With the lights at green we must step on the gas now

The Stern Review on the economics of climate change (2006) set out the global and inter-generational nature of the problem, but there was a clear message that there was still time to avoid the worst impacts of climate change, provided that we take strong action now.

‘Urgency’ is driven not only by the potentially serious consequences of inaction, but crucially by the effective cumulative irreversibility of rising atmospheric CO2 concentrations arising from emissions under ‘business as usual’. The longer action to reduce CO2 emissions is delayed, the more intractable the problem becomes. Moreover, realistic solutions will depend on technological and system changes, which will take decades to implement fully.

The need for global urgency strengthens the case for effective UK action. Early progress in reducing emissions by the UK and other like-minded developed countries will almost certainly be a necessary (albeit not sufficient) precondition for a comprehensive ‘post-Kyoto’ settlement. If progress towards that is urgent, then so are its preconditions.

This is the source of the potential ‘exemplary value’ of UK action, which is very much greater than the UK’s 2 per cent share of global CO2 emissions would indicate. For this to be realised, the UK has to demonstrate that from now on it is beginning to reduce its emissions at a rate consistent with a global accumulation of no more than 450-550 ppm of CO2 by 2050. (The implied UK cumulative ‘carbon budget’ to 2050 is likely to involve emission reductions in 2050 nearer to 80 per cent than the 60 per cent currently embedded in UK policy.)

 The UK thus has to show, not only that it can establish a track record of early progress, but also that it has policies which will sustain the process in the decades ahead, and do so without prejudicing national prosperity.

This is a very formidable remit, which will require singleness of purpose. The importance of the carbon targets will need to permeate the whole conduct of ‘joined-up government’, so that wherever possible, policies to meet other objectives (security of supply, competitiveness, and income distribution) should be consistent with, and should not obstruct CO2 reduction.

Synergies should be sought with other objectives, since they will not always be in fundamental conflict. Where policies, exceptionally, do obstruct CO2 reduction, other countervailing measures will be needed.

How far is all this reflected in the white paper? There is, as always, a good deal of useful commentary on what needs to be done, and significant emphasis on the need to make ‘significant progress’ by 2020, hitherto defined as UK emissions falling to within a range of 110-120 millions of tonnes of carbon (MTC) by 2020. The latest projections envisage a range of 119-129 MTC by 2020 (excluding aviation and shipping), a shortfall of some 9 MTC. But the most striking aspects of these projections are:

• The ‘baseline’ projection for 2020, before taking account of projected savings from measures in this white paper, is 151 MTC — the same as actual emissions in 2005, and higher than emissions in 1997. Yet this ‘baseline’ includes 25 MTC savings from previous white papers/programmes. In other words, previously introduced/announced measures are projected to do no more than offset those underlying trends which increase emissions. This is a dramatic illustration not only of the fundamental inertia in the energy system, but also of the strength of the measures/incentives required to move a large net savings.

• The extent to which the additional savings arise from this white paper are based on an ‘illustrative projection’ of savings arising from the EU emissions trading scheme: some 14 MTC out of a total savings of some 25 MTC.

In the white paper, the government reiterates its view that ‘emissions trading is the UK’s carbon price instrument of choice and a key component in a comprehensive UK policy framework to effectively mitigate climate change’, although they recognise the importance of significant reforms to the EU ETS from 2012.

However, all this takes time. In the meantime, as Stern observed, ‘governments should consider how to deal with investments in long -lived assets which risk locking economies into a high carbon trajectory’.  

Further, the extent to which the UK should rely on the purchase of emission allowances from abroad needs very careful thought (an issue raised by the draft Climate Change Bill). If the purchase of even soundly-based international credits was on a scale which left only minimal ‘domestic’ reductions, then the effectiveness of low-carbon incentives within the UK, and the ‘exemplary value’ of UK action, would be severely damaged; and, in any case, the availability of such credits will be very difficult to predict. Thus, there is a strong case for only very limited use of overseas credits until such time as proposed reforms in Phase III of the EU ETS have been implemented and tested.

Most public comment on the white paper has related to the nuclear issue, and the extent to which new stations will be built to replace existing stations due for retirement, which is both a climate change and a security of supply issue. But however this issue is resolved, there is a vital need for an approach to climate change policy which will address ‘urgency’ directly. Given the long lead-times involved in removing sources of inertia, introducing low-carbon technologies and making the associated changes to infrastructure and institutions, together with the lack of progress so far, mean that the attainment of the CO2 reduction goals for 2050 are already on a very tight schedule.

Accordingly, the British Institute of Energy Economics (BIEE) Climate Change Policy Group has advocated ‘time critical pathways’ for the electricity, transport and building sectors, drawn up by the relevant government departments and which would identify, for each sector:

• The extent and duration of CO2 savings likely to be available from short-term behavioural changes to reduce demand, increased efficiency of existing assets and systems, and fuel switching between existing assets and systems;

• The likely portfolio of options for key technologies/system changes which could contribute to the sector’s transition to a very low carbon future by 2050, and an assessment of the speed of their introduction.

• The resultant ‘time critical pathways’, with the order and timing of key decisions and commitments to meet the ultimate goals, together with consequential answers to the questions of:

Who will be the main agents for change? What incentives will be most appropriate?  What co-ordination issues will arise?  How to maintain sufficient flexibility?

Such an approach, with its emphasis throughout on leadtimes and time–criticality would bring coherence to the whole corpus of climate change policy, and credible links between the ultimate objectives and the accountability framework associated with the proposed ‘carbon budgeting’ system proposed under the Climate Change Bill. It is against the ‘time criticality’ background on climate change policy that the white paper needs to be judged.

Mike Parker is a member of the Sussex Energy Group and Chair of the BIEE Climate Change Policy Group. He writes here in a personal capacity.