After a Spectator debate on climate change in March, Fraser Nelson wrote about whether or not we should try to engage in the debate ourselves or “trust the expert”. Simon Singh had argued in the debate that the most credible experts supported the view that the human contribution to potential global warming was real and serious. The response to my new book Let Them Eat Carbon shows how much that kind of debate is turned on its head when it comes to policy.
The science is much less important than people make out. No argument about historical bristlecone pines is going to settle whether or not we should pay handsome subsidies to offshore wind farms. Policymakers often have to make decisions with only a vague sense of the likely results. Mervyn King doesn’t enjoy the luxury of a scientific consensus telling him what will or won’t happen if he hikes interest rates. If we could really base our decisions on some kind of impeccable scientific consensus then politics would be much simpler if rather dull. We can’t.
William Nordhaus, Sterling Professor of Economics at Yale, isn’t a climate sceptic. He has spent decades refining his model of the economic effects of climate change. When he applied the 2007 version of that model to the recommendations from the Stern Review produced for the last government, he found that the plan would reduce climate change harms by about $14 trillion, but at a cost of nearly $28 trillion. The cure would be worse than the disease.
Of course, that is just one study. But his results are in the same ballpark as the average across the literature. So the irony is that if we really want to stick to the “scientific consensus” then the government’s actions and plans are disproportionate.
Nordhaus does find that a mild and escalating carbon tax might make us a bit better off, but economists can always find marginal gains like that on a blackboard. That assumes a truly heroic global agreement, with every country selflessly taking their share of action fairly and efficiently. That isn’t happening.
And we aren’t talking about huge ‘save the world’ results anymore. In his latest model run in 2010, the ‘optimal’ path leaves us 0.35 per cent better off than in a base case where no climate change policies are adopted. Try putting that on a banner at the next UN summit.
The curious result is that advocates for radical, immediate action to cut emissions are the ones relying on the science being uncertain or systematically wrong, not the sceptics. Jim Manzi has written about this reversal of the normal terms of the climate debate for the New Republic.
In response to a finding from my book covered in the media, that green taxes are excessive by £500 a family, the same argument has come up again. The website Carbon Brief argued that I was wrong to compare these taxes – justified on the grounds they correct for externalities – with the Social Cost of Carbon – the scale of those externalities – to see if they are proportionate. Essentially, they argue that there is too much uncertainty about the costs and we can’t quantify them, so it is better to just accept the targets for emissions cuts as a given and argue about how to achieve them, write a blank cheque for climate policy.
They cite some new studies which suggest the cost and extent of climate change could be greater than had been expected. But now they’re the ones in the sceptics’ shoes, arguing that their favoured new study is preferable to the flawed process that is the IPCC synthesis. Jim Manzi has pointed out the problem with getting into that kind of game, “Of course, there is a long history of individual studies that project greater future warming than the consensus estimate. These go all the way back to the first major attempt to create such a consensus estimate: the NRC Charney Commission of 1979. [The scientist cited in the Charney Commission working papers who led the climate modeling team that projected much higher warming than the consensus estimate more than thirty years ago was…James Hansen.] In spite of these frequent challenges, however, the estimated value for climate sensitivity — the central scaling parameter that projects how much warming will be created by a given emissions scenario — has remained essentially unchanged for decades at about 3C, from the Charney report through each of the four successive IPCC assessment reports, and remains the estimate in the current AR4.”
Carbon Brief’s case has been made most persuasively by the Harvard academic Martin Weitzman. To put quite a formal mathematical argument about “fat-tailed” risks in very simple terms, he argued that we don’t know enough to discount the possibility of a catastrophe and the potential for a complete disaster is enough to justify taking expensive precautions.
The problem with that argument is that it isn’t based on much more than what he concedes are “extremely crude ballpark estimates”. It is possible that there is such a risk, but then there are lots of other catastrophic risks out there from asteroids to super volcanoes. There are too many potential catastrophes to remake the world economy hoping to forestall all of them.
Once you get off the economist’s blackboard things get even worse. The actual policies we are pursuing are dismally ineffective. Let Them Eat Carbon goes over the dismal record of the EU Emissions Trading Scheme, the Renewables Obligation, green taxes and a whole range of other climate policies costing a fortune and delivering very little in detail.
Lots of politicians are quietly sceptical of what successive governments have done in this area keep their heads down. They think it isn’t a priority, so they’ll focus on other issues like the crisis in the public finances. But if we pile rises in energy prices on top of a fiscal adjustment, then the burden on family budgets will just be too much, particularly for the elderly and low income families who spend far more on energy as a share of their income. More people are concerned about electricity and gas prices than any other economic issue according to a Populus poll.
To avoid that dismal political prospect, politicians need to be more realistic. Investment in research and development to make low carbon energy cheaper is a more realistic prospect than a global deal to make energy from fossil fuels more expensive. The best way to ensure than Britain can cope with climate change is to bet on growth, and build a country rich and free enough to survive whatever the climate throws at it.
Matthew Sinclair is Director of the Taxpayers’ Alliance
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