's
Fourth Assessment Report (due in 2007), the IPCC will assess the
scenarios published in the peer reviewed scientific literature,
whether or not generated by IPCC. This will include consideration
of the effect of revised population projections.
Overall, the Government strongly supports the continued
strengthening and improvement of the economic assumptions feeding
in the IPCC report and contributed significantly to IPCC's recent
workshop on the requirements for future emissions scenarios.
Response to paragraph 63 of the Report
16. We consider the convergence assumptions
in the IPCC scenarios to be open to some question. In our view,
political factors should not be allowed to influence the scenarios,
whether over the issue of convergence or indeed in any other context
(paragraph 63).
Global modelling exercises, such as projecting world
emissions of greenhouse gases require assumptions about economic
convergence across regions. These convergence scenarios are often
derived from exogenous assumptions on population and productivity
growth which may be open to questioning. The dynamics of convergence
are in themselves debated in the economic literature. Convergence
is also conditional to political, institutional and geographical
factors, and it is possible to witness clusters of very rapid
economic growth in certain regions of the world (for instance
the current rate of economic growth in China and in India) accompanied
by stagnation in other regions.
It is therefore unsurprising that any set of assumptions
is open to question, including the assumptions on convergence
made for in the IPCC Scenarios, which also look at the very long-term.
This does not imply political interference in the IPCC process
and no evidence to suggest this has been provided.
The UK Government is providing support for a forthcoming
workshop on the economics of convergence which is being organised
by the OECD Environment Policy Committee in early 2006. It is
envisaged that this event should help define a global baseline
scenario, which could be used in global modelling exercises currently
carried out in the OECD, other international institutions and
academic research. The outcomes of this workshop could also provide
a timely input for the ongoing IPCC Fourth Assessment Report.
Response to paragraph 66 of the Report
17. In general, any change in emissions due
to changed economic assumptions will translate into a smaller
effect on concentrations and an even smaller effect on temperature.
This in no way excuses poor analysis in the emissions scenarios,
but it may mean that projections of warming are not themselves
greatly affected (paragraph 66).
Most commentators on the IPCC scenarios debate would
agree that any change in emissions due to changed economic assumptions
will translate into a smaller effect on concentrations and an
even smaller effect on temperature, which does not respond in
a linear manner to changes in greenhouse gas concentrations. In
other words the current IPCC scenarios are still fit for informing
the climate change policy debate.
Looking ahead, the Government believes that there
may be scope for strengthening some of the analysis underpinning
the IPCC socio-economic scenarios in line with developments in
the literature. The Stern review will examine the effect of growth
on energy demand and emissions.
Response to paragraph 68 of the Report
18. It appears that the IPCC scenarios are
not capturing recent emissions experience in their short-term
projections (paragraph 68).
This is incorrect. The Government's analysis of data
from the International Energy Agency (IEA) and from the BP
Statistical Review of World Energy suggests that since 2000
the percentage increases in global fossil carbon emissions are
within the range of the values expected from the IPCC scenarios,
and appear to be moving from about the centre of the range towards
the top of the range. In the Government's view the Committee's
analysis may have been unduly influenced by emissions reductions
due to economic restructuring and fuel switching at the end of
the last century and cannot be relied upon.
Response to paragraph 72 of the Report
19. We received a significant amount of evidence
on the realism of the IPCC emission scenarios, and doubts were
raised, particularly about the high emission scenarios. The balance
of this evidence suggests to us that the high emissions scenarios
contained some questionable assumptions and outcomes. While errors
do not translate into equal magnitude errors in concentrations
or warming, it seems to us important that the IPCC emissions modellers
give serious attention to adopting the correct procedures (paragraph
72).
All scenarios are likely to contain assumptions that
some will find questionable, and scenarios at the upper or lower
end of a range may be questioned more than those at the centre.
The IPCC has deliberately chosen a non-probabilistic approach.
So the important point is the comprehensiveness of the range,
not the "realism" of particular scenarios in the range.
As mentioned in responding to several of the recommendations
made by this Committee, the Government supports the review of
the literature on scenarios by the IPCC in its Fourth Assessment
Report and—as mentioned in response to paragraph 41—sees
the potential benefits of a move towards probabilistic scenarios
The costs of tackling climate change
Response to paragraph 73 of the Report
20. It is very important that a realistic picture
of the likely costs be conveyed to, and understood by, people
today who will have to pay them. We note the considerable efforts
that the IPCC has made in constructing likely cost estimates for
the world as a whole. We are far less satisfied with the data
currently available on the costs to the UK, and we call for a
significantly greater effort to clarify and estimate those costs
(paragraph 73).
The Government agrees that the IPCC has made good
progress in assessing global mitigation cost estimates and anticipates
that further progress will be made with the IPCC's Fourth Assessment
Report.
The Government agrees on the need for expanding and
updating information on costs at the national level. The Energy
White Paper (2003) set an international precedent by outlining
economy wide costs of climate change policies. This covered abatement
costs in absolute terms, as well as impacts on total GDP and GDP
growth rates over the period to 2050 (estimated in a range between
0.5% and 2% of GDP for carbon reductions of 60%). The estimates
were based on a wide range of sensitivities and scenarios. Sensitivities
modelled included changing the availability of low carbon technologies
and their costs, the cost and availability of energy efficiency
in the domestic and business sectors and the level of innovation
in low carbon technologies.
These estimates were found to be entirely consistent
with those of other studies including by the IPCC.
The DTI and DEFRA have also commissioned additional
academic work in this area to look at more recent studies of the
impact of carbon abatement measures on GDP and have again found
the numbers in the Energy White Paper to be within the range of
estimates from these studies (see the ICEPT report (2005)).
While the costs to the wider economy appear to be
relatively small, the Energy White Paper did not underestimate
the challenges posed by the transition to a low-carbon economy.
It acknowledged that transitional/adjustment costs may be high
if tight reduction targets were adopted in too short a timescale;
hence the need to use cost-effective instruments. The Energy White
Paper also set as a key objective of UK's foreign policy securing
international commitment to this ambition.
Information on the costs of specific policies and
measures will be extended under the Climate Change Programme Review,
currently under way. The costs and benefits of all the existing
policies in the Climate Change Programme and all the possible
new policies we are considering introducing are being calculated.
We are using our best available data to assess each policy on
a consistent basis in terms of tonnes of carbon it could save
at what cost (including non-market costs). It is envisaged that
the analytical work underpinning the review should produce abatement
cost-curves showing the cost effectiveness and carbon saving potential
of possible new policies and measures for reaching the Government
2010 goal of a 20% reduction in CO2 and for being on
a path towards the long-term targets. The work will also provide
us with the opportunity to compare the carbon mitigation costs
of our policies with the research evidence on the damage cost
of carbon. Building on this work, the Stern review will provide
an assessment of the economics of moving to a low-carbon global
economy, including of the costs and benefits of adaptation, focussing
on the medium to long-term perspective, and drawing out policy
implications. This analysis will be applied to the specific case
of the UK in the context of its existing climate change goals.
Response to paragraph 83 of the Report
21. Given the wide array of potential technologies,
we are surprised that the Government's Energy White Paper should
place such emphasis on just one technology, wind energy (paragraph
83).
This is incorrect. The Energy White Paper included
analysis of a wide range of technologies aimed at abating carbon
emissions in energy supply, energy demand and the efficient use
of energy and in the transport system. Therefore, stating that
the Energy White Paper emphasises just one technology is a misrepresentation.
Clearly, renewable energy is an integral part of the Government's
long-term aim of reducing emissions by 60% by 2050. Achieving
10% of supply from renewables in 2010 would save approximately
2.5 MtC per year if the equivalent amount of energy were generated
from gas. By 2020, 3-5MtC of carbon savings was indicated in the
Energy White Paper as potentially coming from renewables. But
this is only a share of the 15-25MtC of carbon savings that might
be obtained in 2020. Also, the analysis underlying the Energy
White Paper did not only look at wind among all generation technologies.
The UK version of the Market Allocation model (MARKAL) which was
employed in the analysis encompassed other low carbon generation
sources such as biomass, wave and tidal, nuclear and carbon capture
and storage as well as onshore and offshore wind.
Most importantly, current policies are not set up
to favour any specific generation technology. In particular, the
Renewables Obligation does not involve picking winners in order
to meet the targets set for 2010 and 2015. Wind energy is, however,
currently the most developed and cost effective of the renewable
technologies with scope for expansion. It will play a major role
in meeting the target of 10% of electricity to be supplied by
renewables by 2010. An expansion of both onshore and offshore
wind will be needed to meet this. 240 MW of wind generating plant
has been built during 2004 (more than twice the 2003 figure),
and around 600 MW is expected during 2005.
Response to paragraph 84 of the Report
22. In our view, it would be unwise to close
the nuclear energy option. It is prudent to maintain as wide an
energy portfolio as possible. We argue that the current capacity
of nuclear power, before further decommissioning occurs, should
be retained (paragraph 84).
Nuclear power is currently an important source of
carbon free electricity and the Energy White Paper published in
2003 did not rule out the future use of nuclear energy. However,
analysis for the White Paper showed that current economics make
it an unattractive option. There are also important issues of
nuclear waste to be resolved. The White Paper made it clear that
the Government's priority is to strengthen the contribution that
energy efficiency and renewable energy sources make towards meeting
our carbon commitment. It therefore made no proposals to build
new nuclear power stations but the possibility of new nuclear
build at some point in the future is not ruled out.
The Prime Minister has recently announced that proposals
on energy policy to tackle the combined threat of global warming
and security of energy supply will be published in 2006, and this
will include an assessment of all options, including nuclear.
This will follow on from the ongoing review of the Climate Change
Programme.
Response to paragraph 94 of the Report
23. We are concerned that UK energy and climate
policy appears to rest on a very debatable model of the energy-economic
system and on dubious assumptions about the costs of meeting the
long run target of 60% reduction in CO2 emissions.
We call on DTI and the Treasury to improve substantially (a) the
cost estimates being conveyed to the public and (b) the manner
of their presentation. We believe that the Treasury should be
more active in scrutinising and publicising these costs and benefits,
in association with Defra and DTI (paragraph 94).
The Government has taken care to ensure that cost
information is thoroughly analysed and the risks in the calculations
are fully understood. DTI and Defra have used a model (MARKAL)
developed by the International Energy Agency (IEA) in order to
derive the estimates of the costs of meeting the long-run target
of a 60% reduction in CO2 emissions by 2050. MARKAL
is a widely used and tried modelling framework which has around
150 licensed users world-wide and has been applied in different
variants in several countries including the US, the Netherlands,
China and Japan. The IEA is currently engaged in a major study
to look at available technologies for carbon reduction and their
costs using a version of the MARKAL model.
But DTI and Defra have not relied on these estimates
alone as noted in the response to paragraph 73 above. Both departments
are currently examining the scope for upgrading the UK version
of the MARKAL model to introduce more economic feedbacks and dynamics,
which would help to address the concerns raised by the Committee.
The costs estimated for meeting the UK's 60% goal
are consistent with expectations from the international literature
and have been conveyed to the public via the Energy White Paper
and the supporting documentation. The Treasury is fully involved
with this work via the interdepartmental group responsible for
the analytical work in this area.
The costs of any specific policy proposals are routinely
and transparently presented to the public via the Regulatory Impact
Assessment process, which provides a valuable mechanism for seeking
views and challenging assumptions in the drafting of policy and
cost implications. Consultation on regulatory impact assessments
provides an opportunity for greater public scrutiny of the cost
implications of Government policies.
The Stern review will also examine the cost implications
of climate change. The Government is confident that this review
will provide greater clarity on costs and help raise awareness
of climate change impacts.
The benefits of climate change control
Response to paragraph 99 of the Report
24. Research suggests that, in terms of percentages
of world GNP, monetised damage is relatively low, even for warming
of 2.5oC. The damages are not evenly spread. In general,
developing countries lose more than developed economies. Some
models suggest no real net damage to rich countries (paragraph
99).
The Government agrees that the damages are often
projected to be greater in developing countries which are the
most vulnerable. This is clearly a matter of concern. It would
be a mistake however to consider there would be little impact
on rich countries. The Government notes that the range of monetised
estimates available is very wide, and heavily dependent on assumptions
made. Typically, benchmark estimates of the damage costs of climate
change are not time-dependent, but rather are calculated looking
at the impacts of a benchmark increase in temperature on the basis
of current socio-economic scenarios. A higher rate of climate
change (driven by a higher climate sensitivity to greenhouse gas
concentrations) would be likely to increase damage costs, also
by reducing the possibilities for adaptation. Also, monetised
estimates typically omit many physical impacts and risks and net
damage estimates can conceal very significant losses to sectors
of society and the economy. Finally the Government has already
pointed the Committee to the transient nature of benefits from
climate change in the response to paragraph 43.
Response to paragraph 101 of the Report
25. The evidence presented to us indicates
that the estimates of monetised damage are highly controversial
within IPCC deliberations
(paragraph 101). We urge the Government to press the IPCC for
a proper detailing of the estimates and for a discussion of the
uncertainties in the next IPCC Assessment Report in 2007 (paragraph
101).
The Government is satisfied. The IPCC successfully
assesses the scientific literature relevant to climate change
(including not only the physical sciences but also the socio-economic
literature) in a balanced and objective manner. It would be inappropriate
for the UK or any other Government to press the IPCC on particular
issues, and to do so would be to encourage political interference
which the Committee elsewhere deplores. The Government agrees
with the Committee that monetised damage estimates are often controversial
and notes that this reflects differences in the socio-economic
literature as well as the sensitivity to uncertain parameters
such as the relationship between greenhouse gas concentrations
and temperature increase.
Response to paragraph 105 of the Report
26. While we agree with others that the monetised
benefit estimates for controlling global warming are uncertain,
we are concerned that the IPCC appears to be playing down these
estimates in favour of often detailed descriptions of individual
impacts that cannot be brought into comparison with the likely
costs of control. Perhaps one reason for this lack of emphasis
is that the economic measures of damage give the impression that
the benefits of warming control are smaller relative to the costs
(paragraph 105).
The IPCC assesses the literature available to it,
including the literature on monetised estimates and on physical
impacts and risks. As discussed in responding to paragraphs 99
and 101 the Government notes that monetised estimates of the damage
costs of climate change that are currently available are a subset
of total damages and therefore inadequate by themselves as a basis
for policy development. The only way that this will improve is
by consideration of physical damage estimates not currently included
in the models.
Response to paragraph 105 of the Report
27. We urge that explicit comparisons be made
between the monetary cost of adaptation measures and their benefits.
While we were reassured by Defra that they would be pressing for
a higher profile for the economics in the IPCC's Fourth Assessment
Report, we consider that the Treasury has a duty to reinforce
Defra's intent. Indeed, given the potential importance of this
issue, both in terms of public expenditure and of overall economic
cost, the Treasury should become directly involved itself, making
its own economic assessment of the issue (paragraph 105).
Defra and other UK Government departments have commissioned
or otherwise supported important research projects taking a longer
term look at the economics of climate change and/or aimed at developing
tools for economic analysis. Several of these activities have
a good chance of being reflected in the IPCC Fourth Assessment
Report.
As explained in the response to paragraph 27 and
47, the UK Government is committed to improving the evidence base
on the costs and benefits of adaptation options in the UK. Nonetheless
the Government recognises that there is further scope for investigating
the monetary cost of adaptation measures and their benefits. The
Stern review will examine the evidence on the economic, social
and environmental costs and benefits of climate change, for both
developed and developing countries, including the possibilities
of increased climate volatility and major irreversible impacts.
Evidence will also be collated on the climatic interaction of
greenhouse gases with other air pollutants, together with the
costs and benefits of actions taken to limit the damage.
The IPCC process
Response to paragraphs 111 and 114 of the Report
28. We can see no justification for an IPCC
procedure which strikes us as opening the way for climate science
and economics to be determined, at least in part, by political
requirements rather than by the evidence. Sound science cannot
emerge from an unsound process (paragraph 111).
29. The IPCC Summary for policy makers says
that economic studies underestimate damage, whereas the chapter
says the direction of the bias is not known (paragraph 114).
This is incorrect. The Government disagrees with
the suggestion that the IPCC process is unsound and that it may
lead to climate science and economics being determined by political
requirements.
The agreement of Summaries for Policy Makers helps
communicate IPCC outputs to Governments. Political bias is unlikely
given the entire range of opinion represented by Governments who
support the IPCC and the dialogue between the Government representatives
and the IPCC authors. The process of agreement of Summaries for
Policy Makers involves debate because of the level of engagement
of Governments and authors. This is healthy and should not be
mistaken for political influence and no evidence to the contrary
has been provided.
The Government notes that the process of producing
an Assessment Report is designed to be transparent and unbiased;
IPCC members (governments) elect an IPCC Bureau of 30 members
based on scientific credentials and also are asked to nominate
scientists who may subsequently be chosen as contributors to the
report. The Bureau then has responsibility for choosing authors
and overseeing the production of an Assessment Report. IPCC members
are not involved in this process. Authors are responsible for
preparing the Report, including the Summary for Policy-makers.
IPCC members subsequently consider and approve the Summary for
Policy-makers, in part to ensure that the authors are not moving
beyond their remit and producing a policy-prescriptive, rather
than policy relevant while neutral summary.
The example given by the Committee is the only instance
the Government has seen of an apparent discrepancy between an
IPCC report chapter and the summary for policy makers. The Government
recognises that the process of producing a summary for policy
makers is difficult, as it inevitably involves some simplifications
of the underlying scientific reports, and may lead to more emphasis
being placed on the findings that are believed to be more politically
relevant by Government representatives. Judgments may vary on
how successfully this task has been carried out, and of course
these judgments may themselves reflect the opinions of individuals;
this tends to increase the value of Summaries for Policymakers
as collective summaries rather than opinions of individuals or
interest groups. The process of agreeing summaries is in any case
open and consensual, so those delegates or authors who disagree
with a particular sentence or paragraph have a chance to put forward
alternative forms of wording.
Response to paragraph 116 of the Report
30. We are concerned that there may be political
interference in the nomination of scientists to the IPCC. Nominees'
credentials should rest solely with their scientific qualifications
for the tasks involved
(paragraph 116).
No evidence has been provided to justify these assertions.
IPCC members elect three Working Group (WG) Bureaux, as part of
the IPCC Bureau. Each WG bureau is comprised of two co-chairs
and six members, and is responsible for producing a section of
an IPCC Assessment Report. WG members are elected on the grounds
of scientific expertise relevant to their part of the Report.
Agreement of the Bureau is usually by consensus of the IPCC members.
WG members are responsible for using their experience in the relevant
research area to identify which authors should be invited to contribute
to the Report. IPCC members (governments) are asked to nominate
potential writers for a report, as noted above, but they are not
involved in the identification of authors. In addition the Bureaux
may also invite authors to take part who have not been nominated
by IPCC members.
Response to paragraph 118 of the Report
31. The IPCC process could be improved by rethinking
the role that government-nominated representatives play in the
procedures, and by ensuring that the appointment of authors is
above reproach. At the moment, it seems to us that the emissions
scenarios are influenced by political considerations and, more
broadly, that the economics input into the IPCC is in some danger
of being sidelined. We call on the Government to make every effort
to ensure that these risks are minimised
(paragraph 118).
The Government disagrees with the view that emissions
scenarios are politically determined. All government-nominated
representatives (those serving on the IPCC Bureau) are agreed
by consensus of the IPCC members, limiting any particular political
influence of the composition of the Bureau from one or more Parties.
The process by which authors are appointed is transparent. Appointments
are the responsibility of the scientists in the Bureau, not the
IPCC members. No basis has been provided to back up the assertion
of political considerations.
UK policy and the international negotiations on climate
change
Response to paragraph 122 of the Report
32. We note that the compliance mechanisms
in the Kyoto Protocol are very weak and even counter-productive.
We heard from several witnesses that the Kyoto targets themselves
were going to make little difference to rates of warming (paragraph
122).
The Government is well aware that atmospheric greenhouse
gas concentrations will not be stabilised in accordance with the
United Nations Framework Convention on Climate Change unless the
first commitment period under the Kyoto Protocol is followed by
more comprehensive and ambitious commitments. UK policy is intended
to help achieve this. This by no means diminishes the achievement
of the Protocol. The Government notes that the Protocol and its
compliance regime have facilitated the establishment of international
trading in greenhouse gas emissions and have induced effects even
amongst countries that have not ratified it. This means that the
Protocol is likely to have a greater influence in limiting and
reducing emissions than sometimes supposed.
The Kyoto compliance mechanism provides for several
compliance consequences including the deduction from the Party's
assigned amount for the second commitment period of a number of
tonnes equal to 1.3 times the amount in tonnes of excess emissions.
This is a significant penalty and could potentially have an impact
on future negotiations, although we expect that negotiations on
a future commitment period would be concluded at least by the
end of 2012 and some two years before compliance assessment for
the commitment period.
Another compliance consequence is the suspension
of the eligibility to make international transfers. Kyoto envisages
that targets will be met most cheaply by taking advantage of trading
mechanisms and envisages compliance assessment as a comparison
of unit holding of Kyoto units and final emissions. Following
the completion of a review of 2012 emissions in 2015, parties
will have 100 days—the additional period for fulfilling
commitments—to purchase sufficient Kyoto units to bring
them back into compliance, and to avoid the Kyoto penalty and
potential suspension of trading eligibility. Suspension of eligibility
to trade will reduce the opportunity to mitigate compliance costs
in the middle of a future period and will generate its own incentive—i.e.
should a Kyoto party fail to meet its targets it will prejudice
its ability to meet targets in future periods.
In the EU context it should be noticed that additional
compliance measures have been adopted under the monitoring mechanism
and registries regulation. Member states are required to perform
early compliance measures by retiring Kyoto units to cover Emissions
Trading Scheme (ETS) emissions and national emissions on an annual
basis from 2009. In addition from 2008 the suspension of Kyoto
trading eligibility would also require suspension of EU ETS trading.
As has been observed by witnesses Kyoto represents
only a first step in the reduction of emissions and that further
reductions will be needed to impact on overall atmospheric concentrations
of greenhouse gases in the atmosphere. The UK is open to innovative
approaches to achieving the level of emissions and additional
reductions necessary to avoid dangerous anthropogenic interference
in the climate system, though we believe that targets, of whatever
type, combined with emissions trading represents the most plausible
and cost effective mitigation solution. A global emissions trading
scheme is not an alternative to target setting. An approach based
on technology deployment and development in the private sector
will require incentives, in which the creation of a global carbon
price through trading has a major role to play. All market mechanisms
including emissions trading will only work in conditions of scarcity
and therefore only with the adoption of a clear cap on allowable
emissions. We are surprised that the Committee is pessimistic
on the prospects for improvement of trading compliance mechanisms—and
in particular negotiation of trade sanctions—but more optimistic
about the prospect of harmonising carbon taxes on an international
basis, or on the introduction of global emissions trading without
a cap on emissions which seems a fundamentally flawed position.
Response to paragraphs 123, 132, 133 and 136 of
the Report
33. We consider that the "beyond Kyoto"
negotiations, which start this year, will have to take a far more
innovatory approach than simply assuming that the Kyoto targets
will be tightened (paragraph 123).
34. The US has repeatedly stressed the role
of technological change in securing greenhouse gas emission reductions.
While the Kyoto Protocol should, in principle, encourage technological
change, we are not convinced that it has sufficient focus on this
central issue (paragraph 132).
35. We argue that the present "more of
the same" approach, relying exclusively on targets for emissions
reductions, may not tackle the global warming threat. We urge
the Government to help broaden the debate through its membership
and current presidency of the G8 and using its position of being
internationally respected in the scientific world (paragraph 133).
36. It could be argued that it is late in the
day to be suggesting a significant change of focus in the climate
negotiations. But we fear that the "more of the same"
approach, focusing on emissions targets, will fail
(paragraph 136).
The UK and EU have begun deliberations on how we
can build on action in 2008-2012 and accelerate the momentum to
tackle climate change post-2012. We are keen to listen and learn
from others' views and perspectives, and engage in constructive
dialogue to develop a common understanding of the global climate
change challenge ahead of us, including what it implies for limiting
global temperature increase and associated risks. The Kyoto Protocol
first commitment period is only a first step in achieving emissions
reductions, and it is clear from the science of climate change
that considerably more needs to be achieved in the years after
2012.
The Government successfully raised the profile of
climate change and facilitated debate by making the issue a G8
priority. The G8 agreed a plan of action at Gleneagles which addresses
potential areas for collaboration in technology development as
well as agreeing to work further on policy and market instruments
to reduce emissions. The Government sees these activities as complementary
to the United Nation's Framework Convention of Climate Change
(UNFCCC) and the Kyoto Protocol, which already contain provisions
for technology transfer and capacity building in developing countries
as well as the Clean Development Mechanism to encourage investment
in energy and carbon saving.
The Government looks forward to international discussions
on the widest possible range of options for building on the achievements
of the UNFCCC and Kyoto Protocol.
Response to paragraph 137 of the Report
37. Climate adaptation should become one of
the mainstream elements of investment decisions, particularly
with respect to infrastructure, housing, coastal development and
international development assistance
(paragraph 137).
Although it doesn't make sense to ignore the cause
and just deal with effects, we agree we must address this, and
have been working to secure this for some time. Domestically,
climate change is now a material consideration in the planning
process (PPS1[2] and PPG25[3]),
is being incorporated into building regulations
(Part L), codes of practice (including those of the Chartered
Institution of Building Services Engineers and the Construction
Industry Research and Information Association) and allowances
are made for climate change in planning flood and coastal defences
(Making Space for Water[4]).
The Department for Transport (DfT) is also looking at adaptation
to climate change in the transport sector. The Department produced
a report in April 2004 which looked at the impact of climate change
on transport[5], and the
recommendations in that report are being implemented. For example,
workshops have been held to look at climate risks and possible
adaptation actions for the road and rail sectors; a website to
pool transport adaptation research has been set up (www.dft.gov.uk/strategy/climatechangeimpacts);
and the Department is about to go out to tender on a contract
to produce best practice guidance for local highways authorities
on how climate change will affect their maintenance operations.
There are many more examples of climate change adaptation
considerations being mainstreamed into investment decision-making.
Guidance is being made available to investors by groups such as
the Institutional Investors Group on Climate Change, and the University
Superannuation Scheme to guide investment decision-making.
Internationally, our work during the UK's presidency
of G8 has identified the need for climate change to become a more
prominent consideration in bilateral and multilateral overseas
development spending. In the Gleneagles plan of action the G8
leaders called on the World Bank to incorporate climate risk screening
into development aid decision for those investing in climate sensitive
sectors. Other multilateral and bilateral development organisations
were also invited to adopt the World Bank guidelines. This will
raise the profile of adaptation in development planning, and ensure
the long-term sustainability and resilience of the agencies development
efforts. It will also play an essential role in decreasing recipients'
future vulnerability by enhancing the return of development investments
at effectively no cost. The Department for International Development
(DFID) have been progressing this work with the Bank.
DFID India Trust Fund is funding a study by the World
Bank addressing vulnerability to climate variability and climate
change in India through an assessment of adaptation issues and
options. Outcomes sought include a common understanding of issues
and options for an informed dialogue between and within the Bank
and the Government of India and better integration and mainstreaming
of climate issues into the Bank's activities and into India's
development efforts.
DFID Bangladesh is focusing on the integration of
long-term climate risks and uncertainties and consequent adaptation
and disaster risk reduction as an integral part of national development
planning through the Poverty Reduction Strategy Paper and the
Medium Term Policy Framework. A framework for assessing and managing
climate change and disaster risks is also being applied across
the DFID Bangladesh programme portfolio. In addition, £6
million have been provided over five years to establish a Comprehensive
Disaster Management Programme to enable the transition of disaster
management from relief to a risk reduction focus, including longer-term
climate risks. Support is also being provided to build internal
government capacity in Bangladesh to coordinate and integrate
climate change issues in mainstream development activities and
across government with a focus on awareness raising, advocacy
and coordination to promote climate change adaptation and risk
reduction in development activities.
The Commission for Africa report also highlighted
the need to screen new investments in infrastructure for their
potential impact on the environment, and for the potential impact
of the environment (climate variability and change) on the sustainability
of the investments. In the latter case, the report points to the
need for mainstreaming climate responses into project planning
and design. An ex ante climate-risk screening tool is an effective
means to that end.
Response to paragraph 140 of the Report
38. We urge a thorough review of the Climate
Change Levy regime, with the aim of moving as fast as possible
to replacing it by a carbon tax (paragraph 140).
The Government has published a review of the Climate
Change Levy (CCL) by Cambridge Econometrics in March 2005 which
suggested that the levy is expected to deliver over 3.5 million
tonnes of carbon by 2010. The CCL is a "downstream"
energy tax, levied by utilities at a relatively late stage in
the distribution chain, in order to avoid taxing the domestic
sector. Because it is a downstream tax, it is difficult to differentiate
between fuels used for electricity generation. Any tax that did
so could impact on the domestic sector.
Response to paragraph 141 of the Report
39. There appears to be growing support for
the idea that Kyoto-plus should focus on technology and R&D
(paragraph 141).
We refer to response to paragraphs 123, 132, 133
and 136.
The Government looks forward to international discussions
on the widest possible range of options for building on the achievements
of the UNFCCC and Kyoto Protocol. Large-scale investment in technology
in isolation is a risky strategy that will not deliver for many
years and is unlikely to ever lead to sufficient reductions in
emissions. Technologies developed by R&D need incentives to
pull them into the market and make them cost effective. Furthermore,
governments are better at creating an environment in which people
have an incentive to innovate than in picking winners. We are
surprised by an Economics Affairs Committee's lack of faith in
market solutions to provide such incentives when the evidence
is they are having a positive effect on encouraging new technologies.
Response to paragraph 142 of the Report
40. The International Energy Agency has estimated
that the R&D expenditure needed, if carbon-free energy is
to become economically viable through the use of solar photovoltaics,
biomass and carbon sequestration, is around $400 billion. The
IEA programme would cost about the same now as the 1963-73 US
Apollo programme that put man on the moon cost then—1% of
world GNP. Such an R&D programme would be a true global public
good: one in which everyone would have a share of the benefits.
This is an illustration of what international negotiators might
now consider—an agreement on technology and its diffusion
(paragraph 142).
The international community collaborates on R&D
through a number of fora. The G8 agreed in their plan of action,
to further their support for existing research networks into major
technologies that have the potential to deliver reductions of
the order necessary and to seek ways to improve the current arrangements
for collaboration between developed and developing countries.
The IEA's Implementing Agreement system is another
way to get better value for money spent on R&D through international
cooperation. More than 40 Implementing Agreements have been put
in place to cover a range of technologies in which member countries
collaborate including energy efficiency, renewables, clean coal
in power generation, carbon capture and storage, hydrogen and
fusion. Non-member countries and private businesses are now being
encouraged to join these agreements.
Whilst R&D can reduce costs this may not be sufficient
to encourage adoption in a free market. This is because of the
failure of the market to fully value the abatement of CO2
emissions as a primary objective. For example, carbon sequestered
energy generation will always be more expensive than generation
without it so there will always be a need to create incentives
to shift to low-carbon options.
Response to paragraph 143 of the Report
41. The important issue is to wean the international
negotiators away from excessive reliance on the "targets
and penalties" approach embodied in Kyoto. Hence there should
be urgent progress towards thinking about wholly different, and
more promising, approaches based on a careful analysis of the
incentives that countries have to agree to any measures adopted
(paragraph 143).
The Government believes that the important issue
is to strengthen implementation of wide-ranging UNFCCC in ways
that meets its overall objective to achieve stabilisation of greenhouse
gas concentrations in the atmosphere at a level that will prevent
dangerous anthropogenic interference with the climate system.
As explained in response to paragraph 122, targets have an important
role to play in driving emissions reductions and are essential
to cost effective solutions such as cap and trade systems. But
the Government also believes that we should explore options for
broadening the range of actions open to countries and that devising
incentives for strengthening action could be a very important
part of broadening participation in global action.
Department for Environment, Food and Rural Affairs
November 2005
1 Imperial College London Centre for Energy Policy
and Technology (ICEPT), September 2005, Options for a Low Carbon
Future: Review of Modelling Activities and an Update, DTI
Occasional Paper no. 1. Back
2
http://www.odpm.gov.uk/index.asp?id=1143805 Back
3
http://www.odpm.gov.uk/index.asp?id=1144113 Back
4
http://www.defra.gov.uk/environ/fcd/policy/strategy.htm Back
5
DfT, April 2004, The Impacts of Climate Change on the Transport
Network, http://www.dft.gov.uk/stellent/groups/dft_about/documents/page/dft_about_032280.hcsp Back
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