Climate Change: Carbon Budgets — Motion to Take Note
Lord Turnbull (Crossbench)
My Lords, on first reading the Committee on Climate Change's latest progress report, I found it an impressive document. It was broad in scope and very detailed. But the more I dug into it the more troubled I became. Below the surface there are serious questions about the foundations on which it has been constructed. There are questions in four areas-the framework created by the Climate Change Act 2008, the policy responses at EU and UK level, the estimate of costs and finally the scientific basis on which the whole scheme of things rests. I will consider each in turn.
Unlike many of those involved in the climate change field, I have no pecuniary interest to declare, but I am a founder trustee of the Global Warming Policy Foundation, which seeks to bring rationality, objectivity and, above all, tolerance to the debate.
I have long been in the camp of what might be called the semi-sceptics. I have taken the science on trust, while becoming increasingly critical of the policy responses being made to achieve a given CO2 or global warming constraint. First, let us look at the Climate Change Act, which has been highly praised, even today, as the most comprehensive and ambitious framework anywhere in the world-a real pioneering first for the UK. However, it has serious flaws. It starts by imposing a completely unworkable duty on the Secretary of State to reduce greenhouse gas emissions by 80 per cent by 2050, even though many of the actions required lie outside his control. It would have been better, as the noble Lord, Lord Crickhowell, and I argued, for the duty to be connected to what the Secretary of State can control, such as his own actions and policies, and not the outcome, which he cannot.
In the Act's passage through Parliament, the target was raised from 60 per cent to 80 per cent, with little discussion of its costs or feasibility. It is a simple arithmetic calculation to show that if the UK economy continues to grow at its historic trend rate, we will need, only 40 years from now, to produce each £1,000 of GDP with only 8 per cent of the carbon we use today. That is a cut of 90 per cent. Many observers think that this is implausible. A recent report by the Institution of Mechanical Engineers reported that the rate of improvement in carbon intensity/productivity would need to quadruple from the 1.3 per cent achieved in the five years up to the recession to around 5.5 per cent. It would need to be even higher at the end of the period to make up for what the noble Lord, Lord May, calls falling behind the run rate.
Professor Dieter Helm has pointed out that the measurement system used in the Kyoto framework and in the UK's carbon accounts is a misleading guide to what is really being achieved. The carbon accounts use the territorial method-that is, the emissions from UK territory. In this way, the UK is able to claim that CO2 emissions have been reduced, but that is a misleading way of measuring a nation's carbon footprint and its impact on the world. It should include the carbon in its imports. If this was done it would show that we are going backwards, since we would be forced to take responsibility for the manufacturing that we have outsourced to such countries as China but are still consuming. The current method is, of course, politically very convenient as it allows us to label China as the world's largest emitter. The embedded carbon calculation is, I accept, far more complicated, but it is far more honest.
Another flaw in the framework is that the targets are unconditional. It is a legal duty, irrespective of what other countries achieve. Some, including me, argue that there should be two targets: one of which is a commitment, and a higher one which we will argue for internationally but only undertake as part of an agreement. Ironically, this is precisely the approach that the EU is taking with its 20 per cent reduction target by 2020, which would be raised to 30 per cent as part of an international agreement. The danger is that by going it alone we could face a double whammy, paying for decarbonising our own economy, yet still having to pay for the costs of raising our sea defences if others do not follow suit.
Secondly, let us consider the specific policies that have been adopted. Current EU policy follows two inconsistent paths. On the one hand, the ETS seeks to establish a common price for CO2, against which various competing technologies can be measured. The market share of each is determined by the relative costs. This is attractive to economists, since it allows the cost per tonne of CO2 abated to be equalised at the margin, thereby ensuring that the cost of achieving any CO2 target is minimised. The problem is that, despite its theoretical attractions, the ETS is failing. It provides no clear signal on the price of carbon on which investors can base their decisions. The committee, in this report, estimates that the ETS CO2 price in 2020 will be around €22 per tonne. The committee has rightly identified the central contradiction in its own report: the carbon price will be too low and too uncertain to stimulate the low-carbon investments needed to validate the committee's projections.
At the same time, the EU is following a different approach under its 20:20:20 plan-to achieve a 20 per cent reduction in CO2 by 2020, with 20 per cent of energy coming from renewables. In this way, it predetermines a market share for a technology-renewables-rather than letting the merit order decide. The danger is that in pressing to achieve this target, which implies that over 30 per cent of electricity generation will come from renewables, some renewables capacity will be created which will be more expensive than other responses.
There is also a lack of clarity about the true cost of wind power, once we factor in the cost of retaining a large amount of underutilised conventional capacity, and the extension of the grid. The noble Lord, Lord Reay, has said more than enough on that so I do not need to follow that line of argument.
There is illogicality in the treatment of nuclear energy in the climate change levy. It is ridiculous that nuclear power, as a low-carbon source, is still in the taxable box. For 50 years, a major experiment has been conducted just 20 miles off our coast. France has generated three-quarters of its electricity from nuclear power. The French believe that it has been a huge success, delivering electricity which is secure, cheap and stable in price. France's carbon intensity is 0.3 of a tonne per $1,000 of GDP, compared to 0.42 in the UK, 0.51 in Germany-so much for it being a market leader-and 0.63 in the US. However, the French option has barely been considered in this country.
As part of the EU plan, 10 per cent of road fuel is mandated to come from biofuels, but by the time this was enacted the credibility of first-generation biofuels had collapsed. Finally, our policy framework lacks balance. It is almost exclusively focused on mitigation through CO2 reduction, The Institution of Mechanical Engineers has argued for what it calls a MAG approach, with effort being committed not just to mitigation but to adaptation and geo-engineering.
Thirdly, there is the issue of cost. All we had to go on at the time when the target was set more ambitiously was the estimate by the noble Lord, Lord Stern, of 1 per cent of GDP. Many people were sceptical at the time and probably even more are now, including, it seems, the noble Lord, Lord Stern, himself. It was reported in the press last week that he now thinks that it might be 2 per cent, but could rise to 5 per cent. I hope he will clarify this when he speaks to us shortly.
In the document that we have before us, the committee says that it previously estimated that costs in 2020 would be about 1 per cent of GDP. That is consistent with its view that it might get to 2 per cent by 2050. In the new report it simply reaffirms the 1 per cent figure in just one paragraph in 250 pages. That is it. I have to say to the noble Lords, Lord Krebs and Lord May, that I do not think that that is adequate. It is difficult to relate these figures to what we are observing on the ground about the difficulties and costs of bringing on stream different technologies such as offshore wind and CCS.
One of the problems bedevilling the debate is the lack of transparency over the huge cross-subsidies that are being created by the renewables obligation and the regime for feed-in tariffs. There is no assurance that their extent is commensurate with the benefits in CO2 abated. My electricity costs me 11p per kilowatt hour. If I erected a wind turbine, I could sell the power I produced to the grid for a whopping 23p. I think I would go out and buy a gizmo which linked my inward meter to my outward meter. That excess cost is averaged over the bills of consumers as a whole, but how much is it in total, or for individual consumers? Here I differ from the noble Lord, Lord May. The whole issue of cost must be given far more attention. The Government cannot ask people to make radical changes to their lifestyle without being more open about the costs that they are being asked to bear.
I accept that "do nothing" is not the right option. Some measures, such as energy efficiency, heat recovery from waste and biomass, and stopping deforestation are probably justified on their own merits. More nuclear power which, in turn, would open the way for electrification of our transport fleet would enhance security of supply. Other measures may be justified as pure insurance, given the uncertainty that we face. But what is badly needed is a consistent metric that allows us to judge whether any given objective is being achieved at minimum cost. The recent book by Professor MacKay, the newly appointed scientific adviser at DECC, provides an excellent starting point. I also very much welcome the intervention by the noble Earl, Lord Selborne, debunking the waste hierarchy and the act of faith that that embodies.
There is the issue of the science, which I had previously taken as given; but many people's faith is being tested. We are often told that the science is settled. I suppose that is what the Inquisition said to Galileo. If so, why are we spending millions of pounds on research? The science is far from settled. There are major controversies not just about the contribution of CO2, on which most of the debate is focused, but about the influence of other factors such as water vapour, or clouds-the most powerful greenhouse gas-ocean currents and the sun, together with feedback effects which can be negative as well as positive.
Worse still, there are even controversies about the basic data on temperature. The series going back one, 10 or 100,000 years are, in the genuine sense of the word, synthetic. They are not direct observations but are melded together from proxies such as ice cores, ocean sediments and tree rings.
Given the extent to which the outcome is affected by the statistical techniques and the weightings applied by individual researchers, it is essential that the work is done as transparently as possible, with the greatest scope for challenge. That is why the disclosure of documents and e-mails from the Climatic Research Unit is so disturbing. Instead of an open debate, a picture is emerging of selective use of data, efforts to silence critics, and particularly a refusal to share data and methodologies.
It is essential that these allegations are independently and rigorously investigated. Naturally, I welcome the appointment of my old colleague, Sir Muir Russell, to lead this investigation; a civil servant with a physics degree is a rare beast indeed. He needs to establish what the documents really mean and recommend changes in governance and transparency which will restore confidence in the integrity of the data. This is not just an academic feud in the English department from a Malcolm Bradbury novel. The CRU is a major contributor to the IPCC process. The Government should not see this as a purely university matter. They are the funders of much of this research and their climate change policies are based on it.
We need to purge the debate of the unpleasant religiosity that surrounds it, of scientists acting like NGO activists, of propaganda based on fear, for example, the quite disgraceful government advertisement which tried to frighten young children-the final image being the family dog being drowned-and of claims about having "10 days to save the world". Crude insults from the Prime Minister do not help.
The noble Lords, Lord Krebs and Lord May, and their eminent colleagues on the CCC have a choice. They can take the policy framework as given, the policy responses as given, the costs as given, and the science as given, and then proceed to churn out more and more sophisticated projections, or-as I hope-they can apply the formidable intellectual firepower they command and start to find answers to many of the unsolved questions.