Matthew Sinclair: The three elements of good climate policy

Matthew Sinclair is Director of The TaxPayers' Alliance.

I think Roger Scruton is absolutely right both in his book – Green Philosophy – and his article for this website about the motive that can cause people to protect their environment: it is oikophilia; love of the common home that we share with those dead and those who have yet to be born. You can see that motive at work when beautiful creatures, landscapes and buildings are threatened. No commandment from a politician or bureaucrat is needed to encourage people to rally to their defence.

Unfortunately, oikophilia has its limits. It works well when the environmental good at stake is something you can see, hear, taste or touch. It motivates what Peter Huber called – in his book Hard Green – hard greens, not soft greens who are more concerned about concentrations of carbon dioxide in the atmosphere and similarly intangible problems. No one feels in their bones that an extra tonne of carbon dioxide in the air is an attack on the integrity of their home. They need to be told that it is even there.

Whatever the latest laughable analysis from the Department of Energy and Climate Change says, cutting greenhouse gas emissions is expensive. Economic growth has been associated with increasing carbon dioxide emissions since the Industrial Revolution. The 19th Century French economist Emile Levasseur wrote about how, if one steam horsepower was taken as equivalent to twenty-one men, in 1840 French industry had a million new workers as a result of steam power. By 1885–87 that number had risen to 98 million, or “deux esclaves et demi par habitant de la France” (two and a half “slaves” for each inhabitant of France).

Our final energy consumption in 2009 was equivalent to the labour of 97 men working tirelessly to serve each Briton. If we use more expensive sources of energy in order to reduce greenhouse gas emissions that means paying them more. The Japanese economist Yoichi Kaya described the result in what is now known as the Kaya Identity: Emissions = Population x Income per capita x Energy intensity of income x Carbon intensity of energy.

Free market economies tend to use and generate energy more efficiently over time but, short of a technological revolution, the draconian limits on emissions that politicians have enshrined in law can only be met with a substantial contraction in national income. The public don’t want to pay that price, which is why climate policy has tended to proceed by the least democratic route possible.
And they are right. William Nordhaus, Sterling Professor of Economics at Yale, is probably the closest anyone comes to the centre of the climate policy debate. Using the 2007 version of his model he estimated that the course of action recommended in the Stern Review would reduce climate harms by $14 trillion but at a cost of nearly $28 trillion. The kind of radical action that politicians have committed us to here doesn’t pass the cost-benefit test.

Nordhaus has found that the “optimal” path – a mild and escalating carbon tax – leaves us 0.35 per cent better off than in a base case where no climate change policies are adopted, using the more recent 2010 version of his model. But economists can always find marginal gains like that on a blackboard. It assumes a truly heroic global agreement, with every country selflessly and efficiently doing their bit. That is not happening.

We are instead pressing ahead unilaterally with terrible policies: draining the budgets of families and businesses with excessive green taxes; picking losers by giving the most generous subsidies to the most expensive sources of low carbon energy; and recreating the volatility of the housing market with an emissions trading scheme where the supply of allowances is fixed, so fluctuations in demand lead to wild swings in the price.

On top of all that we now have the carbon floor price, which is nothing more than an act of industrial masochism. It hurts British industry and, by depressing market demand for emissions allowances and thereby reducing prices in other countries, helps its competitors in other European countries.

Some think that the answer is to replace all that with a nice, neat carbon tax. Pigovian taxation looks great on the economist’s blackboard but will never survive contact with reality. Politicians don’t have the information or the incentives to set the right taxes for negative externalities and subsidies for positive externalities. It quickly degenerates into just another excuse to feed the habits of countless subsidy junkies and impose higher taxes on the rest of us.

British climate policy has, for far too long, been based on trying to answer the question “if a global government set climate policy, what would it tell us to do?”

We are investing enormous resources in cutting what amounts to well under two per cent of global emissions. And higher energy prices here are as likely to export emissions as to eliminate them. If we instead ask “how can Britain, a country producing modest emissions itself but with considerable financial and technical resources, make it easier to cut global emissions?”

I think the answer is then obvious. Staking enormous resources on installing phenomenal amounts of offshore wind capacity in the hope that will drive down costs to an economic level is madness. Instead of investing hundreds of billions to meet environmental targets with the technology available today, we should invest hundreds of millions in putting British scientists and engineers to work developing better alternatives. Prizes are the best way of deploying the money and have been used to steer technological development in useful directions since the Industrial Revolution.
Good climate policy has three elements: resilience, as free and prosperous societies will cope best with whatever the natural world throws at them; adaptation, as climate will always change and we will need to roll with the punches; and promoting research and development which can lower the price of cutting emissions.

All that fits within the established role of government. It does not require a utopian faith in supranational institutions. It will survive a lot of mistakes as each grant or prize doesn’t need to be worth billions so the stakes are relatively low on each roll of the dice. I would submit that it is both the right climate policy and definitely the right climate policy for an oikophile conservative.

Comments

[Jack Savage]

Hurrah! What a great piece of adult thinking.

All the more relevant, of course, if we are not actually heading for a "climate catastrophe" after all....as seems very likely.

[IanofTickenham]

Controlling climate change has as much scientific validity as phlogiston.

[Elaine Turner]

Matthew, I am quite in love with your writing. Such a pity that you aren't advising the Govt!You speak such common sense.

It seems to me that the Green agenda will not be satisfied until we are all living in caves again.

Why do our politician's want to disadvantage Britain so much. We all want growth - how can we afford it?

[m wood]

Our Climate is always changing - just look back over the centuries. To understand whether we significantly affect it, it is essential to study the effects of the sun and our planetry movements on our climate. There needs to be as much effort (and grants)put into this as all the work and computer modelling carried out on AGW

[Phil]

The one thing I despair of is the unwillingness of political carpetbaggers, the media and climate change Scientits (I spelt that deliberately)to admit their theory is a load of bunkum.

[Malcolm Shykles]

"Controlling climate change has as much scientific validity as phlogiston." - agreed

At least Boris is willing to consider what scientists who do not support the Ken Lay hoax such as Piers Corbyn have to say.

“WeatherAction is involved in the Global Warming /Climate Change debate where we point out that the world is now cooling not warming and there is no observational evidence in the thousands and millions of years of data that changes in CO2 have any effect on weather or climate.

There are no scientists in the world who can produce such observational data. There is only effect the other way, namely that ocean temperatures control average CO2 levels. Boris Johnson, the Mayor of London has expressed interest in what we say: see article “
http://www.weatheraction.com/

[Axstane]

Matthew - that is a charming essay on the topic. We need new thinking and, as you say, investment into the emerging sciences so that the energy sufficiency problems may be solved.

Mankind has prospered and now inhabits many parts of the world formerly considered to be uninhabitable by the technology to modify or work with such environments. Even if we assume that climatologists'worst predictions might come true then we will make the progress necessary to cope. The confidence trick of trading carbon credits will achieve precisely naught.

[Grindelow]

Germany is spending £110 billion to delay global warming by 37 hours see http://www.weeklystandard.com/blogs/claim-germany-spends-110-billion-delay-global-warming-37-hours_712223.html
Pity that politicians are not capable or interested in putting figures to their spend in terms of achievable results such as in hours delay to global warming. It allows them to waste hundreds of billions to little or no effect.
I wonder how many hours delay wind turbines will create. I'm guessing less than 100.

[Smithersjones]

Once again Matthew SInclair proves he is ten times the poltician any of that scurvy cabinet in Downing Street is.

He should join UKIP!

[Margaret A]

Let’s begin with the first comment, no one feels climate change. Ask anyone in the horn of Africa and they will tell you their droughts are a result of climate change. Oyster fisherman will tell you climate change on the pacific coast of the US has led to a collapse of their fishery. Kiribati is negotiating to buy land in Fiji so that some of its citizens can escape from the consequences of rising sea levels. The reason you don't feel climate change is because you don't farm, fish or graze livestock but instead live in an urban environment completely disconnected from Nature. On your second point that it is only 2%, in Consumption-Based Emissions Reporting: Government Response to the Committee's Twelfth Report of Session 2010-12 the government position was 'DECC's claim that the UK is only responsible for 2% of global emissions—without acknowledgement of the caveat that this is on a territorial basis and does not take account of the emissions embedded in the goods we import—is unhelpful in terms of understanding our impact on the global climate.' Our emissions are actually a lot higher and there has been no decrease since 1990. As for the UK acting unilaterally, global investment in renewable energy in 2011 rose to a $257 billion, the US spends $18Billion on climate change, and China will spend 1 trillion over the next 5 years on green technology. Every single country on the planet is spending money on climate change. Your stance that we should just adapt fails to recognize that adapting means people moving to new countries, like the UK and people fighting over water and land – conflict and refugees. Adapting will not be cheaper than mitigating climate change.

[Faykellytuncay]

The assumption is till being made that the science of global warming is sound.

Well not according to Russian NASA scientists who say the Little Ice Age is happening and will last another 200 years. So much for global warming Met Office.

FIND EVIDENCE HERE
http://repealtheact.org.uk/blog/russian-nasa-scientists-say-little-ice-age-is-happening

Don't forget to leave your lights on and sign our petition to repeal the Climate Change Act

http://epetitions.direct.gov.uk/petitions/42784

[It doesn't add up...]

The government should spend more on ensuring that its policy advisors are not being misled by unsound politics masquerading as science. The climate model forecasts of a decade ago are all but totally discredited. Those whose careers depend on them are desperately trying to reinterpret them, instead of acknowledging that their theories are inadequate to explain reality. They are now attached to a political agenda, and not the advancement of science.

Such has been the collapse in our energy consumption and industrial activity that we now account for just 1.5% of global CO2 emissions. we are the only country in the world that has the primary energy use as in 1965. If we're setting an example, no-one else is following. If climate evangelists are sincere about their views, they should concentrate where it matters - on the emissions of China, which now grow by more than the UK's entire output every year. Our measures result in an increase in global emissions, because they result in the transfer of production to far more polluting factories abroad, and add to the need for transport of goods around the world.

As it is, there are serious grounds for doubting whether emissions should be controlled for anything other than environmental reasons, rather than the courtiers telling modern day Canute that their actions can change the climate. Canute simply couldn't control the tide, never mind the climate - but he had the wisdom to know it.

[Derek]

Margaret A @8pm seems to be a true believer, and I don't dispute that there are places on the planet where climate change is occurring. We also witness great changes in the weather from year to year. What cannot be done is to show any scientific proof that any of this is due to man made CO2. Indeed the latest evidence appears to show that global warming has stopped for the past 16 years. Adaptation is the only sensible response.

[Barbara]

Climate is always changing - always has and always will, with or without man.

Margaret A - show me a time in geological history when the climate didn't change?

This is just *one* reason why many geologists remain largely unconvinced of your apocalyptic stance, which seems to owe more to religion than science.

[John Law]

Matthew, you make very good sense on the madness of the current reckless energy policy.

However, since there is no good evidence that carbon dioxide emissions have an impact on climate; a government must assume the powers available only to God or Gordon Brown, to believe that it can affect the climate by its policies.

On the precautionary principle, we have the means to reduce CO2 emissions in the short and longer term (and keep our economy intact), using continued improvement in energy efficiency, nuclear power and the shale reserves (and combined cycle gas power stations) to replace coal (which has other emission problems) and oil for generation, transport, domestic heating and chemical feedstock.

When (if) we have viable mass energy storage technology (I don’t see any obvious viable routes to that!), we can then consider intermittent electrical generation technologies; the environmental vandalism associated with them, may at least be seen to be balanced by some real benefit to the people

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