TCS Daily

Climate Policy Needs a Stern Review

By Iain Murray - November 29, 2005 12:00 AM

Tony Blair's admission that any international climate change treaty to follow Kyoto is unlikely to be based on the same model is probably the best news this sterile debate has received in a long time. For too long now the debate over climate change has been about angels dancing on pinheads. Arguments have become futile, with neither climate alarmists nor economic realists willing to budge an inch. We have the debate over the hockey stick, which tells us far more about lax standards of peer review in climatology than it does about climate history (although for that reason it is valuable in itself), while on the other hand we are subjected to a vast propaganda campaign aimed at telling us that science now compels us to take certain specified policy actions now (see, for instance, this Rolling Stone article).

Science, however, can never prescribe a policy choice; it can just lay out policy options. But the more we learn about the climate, the more it is clear that our knowledge is just scratching the surface. The National Research Council, for instance, last year issued a complex but fascinating report that spelled out that we know very little about the various "forcings" on our climate system beyond the effect of greenhouse gases. It also pointed out that the global temperature metric may not be the best signal as to what is going on with the climate. If the scientific discovery process can be likened to a police investigation, then focusing policy attention on greenhouse gases is akin to finding a murder victim in a house with a broken window and picking up a usual suspect whose modus operandi involves breaking windows. Unwise though it may seem to those who are convinced they've got the right man, much more investigation is needed.

Just as it is becoming increasingly clear that mankind cannot fine tune the climate system it is also becoming clear that the Kyoto-style policy solution of reducing greenhouse gas emissions by means of binding targets is just as simple-minded. The vast majority of countries, recognizing the link between energy use and economic growth, have rejected any binding targets on them. Most of the countries that have accepted targets are now looking increasingly unlikely to meet them. The few countries that are likely to meet their targets are mostly Eastern European nations that have done it the old-fashioned way, by economic collapse. The United Kingdom, which had a huge head-start in emissions reduction since the benchmark date of 1990 thanks to Margaret Thatcher's victory over the coal mining unions, has seen itself knocked off course not just to meet its self-imposed target of additional emissions reductions but even its Kyoto obligations themselves.

Faced with this simple reality, economics and finance ministers all over the world are beginning to pay attention to the issue. If the circle of emissions reductions and economic growth cannot be squared, economic growth will win every time, much to the chagrin of the environmentalist lobby. Even Sir David King, the British government's chief scientific adviser and one of the world's leading alarmists, has said, "The message needs to be got across that this isn't at the expense of growing economies. I don't think that any country is going to manage a process where the suspicion is that they will need to reduce their GDP growth." The news that a recent economic study found that simply meeting its modest Kyoto targets would cost the UK 1 percent of GDP is directly relevant here. If an advanced economy with a built-in advantage will have to shrink to meet Kyoto Stage I requirements, what hope is there for the rest of the world? And, of course, as the environmentalist lobbyists often gleefully admit, Kyoto itself is but a baby step on the way to the massive reductions they think necessary.

It is clear, therefore, that new thinking is necessary to solve this seemingly intractable problem. The old nostrums of targets and timetables must give way. Tony Blair has therefore asked Sir Nicholas Stern, head of the Government Economic Service, to conduct a review of the economics of climate change, specifically:


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