Nothing could better illustrate the intellectual bankruptcy of what might be termed the climate change establishment than Michael Grubb's September article in Prospect "Stick to the Target." He is clearly outraged by the fact that, in July, the House of Lords select committee on economic affairs published a report, "The Economics of Climate Change," which had the temerity to express considerable scepticism about both the reliability of the IPCC process—the intergovernmental panel on climate change, set up under the auspices of the UN to inform and advise governments on what is clearly a global issue—and the desirability of the Kyoto/emissions targets approach to tackling the problem.
Although I was a member of that committee, I cannot speak for it as a whole. But my own understanding of the issue is clear. The IPCC story, which appears to have been swallowed hook, line and sinker by most governments, not least our own, is as follows. Over the past millennium, the world's mean temperature scarcely changed at all until around 1860, when direct records first began. Since then it has risen (not steadily, in fact: there was a period of cooling between 1945 and 1965) by an unprecedented 0.6 degrees Celsius. This can only be due to the simultaneous growth in the amount of carbon dioxide in the atmosphere as a result of industrialisation, which warms the planet by the so-called greenhouse effect. Unless something is done about it, this warming is set to continue, and probably to accelerate, as world economic growth continues apace, and with it carbon dioxide emissions. On this basis, a range of possible scenarios can be produced, showing further increases in world temperature ranging from 1.7 degrees to 6.1 degrees by the end of the present century, with dire consequences on a number of fronts. The only solution is to cut back on carbon dioxide emissions as much and as soon as possible, and the best way to do this is by the Kyoto process of internationally agreed emissions targets.
While there is little doubt that carbon dioxide emissions, other things being equal, do warm the atmosphere—although reputable climate scientists differ over the extent of this warming—every other aspect of the IPCC story is seriously flawed.
First, the history. The "hockey-stick" chart of temperatures over the past millennium (so called because the constant temperature over the long period up to 1860 resembles the straight handle and the subsequent rise the curved blade), which featured prominently in the government's 2003 energy white paper, is almost certainly a myth. There is, for example, ample evidence of a warm period—warmer than today—in the middle ages and of a very cold period around 1800. Historical treeline studies—showing how far up mountains trees are able to grow at different times, which is clearly correlated with climate change—confirm this variation. This would not matter very much, merely indicating that the climate fluctuates all the time and that the present warming phase is by no means without precedent, were it not for the IPCC's consistent refusal to entertain any dissent, however well reseached, over the issue since it first published the "hockey-stick" chart.
Next, the scenarios. It is of course hard to form a view of the likely rate of world economic growth over the next hundred years; but it is striking that all the IPCC scenarios incorporate a heartwarmingly rapid rate of growth in the developing world, so that by the end of the century income per head in the developing world is well above what it is in the rich world today. This may happen—I hope it does—but it is clear that the IPCC scenarios do not capture the true range of realistically possible outcomes.
This upward bias is further compounded by the translation from economic growth to growth in carbon dioxide emissions. The recent historical record shows a steady decline in this rate of growth, from 2.3 per cent a year over the past 40 years, to 1.6 per cent a year over the past 30 years, to 1.3 per cent a year over the past 20 years, to 1.2 per cent a year over the past 10 years. This should not be surprising. In the first place, economic progress is a story of increasing efficiency in the use of all factors of production. In the case of labour this is customarily referred to as growth in productivity, but precisely the same applies to land and energy. Second, the pattern of world economic growth has been changing, with services, which are less energy-intensive, growing faster than manufacturing, which is more so.
What is surprising, however, is the IPCC's assumption that this trend will now be reversed. Its six scenarios for the 21st century are based on an annual rate of growth in carbon dioxide emissions ranging from 1.4 per cent a year (appreciably greater, rather than less, than in the recent past) to 2.3 per cent a year (almost double the rate of the recent past). Once again, although the future is inevitably uncertain, it is clear that the IPCC scenarios do not capture the true range of plausible futures. And of course this upward bias feeds directly into an upward bias in projected climate change.
There are two possible reasons why this should be so, and why the IPCC is so adamant that it will not revisit its assumptions. Both may be true. The first is that those involved in the exercise are so profoundly concerned about the perils of global warming, and the risk of governments deferring the action they believe is needed, that the scarier the outlook they can produce the better. The second is a characteristic of any institution looking into any problem: the more serious the problem can be made to appear, the more important the institution and its personnel become and the more attention they can command.
But however understandable, this is not helpful in a world of limited resources where there are many other problems jostling for attention and the devotion of additional resources: to take just two examples, dealing with the more imminent dangers posed by Islamic terrorism and by nuclear proliferation—and by the possible interaction between them. Humanitarian aid to the world's poorest is another obvious candidate for more resources. At the margin, choices have to be made, and it is essential they are made on the basis of the most rational assessments we can achieve.
Which brings us to the question of what is to be done about such global warming as is likely to occur. There are two possible approaches, not mutually exclusive: mitigation: seeking to stabilise and, if possible, reduce the amount of carbon dioxide in the atmosphere; and adaptation: to accept that the climate may well be warming, and to take action to counter any harmful consequences that may flow from this. The IPCC and its acolytes make only the most perfunctory acknowledgment of adaptation, base their estimates of the damage from global warming on the assumption that very little adaptation occurs, and focus almost exclusively on the need for mitigation. By contrast, perhaps the most important conclusion of the House of Lords report is that adaptation needs to take centre stage.
Numerous studies have shown that adaptation is the more cost-effective option. Not only is it the way we normally come to terms with climatic vagaries, but—a fact which the IPCC does its best to play down—there are benefits as well as costs from global warming. There are, of course, regional variations: in northern Europe, for example, including Britain, for the rest of this century the benefits are likely to exceed the costs, whereas for the tropics the reverse is the case. But adaptation, which implies pocketing the benefits while acting to diminish the costs, has obvious attractions.
The four principal costs potentially involved in global warming are damage to agriculture and food production, water shortage, coastal flooding (as sea levels rise), and—allegedly—malaria. In the case of agriculture, adaptation, much of which will occur without the need for government action, would consist of cultivating areas which have hitherto been too cold to be economic and, in other cases, switching to crops better suited to warmer climates. In the case of water shortage, we already waste water on a massive scale, and there is ample scope for water conservation measures.
The most serious likely cost is that caused by coastal flooding of low-lying areas, where government action is clearly required, in the form of the construction of effective sea defences—as the Dutch have had for more than 500 years. With modern technology this becomes a highly cost-effective option. Finally, as to malaria—which leading malaria experts argue is unrelated to temperature, noting that the disease was endemic in Europe until the 17th century—the means of combating if not eradicating this scourge are well established.
By contrast, the Kyoto/emissions targets approach seems a most unattractive option. Michael Grubb admitted, in his evidence to the House of Lords committee, that even if the existing Kyoto targets were attained, they would make little if any difference to the rate of global warming: Kyoto's importance for him was as a first step to other, stiffer, such agreements. But this is pie in the sky. The developing countries, including major contributors to future carbon dioxide emissions like China and India, are determined to remain outside the process, while the US, the biggest emitter of all, has declined to ratify the treaty. Moreover, since the only sanction against non-compliance with Kyoto (which is likely to be widespread) is even stricter targets in any successor agreement, the realism of this approach is even harder to detect.
This is no bad thing, since the cost of going the emissions targets route, if it were effective, would be horrendous. Essentially, it would work by raising the cost of carbon-based energy to the point where carbon-free energy sources, and other carbon-saving measures, become economic. Given that only last month Gordon Brown told the annual TUC conference that the recent rise in oil prices was a global problem requiring a global solution, and called on the oil-producing nations to reduce their prices, there seems to be some lack of coherence in the government's approach. For Kyoto-style mitigation to be seriously effective involves a substantially greater rise in energy prices than anything we have yet seen—although the government's energy white paper was curiously silent about this.
But the real cost of this approach is not so much dearer energy as the reduction in world economic growth. It is far from self-evident, not least for the developing world, that over the next 100 years a poorer but cooler world is to be preferred to a richer but warmer one. And why should the present and next generations sacrifice their living standards in order to benefit more distant generations, who are projected in any event to be considerably better off?
The IPCC process is so flawed, and the institution so closed to reason, that it would be far better to thank it for the work it has done, close it down, and transfer all future international collaboration on the issue of climate change to the established Bretton Woods institutions. Meanwhile, whether this happens or not, it is imperative that in this country the treasury becomes fully involved in all this. In my time as chancellor, it would have been unthinkable for the treasury not to have made its own independent and rigorous economic analysis of a matter as important as climate change.
But the IPCC's apparent determination to suppress or ignore dissenting views, which has become little short of a scandal, is part of a wider problem. In Europe, where climate change absolutism is at its strongest, the quasi-religion of greenery in general and the climate change issue in particular have filled the vacuum of organised religion, with reasoned questioning of its mantras regarded as a form of blasphemy.
We have recently seen a further example of this in the widespread assumption that the Mexican gulf coast hurricanes, Katrina and Rita, are a consequence of global warming—a punishment, it is implied, for our heedless materialism and disregard of the planet. One wonders, in that case, what caused the region's worst recorded hurricane, which devastated Galveston in 1900. In fact, the balance of scientific opinion is that there is no convincing evidence that the further climate change which is feared might occur over the coming decades will lead to an increased incidence and severity of hurricanes, let alone the modest degree of warming that we have seen so far.
As Dick Taverne has pointed out, we appear to have entered a new age of unreason, which threatens to be as economically harmful as it is profoundly disquieting. It must not be allowed to prevail.
