Motion to Take Note

Part of Energy: Renewables (Economic Affairs Committee Report) – in the House of Lords at 5:50 pm on 24th February 2009.

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Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative 5:50 pm, 24th February 2009

My Lords, I follow the noble Lord, Lord Layard, in paying tribute to our chairman, the noble Lord, Lord Vallance, who conducted this inquiry with great charm and diligence. He has given today an exemplary summary of what was in our report. I say "our report", but I have to make it clear that I am no longer a member of the committee, having been rotated off. This was the last inquiry to which I was party, and so I thought that I might say a few words today.

It was a great privilege to be a member of the Economic Affairs Committee of this House. During my time, a number of reports were produced. I will name simply three: the one on the economics of climate change, to which both noble Lords have already referred; the one on the economic impact of immigration; and the one before the House today. It is the sort of thing that the House does particularly well, and I hope that everyone here, and others too, will read the report that we are debating.

I will focus my remarks on one section of the Government's reply that causes me great concern. By way of preamble, I will allude to a remark made by the noble Lord, Lord Layard, who kept referring to climate change as the greatest problem facing mankind. Well, he is entitled to his opinion, but he may like to know that the most thorough survey of climate scientists on this issue—they ought to have some knowledge and understanding of the matter—was published in 2007 and conducted by Hans von Storch, professor of meteorology at Hamburg University. He asked climate scientists to identify the greatest threat facing mankind over the next 100 years. I wonder how many noble Lords can guess how many scientists answered that the greatest threat was climate change or global warming. It was only 8 per cent.

I return to the Government's reply, and the passage that gives me such concern. In paragraph 6 on page 5, the Government say, after accepting that there are massive costs in trying to decarbonise the economy, in particular through wind power, which is about the most expensive way that anybody could ever devise:

"It is also however important to recognise what these costs are paying for: a reduction in the risk of catastrophic climate change and dangerous energy insecurity. The Stern Review showed that the damage caused by global climate change could cost five times more than the cost of actions to stabilise global emissions by 2050".

That is what they wrote, and every single thing is demonstrably unfounded. For a policy to be based on assumptions that are clearly incorrect in the view of the majority of people who know something about the subject is irresponsible.

I will take the statement bit by bit, starting with the,

"reduction in the risk of catastrophic climate change".

There is no scientific basis for the view that there will be catastrophic climate change. Mike Hulme, professor of environmental sciences at the University of East Anglia and director of the Tyndall Centre for Climate Change Research, said a little while back that,

"to state that climate change will be 'catastrophic' hides a cascade of value-laden assumptions which do not emerge from empirical or theoretical science".

Those are the words of Professor Hulme of the Tyndall centre, which believes in the conventional wisdom of global warming, but says there is no scientific basis for talking of catastrophe. Nor, incidentally, does the IPCC believe in that. That is the first thing that the Government have said that is wholly false and misleading, and no basis for public policy.

The second claim is that this policy is needed to remove dangerous energy insecurity. There is only one serious threat to our energy security in this country at present, and that is the Government's reluctance to allow the building of new coal-fired power stations. Coal is abundant in this country and throughout the world. There will be no energy security while the building of coal-fired power stations is forbidden. This policy is a cause of the insecurity, not an answer to it.

The Government's reply says:

"The Stern review showed that the damage caused by global climate change could cost five times more than the cost of actions to stabilise global emissions by 2050".

The Stern review showed nothing of the sort: it merely asserted it. This has now been examined by leading energy economists and environmental economists on both sides of the Atlantic. These are people of considerable eminence: Professor Helm at Oxford, Professor Nordhaus at Yale, Professor Tol, Professor Weitzman of Harvard. Every one has said that the Stern review's economics is profoundly flawed and utterly mistaken. That is the state of opinion among leading economists who have studied this. It is understandable that the Government like their own man—he was their man at the time—but for them to take this economic analysis, which has been widely discredited and totally shredded, and say, "This is the basis for an extremely expensive policy that is going to do great damage to the people of this country if it is carried through" and ignore completely all the other economic wisdom on this subject from people far more eminent than the noble Lord, Lord Stern, is grotesquely irresponsible.

Of course, the Stern review is somewhat all over the place. The Minister may not be aware that the review says at one point:

"The lesson here is to avoid doing too much, too fast, and to pace the flow of mitigation appropriately. For example, great uncertainty remains as to the costs of very deep reductions. Digging down to emissions reductions of 60-80% or more relative to baseline will require progress in reducing emissions from industrial processes, aviation and a number of areas where it is presently hard to envisage cost-effective approaches".

That comes from the Stern review. Of course, the noble Lord says different things now, just as when he actually produced the review, he said that the costs would be 1 per cent of GDP. That was completely rubbished by Professor Helm in particular, but also by most of these other economists, so he popped up a little later and said, "Well, maybe it is 2 per cent". That is a 100 per cent difference in a short time.

It is true that the Stern review has a gift given to few of us—certainly not given to me. The review tells us confidently what is likely to happen 100 years, 200 years, 300 years, and at one point 1,000 years hence. I confess to noble Lords that I do not know what is going to happen 1,000 years hence; I do not know what is going to happen 300 years hence; I do not know what is going to happen 200 years hence; and—do not tell anybody—I do not actually know what is going to happen 100 years hence. What I do know is that the current certainty is based on the same computer models as the financial services industry relied on to tell it with certainty the risks it was taking in the current financial circumstances, and we know where that led. It does great discredit to the Government. They are not taking the issue seriously. They are taking it gravely but, intellectually, they are not taking it seriously at all. They should address themselves to it and it gives me great concern that they are not.

I do not want to detain the House but I do want to mention one other aspect. The noble Lord, Lord Vallance, said that we will have to look at the issue again in the light of the very different circumstances in which we find ourselves. That is especially true in the developing world, particularly in China and India, where, everyone agrees, emissions will rise fastest. They are certainly in no position now, if they ever were, to take on the economic costs of the proposed carbon emissions cuts. The idea of an international agreement is therefore completely useless: it will not happen. A different approach is necessary as this is unreasonable, unworkable, unrealistic.

Another point is causing me considerable concern. We are going through a very serious world recession because of the banking crisis. It is far worse than anything since the 1930s, although in my judgment it is not as bad as the 1930s, nor will it be. However, it will be the worst recession since the war. At a time of world recession there is always a great impulse to protection. That is the great danger now, because it will make things infinitely worse if countries resort to protection. All the normal protectionist impulses are there, but there is also a new one. The leaders of the steel and other big industries in America got together with organised labour—the AFL-CIO—to say that tariffs must be put up against imports from countries not prepared to cut back sharply on their carbon emissions. Let us call them tariffs against China and India. The same song is being sung by President Sarkozy in France and by a number of people in the European Commission in Brussels. It is very dangerous indeed.

In conclusion, I ask the Minister for an undertaking: that the United Kingdom will vote against and if necessary veto any European proposals of this kind for tariff barriers, protectionist measures, border equalisation taxes—whatever you like to call them—against trade with China, India and other parts of the developing world.