The Freedom Association Fringe Event

Conservative Party Conference, 30 September 2008, The Freedom Association
“Free thinking on Climate Change”, Ruth Lea, Director Global Vision

Britain’s climate change policies
I’m delighted to be here to discuss some aspects of Britain’s climate change policies and the associated costs.

The Climate Change Bill, due to receive the Royal Assent this autumn, is at the heart of Britain’s current climate change policies. It includes 2 legally binding targets:

• 60% reduction in anthropogenic CO2 emissions by 2050, compared with 1990.
• 26 to 32% reduction by 2020, compared with 1990. Interestingly, the EU has a 20% target for cutting carbon dioxide emissions by 2020, compared with 1990. British legislators, however, seem to regard the EU’s targets as insufficiently tight.

The objective of reducing CO2 emissions (thereby partly “decarbonising” the British economy) is to combat the global warming that, it is claimed, is mainly caused by man-made (anthropogenic) CO2 emissions. Of course, it is appreciated that Britain cannot do this alone. But through international agreements, mainly under the auspices of the UN’s Intergovernmental Panel on Climate Change (IPCC), it is assumed that other countries will follow Britain’s lead and the lead of other like-minded governments. 

Climate change
The belief that global warming is mainly a simple function of man-made CO2 emissions (a major “greenhouse gas”) appears to be strongly held by the British government and, of course, is also behind the work of the IPCC. I am no climate scientist. But I understand that there are many scientists who question this belief. There is no “consensus”. And it does seem extraordinary that this, frequently challenged, hypothesis has established such a grip on policy-makers. Morever, it is so obvious that the planet’s climate is always changing – for the better or the worse. And it has done since the dawn of pre-history.

The last ice age ended about 10,000 years ago. It was followed by a period which ran from about 8,000 to 5,000 BP (6,000-3,000BC) known as the “Holocene Maximum or Optimum” when average temperatures were about 1.5oC higher than they are today. The Neolithic climate was somewhat balmy – if not “optimal”. Temperatures then cooled, resulting in the “little Archaic ice age” (520-350BC), and then warmed into Roman times. The Dark Ages were, apparently, on the cool side, but the flowering of medieval culture was happily assisted by a warm period. The subsequent “Little Ice Age” occurred around 1500 to 1860. It included some bitterly cold winters in the 17th century when the Thames froze. Greenland’s icy mountains became decidedly icier and the Norse settlements died out.

Since the middle of the 19th century average temperatures have picked up on average. But even over this geologically short period of time there have been discernable swings in temperature. The 1930s were warm but the years 1942-70 were on the chilly side. They included the bitter winter of 1962/63 which was the coldest in England and Wales since 1740. “Runaway glaciation” and a new ice age were foretold in the early 1970s. But, lo, this did not happen and there was warming between the early 1970s and the late 1990s. But since then temperatures have not risen. Indeed in the last 2 years they may have cooled. And over the whole of the 20th century, the average temperature rose by around 0.60C – a modest increase by any standards. Temperatures may rise overall in the 21st century. But, there again, they may not. At the rate they are going at so far this century, they would fall. We have already been informed by thwarted “warmists” that there will be global warming in the 21st century – but it’s been postponed a decade.    

The Intergovernmental Panel on Climate Change (IPCC)
Yet we are told, somewhat alarmingly, that we must cut CO2 emissions to mitigate, to combat, the forthcoming “dangerous climate change” by our legislators. If we do not we will, apparently, be fried alive or drowned in our beds as the seas rise and drown the earth. The main source for this alarmism is the IPCC’s temperature change projections, which were, of course, reflected in the equally alarmist, but sadly influential, Stern Report on the Economics of Climate Change (October 2006). The Stern Report, in turn, has informed Britain’s Climate Change Bill.

The IPCC’s latest assessment on global warming is the the Fourth Assessment Report (November 2007), which provided several probability-based scenarios. These scenarios provide a wide range of temperature increases in the 21st century and compare projected temperatures in 2090-2099 with the last 20 years of the 20th century (which included the cool-ish 1980s). It is curious, to say the least, that the last 20 years of the 20th century were chosen, rather than the last decade! The lowest “best estimate” was for an increase of 1.8oC. The highest “best estimate” was for an increase of 4.0oC. Suffice to say, the alarmists have picked the highest number.

But the IPCC’s work should be questioned for other reasons. Firstly, the IPCC’s very methodology should be questioned. As already implied, they don’t forecast as such. They construct scenarios. They make bold assumptions on, for example, population change, economic growth, technological change and energy use in order to project changes to global CO2 emissions. These projections are then fed into a climate change model which, however sophisticated, cannot adequately replicate the complexities of the climate system, in order to calculate temperature changes.

It is impossible to exaggerate the huge uncertainties involved in these procedures. I am not a climate scientist and will say no more about the science. But I have spent much of my life on economic forecasting, frequently for a mere 12-18 months ahead. It is a humbling experience. And who is to say what the oil price will be next week, never mind in 2095. Yet here is the IPCC making the boldest demographic and economic assumptions for the late 21st century in order to calculate CO2 emissions to feed into their climate model. It is a nonsense. I simply don’t believe the projections.

The second point to make is painfully obvious. There is a huge difference between 1.80 C warming or a 40 C warming. And they require different policy responses. It could well be argued that an increase of 1.80C would be, overall, beneficial for the planet. Indeed even with a 1.80 C increase (over the 1980s and 1990s) it would probably be only a tad warmer than during the Holocene Optimum, when man-kind adapted rather sucessfully. This is hardly “dangerous warming”. Cooler climes would become more productive and currently hot climes could be assisted in adapting to the higher temperatures. Adaptation would seem to be key to this and not costly mitigation. And even with an overall increase of 4oC, adaptation, or reasons I will mention below, is the more approriate response 

Thirdly, it should be noted that the IPCC is a deeply politicized body. It is not an independent body of independently-minded scientists, as is sometimes claimed. It is a body of politically appointed representatives, appointed by governments with their separate political agendas. In addition, the IPCC was set up in 1988 by two UN organisations, the World Meteorological Organisation (WMO) and, crucially, the UN Environment Programme (UNEP), so there was a strong evangelical environmentalism from the start. Its remit is not only to assess the information on human-induced climate change, but also to assess the impacts of said climate-change and to consider the options for adaptation and mitigation. No human-induced climate change – no IPCC.

The influence of the IPCC cannot be exaggerated. Its work was behind the Kyoto Protocol (1997) where the signatory countries agreed a target of an 8% reduction in greenhouse gas emissions between 1990 and 2008-2012. And, as already stated, its work is behind Britain’s Climate Change policies.

Mitigation policies will be ineffective
Now Britain’s climate change policies are not just predicated on the belief that global warming is mainly caused by man-made CO2 emissions. It is also simplistically assumes that climate change can be “mitigated” by cutting man-made CO2 emissions as if there were a straightforward, bivariate and uni-causal relationship between CO2 emissions (and hence concentrations) and temperature. Nothing, I am reliably informed by my climate scientist colleagues, could be further from the truth. The climate system is too complex, too scientifically “chaotic” Indeed, I have been told, cutting CO2 emissions could actually heat the planet up. “Mitigation” policies of cutting CO2 emissions to “save the planet” are, apparently, scientific hokum.  
 
Another point: the Bill chooses to ignore the rather important fact that, whilst Britain attempts to decarbonise her economy, much of the rest of the world will not, as already implied. Britain accounts for less than 2% of world man-made CO2 emissions whilst China’s emissions probably increase by that every year. Apparently China is opening a new coal-fired power station every week. We may make our economy uncompetitive and curtail British people’s economic freedoms and prosperity by pursuing this policy. But where we lead, others will not follow. Not even the other EU member states, if it suits them. Indeed even on the the current Kyoto targets (to 2008-2012), several of the major EU countries will miss them. Britain’s climate change policies will be completely ineffective in curbing global CO2 emissions.

Policies to reduce CO2 emissions

The British Government’s policies for cutting CO2 emissions are two-fold:
• Building nuclear power stations. I can agree with this one.
• A huge increase in renewables capacity, as also required under the EU’s draft Renewables Directive. 

The EU’s Renewables Directive
The EU’s Renewables Directive is one of the EU’s major policy initiatives for achieving the EU’s target of a 20% cut in CO2 emissions by 2020. The Emissions Trading Scheme (ETS) is the other. The core of the Directive is the target of sourcing  20% of the EU’s energy needs with renewables by 2020. Renewables, incidentally, do not include nuclear power even though it is probably one of the most effective ways of reducing dependency on fossil fuels & cutting carbon emissions.

Through the “burden sharing” agreements Britain agreed to a 15% renewables target, but this should not be seen as an easy ride for us. On the contrary, Britain has undoubtedly one of the biggest mountains to climb in the EU. In 2006 our permissible renewables share was a mere 1.5%. The UK has committed itself, therefore, to increase its renewables share ten-fold by 2020. With the possible exceptions of Malta and Luxembourg, the UK is faced with by far the greatest challenge in reaching its 2020 target. In addition the unit costs in the UK are relatively high because Britain lacks access to cheap biomass resource in the electricity and heat sectors and is placing greater reliance on high cost, expensive electricity technologies such as wind (mainly) and wave/tidal. By contrast several EU countries are well-placed including Austria, Finland and Sweden as are many of the central and eastern European countries.

It is, therefore, unsurprising that the UK is likely to carry a disproportionate burden of the costs of meeting the EU’s 2020 renewables target. According to a study by Pöyry Energy Consulting, on the BERR website, the UK could carry around 20-25% of the total EU costs. Pöyry have estimated that the annual cost in 2020 could be around £150 to £200 per UK household and the lifetime costs up to 2020 would be £1,800, even as high as £2,800, per UK household. These are significant sums and are likely to be under-estimates.

In order to move towards the 15% target, there will have to be a dramatic increase in renewables capacity, much of it wind-power, in electricity generation. Gordon Brown’s “renewable energy strategy”, launched last June, involved 7,000 new wind turbines (3,000 at sea and 4,000 on land) by 2020. But, of course, even if the required wind farms were developed, conventional power stations will have to maintained in order to provide the back-up power because wind power is intermittent and unreliable. If this is not done, the country will be even more vulnerable to black-outs than it already is. Paul Golby, Chief Executive of E.ON UK, has said that this back-up capacity would have to amount to 90% of the capacity of the wind turbines, if supplies were to be reliable. This would be an absurd and costly misallocation of resources, with the extra costs falling on households and businesses.

But, costs apart, there is an insuperable problem. All my energy expert colleagues tell me that it is a physical impossibility to build so many wind turbines in 12 years. So we face an insuperable task of hitting the 2020 renewables target. And even if we built 7,000 turbines, we would, apparently, still miss the target. We will incur significant costs in moving towards the target. And, yes, we will miss the target. And, yes, we will then be fined. It’s the economics of the madhouse. Our energy policy is fundamentally flawed. 

General economic effects
The Government’s climate change policies will lead to higher and less competitive energy prices in Britain, other things being equal. For households, especially low income and pensioner households, this will bite into general living standards. Businesses, especially energy intensive industries, will continue lose competitiveness and migrate overseas to, say, India and China. The Energy Intensive Users Group (EIUG) estimates that various “green measures” (the Renewables Obligation, the Climate Change Levy and the costs of the EU’s Emissions Trading Scheme) already account for a quarter of total electricity costs for their members.

And these costs will rise. The costs of meeting the increasing targets under the Renewables Obligation will rise. And the next phase of the ETS involves companies having to pay for their permits in order to emit CO2 – instead of having most of them for free. Unsurprisingly, the German government has decided to back almost total exemption for industry from this competitiveness-destroying madness. Angela Merkel has said she “could not support the destruction of German jobs through an ill-advised climate policy”. If only a British government would say the same. Britain’s chemicals, cement and steel industries, to name but three, are likely to shrink, jobs will be lost and the balance of payments will deteriorate. Yet this has barely been discussed in this country. Does no-one care? 

Concluding remarks
The Climate Change Bill will be enacted. But, putting aside its unfounded scientific assumptions and significant economic downsides, it’s already politically irrelevant. It’s no longer cool to save the planet when the financial markets are in meltdown, jobs are being lost and living standards are falling.

The debate is changing for 2 main reasons:

• The first is the, already noted, absence of global warming since the end of the 20th century. People understand this. It’s called the weather. Recent polls show that the British people are sceptical about man-made global warming despite of all the self-righteous, guilt-inducing propaganda thrust at them. They are rightly suspicious of cant.
• The second is the economy. Bill Clinton was right: “it’s the economy, stupid”. Falling living standards change people’s priorities and British people feel “taxed out”. Most regard green taxes as an excuse to raise taxes. In a recent Taxpayers’ Alliance (TPA) poll 74% agreed with this, with just 11% saying that green taxes were mainly about “saving the planet”.

Britain’s perilous economic circumstances require a radical rethinking of policies on the climate and, hence, energy. The British people are owed nothing less.