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My fourth and final point is that the single greatest challenge we face is how to engage developing countries in a global climate-change agreement. It is estimated that the sum of national policies in the developed world is unlikely to achieve more than a third of the required emissions reductions by 2020. Developing countries represent the single biggest source of emissions growth, and they contain by far the most material opportunities to reduce emissions: two-thirds of the global potential, deliverable with half the capital expenditure. Yet on every measure of equity, it is unfair to expect developing countries to shoulder the

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same amount of effort as developed countries from the start. I believe the solution is twofold. First, developing countries must do what they can, focusing on areas, such as energy efficiency, that also enhance their economic prosperity and national security. Secondly, and in parallel, policymakers must harness the power of the market, putting in place strengthened international carbon-finance mechanisms. This was the central conclusion of yesterday's announcement by the European Union on EU climate change priorities. The CDM, with its project focus, has proved inadequate and difficult to scale up. It should be expanded, made less bureaucratic and significantly enhanced with carbon-finance mechanisms that apply across entire industrial sectors.

One of the key recommendations of the Government's Eliasch review is the need for a new financial framework for preventing deforestation and encouraging good land management. These activities alone could contribute half the necessary reduction in global emissions by 2020. Additional funds will also be needed to encourage the transfer of low-carbon technologies internationally, to build administrative and human capital and to pay for adaptation efforts.

Last year, rich nations spent more than $100 billion on overseas development assistance. A recent analysis suggests that flows of carbon-related finance to the developing world will, in time, need to be of a similar magnitude. This is a hugely ambitious and will be impossible without dramatically strengthened international governance. The answer is not to tear up existing institutions, such as the UNFCCC, and start from scratch. The evolution of GATT into the WTO suggests that, with the right support, institutions can widen and strengthen significantly over time. However, I believe that a new body, an international carbon fund, will be needed to act as a global central bank for carbon and to manage the exchange of multiple environmental “currencies” as national, regional and international schemes become linked together.

All that will require a great deal of diplomacy, and the UK will have a critical part to play. This country possesses a good deal of influence on energy and climate matters in the EU, which has spoken with a single and determined voice in recent negotiations. Our relationship with the United States could be pivotal as Barack Obama’s inauguration heralds a new era of US management. We hold close friendships with many of the most important developing countries. Several of those countries are in the G20, whose members are collectively responsible for 85 per cent of global emissions. With strong political leadership, the G20 could unlock a new global climate change agreement in Copenhagen this year.

So we have a vision for the future, and the work on policy design is complete. Now we must begin the hard work of implementation. My advice to policymakers is simple: place climate change efforts at the heart of society; embrace the opportunity to build a new low-carbon industry; retool energy policy to deliver the new diversified infrastructure we need; and focus as much, if not more effort externally on forging a global agreement underwritten by stronger institutions. With that, I beg to move for Papers.

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11.56 am

Lord Giddens: My Lords, I congratulate the noble Lord, Lord Browne of Madingley, on securing this debate and on the elegant and powerful manner in which he introduced it.

I want to take seriously the title of the debate—the political aspects of addressing climate change—and argue that climate change is a political problem like no other that we have had to face before. There are many reasons for that, but I shall mention just two primarily. One is what, with the indulgence of noble Lords, I call Giddens’s paradox. Giddens’s paradox states that, as climate change is an abstract and to some extent future risk, it is very difficult for ordinary citizens to relate to it in such a way that they are prepared substantially to change their everyday behaviour. However, if we wait until climate change becomes a risk that is visible in that way—if, for example, we wait until there is massive flooding of the dykes in the Netherlands—it is by definition too late because at the moment we do not know how to get the emissions out of the air once they are there. I suggest that that paradox infects most aspects of national and international policy-making on climate change.

The second key difficulty is what political scientists call free riding. Free riding is everywhere in the area of climate change policy. When I came into the House of Lords this morning I walked through the car park. There was one big SUV parked there, a big Mercedes parked there and a little Prius parked closer to the entrance. You could say that the driver of the Mercedes and the driver of the SUV are free riding off the driver of the Prius, who is at least making some attempt to reduce his or her emissions, but you could also say that the driver of the Prius is free riding off people like me who came on the Underground or who—like most noble Lords here, I am sure—walked to work. Free-riding issues are everywhere in the area of climate change.

I am a strong supporter of the need, as the noble Lord said, to produce international agreements to limit emissions and, like everyone, I hope that our negotiations stretching from Bali through to Copenhagen are successful, although I have my doubts about that. However, when one is talking about the politics of climate change, it is crucial to remember that negotiations on their own do not amount to very much, even if they should reach solid agreement. Those negotiations will count at the level of the state only if states actually have the policies to implement them. Furthermore, what the industrial countries do will be crucial, as we all know, because the large developing countries, China and the others, will not take significant action unless they are convinced that the industrial societies already have in place practical and consequential policies for limiting climate change.

The noble Lord, Lord Browne, touched only briefly on the policies of the industrial countries. I have three or four points to make about them. First, almost all the industrial countries that have been the most successful in limiting their emissions have been successful by accident, not through climate-change inspired policy. Those countries include Sweden, Denmark and Japan, which is at the head of innovative technology in some areas—technology that led, for example, to the Prius.

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Perhaps I should not mention the Prius in the House of Lords. These things were driven primarily by the oil crisis of the 1970s. These countries started to react at that time to reduce their dependency on oil and imported gas. One of the salutary features of this is that it seems to have taken some 20 years for such technological innovation to feed through. This is a little disturbing when you consider the climate change policy that is instigated now, even in a country such as Germany, which is in the vanguard of climate change policy among the industrial countries mainly because of changes in that earlier period rather than recently initiated policies. This is cause at least for some salutary observation.

Secondly, there are still yawning divergences between the industrial countries’ levels of emissions. Most noble Lords here will be well aware that the United States produces about twice as many emissions per head as the EU countries do, but even within the EU there are very large examples of free riding. Sweden, for instance, is one of the few countries in the world that has produced an absolute reduction in its greenhouse gas emissions. In comparison, emissions produced by Spain over the period since 1990 have gone up 19 per cent. So no matter what the European Union does with its policies—they are certainly well intentioned—it will be very hard to close that gap.

Thirdly, every country is struggling to produce consistent policy on climate change. This is very visible in my own Government—the Climate Change Act and the Energy Act are very important contributions—but I am not in favour of investing in further coal-fired power stations in the hope that CCS technology will prove effective, and I am not in favour of the expansion of Heathrow. However, not only this country is struggling with this issue. Germany is committed to the phasing out of nuclear power stations, but no rational observer can see that it can meet its climate change targets if it phases out nuclear power. Nuclear power is still a substantial proportion of the energy mix in Germany. The noble Lord, Lord Browne, rightly emphasised that you must have consistent policy within a range of other policies. It is not good having well motivated policies in one area and negating them by what you do in other areas. This problem is fairly formidable.

Fourthly, surveys of people’s attitudes to climate change show that Giddens’s paradox is alive and well. A lot of survey material in most industrial countries in the past 10 years shows that people express greater concern about climate change than they did before, but most of them are not prepared to change their behaviour and are not changing their behaviour. A recent and very good survey study by Defra in this country showed that about 17 per cent of the population are prepared to do something and are doing something in response to climate change, whether it is recycling, walking more or whatever. The vast majority, however, are not. For most people, climate change remains an issue at the back of the mind rather than the front. It will be difficult to propel it to the front.

There are three implications, which converge a lot with what the noble Lord, Lord Browne, said, and I shall ask the Minister one or two questions about them. First, we need a new approach now. Fear is not a good motivator for change, especially fear of an

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abstract threat that most ordinary people find it hard to come to terms with. We should therefore switch, much as the noble Lord, Lord Browne, indicated, to an investment-generated policy. We should look for positives rather than negatives. We should recognise that this involves a transformation of the economy and society as a whole.

Personally, I should like to see a visible, advanced vanguard of business leaders committed to progressing environmental goals, who have much more prominence than such a group has at the moment, visible both nationally and internationally, and whose views reach the citizenry. I do not see why we cannot have, for example, national competitions for technology and innovation, where the winners achieve national recognition. I ask the Minster whether such policies are in prospect. Are the Government working on these issues?

Secondly, climate change goes through the whole economy. We must therefore do a lot of work on the future of the economy but I do not see where it is being done. For instance, you see pronouncements such as “Wind power will generate 100,000 jobs in the British economy”. That is probably not the case. Most technological innovations reduce the need for labour power. Anyway, if you generate more energy by alternative low-carbon sources, people will lose their jobs in the older industries. We need a thoroughgoing analysis of the economy. Have the Government a mechanism for providing that?

Finally, we need a lot more exchange between the industrial countries. Of course, we need something analogous to but better than the CDM. We need a lot more networking between the industrial countries, and a lot more technological transfer between them. Do the Government have plans to promote this?

12.07 pm

Lord Dixon-Smith: My Lords, the noble Lord, Lord Browne of Madingley, has brought unparalleled knowledge and experience of the energy industry to this question this morning. I, for one, am extremely grateful to him. He is absolutely right: this is, above all else, a political problem at this stage. For better or for worse, we do not know in detail what the solutions will be because everything is in a state of evolution. Not the least of our problems is that we must currently keep all options open.

I am a simple farmer. I have no interest to declare other than that, the noble Lord, Lord Giddens, will be disappointed to learn, I drive a Mercedes. I do so because I cannot purchase the alternative that I want, which is only just becoming available on world markets. I want a hydrogen-powered car, which means needing not just the car but the fuel infrastructure for it. There, I defer to the noble Lord, Lord Browne, who will know far more about the possibilities of producing that than I could.

We must tackle this issue in a positive way. Too often, matters are discussed in the context of what we must stop doing. If we are to bring the public with us so that they do not react against the whole proposition of this hugely complex international subject, we must discuss it in the context of how we keep everything

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going. That is vital if we are to carry everyone with us. The negative question just opens the door for people to ride particular hobby horses, as we have seen already, by which they want to stop some things. Society did not develop in the way that it has, or to the point that it has, without a great deal of benefit to and meeting the needs of people in how they wish to live. We have an enormously high standard of living today compared with previous periods. Matters are made worse, dare I say, because we also have a rapidly rising population—not in this country perhaps, although it is rising too fast here. That is not an issue for politics today, but it probably will become a highly contentious political issue and will need to be dealt with.

Modern society demands high energy. It is very easy to say that we can economise on energy. Indeed, we shall and must do that. But I again draw the attention of the House to the 2005 report of the Science and Technology Committee on energy efficiency. It shows a very interesting graph with a steadily rising GDP; it shows the units of energy required per unit of GDP steadily falling. But, actual energy consumption remains relative and is climbing very slowly. We need to recognise that, while we must continue to work very hard on the efficient use of energy, this is not part of the solution. If we hold our energy consumption, and society’s development continues and we continue to improve our standard of living, we will do very well to keep our energy consumption at its present level.

The problem is not the energy that we use; it is the source of the energy that we use. Above all, that is what we have to change. I shall digress for a moment into carbon capture and storage, which all too often is held out as a panacea. Carbon capture and storage will deal only with large institutions producing large volumes of CO2. The vast bulk of our emissions come from the domestic, industrial and heating sectors, which is a very different problem to deal with. It is in that sector, above all else, where we have to make the main introduction of alternative technologies.

In addition, we do not know what the cost of carbon capture and storage will be. It is all very well saying that this is the technical solution, but if it proves to be economically uncompetitive, we have a problem. We have to consider that problem and recognise at this stage that we must keep all the technological opportunities open. Some will be very expensive and will have to be written off because, ultimately, they will not be economically viable even if they are politically acceptable. If they are not economically viable here, nor will they be in other parts of the world.

We do not know what the absolute costs of going nuclear will be. We do not know what the costs of dispersed generation, which will become very important across society, will be. We do not know what the cost of tidal barrages will be. They will require novel funding because, unlike most of our energy-generating installations which involve a 40- or possibly 50-year timescale, with tidal barrages the timescale is possibly 200 years. As I say, a novel approach to funding would be needed. We do not yet know the real costs of organic waste digestion, which can produce methane to turn to electricity.

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We do know that all the green sources of energy lead to electricity. We in society want to maintain our present mobility, on which we are very dependent. Modern society relies on a great deal of transport for the movement of people and goods, so we need fuel systems that can be carried on vehicles. It is easy to say that battery-powered vehicles are the answer; they may be, but they will not plough my fields and they will not deal with the amount of road transport we have. I am afraid that we are not going to get back to moving everything by rail. That is why I want my hydrogen-powered car. I have no problem with motor manufacturers; indeed, I want to see them continue in business, but I want to see them continuing by producing emissions-free vehicles.

To do that, we must come back to the energy sector. It has to make a transition on an enormous scale, with investments that involve the whole of society. Governments rely on investments from the energy sector, and the investment world itself relies on investments in the energy sector because they regard it as a safe investment, but suddenly all that has to change. It is politics written in large capital letters, and it will be politicians who have to will the solution and create the conditions for this to happen.

I am grateful to the noble Lord, Lord Turner of Ecchinswell, for his recent work with the Climate Change Committee because he has made the task a bit easier. The committee recommended that we must reduce our carbon emissions by 80 per cent by 2050. That makes the picture of what the economy must look like in 2050 somewhat clearer. In my view, by then the only carbon dioxide emissions that will be acceptable will be those for which there is no physical alternative. I can give three illustrations and, although perhaps the first is the most stupid one, it is none the less real: we can do nothing about cows; we may be able to reduce slightly the methane they emit through dietary changes, but in the end we can do very little about the fact that cows produce quite a large proportion of this country’s global warming emissions.

Aviation will continue to be a problem, although I want to see the industry continue. The problem with aeroplanes is energy density, so it is difficult to see an alternative to fossil fuels except, possibly, biofuels. I say “possibly” because I am sceptical about biofuels, and as a farmer I regret having to say that. However, the harsh reality we have to face is that there is not enough land to provide mankind’s energy and his food.

We have a dreadful responsibility here. We unleashed the Industrial Revolution on the world and in my view we now have the responsibility to show that a solution is possible. I would love to know that, when my grandchildren reach our age, the solution will be within their grasp. At the moment, a combination of political and economic inertia make that prospect look rather poor. But matters are improving slowly.

12.20 pm

Lord Broers: My Lords, I, too, congratulate the noble Lord, Lord Browne, on introducing this debate. It is topical and urgent and there is no one better qualified than the noble Lord to introduce it.

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I wish to make a general point about the way in which the Government tackle complex engineering and technological issues because it relates to the likelihood of our success in dealing with climate change. It is apparent that over the past four decades we have lost competitiveness in many areas of technology in which we used to be strong and had profitable companies based on home-grown technological advances. It has puzzled and distressed me why our national strategies have produced this unfortunate result. In retrospect, the strategies have frequently been inadequate both in the goals that were set and in the time allowed to reach them.

We have, however, sustained some outstanding industrial capabilities—the accomplishments of Arup and Rolls Royce are shining examples—but these companies have survived, at least over the past two decades, largely on their own and almost in spite of government direction. But I am not suggesting that all engineering issues, such as the supply of clean, low-carbon power, can be tackled solely by private enterprises. Government must be involved because initially the commercial incentives will not be sufficient.

The protection of the atmosphere is a very long-term task without immediate commercial benefit. It took state and federal regulation in the USA to introduce pollution controls on road vehicles. There was insufficient commercial motivation for Detroit to act without regulation. Fortunately, the government-enforced regulations proved effective and practicable, and were relatively rapidly taken up worldwide. There is the opportunity for the UK to show similar leadership in aspects of climate change.

The science of climate change is reasonably well established in many areas, and it is now up to engineers to develop practicable solutions. By “practicable” I mean technologies that not only reduce pollution and carbon dioxide but which are economically sensible, sustainable from a maintenance point of view and can be implemented on a timescale that meets our goals. So far some of the proposals that have emerged from the Government have failed to be practicable. I cite the overambitious expectations for offshore wind, which the noble Lord, Lord Browne, mentioned, and which have now been generally accepted as unrealistic.

From whence do these recommendations come? I am naïve in these matters but it seems certain that they are not the collected recommendations of competent engineers. Too often the Government seem to turn to individuals with little professional engineering experience to chair inquiries that, as a result, almost inevitably come up with recommendations that stand little chance of passing my practicality test or, on the other hand, are too commercial and short term and try to avoid the high initial cost of really tackling the problem. An example of the latter was the transport strategy that emerged at the end of 2006.

Within government departments, many who draft recommendations have no science, let alone engineering, qualifications. In addition, most departments have science advisors when they would be better off with engineering advisers. The House of Commons Innovation, Universities, Science and Skills Select Committee, in gathering evidence for its inquiry into engineering in

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government, asked me whether I thought it would be sensible to have chief engineering advisers alongside the chief science advisers in some government departments. My response was that it had it the wrong way round and that the question it should be asking was whether it was necessary to have science advisers to work alongside engineers. The chair then asked me what my answer to that question was. I replied that the answer was probably no, because to be classed as competent, engineers should have a thorough knowledge of the science of their specialism.

Engineers are, in effect, scientists who have gained the additional knowledge necessary to make science useful. It is engineers who are needed to fix our economy and come up with the practicable solutions to the supply of, for example, carbon-free energy. Science forms the base for engineering and it is essential to maintain a strong science base. As my noble friend Lord May and others have pointed out many times, we have a very strong science base, but it is not scientists who will fix the economy, it is engineers. As has become painfully obvious over the past few months, it is not financiers either.

I was pleased to hear the noble Lord, Lord Mandelson, make that point in this Chamber two days ago when talking about the automotive industry. He said that, for the future, Britain needs an economy with less financial engineering and more real engineering. Creative engineers are needed if we are to give our automotive manufacturing facilities unique capabilities that will encourage their overseas owners to sustain and grow them, rather than phase them out when the going gets rough.

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