“If we are really serious about overcoming climate change the next phase will be much harder than the last”

The first step is to recognise the challenges much more clearly and honestly. Pretending it will be easy risks making it impossible. It’ll take a rethink on taxes and investment of £50bn a year to hit their targets on emissions These are the messages of Paul Johnson, director of the UK’s Institute for Fiscal Studies in an article on The Times website. What are your views?

 

The hidden costs of fighting climate change

You’ll have heard the prime minister committing to halving our greenhouse gas emissions within the next decade, on the way to achieving “net zero” by 2050. That’s on top of a reduction of more than 40 per cent since 1990, a period during which the carbon intensity of our economy has fallen faster than that of any other G20 nation.

You’ll hear a lot more about how well we’ve done and how ambitious we’re being as we approach the huge international jamboree that is the Conference of the Parties (Cop) 26 in Glasgow in November. You’ll also hear other countries making similar claims and setting their own ambitious targets.

All that progress has been pretty painless. Even better, the climate change committee, the government advisory body of which I am a member, reckons that the overall economic cost of making progress from here will be modest. The price of renewable electricity has fallen faster than even the most optimistic projections. The cost of building green infrastructure will be largely offset by later savings in fuel costs and by the boost to the economy from all that extra green investment.

That’s the good news. The bad news lies in the only data that really matters: the concentration of greenhouse gases in the atmosphere has kept on growing.

As Cop26’s name suggests, this year will be the 26th time countries will have met to talk about reducing emissions. It’s nearly 30 years since the UN Framework Convention on Climate Change committed signatories to reducing them.

Yet year on year the world’s emissions have increased. Atmospheric concentrations of carbon dioxide have continued increasing at the same rate as before. To be fair, they would have gone up even faster without the action that has been taken. We have slowed climate change. However, from the perspective of 1992 the past 30 years have not been a great success.

That’s in part down to the emergence of China. It accounts for a quarter of the world’s CO2 emissions. That’s not simply a reason to chastise the Chinese, though. It’s a reason to suspend our own self-congratulation. We import colossal amounts of stuff made not just in China but around the globe, often using electricity produced by burning coal. Part of our apparent success in reducing emissions has come from relying on other countries to manufacture the goods we consume. Our carbon footprint, measured by consumption, has barely changed since 1990.

As for the future, three things at least should give us pause. We have so far reduced emissions largely by finding greener ways to generate our electricity. That hasn’t required you or me to do anything, other than pay a bit more for it. Even that has been offset by more efficient household appliances. That’s why our lifestyles have barely been affected.

To get to zero emissions, however, we’re all going to have to get used to driving electric cars. Our gas boilers will need replacing, but nobody is yet sure with what. We will probably have to eat less meat and fly less. One way or another, we’ll certainly notice the next phase.

The overall economic cost may turn out to be small but only if the government gets a lot of big policy decisions right and implements them properly. Let’s just say history isn’t on the side of the optimists, as two simple examples of policy failure show. We subsidise burning gas by charging a VAT rate of only 5 per cent. Yet we charge 20 per cent VAT on home improvements that could improve energy efficiency and reduce gas consumption. Environmental and social obligations account for more than a fifth of our electricity bills. They account for barely 2 per cent of the typical gas bill. Electricity is much less polluting than gas but costs something like five times as much per kilowatt hour.

If you want a more egregious example, consider the green homes grant. Scrapped last month after just six months, it was supposed to be a £1.5 billion programme to subsidise insulation and low-carbon heating in homes. “Botched” and “disastrous” were some of the kinder words used to describe it by the House of Commons environmental audit committee. It’s not the first such scheme to flop. The so-called “green deal”, which provided loans for similar projects, was abandoned in 2015 as a resounding failure. If, like these schemes, policy is badly designed and badly implemented, not only will costs escalate but public support will evaporate.

Even if we get policy right, and the economic cost as measured by the impact on national income is small, it won’t feel small. Public and private sectors between them will need to invest well north of £50 billion a year for 30 years. Lots of jobs will disappear and new ones will be created. There will be winners and losers. The costs might be small on average but averages don’t count for very much. For some people, in Britain and abroad, they could feel very big indeed.

If we are really serious about overcoming climate change the next phase will be much harder than the last. We need to tackle imported emissions. We will have to get used to changing the way we live. The government will have to move from warm words to difficult and specific policy. It will need to bite the bullet on gas prices, fuel duties and much more besides.

The first step is to recognise the challenges much more clearly and honestly. Pretending it will be easy risks making it impossible.

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