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Ruth Lea

Ruth Lea: Britain is in a depression and the Coalition's green policies are making matters worse

The destruction of British industry, prosperity and jobs goes on. The latest casualty is Rio Tinto Alcan’s aluminium smelter in Lynemouth, Northumberland. RTA could not have been clearer in their reason for closing the plant. They said “…it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation”.

It is widely expected that the Chancellor will offer some assistance to energy intensive industries in his Autumn Statement, but it will be too little, and in some cases, too late. This has been obvious for some time. Instead of tinkering at the edges, he should be putting pressure on the Prime Minister and DECC to radically update our energy policies if he really wishes to help manufacturing industry. As Matthew Sinclair recommends in his latest, excellent paper (pdf) the carbon floor price should be abandoned. The EU renewables targets, which are driving the heavy investment in costly and inefficient wind-generated electricity, should also be abandoned and Britain should opt out of the EU’s Emissions Trading System (ETS). Finally, the draconian carbon reduction targets, as specified under the Climate Change Act (2008), should be radically reassessed for their practicality. I return to this issue below.

Let us take stock of where the economy is now. Unemployment is now rising rapidly, the economy could well be heading back into recession and the public finances are still in a parlous state. The on-going crisis in the Eurozone will act as a drag for the foreseeable future. It could be 2013, or even 2014, before GDP recovers the level of the last peak in early 2008, prior to the great recession. We are in a depression. The last thing the economy needs is damaging high cost energy policies, which were conceived in economically happier times when “dangerous manmade global warming” was perceived by some as a major issue. I suspect there are few who regard this semi-religious phenomenon as a major issue now. The world has moved on to a much more dangerous place. Our energy policies are not just foolish, they are past their sell-by date as well.

Meanwhile, slightly off the radar at present, plans are afoot for the next UN Climate Change Conference to be held in Durban and running from 28 November to 9 December. Expectations of any progress towards significant carbon reduction commitments by the major emerging economies, or indeed by the US, are extraordinarily low. The BASIC countries (China, India, South Africa and Brazil) are quite understandably unwilling to restrain their economic progress by burdening themselves with high energy costs. And this sentiment is shared by the US Senate. There seems to be little point in holding the meeting. International bureaucracies, however, have a momentum all of their own.     

The EU’s self-immolating determination to show “leadership by example” in saving the planet is a lonely affair. (Australia is a fellow traveller for the time being, but a change of government would probably put paid to that.) And even in the EU, enthusiasm for carbon reduction programmes is wilting as other crises engulf the continent. Doubtless the EU will keep its targets and lecture others on the need to follow suit, but adherence to them will slip down the list of priorities. Under these circumstances there is absolutely no point in Britain continuing with its “industrial masochism” as Matt Sinclair puts it. Indeed it is an unforgiveable folly to persist with it.

May I leave you with two other thoughts? The first is the sheer insignificance of the UK as a CO2 emitter. In 2009 Britain accounted for just 1.6% of global emissions. We are shrinking into irrelevance as a carbon-emitting nation. Even if Britain’s economy were to be completely decarbonised the saving in global emissions, other things being equal, would be less than 0.5bn metric tonnes. In 2009 China’s CO2 emissions increased by over 0.3bn metric tonnes to 6.8bn metric tonnes, over 23% of the global total. Between 2007 and 2009 the increase in China’s emissions was 0.8bn metric tonnes, over one and half times Britain’s total annual emissions. China’s emissions are 13-14 times the size of ours and rising fast.

And, by the way, the EU27’s total emissions were just over 12% of the total in 2009, about half of China’s. Even the EU27 is not the big and influential player it likes to think that it is. They should see themselves as others see them. China has no reason to listen to the EU’s lectures on carbon reduction, and, if it’s possible, even less reason to listen to Britain. Our draconian carbon reduction targets may satisfy the inner-masochist, or feed the green gods, but they’re a futile gesture. And they’re wrecking perfectly good businesses.

Secondly, even the UN’s Intergovernmental Panel on Climate Change (IPCC) is cooling (no pun intended) on the significance of the imminent perils of dangerous manmade global warming. According to the latest report (pdf) on “managing risks of extreme events and disasters” the IPCC conceded that natural variability would dominate weather events for the next 20-30 years, with mankind’s CO2 emitting activities playing a relatively minor role.

The report said “…projected changes in climate extremes under different emissions scenarios generally do not strongly diverge in the coming two to three decades, but these signals are relatively small compared to natural climate variability over this time frame. Even the sign of projected changes in some climate extremes over this time frame is uncertain.” This represents a most profound change of tone compared with previous assessments and led Richard Black, the BBC’s environment correspondent, to write “…for the future, the draft gives even less succour to those seeking here a new mandate for urgent action on greenhouse gas emissions”.

So there we have it. The IPCC is implying there is little point in cutting carbon emissions to prevent climate variability. The EU’s enthusiasm to save the planet from being fried alive is waning and most of the rest of the world doesn’t want to know. Britain should fundamentally reform its carbon reduction targets in the wake of these developments. Chris Huhne has already announced a review of policy “in early 2014 to ensure our own carbon targets are in line with the EU’s”. That review should happen now and the comparison should be with the world’s “targets”, insofar as they exist, not just the EU’s, soggy as they are. To repeat, the EU accounts for just over 12% of global emissions.

It would be funny in a Pythonesque sense, if it weren’t so serious, if businesses weren’t closing and if people weren’t losing their jobs. But it’s not funny, not funny at all.


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