Following the election of a Conservative majority government, there is now a Tory minister, Amber Rudd, in charge of the Department of Energy and Climate Change. In this article, Bob Ward argues that she should would be well advised to ignore the views of Fraser Nelson and the Conservative fringe of free-market fundamentalists and climate change ‘sceptics’.
One of the main differences between the new UK Government and the previous Coalition is that a Conservative, Amber Rudd, is now in charge of the Department of Energy and Climate Change. It is not yet completely clear what this means for energy and climate change policies, but efforts to sway the views of the new energy secretary are in full swing.
The Conservative Party manifesto for the election in May 2015 re-affirmed support for the 2008 Climate Change Act, which, among other things, sets an ambitious target for the UK to cut its annual emissions of greenhouse gases by at least 80 per cent by 2050 compared with 1990.
However, it also pledged to stop support for onshore windfarms, which are unpopular among some Conservative Members of Parliament and their constituents, even though opinion polls show the majority of the UK public are in favour of them. Rudd took the first step towards fulfilling this promise last week by announcing plans to exclude onshore wind from the Renewables Obligation in 2016, one year before the scheme closes altogether.
As onshore wind requires a smaller subsidy per unit of electricity than other sources of renewable energy in the UK, this policy change is likely to make it more expensive to meet our targets for clean electricity and emissions reductions. But figures from the fringe of Rudd’s party have already begun to lobby the Government to further weaken its efforts to tackle climate change.
Fraser Nelson, the editor of The Spectator, added his voice to this campaign through his column in The Daily Telegraph on 19 June. While the magazine has expressed a broad range of views on many issues under Nelson’s editorship, on climate change he has chosen to champion the voices of a tiny ‘sceptic’ minority, including those who deny the scientific evidence that global warming is primarily driven by human activities. His column reflects this by recycling the common refrain of climate change ‘sceptics’ that “global temperatures have not been significantly warming for about 17 years now”, suggesting that this is “encouraging a closer look at climate variability”.
‘Sceptics’ such as Nelson ignore the fact that any sequence of 17 years is usually too short to yield a statistically significant trend in global temperature due to autocorrelation effects. What is true, as the Intergovernmental Panel on Climate Change noted in its recent assessment, is that most global temperature records show that the rate of increase over the past 17 years has been smaller than the long-term trend, but this is likely due to short-term factors that are temporarily masking the underlying warming caused by rising greenhouse gas concentrations in the atmosphere.
Indeed, researchers at the United States National Oceanic and Atmospheric Administration recently concluded that the temporary slowdown may largely be an artefact of the imperfect way data is collected and collated from around the world.
None of this is mentioned in Nelson’s column, nor the fact that 13 of the world’s 14 warmest years on record have all occurred since 2000. And Nelson fails to acknowledge that there is not a reputable scientific organisation in the world which agrees with his suggestion that natural variability might be the main driver of global warming. But most of Nelson’s inaccurate and misleading claims are not about the science, and instead litter his narrative on economics and policy.
He attacks a supposed green subsidy on fuel bills “costing the average household some £150 a year”. But that is wrong. According to official figures from Ofgem, just £50 of an average household dual fuel bill of £1344 provides support to alternative energy through the Renewables Obligation and Feed-in Tariffs, while the Energy Companies Obligation, which promotes energy efficiency, accounts for £40. Hence so-called green levies are only responsible for £90, or 6.7 per cent, of a typical household gas and electricity bill each year.
Needless to say, Nelson is completely silent on the financial support that fossil fuels receive, including through a weak carbon price which means that markets fail to take account of the full costs of greenhouse gas pollution. Nor does he acknowledge the rising costs of climate change impacts in the UK, contributing, for example, to the damage that was inflicted by flooding last year during the wettest winter on record, largely resulting from heavy rainfall that is now 25 per cent more likely due to global warming.
He also cherry-picks a single calm day last winter, pointing out that wind turbines provided only 1 per cent of electricity, as evidence that they are “useless”. But he neglects to mention that onshore and offshore windfarms actually generated more than 9 per cent of the UK’s total electricity in 2014.
A theme throughout Nelson’s column is that the additional cost of pricing fossil fuels correctly and providing support to alternatives is making UK businesses uncompetitive. But rigorous analysis of the evidence fails to reveal any detectable flow of businesses to other countries that have weaker climate policies.
Nelson’s distortion of the facts is not restricted to domestic policy, but also extends to his misleading comments on international policy-making. He suggests that “the United States was condemned by environmentalists for refusing to ratify the Kyoto Treaty, yet ended up lowering its carbon emissions more than any other country”.
That is pure nonsense. The Kyoto Protocol was signed in 1997. By 2013, annual production of greenhouse gases by the United States had declined by 4.2 per cent, but many other countries had achieved much more, including the UK, which cut its emissions by 24.9 per cent.
Nelson then stares into his crystal ball and predicts that “India and China are highly unlikely to sign up to any legally binding target to cut down on emissions”. Yet both countries are expected in the next few months to make pledges to limit emissions as part of the process of negotiating a new international agreement on climate change, to be finalised at the United Nations summit in Paris in December. And President Xi Jinping committed China last November to stopping its emissions from rising by 2030, and probably even earlier.
Overall, Fraser Nelson’s article exposes the weakness of the arguments on offer from the Conservative fringe of free-market fundamentalists and climate change ‘sceptics’ who distort the facts in order to force them into an ideological straitjacket. Amber Rudd would be far better advised to seek the views of those who have more respect for the truth, and who will support the development of evidence-based climate and energy policies.
Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Featured image credit: Policy Exchange CC BY 2.0
Bob Ward is policy and communications director at the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science.
Hi Mark, thanks for your comment. To understand the justification for subsidies and other forms of support for low-carbon energy, it is important to recognise that climate change is the result of multiple market failures. The greenhouse gas externality is the biggest market failure and can be addressed through some form of carbon pricing, whether it is cap and trade, a carbon tax, or fee and dividend. However, there are lots of other market failures holding back low-carbon technologies, such as access to networks, R&D, etc, which is why you need other policies to support them.
Free market fundamentalists are really anti-Government. Those who really support markets are in favour of correcting failures so that they work more effectively.
I would scrap both subsidy, RO, and contracts for difference, CfD, in electricity generation. Replace all such schemes with a single ‘fee and dividend’ on fossil fuels (used to make electricity). The ‘fee’ not to exceed £50/tonne CO2 (but lower in proportion to any carbon tax). I would also deregulate nuclear power to allow immediate competition from South Korean and Chinese suppliers who would undercut the Hinkley C prices by half, or more. This measure would have the greatest effect of all in promoting non-carbon energy.
“Fee and dividend” initially raises the price of fossil fuel by charging a fee on carbon dioxide emitted. This raises the apparent floor price of electricity from such fossil fuel sources allowing non-carbon sources to compete. In this example, such a floor price will never be less than £70/MWh. Because the British carbon tax is about £18/tonne CO2, the actual ‘fee’ will be £32/tonne. All the fees raised are immediately given back to customers (the ‘dividend’), and appear as a rebate on our bills. Ideally, the carbon tax should be abolished and incorporated into the fee and dividend.
If Fraser Nelson has any arguments against climate change they’re most likely proxy arguments. His real argument is in support of free markets. Against subsidy. A better system to account for fossil fuel externalities may have clipped his wings. Subsidies and guaranteed floor prices (CfD) have a long record of encouraging business to chase subsidy, thereby creating an inefficient national economy. Fee and dividend is the best, simplest, least distorting and fairest way to account for externalities. It is trivially easy to implement and, pretty much, impossible to game. It’s a shame climate change campaigners are so wedded to the special interests in supporting renewable energies, and opposing nuclear power. If they’d really wanted the best system for reducing Britain’s carbon emissions they’d picked fee and dividend.