Carbon crunch

A couple of weeks ago I read Dieter Helm's new book Carbon crunch.

I thought this was an important book. For a start Dieter Helm appears to be one of our foremost experts on energy policy. What he says matters. I also found it addressed lots of concerns I have about what to do about climate change.


One particular thing I found refreshing - Helm is not approaching this from a left-wing angle. His rhetoric is broadly conservative but, unlike some conservatives, he takes climate change very seriously. In this he helps counter the idea that concern about climate change is mainly a left-wing conspiracy to legitimise higher taxes and more state control over the economy and people's lives. It has been a hobby-horse of mine for years that the laws of physics apply to conservatives as much as to liberals and socialists and the principle of taking firm action to mitigate the risks from climate change shouldn't be characterised as left-wing or right-wing.

The first important message I got from the book is that international efforts to curb greenhouse gas emissions have so far been an utter failure. Helm thinks we should stop pinning our hopes on "top down" measures, such as the Kyoto Protocol, and go for "bottom-up" measures (the "bottom", in this case generally being the nation-state, but in Europe's case perhaps the EU). The main bottom-up measure he advocates is a carbon tax. The carbon tax would apply not only to energy consumed directly within a country but also to goods imported from abroad. This would address the issue that the UK, for instance, has over-achieved on its Kyoto target mainly by off-shoring production of physical goods to countries such as China, where they are produced in a more carbon-intensive way than they would have been at home. If the embodied carbon in imported goods were counted as emissions for which the UK is responsible, our emissions would be seen to have soared over the past twenty years rather than being cut.[1]

The obvious appeal of this idea is, of course, that it doesn't rely on universal international agreement. Those countries that are serious about climate change can implement it and so create an incentive for consumers as well as producers to cut the emissions for which they are responsible. So if, for instance, China declines to de-carbonise its manufacturing processes, it will face higher tax barriers on its exports than otherwise. Western consumers will be incentivised to consume less.

An important, but less obvious appeal is that a carbon tax would obviate the need for governments to subsidise particular forms of clean energy and allow the market to develop the most cost-effective ways of cutting emissions.

Of course, this means slaughtering a sacred cow - the tradition of GATT and the WTO. These measures were conceived before the days when global warming was seen as a major threat. It long seemed obvious to me that the governance of international trade will need to change radically if we are serious about tackling climate change.

However, that's not the only sacred cow in the abattoir. Helm takes a dim view of the posturing of the UK and Europe as leaders in the fight against global warming. He thinks we have unrealistic expectations of what we can achieve with today's clean energy technology. Hence he favours using natural gas as a "bridge" fuel - lowering our emissions as we switch from coal but not achieving the cuts we need ultimately to aim for. I think this means not meeting all the intermediate targets we have set ourselves.

Now we are out of my comfort zone. Having studied sources such as David MacKay's Sustainable energy without the hot air, I have long suspected that renewable energy, with existing technology, can come nowhere near to replacing the energy we use now and that radical changes, involving major economic sacrifices, will be necessary if we are to get our greenhouse gas emissions down to the level where the risks from global warming can be said to be acceptable. Helm may be taking the view about what is politically realistic and this view will dictate the rate at which we de-carbonise. Perhaps I am being over-ambitious in wanting the rate of de-carbonisation to be set through an assessment of the risks rather than by an assessment of what is politically feasible.

This is a very meaty book and my first reading of it has probably been superficial. My heart rebels against the idea of relaxing our targets but my head says I should look at the issues more closely. What matters is not by how much Britain and Europe cut their emissions but how quickly world emissions peak and then fall. Setting a pious example in Britain and Europe may be less effective than taking unilateral measures to tax the embodied carbon in our imports.

I need to study the book in greater depth.
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[1] "Between 1990 and 2005, whilst carbon production fell by 15%, carbon consumption went up by over 19%. In other words, the British were causing an increase in global emissions, masked by a reduction in the amount produced in Britain." p69