Climate Change

The UK Government last year commissioned the Stern Review, a report by the former World Bank Chief Economist Sir Nicholas Stern on the economics of climate change, and timed its publication for maximum impact on the November 2006 Conference of (the Parties to) the UN framework convention on climate change in Nairobi, at which the future of the Kyoto protocol was discussed. The European Union’s environment commissioner stated that the Review was a very important factor in creating a new spirit of willingness to progress and a sense of urgency at the Conference.

Stern estimated that the cost of reducing global greenhouse gas (GHG) emissions by 25% below current levels (and about 60% below ‘business as usual’ levels) by 2050 would be just 1 per cent of global gross domestic product (GDP) and the cost of inaction, i.e., the long-term adverse consequences for human welfare, could be as much as 5 to 20 per cent of global GDP. As David Milliband, UK Secretary of State for the Environment, has pointed out[1], Stern shows we can’t afford not to act now, and demolishes the arguments of those critics, such as former Conservative Chancellor Nigel Lawson and some big businesses, who resist action now on reducing GHG emissions on the grounds that it will reduce growth and damage economies; they advocate that the world should focus on ‘adapting’ and fund action on climate change in the future out of growth. Typically these climate change procrastinators argue that a higher ‘discount rate’ should be used in calculations (the rate of return used to compare the ‘present value’ of a pound spent today with one spent at some point in the future), but by doing this they are effectively undervaluing the welfare of future generations.[2]

In any case, ‘early action’ is vital, firstly because the consequences of a rise in temperature are inherently risky and uncertain due to the possibility of self-reinforcing effects, such as the release of carbon dioxide (CO₂) from the drying out of our peat bogs, or of methane from the frozen tundra – this is what James Lovelock talked about in his famous and visionary book Gaia. Secondly, the warmer regions of the world, such as India and Africa, will suffer more than the colder ones, and are already doing so.

Why the UN Framework Convention On Climate Change and the Kyoto protocol are still the best mechanisms we have for global action

At the Montreal climate change conference in December 2005, all countries under the UN Framework Convention On Climate Change (UNFCCC) have agreed to begin talks on the longer term future post 2012, including the signatories to the Kyoto protocol, such as India and China, and the non-signatories, such as US and Australia (a complete list of signatories, those who have ratified, etc, can be found by clicking here).

One of the criticisms of the Kyoto protocol is that it only constrains the developed countries with its targets for CO₂ emissions; but we need to understand that developing countries like India, whose per capita emissions are less than a tenth of those of the USA, are not going to make binding commitments to cut CO₂ emissions unless they see they rich world taking action. The fact that the USA has not signed up under Bush does not mean it won’t do so under the next administration, nor has it stopped individual states, such as California, which is feeling the effects of climate change, from taking radical action. While it may be true that initial targets are insufficient to the mammoth task, the important thing about the Kyoto protocol is that it provides a mechanism for concerted action and, as it is a ‘framework agreement’, it allows flexibility and further tightening up of future targets. ‘Renewable’ and energy efficiency technologies developed now can provide a valuable capital stock for future generations and better equip them to cut emissions. This added value also needs to be factored into the economic analyses.

'Contraction & Convergence' versus the 'Simultaneous Policy'

Some theoretical policy proposals or principles which are current in the climate change debate, such as the ‘Simultaneous Policy’, imply that we don’t have to take action until all countries sign up to it. On the contrary, we need to act now, both at a national level, as is proposed in the Government’s draft Climate Change Bill, which is currently going through Parliament (see below, under 'Action at a national level', for information on this), and at the level of negotiated international agreements.

At a global level, any international agreement to combat climate change must embrace fairness and justice to developing nations. In addition, I feel strongly that it behoves developed countries to help less developed nations to tackle climate change, particularly as in many cases these countries are the worst affected. That is why I support the principle of ‘Contraction and Convergence’

‘Contraction and Convergence’ consists of a framework to reduce overall global emissions of greenhouse gasses to a ‘safe’ level by which every country brings emissions per capita to a level which is equal for all countries. Hence, developed countries are the first to make large cuts in their emissions levels, whereas developing countries are permitted to keep increasing their emissions levels for a period before also beginning to cut their emissions. Like the Kyoto treaty and subsequent UN brokered agreements, the framework allows flexibility for the level of 'greenhouse gas' (ghg) reductions to be adjusted in order to match a precautionary and safe future stable value for the rising ghg concentrations. In order to limit a maximum temperature rise to 2 degrees compared to pre-industrial levels and thereby reduce the risk dangerous climate change, CO₂ would need to be stabilised at 450ppm or less.

Developing countries have correctly argued that as the industrial countries have grown rich emitting an accumulated 80% of the emissions to date, they should 'take the lead' in cutting the emissions now without seeking to impose equal emissions reduction responsibilities on the rest of the world. Contraction and Convergence is supported by the Group of African Nations, the governments of India and China and the European Commission.

Aviation and the European Emissions Trading Scheme (EETS)

It is my opinion that aviation and shipping emissions should be included in national accounts of carbon dioxide emissions, as leaving them out completely undermines the targets that the UK and other countries are setting themselves, and will therefore result in a temperature rises that will be higher than planned for. The Government has taken the view that the European Emissions Trading Scheme (EETS) is the mechanism to deal with emissions from this sector, because much of it is international in nature, however, to be properly effective the EETS needs to be ‘tight’ in terms of setting the emissions apportionment for the sector at sufficiently low levels, which is not the case to date. (See below for a brief explanation of the EETS.) I doubt that the present Air Passenger Duty will have much effect on flights, and would think that the tax would have to be very high to dissuade the public from taking cheap flights. I agree with David Miliband that personal carbon rationing would be a fairer system as regards rich and poor. I have taken the decision not to take short trips abroad by plane unless they are absolutely necessary for my work. In a speech I made in the Budget debate in March 2007, I spoke about aviation and emissions trading. You can access the Hansard record of the relevant part of my speech here ( I deal with environmental issues in general from column 914 and I talk about aviationin column 915). Alternatively you may find it easier to look at the whole of my speech via the 'They work for you' website.

The much-maligned EU is the obvious starting place to achieve international progress and lead the way on all sorts of environmental issues because, uniquely in the world, its laws (in the form of directives and regulations) are legally binding across international boundaries (as opposed to conventions, which are agreements relying on peer pressure). Under the European Emissions Trading Scheme Member States (MS) allocate emissions allowances to ‘installations’, such as power plants or airlines, for a specific period, which are both capped and tradable. Installations can either reduce their emissions to stay within their capped allocation or they can trade with other installations according to whether they have a deficit or excess of allowances. Each MS specifies the caps on allowance in a ‘National Allocation Plan’ for each period, which must be in line with the MS’s Kyoto target for emissions in order to be approved by the European Commission. Phase I of the Scheme began on 1 January 2005 and will run until 31 December 2007. Phase II will run from 2008-2012 to coincide with the first Kyoto Protocol commitment period.

Action at the national level

The Government's Climate Change Bill

The Government first published a draft Climate Change Bill in March 2007.

The Environment, Food and Rural Affairs (EFRA) Committee, of which I am a member, carried out pre-legislative scrutiny of the Draft Climate Change Bill. You can access both our report on the draft Bill and the Government's full response to our recommendations (and to those of two other committees) - called "Taking Forward the UK Climate Change Bill" - on the EFRA Committee’s website at:

http://www.parliament.uk/parliamentary_committees/environment
__food_and_rural_affairs/efra_draft_climate_change_bill.cfm

On November 6th 2007 the Government announced in the Queen's Speech that it will introduce a Climate Change Bill in its 2007/2008 legislative programme.

I am pleased to say the Government has announced that, following public consultation and pre-legislative scrutiny of the draft Bill, the new Climate Change Bill will be strengthened in a number of ways. You can read about the improvements here (taken from the Government's response mentioned above).

Economic benefits of investing in renewables

The economic benefit of developing renewable technologies (what academics have referred to as ‘ecological modernisation’) has long been a strong theme of mine. I am pleased that on December 18th the Government’s Department for Trade and Industry gave the go-ahead for two major offshore wind farms to be built in the Thames Estuary. It is estimated that the London Array will contribute 10% of the Government's 2010 target for renewable energy, and together the London Array and Thanet schemes will total 1.3GW of green electricity, enough to power a million households when fully operational.

I would like to see, though, more Government effort now going in to renewable technologies such as photovoltaic cells, which at this stage produce electricity more expensively than wind power but which will come down in price with increasing demand. See also the links on my ‘Environment’ page about biofuels.

Action by Individuals

Personal carbon allowances

In a speech to the Fabian Society, the then Environment Minister, David Miliband, proposed a radical new approach to cutting carbon emissions: his proposed plan would be to give each citizen the same quota of energy - a personal carbon allowance - and let them buy and sell it on the open market. As Polly Toynbee commented[3] this system would be inherently fair in the same way that wartime ration books were. Simply taxing energy will disproportionately hurt the poor and not be noticed by the rich, but this is what the Tories and Lib Dems are advocating. As with the Kyoto protocol targets, the quota could be tightened each year to meet the necessary emissions targets and as this happens the value or price of each quota would rise. I will watch with great interest how David seeks to develop and elaborate on the practical details of this policy. I note that the Number 10 website has recently added an e-petition feature (see link below) to Adopt Carbon Rationing and Contraction and Convergence e-petition

While it is important that UK industry produces consumables in a cleaner and more energy efficient way (and the sector has made considerable progress over the last 15 years), it is also up to us as individuals to take responsibility for our own consumption, which creates the demand for greenhouse gas producing products. It is salutary to note the differences in the estimated CO2 emissions per capita for different countries, which are approximately as follows:

CO₂ tonnes per capita

      USA                       10
     UK                           5
     China                         2
      India                           1

(Figures[4] taken from United Nations Environment Program/GRIDA. Click here to go to source)

What you can do as an individual

The Environment, Food and Rural Affairs (EFRA) Select Committee, of which I am a member, is conducting an enquiry into the ‘citizen’s agenda’: actions we can each take to reduce our personal contribution to greenhouse gases. Click here for my personal pledges.

Measure your household's annual carbon footprint using the web-based calculator at www.direct.gov.uk/ActonCO2

This uses Government-approved data and calculating methodology and not only allows you to work out your CO₂emissions and provides a tailored action plan with tips to reduce your CO₂footprint.

‘Green taxes'

Some constituents have written to me asking why people in Britons should pay more ‘green taxes’ when we are on course to achieve our targets under the Kyoto protocol. There are two aspects to this.

First of all, we are only meeting our target because of the switch from coal to gas and, in fact, in recent years our CO₂ emissions have increased. Household greenhouse gas[5] emissions in particular increased by 1.6 MtC[6] between 2000 and 2004, the last year for which figures are available.

Secondly, paying ‘green taxes’ does not mean that the overall tax burden on individuals (tax payers) or companies is necessarily increased, and there has been much discussion about making such taxes are ‘revenue neutral’. It simply means that the Government, by means of the tax system, wishes to encourage behaviours that are positive to tackling climate change, such as building houses with a low carbon rating, and to discourage negative behaviours, such as excessive use of fossil fuels. People who insulate their houses and save energy will not only have lower heating bills but they will benefit from tax incentives from the Government; hence they will save money in two ways, which can then be spent on other things. So, in this way green taxes get us on the right track, investing in ‘green technologies’ rather than old-fashioned dirty ones, and this, as I’ve said, can only benefit the UK’s economy.

Notes

[1] Reported in the Financial Times, 30 November 2006 “Stern report gave impetus to global climate talks”.

[2] See “Change of Climate” by Adair Turner, former Director General of the CBI, published in Prospect December 2006, which has influenced the whole content of this webpage.

[3] “This electric radicalism marries green politics with social justice: David Miliband’s plan for carbon allowances raises a re/green standard that the blue/green Tories can never match.” The Guardian, 15 December 2006.

[4] Per capita emissions cannot be monitored directly, but are estimated using models. These vary from organisation to organisation but the overall pattern is consistent.

[5] Greenhouse gases refer to a ‘basket’ of gases: carbon dioxide, methane, nitrous oxide and hydro fluorocarbons (HFCs).

[6] MtC = Million tonnes of carbon equivalent

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