Posts Tagged ‘climate change’

If you want to give your children nightmares tonight, maybe reading the summary of the IPCC report that was released last month would be a good idea.

The report states that, ‘it is extremely likely’ that humans have been the dominant influence on observed warming since the mid-20th century. But whether you believe that the effects are man-made or not, the effects are real:

  • The rate of sea level rises have been faster since the mid-19th century than at any point in the previous 2,000 years;
  • 75% (high confidence) of the rise is due to glacier loss and ocean thermal expansion;
  • Global average sea levels rose by 0.19m between 1901-2010 and is expected to rise by 0.26m to 0.98m by 2100 (depending on which concentration path we follow);
  • It is very likely that there will be an increase in heavy precipitation events over most land areas.
  • Most aspects of climate change will persist over centuries, even if we stop CO2 emissions immediately.
  • Both rich and poor nations will be negatively affected.

Given that the effects will happen regardless of our emission path, a policy of adaptation is necessary alongside mitigation strategies.

It is often the case that any type of change brings about new markets – climate change is no different. When so many people see a problem, some people see an opportunity. Welcome to the era of environmental capitalism.

A recent Radio 4 programme called, The Great Global Warming Gold Rush, highlights a few of these entrepreneurs and companies who are making money off climate change. The Dutch water management department of Arcadis are set to benefit greatly from future flood protection schemes; they received $200m in contracts after Hurricane Katrina to prevent another flood happening in New Orleans.

Another Dutch company, Delta Sink is developing amphibious buildings and floating roads. With over 2.5bn people expected to live in coastal cities in the next hundred years, even a minute portion of the market will allow this company to have a pretty secure future.

Essentially, the Dutch have transformed a national vulnerability into a comparative advantage; they have the knowledge, the technology and the skills that they export – and will be exporting – around the world.

The programme also highlighted an example of how we can work with nature for a profit. Jason Drew grows and breeds around 8bn flies that recycle nutrients from waste (that they get paid to take!) and transform it into a cheaper substitute for fishmeal.

Entrepreneurs are by definition those that move faster than the rest of society, and their innovations can help us all adapt to climate change. But Governments need to implement policies that can steer these entrepreneurs to identify the best long term outcomes for us all, rather than just short-term fixes that make a quick buck. 

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The state of the art in marine science raises many fascinating questions – the Society for Environmental Toxicology and Chemistry’s (SETAC’s) symposium highlights just how much we still have to learn about our planet’s oceans. What are human pressures – like the cocaine detected in Oslo’s fjord originating from the city’s waste water, or the billions of tonnes of microscopic plastic fragments accumulating in the world’s oceans – doing to marine life?

The emerging evidence on Ocean acidification is particularly striking, and a threat whichever greenhouse gas emissions path the world ends up on. I’ve always heard targets for emissions reductions described in terms of avoiding the risk of ‘dangerous climate change’ (limiting global warming to 2 degrees, although you suspect it’s not that simple). But these scenarios still involve massively higher anthropocentric emissions of carbon dioxide, which will be absorbed into the ocean.

So ocean acidification is ongoing and unavoidable – reductions in emissions can reduce its speed but more acidic oceans are inevitable. Some organisms will grow more quickly, others more slowly. For many species, acidification will mean they require more energy to survive, to regulate their internal chemistry. This means they have less energy available for growth. Overall, biological productivity is expected to reduce so ocean biomass will fall, affecting the entire food chain.

We are not going to mitigate all of humanity’s effects on the planet, so it’s a question of priorities for actions: I hope the fish are only exposed to doses of cocaine at weekends, rather than being permanently on acid.

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In our last post we talked about the possible reasoning behind George Osborne failing to commit to stringent climate change targets and how this is affecting firms who want to invest in low-carbon technologies, and how this in turn will affect the UK economy.  In this post we talk about the long-term impacts of this failure to commit – the increasing costs of climate change.

George Osborne’s perspective is surely a case of short term political thinking trumping the strategic planning required when considering the impacts of long term environmental change. Without investment in low carbon technologies, their costs will remain high and Osborne can continue to claim that lower carbon targets will be a burden on business. Only by investing in research and development will the costs of low carbon technologies be reduced as we learn more about them and discover new and cheaper ways to implement them.

The time taken for cost reductions in low carbon technologies due to higher research spending on their development is unclear, but as the Stern review[1] (a 2006 review of the economic costs of climate change) illustrates, we are on a path to increasing costs of climate change given a business as usual situation. Therefore, although the Chancellor may not be imposing any additional costs on businesses in the short term, the longer the government fails to promote the low carbon renewable technology cause, the higher the costs of climate change become in the future as its impacts increase.

A likely retort from climate change sceptics is that the academic literature is unclear on the best timing and extent of investment in climate change mitigation and some such as Nordhaus[2] recommend waiting before committing the kind of large scale investments Stern’s review advocates. However, this essentially means waiting until the costs of climate change become large enough to justify the investments in low carbon technologies. The question then becomes are we willing to take that risk given the potentially irreversible consequences of inaction?

George  Osborne’s reluctance to commit to low carbon targets seemingly stems from his desire to keep business on board and his view that there’s a choice between ‘environment’ and the ‘economy’ played out in policy terms through either ‘going green’ or ‘gaining growth’. Therefore perhaps the most convincing argument for the government to implement the CCC’s policy recommendation is the demand from UK businesses for greater government commitment on carbon. In a letter co-ordinated by the Aldersgate Group, over 50 businesses including ASDA, Sky and Anglian Water[3], call for the inclusion of such a decarbonisation target in the Energy Bill. Furthermore, John Cridland Director General of the CBI, has also recently voiced his support for greater government commitment to the green economy recognising the benefits that can be had to business and the economy in the long term[4].

Business leaders, politicians (including Mr Davey, the Lib Dem Energy Secretary) and the public seem to be increasingly excited about the potential for ‘green growth’ and prepared for the short term cost of a transition to a low carbon economy. Given what we know about the need to act swiftly in response to climate change, wouldn’t it be a shame if we were unable to reach our greenhouse gas emissions targets because of a failure on the part of the government, not the market, to recognise the long term benefits of early action on climate change.

[1] Stern, N (2006) The Economics of Climate Change.

[2] Nordhaus, W. (2007) A Review of the Stern Review on the Economics of Climate Change

[4] Cridland, J. (2012) Business needs to look at decarbonising their products and services

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The UK economy stands to lose hundreds of millions of pounds of investment in gas-powered plants and offshore wind farms unless the government can provide guarantees about its future carbon policy plans, a leading article in The Times warned on Monday[1]. Seven ’global electricity and nuclear technology’ firms have written collectively to the Energy Secretary Ed Davey and to the Chancellor George Osborne, voicing their concerns over a lack of commitment to the delivery of climate change targets and a watering down of energy policy targets’.  The letter was one of two letters from ‘UK plc’ yesterday asking George Osborne to commit to these targets, the other coming from the Aldersgate Group – a coalition of companies committed to moving towards a green economy[2].

Their concerns come as yet further disagreements within the coalition emerge, this time over whether to pursue the policy recommendations of the Committee on Climate Change (CCC). The CCC recommends that 50g of CO2 should be generated per kilowatt of electricity compared to the current 400GCO2/kW (a 87.5% reduction), something that the Chancellor views as undesirable because of the higher energy cost burdens it imposes on UK businesses. The Chancellor’s argument runs that the higher costs of low carbon technologies would be passed on by energy firms to ‘UK plc’ thereby stifling economic growth as the potential for expansion in employment and productivity in these firms would be reduced.

The reason the CCC was set up was to try and avoid the 5 year political cycle, yet if the government ignores its advice then surely they become a toothless body subject to the whim of politics and their function becomes less of a comfort to those who worry about these sorts of things.

Unfortunately, as a result of George Osborne’s’ lack of commitment to a low carbon economy, energy firms remain reluctant to commit capital investment in such technologies, being unsure of the comparative advantage that it will deliver in the future. In a future where we are committed to lower carbon energy generation, it is likely that there would be higher taxes on carbon intensive energy generation, so investment in low carbon technologies now is a good idea. However without this commitment to lower CO2 targets, energy firms have no incentive to invest in such technologies and will continue to invest in cheaper higher carbon technologies, lest they risk losing out to their competitors.

So in order for a low carbon renewable technology economy to really take off, the government must commit in the long term to stringent targets for CO2 set out by the CCC. Only then will we see the required investment in low carbon technologies and significant advances in employment levels and productivity in the emerging low carbon or ‘green’ economy. And only then will we begin to have any chance of meeting our climate change targets and avoid the large costs associated with a failure to act (see next post).

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Watching the 10 o’clock new a few nights ago, it struck me that the connection between fossil fuel use and climate change isn’t present in the BBC’s editorial meetings. One of the headlines was the continued threat of strikes by fuel tanker drivers. Their gripes include pay and training/safety, but are also linked to rates of fuel taxation in the UK. As usual, climate change didn’t feature in the coverage.

10 minutes later in the same news bulletin and we have the UK’s current weather patterns: large fluctuations in temperature grab the headline, but they also report the drought over the south of the country. Insightfully this includes implications of climate change predictions for gardeners and farmers. The coverage shows dry crumbling soil on a typical arable farm and moots the potential economic cost.

Climate change deniers will probably point out that fuel taxes won’t solve climate change on their own, and that fluctuations in weather aren’t the same as climate change. Both of those are true. But then cutting taxes will make climate change harder to address, and will slow down the UK economy’s adaptation to global carbon constraints… increasing our risks of future economic problems. Also, having led the world into fossil-fueled industrialization, we should lead on the low-carbon alternative.

On patterns in the climate, the logic of this argument is that we need to see a long term trend, which means that by the time we are sure it is happening it will definitely be too late (is it already?). More to the point is this is what is predicted for the future, so if we are wondering if climate policies are worth it, take a look around. We have an exceptional drought, we have had increased incidence of flooding in the UK, we have had hard winter cold snaps the last few years. All of these are in line with climate change predictions. If it looks like climate change, and smells like climate change …

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The biggest part of our job as environmental economics consultants is to communicate economic evidence to decision makers.

This interview with John Loughton, scientist and ex-chair of Royal Commission for Environmental Pollution is inspirational, as his report ‘Making Space for Nature’ has been.

He has some great insight on how to communicate scientific evidence to decision makers.  He says such communication is more an art than science….but an art that should be based on evidence, not opinion. He does not like people saying ‘in my opinion there is no climate change’…it’s not a matter of opinion, it’s a matter of evidence he says. He also urges everyone not to shy away from ‘awkward facts’.

It really is an inspirational interview and it is available online to listen again on the BBC Website:


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– experiences of fitting household solar energy – Getting FITS III is part of a series of blog posts by Limu on the attempt to install solar power at home with the help of the UK Feed in Tariff.

Despite the UK’s historically low interest rates it doesn’t seem that my mortgage lender is keen to lend out money to existing customers – quoting me exorbitant rates (over 6%). This is the problem that has been highlighted in the media about the availability of bank lending holding back investment. I want to employ local tradesman for a week’s work, and have a good credit rating, but without the lending the economic activity will remain a hope. George Osborne take note.

Given the financial payback from Government for FITS, an interest-only mortgage would seem like a good option. This requires confidence that we’ll have more money in the future, a big assumption requiring good reasons. The main ones for us are that the state is starting to pay for educating and therefore caring for our children. That means we won’t have to, and that having moved house, my wife isn’t in work, but has excellent skills so will be sooner or later.

There are other financial models that would work in this situation. A company could lend me the money in return for receiving the FITS subsidy payments until they had recouped their capital and some interest on it. Another option would be for me to rent the roof space to a third party. Either case would require a contract where I was responsible for keeping the energy generation going, and therefore the FITS payments flowing. But that could just involve allowing access to a maintenance company, so should be possible.

The UK’s ‘strength in financial services’ is much lauded in the press. I often wonder if it isn’t part self-justification for bankers earning super-normal profits. In this case it isn’t providing the solutions to broker a deal that should be profitable on all sides – an example of opportunities in the green economy not being taken.

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