Why is it that after more than two decades of effort and expense, there has been no discernable dent in the ever-upward growth of carbon emissions? Why, despite Kyoto, despite all the EU initiatives, despite the Copenhagen summit, has nothing much happened? And why at the Durban Conference at the end of 2012, was even the possibility of a global agreement put off for the rest of this decade?
It is not as if the science is getting any weaker. On the contrary, much has been learnt since 1990 which confirms the fears of what will happen when we pass 400ppm and then probably 500ppm and beyond.
Faced with such dismal failure to make much progress, it is time to look again at the causes of rising emissions and whether the policy mix being pursued above all in Europe is fit for purpose.
Rising emissions have much to do with coal – the dirtiest of all the main fuels – and with the economic growth of China and other developing countries. Coal’s share of world primary energy has risen from about 25% to 30% – and this is a percentage of a rising number. China has added lots of new coal power stations in its phenomenal dash for growth – doubling its economy every decade. If it goes on growing at 7% a year, it will double again by 2020. China and India are together currently opening 3 coal power stations a week. The world will have another 2 billion people by 2050, with the bulk in China, India and Africa. They all will need energy to develop.
This is the scale of the problem that climate change policy needs to address. It would be easy to simply blame China, but China’s growth is export-orientated, and it is the west – Europe and the US – that buys much of these exports. Here is where the arithmetic of Kyoto goes wrong. Kyoto measures carbon production in each country, not carbon consumption. So European countries can deindustrialize: swapping energy-intensive production at home for energy-intensive imports, thereby meeting their own Kyoto targets, whilst actually contributing to greater global emissions. In the UK, for example, between 1990 and 2005, carbon production fell 15%, but carbon consumption went up by around 19%.
So much for Europe’s “world leadership”. But its climate change policies have been focused on the short term and on “winning” technologies which suit its politics. The EU’s Climate Change Package – with the catchy but silly title of 2020-20-20 – has driven member countries in a dash-for-wind and rooftop solar: both are among the most expensive ways known to produce electricity. Germany has gone further, exiting nuclear, and now finds itself opening new large-scale highly polluting lignite coal power stations as a result.
The contrast with the US is stark. Its emissions – contrary to the position in Europe – are falling fast. It has not signed up to Kyoto, but it has been switching out of coal and into gas. Gas in the US is cheap, and there is no sign that gas (or oil) are running out. Getting out of coal is a climate change imperative – unless this happens soon, the temperature rises will be unavoidable.
Going for gas instead of coal is however only a short term “fix”. In the medium term no existing technologies look like facilitating a transition to a low carbon economy. There just isn’t enough land and shallow water to build the sheer numbers of wind turbines that are needed, and, as agricultural land is in short supply, the dash to biofuels is contributing to world hunger without making much difference to carbon emissions.
It is not a matter of whether new technologies are a good idea. It is much more stark: without new technologies, the climate is not going to get fixed. But whilst very large subsidies are available for current renewables, future renewables are starved of cash. Energy customers and taxpayers can only absorb so much and, in the EU, renewables subsidies are pushing at the boundaries of fuel poverty and undermining competitiveness.
A better way forward would be to first encourage a rapid exit from coal. The best way of doing this is to introduce a carbon tax. Not to tax carbon is to subsidise pollution. The tax should focus on our carbon consumption, not our carbon production. It must include a border tax adjustment: it is trade distortion to exclude imported carbon. We should pay for all the pollution we cause in China, and China should not have an artificial economic advantage because it does not impose a domestic carbon price.
A carbon tax would help to tip the balance between coal and gas. Germany would not be building new coal power stations if there were a proper carbon price. This helps a switch to gas in the short term, changing the relative price of coal and gas. But because the carbon price will rise through time, it also makes sure that gas is temporary, and that by 2030 the carbon price will be forcing this temporary gas off the systems.
By going down this carbon taxation route, some of the monies currently being pumped into wind and roof-top solar can be diverted into new technologies. These are where climate change can be solved: through electrification of transport, smart meters and grids rendering the demand side of the market active, through batteries and large-scale electricity storage, and all the new generation technologies, of which next-generation solar looks particularly exciting.
We cannot go on as we are. Climate change is just getting worse and worse. Existing policies are not working, and Kyoto is worse than a dead end – it is an excuse not to try other bottom-up routes, such as taxing carbon consumption. It is ironic that the EU has spent so much political capital and money on existing approaches, whilst it looks like the US will make the biggest impacts on the problem – not only with gas instead of coal, but also because of its vast technological potential.