Fuelling the debate on climate change
Nigel Lawson's An Appeal to Reason highlights some important questions about climate change, although he offers few answers, says Richard Lambert
Saturday April 19, 2008
Climate change is a highly complex global problem, and one plagued by major uncertainties. Despite much progress in recent years, our knowledge about the physical processes underlying global warming is still far from complete. And its possible economic impact depends on a huge number of unpredictable variables, such as how well society might adapt to change, and at what cost.
To this extent, Nigel Lawson's short book is to be welcomed. Along with the polemics, he makes some sensible points. For example, he is right to raise the alarm about the impact of biofuels on food prices, and about the huge costs and inefficiencies of imposing arbitrary targets for the production of renewable energy. He is right to warn about the dangers of trade protectionism that could result from imposing trade barriers against countries that do not cut their greenhouse gas emissions. And he is right to scoff at those who claim that unusual weather conditions in recent years represent clear evidence that disaster is on the way.
But when it comes to the big picture, he is very likely to be wrong. Lawson's view is that what he calls the new religion of global warming contains a grain of truth and a mountain of very damaging nonsense. He believes that "We appear to have entered a new age of unreason, which threatens to be as economically harmful as it is profoundly disquieting."
Never one to suffer from an excess of humility, he is happy to attack the scientific might of the UN's Intergovernmental Panel on Climate Change, a "global quasi-monopoly" whose judgment and integrity he finds open to question. But he reserves his special contempt for the Stern review, which at various points in the book he describes as alarmist, cockeyed, scare- mongering, politically inspired and lamentable.
This abuse has a purpose. Lord Stern's central message is that provided the world acts quickly enough to curb greenhouse gas emissions, we won't have to make the painful choice between averting climate change on the one hand, and economic development on the other. The longer we delay, the more costly the necessary actions.
Lawson has to shoot this down in order to sustain his own argument, which is that given all the uncertainties and the difficulties in securing a sharp cut in emissions, it makes much more sense to go with the flow and adapt to climate conditions if and when they change.
His message is based on two dangerous assumptions. One is that the risks of rapidly accelerating greenhouse gas emissions in the atmosphere are not as great as the consensus would suggest. The other is that the costs and difficulties of curbing these emissions are too great to contemplate.
Repeated throughout the book is the view that, even on the most pessimistic calculation, the people of the developing world a hundred years hence will not be that much worse off than otherwise would have been the case - and they will still be a lot better off than they are today.
It's true that the impact of major economic shocks can be made to seem trivial if they are spread over a wide enough geography and a long enough time horizon. This is the kind of analysis you might have deployed in 1913 to tell the people of western Europe not to get too fussed about the threat of imminent war. And it leads to all kinds of airy generalisations.
For example, Lawson states that if global warming results in water shortages, the obvious remedy is sensible conservation measures, including in particular the pricing of water. Tell this to the almost one billion people in Africa and Asia who, according to the IMF, face water shortages by 2080 as a result of climate change.
When it comes to the potential costs of mitigation, Lawson resorts to the kind of hyperbole that would make the most fanatical environmentalist blush. At one point, he suggests that it would mean unwinding the industrial revolution and returning to a pastoral society - and that would only be the start.
Of course Stern's conclusions are open to challenge. In particular, respectable economists have argued that his method of calculation understates the economic costs and overstates the benefits of early action to avert global warming. But it is ridiculous to suggest, as Lawson does, that the Stern review has played the same role as Tony Blair's notorious "dodgy dossier".
Where does all this leave those of us who are not scientists, economists, or polemicists? Last year, the CBI brought together a group of business leaders who were none of the above. They concluded that climate change represented a significant risk to society and the economy, and that actions to mitigate the risk were therefore necessary.
These include the creation of a meaningful price for carbon, to spur the necessary cuts in emissions; investment in new technologies; spending on the physical infrastructure that will be necessary to protect against weather changes that are already inevitable; regulatory standards to stimulate new behaviour; and serious efforts to build global agreements for curbing greenhouse gas emissions.
Most people don't expect their house to burn down. But they take out fire insurance, provided it is available at a sensible price, to protect themselves against the possibility. In the light of our current knowledge about global warming, that amounts to a compelling case for action.
· Richard Lambert is director-general of the CBI