With only five weeks to go until the start of the UN climate change conference at Copenhagen, and with the recent news that the UK economy has still not come out of recession, there has never been a more important time to state the case as to why it makes good economic sense to act on climate change.
In a speech to the UK Business Council for Sustainable Energy, I argued that the apparent costs of climate change policy, far from coalescing into one sacrificial lump, in fact break down into three very different categories, each with their own justification:
First of all, there are the costs that aren’t costs at all, but actual savings – the money you don’t spend on energy you stop wasting, for example by better insulating our homes and running more efficient industry.
The second category is that of investment, in everything from new consumer technologies to clean energy, where the returns are still sufficient to provide a purely financial justification for action, over and above the environmental benefits.
It is only when we get to the third category that we get to actual costs of climate change policy, which are ventures that currently will not pay for themselves as a conventional investment, for example carbon capture and storage technology. But why make these investments at all? Because they provide a public good – in this case a stable climate system. The costs of making these investments are far cheaper than the costs of dangerous climate instability.
This insurance principle doesn’t just apply to climate change. As fossil fuel reserves become increasingly concentrated in parts of the world that are often unstable and sometimes unfriendly, security of supply is another source of risk. Action against climate change therefore provides a hedge against the economic instability engendered by increasingly volatile fossil fuel prices. Those countries that provide themselves with such an anchor will enjoy greater economic stability than those that don’t. In fact, the greater the disparity in low carbon progress between the best and rest, the greater the comparative advantage.
That is why I believe it is vital that the UK must lead the world in the development of a low carbon economy and why, during the recession, we must increase rather than decrease our efforts.
( 19 comments ) Tags: copenhagen, UN
Comment by Ray Turner on November 2, 2009 at 3:42 pm
I’d like somebody to address the point that a lot of businesspeople are going to make an awful lot of money out of all these changes. I still need to be persuaded that there isn’t a vested interested in forcing all these changes through, be persuaded that its not change for the sake of change, planned obsolesence etc.
Comment by Bob on November 2, 2009 at 4:44 pm
Given that a CCS experiment is nearing completion at Loggannet in Fife, would it not be economic to reopen the coal mine there to provide coal for this power station. Given the advances in coal mining techniques this could be quite a boon for the conservatives in creating high quality jobs and an enviromental step forward.
Comment by It doesn’t add up… on November 2, 2009 at 4:48 pm
Climate change policies will not create a stable climate. The climate on earth has never been stable, and never will be: to claim otherwise is a false prospectus. To claim that climate policy measures in the UK will have any kind of impact on global climate that can be measured is at best highly tendentious.
Risk diversification and security of supply issues are worthy of consideration, as is ensuring that the lights don’t go out. We do have a large secure coal supply beneath our feet.
Comment by Chris D on November 2, 2009 at 6:00 pm
Climate changes are merely a means to extract taxes from the people and, as someone has already said, make a lot of money for a lot of businesses. Climate changes are natural; they’ve been going on long before any human walked the Earth and no-one, not even at Copenhagen, will make a jot of difference. By all means develop new technologies, new ways of doing things…..but dont keep using climate change as the reason for doing them. We;’re all heartily sick and tired of the phrase.
Comment by John Poynton on November 2, 2009 at 6:14 pm
The price of oil and gas is going on up again as expected, and will continue to do so as the BRIC countries and others continue to grow. Any necessary investment in energy efficiency will therefore become self evident and worthwhile without any meddling from politicians which, as always, will only give rise to cost distortions, inefficiencies and corruptions of various kinds, all at a quite unnecessary expense to the taxpayer.
Now of all times is not the moment to saddling the national debt with the cost of yet more political ideology. Quite the reverse. Given that there is no shortage of demand for energy there can be no justification for subsidies of any kind. We should bring the existing subsidies such as for wind turbines to an end and then leave well alone.
The only intervention that cannot be avoided is protection of the rain forests. Please concentrate on this at Copenhagen. In all other respects
Mother Nature will sort things out given a half a chance.
Comment by Ray Turner on November 2, 2009 at 6:19 pm
Agree with John about deforestation. That’s the priority. More accuractely re-forestation, we need to replace what has already been destroyed…
Comment by tim bates on November 2, 2009 at 6:21 pm
hmmm… Slightly facetious thought: If even the third component is a great insurance, then why aren’t insurance companies selling protection from climate change (they’d use the premiums to pay to avoid change)? Answer, because of free-riders and externalities.
Why doesn’t the same logic apply now then: If China and India opt out and generate 90% of new emissions, our investment may seem morally sufficient, but practically it is pointless.
My guess is that 90% of what gets done will be driven by simple economics as the price of energy increases.
PS Radio 4 recently ran a program on the supposed large ROI of home energy use improvements… lots of comments from people selling the products, but very ambiguous and unconvincing ROI comments.
The worst was from a man in charge of a very expensively re-housed government unit, who admitted he had no idea what the Victorian mansion they’d left behind was using in energy, nor what the current spend was, and simply could not quantify the net benefit (if any) of this multi-million pound upgrade. Not very reassuring at all.
Comment by Paul Biggs on November 2, 2009 at 7:06 pm
What utter nonsense Greg! Wasting OUR money in order to try and control the natural events of weather and climate is madness. Even if we reduced the UK’s 2% of global man-made CO2 emissions to zero, there would be no measurable effect on climate. Common sense says that climate and energy policy MUST be separated. We need a referendum on the UK’s Canutian ‘Climate Change Act’ and the Nohopenhagen Treaty. Stop writing blank cheques with taxpayers’ money without asking us first!
Comment by Sam Waterson on November 2, 2009 at 11:54 pm
The ‘climate change’ industry/panic is based on grossly contentious and faulty misreading of what is anyway only computer projections – it’s 90% opinion not scientific mdata that’s driving this giant con.
When projecitng for the future ona computer, you get out what you put in, and in this scenerio, it’s been cr*p! As anyone who has the time and understanding to do a good deal of online searching can pretty easily prove for themselves.
Can someone please give the Tory leadership Christopher Booker’s in-depth study of this giant boondoggle, and ensure they read it? IF – and it’s a big if – there really is global warming, it’s due to sun-spot activity and not man-made. And in any case it will be a benefit to humanity if there is an increase in carbon dioxide, as it will enable e growing world population to grow more food.
I agree with other posters that a stop to destruction of the rainforests plus re-forestation is the most important ‘green’ issue facing the world. And that windfarms are a waste of time unless indiviual householders or businesses wish to employ them.
Meanwhile perhaps someone can examine and put a halt to the obscenity of Tesco burning enough unsold meat each week to heat a small town – why did these animals live and die, if not to be eaten? And why can I as a pensioner still not afford to eat much meat (and no lamb, and never a roast), when so much meat is going to waste?
Comment by Malcolm Nicholls on November 3, 2009 at 11:11 am
Like so many earlier comments this climate change bandwagon is making lots of people lots of money with no direct or indirect effect on the climate. The Government are again treating us as a load of idiots and think we believe everything they say.
This climate summit. How are all the delegates and their hangers on getting there, by air no doubt. What a carbon footprint thats going to be, especially when what they finally decide will not make any difference at all. You cannot stop the natural progression of the earth and its climate, if you are religious, only god can do that. Mind you I do think our politicians think they might be just that person. It has been said that our planet is in fact cooling, so perhaps we are now heading for another ‘Ice Age’.
Comment by John on November 3, 2009 at 11:23 am
As can be seen by the majority of these comments, the public perception of warming/change is becoming far more cynical, and with good reason. With nightmare adverts to scare the children, and now a change to the focus on Methane who wouldn’t be sceptical?
The deforestation is the single most important thing indeed, not clobbering the cash cows with more taxes.
Greg is right about allowing householders to do more, germans get far more grant for green incentives, an so should we.
This is where the money should be spent.
Keep Greg on this, keep Zack locked up and away from the public, he is a climate change extremist. I will bet a large donation to the charity of choice that the whole climate lobby will be disproved in 5 years or so. Regrettably, with the news today about the Lisbon Treaty and snide
comments about the good folk of SW Norfolk, I’m no longer inclined to vote for you.
Comment by Stephen Yeo on November 3, 2009 at 5:01 pm
Nice try Greg. Distract us with the self-financing elements and then slip in that
“carbon capture and storage technology …provide … a stable climate system”. Not “may help to offset the man-made contribution to global warming” but achieve what has eluded the planet for millennia! Let’s hope the manifesto is worded a bit more carefully.
Comment by Ed Lehmann on November 4, 2009 at 10:33 am
Speaking as an ex-ICI, ex-Exxon chemical engineer, now working for PVCS (who make ~10% of the world’s solar silicon), I’d like to be a bit “techy”, if |I may.
First, computer models.
I’ve had to decide on the continued employment and safety of friends by using one, very carefully, covering many different possible problems. Believe me, in the right hands, they work. And when many models converge on a consistent position, over many years, aligned with other data, it is extremely unlikely they are 180° wrong.
Anthropogenic climate change is real, it is with us and may become a major threat. We need to head it off, IMHO.
Second, ecomomics.
If practicable, we need to put a cost on possible global temperature rise. Now this is very hard. For example, I suspect the Maldives are going to be uninhabitable within a century. Along with parts of India, Bangladesh, China, the USA and probably Europe. What is the cost of all that? And what part of that cost should be attributed to each tonne of CO2 we emit? And what discount factor should we use? Hard questions. But I would suggest we talk of “chargable costs” for CO2 emissions, and shift our revenue system to bear down on them instead of income tax, for example. Renewables don’t need subsidy – but do need disposal of damaging waste (CO2) to be charged for.
Comment by Fifi on November 5, 2009 at 12:59 pm
make it more simple for people like us, simple souls!
Comment by michael carroll on November 7, 2009 at 9:37 pm
In all honesty do you really believe the ‘global warming’ theory. Ive read your comments but I think you are all playing Canute.
The earth has evolved and changed over millions of years. All these elements/emissions are in the earth anyway and must have escaped to the surface many times over and over.I do not believe that anything we do will change the natural state of the earth. Granted the advent of smokeless fuel cleared the smog from the towns but that was an easy task to bring about.
Can you imagine if we all went back to horse and carts. The streets would be full of horse muck. Electric cars are about as much use as a handbreak on a canoe at the moment with limited range. Solar power???again limited.
When I was a kid I used to have the Eagle comic. The centre page was usually about something super which would likely appear in the future like a rocket into space and how it would work. We got the rocket we went into space. we even landed on the moon. What for?? We cant even recycle our rubbish properly yet!!
What I do notice about this ‘green thing’ is that its ok to pollute as long as you pay for it. IE; 4X4s can chug around in London or where ever as long as they pay the extra tax on road fund licenses/fuel/car tax etc. By the same token governments spend millions on anti smoking ads but quite happly collect the tax on each pack of ciggys sold. Furthermore, If we wished to smoke its our business and if we get cancer because of it the NHS had better give us treatment because we (who have worked hard) have paid into the system all our working lives.
There is a theory that lung cancer is connected to emmissions from aiircraft pumping all their burned and unburned fuel into the sky..But heyho they have to pay more for the privilage.
What with all this expenses scandle. The referendem on the EU we never got.
It all seems so false and hypocritical out there. You cant wonder at the confusion and uncertainty in the electorate.
Oh!! the next money spinner will be for Raydon. New laws will make us all reponsible for Raydon gas beneath our properties. We will have to purchase Raydon meters and declare readings when selling our homes. It may be in the HIPs regs now. Thats another load of rubbish dumped on us by labour..
Comment by Richard Burton on December 2, 2009 at 4:18 pm
Regarding business and vested interests I might be able to answer a question posed on this blog. I work as an environmental consultant and i believe in anthropogenic climate change. Outside of my business I’m trying to raise public awareness.
I contributed to the blog following David Cameron’s comments, and someone responded that I had a vested interest in promoting a belief in climate change. I do, but i think we all do. I do benefit financially through performing carbon footprints, but there’s another issue. If I and others were entirely successful and convinced the majority of the public bthat it is true, I would suffer more. This is because I live in the fens below sea level. My house price would fall far beyond that which I could recoup through my business. So you see I am motivated by a genuine concern, as I believe most climate scientists are. some may be over zealous in rubbishing or omiting the bad data, but that’s because they’re exposed to the reality of this more than most.
Comment by david peacock on December 12, 2009 at 6:36 pm
global warming is a natural cycle and to say that human activitty is responsable for it is a complete CON
polititions have jumped on the bandwagon because, Hey there’s a tax we can put on it.
Comment by Charlie on January 23, 2010 at 7:10 pm
I heard that this Climate Change thing is just a scam so a bunch of money folk centred around the UN can achieve a World Gobernment to complete the Globalisation Agenda.
I see nothing in the thing but political lies and Corporate Wheeler Dealing over Carbon and ever greater control of the already over taxed human debt cattle of Britain.
Is it true that this con was arranged through the Council on Foreign Relations, The Tri Lateral Commission and the Bilderberg Group, all UN steering groups?
George Osbourn was at the last Bilderberg, I guess he knows what David Rockefeller wants from Britains Political System.
It all smells of Money Mafia to me.
Comment by Bob Bull on February 7, 2010 at 7:25 pm
Why, when all the above comments question the validity of the Climate Change claims, are you still going headlong with over green over reacting high TAX policy? If you really want to win the election differentiate yourselves and give us an alternative.