NET ZERO
HOW WE STOP CAUSING CLIMATE CHANGE
Dieter Helm

Copyright

William Collins

An imprint of HarperCollinsPublishers

1 London Bridge Street

London SE1 9GF

WilliamCollinsBooks.com

This eBook first published in Great Britain by William Collins in 2020

Copyright © Dieter Helm 2020

Cover illustration © Shutterstock

Dieter Helm asserts the moral right to be identified as the author of this work.

A catalogue record for this book is available from the British Library.

All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, down-loaded, decompiled, reverse engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of HarperCollins.

Source ISBN: 9780008404468

Ebook Edition © September 2020 ISBN: 9780008404475

Version: 2020-11-03

Dedication

To Susie, Oliver, Laura, Amelie and Jake

CONTENTS

Cover

Title Page

Copyright

Dedication

Preface

List of abbreviations

Introduction

PART ONE: 30 WASTED YEARS

Chapter one: No progress

Chapter two: Kyoto and Paris

Chapter three: Going it alone

PART TWO: THE NET ZERO ECONOMY

Chapter four: Living within our environmental means

Chapter five: The price of carbon

Chapter six: Net zero infrastructures

Chapter seven: Natural sequestration, offsetting, and carbon capture and storage

PART THREE: AGRICULTURE, TRANSPORT AND ELECTRICITY

Chapter eight: Agriculture: green, prosperous and low-carbon

Chapter nine: Reinventing transport

Chapter ten: The electric future

Conclusions: A no regrets plan

Endnotes

Bibliography

Index

Acknowledgements

About this Book

About the Author

About the Publisher

PREFACE

I thought I had finished writing about climate change a while ago, with my two books on the subject – The Carbon Crunch: How We’re Getting Climate Change Wrong – And How to Fix It and Burn Out: The Endgame for Fossil Fuels – and ‘The Cost of Energy Review’ (the Helm Review) I undertook for the UK government in 2017.[1]

Back in 2012, in The Carbon Crunch I asked the question: why has so little been achieved? I wanted to puncture the complacency, and especially the peak oil fantasy – that we were going to run out of fossil fuels, and hence the oil price was heading north, making what looked like expensive renewables cheap by comparison. I followed this up in 2017 with Burn Out, pointing out that we have enough oil and gas to fry the planet many times over, and that the exit from fossil fuels will be messy for the great oil-producing countries, and messy for the renewables, as the price of oil and gas falls back. In both books, I stressed that a big part of the answer lay with technical progress and new technologies, and suggested that current renewables technologies would not be enough to solve the problem whatever their initial contributions, and they would not be ‘in the money’ any time soon.

And so it has come to pass. The predictions of the peak-oilers have turned out to be nonsense, the price of oil (and gas) has fallen back and, whatever their advocates claim, renewables are not yet subsidy-free once all the costs have been taken into account.

What I had not anticipated was that no serious progress would yet have been made on the fundamental problem, and that the concentration of carbon in the atmosphere would still just keep on going ever upwards, without so much as a blip, and, if anything, slightly accelerate. Only the Covid-19 coronavirus pandemic has made a difference, and this is likely to be temporary. When set against the enormity of the consequences of climate change, the only rational response is anger.

If this failure to achieve anything much in the last 30 years had been the consequence of not trying, it would be bad but at least understandable. But this is not the case: a huge amount of political capital and money has been spent in the name of mitigating climate change. Many people have been led to believe that current policies are working and that we are making good progress. They are not and we are not.

It is hard to stand on the sidelines and watch the results of badly designed policies and the misleading of people whose goodwill in the face of the wall of costs they will have to pay is essential to making progress.

What really bothers me, and makes me pick up the pen again to write on climate change, is the widely repeated claim made by the UK’s Committee on Climate Change (CCC) in the foreword to its recent report ‘Net Zero: The UK’s Contribution to Stopping Global Warming’:

By reducing emissions produced in the UK to zero, we also end our contribution to rising global temperatures.[2]

This is misleading in that the net zero target the CCC advocates is for territorial emissions in the UK, and unless every other country we trade with gets to net zero by 2050 too, or we stop importing carbon-intensive goods, it is simply not true. The net zero carbon production target takes no account of the carbon we import, and which pervades much of our spending. For a deindustrialised economy with only 20 per cent manufacturing, this is particularly pertinent. To give a simple example, if British Steel had closed down (something which was under active consideration at the time the CCC published its report), UK territorial emissions would have gone down, but the subsequent increased imports of steel from, say, China would mean global warming would go up, and by more than it would have had that steel manufacturing remained here. According to the CCC’s logic, why not close the rest of the British car industry, and INEOS’s Grangemouth petrochemical plant too?

Buried later in the CCC report (page 106) is a chart showing the real villain of the piece, carbon consumption, stated as some 70 per cent higher than carbon production (albeit both badly measured and incomplete). If the UK wants to make no further unilateral contribution to global warming, which as I shall argue it should, then it is the altogether harder net zero carbon consumption that matters, and not just the easier bit of net zero carbon production.

It is also misleading because net zero does not actually mean ‘reducing emissions to zero in the UK’. It is not gross zero but net zero. Net zero means that natural and industrial sequestration must be equal to or greater than the remaining carbon emissions in 2050, of which there are still likely to be quite a lot under even the most optimistic scenarios.

The public are being misled, and the CCC’s formulation has the neat consequence that it makes the climate change problem look like it is all about production (and therefore all about what business does), and not about our personal spending. Having set up this illusion, the CCC effectively admits this later on, suggesting that we will have to eat less meat, change the land cover by planting lots of trees, and alter our lifestyles quite a lot. Here it is on stronger ground, although, as we shall see, not by any means strong enough.

It is not just misleading the public that angers me. It is also that a lot of time has been wasted. Thirty years on from the UN’s drive to address climate change, we are still going backwards at an alarming rate. Up to the start of 2020, the concentration of carbon in the atmosphere carried on going up relentlessly at around 2 parts per million (ppm) every year. The only thing that has worked and lowered carbon consumption is the Covid-19 lockdowns, sharply reducing GDP and emissions.

Anger is not enough, and neither is despair at what has so far failed to happen. We can do much better. There needs to be a plan. This is my attempt to bring together my earlier arguments and analyses, to set out a better way of thinking through the carbon problem, and to lay out what a carbon policy would look like if we really wanted to limit global temperatures. It is what I think we should do.

This is about you and me, and about particular countries like the UK. The global UN-led process has failed. Kyoto and now Paris have not made any real difference, and indeed to the extent that political leaders who signed their countries up to Paris tell their voters and citizens that they are therefore taking action, their pledges can become fig leaves for business as usual. They (and us) can be seduced into thinking that it is ‘job done’. Wishing the end entails willing the means.

I am not against more jaw-jaw at the jamborees that the annual Conference of the Parties (COP) have become. But I am against placing much faith in them producing results quickly enough to head off what is likely to happen, or even any meaningful results at all. What focusing on carbon consumption rather than just production does is put the spotlight on the polluters – you and me – and get the polluters to do something about their polluting ways. You and I can make a difference if we change our carbon-consuming habits, and this will make a difference if countries take up this obligation on a carbon-consumption basis. Better still, it turns out that if those countries exporting carbon-intensive products face a carbon border tax on a level playing field with home producers, this encourages them to introduce their own carbon price and keep the money rather than pay it to our government. I will explain how all this works to get much more effective global action than Kyoto and Paris.

We are not impotent, even in the face of something so large-scale and daunting as climate change. Not only can we make a difference to emissions – we can and should reduce our carbon consumption to net zero – some of these changes can also make our lives better. It is pretty obvious that improving air quality by lowering emissions in cities is good for us. It should be good too in Beijing, Delhi and Lagos. But it gets better once the natural carbon sequestration is brought into the frame. Climate change is not just about what we put into the atmosphere, but what nature takes out.

This is the link to my other and more recent writings on natural capital and the use of the land in Natural Capital: Valuing the Planet and Green and Prosperous Land: A Blueprint for Rescuing the British Countryside.[3] I have been working away at how to ensure that the UK government’s overall objective of leaving the natural environment in a better state for the next generation might be achieved in the 25 Year Environment Plan and the supporting legislation.[4] What I have subsequently realised is that how we use the land is a very big part of how we crack climate change, and that it is a key part of net zero. Instead of focusing exclusively on carbon emissions, we also need to take seriously the other side of the equation: the natural sequestration by the land, by the trees, soils and peats, of those emissions. Nature, if protected and enhanced, does this for free all the time, and in the process produces all sorts of other benefits for us too.

In Green and Prosperous Land, I set out the key principles that should motivate action on the natural environment. These are: the polluter-pays principle; the provision of public goods; and the net environmental gain compensation principle. It is these same principles that should motivate decarbonisation. The polluters – you and me – should pay, and that needs a carbon price to incorporate the costs of our pollution, and this should be applied to imported carbon too (and hence trade). The public goods must be provided by the State, even if private companies do the work. These include the crucial low-carbon infrastructures, and research and development (R&D). None of these will be adequately provided by the market on its own. After all the mitigation options have been exhausted, the residual carbon emissions should be offset, and most of this should be natural rather than the industrial carbon capture and storage (CCS) option (although this too has a role).

The neat feature of this merging of the themes of Green and Prosperous Land and my earlier Carbon Crunch and Burn Out is that the environment gets treated holistically. Not doing so creates a very real danger that the silo approach to carbon policies, to the exclusion of everything else, could cause lots of collateral environmental damage. Think what would happen if the Forestry Commission had in the past been let loose with the objective of maximising carbon take-up. The result would have been lots of spruce and even eucalyptus trees, damaging biodiversity, destroying peat bogs and acidifying water courses. It would have been a disaster on an altogether greater scale than the great green conifer blots on the uplands landscapes that the Forestry Commission created in its first 100 years. A proper plan for decarbonisation should be a plan for the environment as a whole – for water, biodiversity, health and well-being, all within a net zero carbon consumption context.

Significant bits of this plan are no regrets: we should do them anyway irrespective of carbon. This includes the R&D and the infrastructures: R&D has lots of unanticipated benefits, and there are lots of new technological advances that will be essential to cracking the carbon problem. I will detail some of these possibilities as the book progresses. Our infrastructures are in such poor shape that no one would relocate to the UK to access them. They have to be replaced anyway, regardless of net zero. The same is true of much of Europe, the US, India and Africa. There should be net environmental gain, not least because of the great mental and physical health benefits, which are now rigorously documented in the scientific literature, and much else besides.

Whether any democracy would vote for all the policies I suggest remains to be seen. The reason for hesitation is that the real message that a focus on carbon consumption brings home is that the root cause of climate change is one that is uncomfortable: our unsustainable carbon lifestyles. If you and I pay for that pollution, and preferably through a carbon price, then our standard of living will be impacted. It is going to cost a lot, and the challenge is to get on a sustainable consumption path, and hence pursue sustainable economic growth, not gross domestic product (GDP). We will have to rebase our lifestyles. It is going to hurt in the short term in order to have the long-term benefits. For if we do not get back onto a sustainable path, the corollary is that our economies will not be sustained. It will happen, it is just whether it happens ex ante by our deliberate choice, or ex post when nature bites back. That is the democratic choice. Failure to act does not abolish the consequences of not acting. They cannot be escaped.

Climate change can be cracked, but not if we carry on deluding ourselves, and our political leaders carry on colluding in maintaining carbon illusions. What is needed is to shine a light on what is going on, and to set out how to address the problem. Whether it will be enough, faced with the enormous challenge of China, India and Africa doubling their GDP every ten years, and hence each being four times bigger by 2040, remains to be seen. It is our moral duty to try, and to do the no regrets stuff first, and it is our leaders’ duty to tell the truth. That is what I try to do here.

LIST OF ABBREVIATIONS

AI, artificial intelligence

BSE, bovine spongiform encephalopathy

CAP, Common Agricultural Policy

CBA, cost–benefit analysis

CCC, Committee on Climate Change

CCS, carbon capture and storage

CEGB, Central Electricity Generating Board

CfD, Contract for Difference

COP, Conference of the Parties

CRISPR, clustered regularly interspaced short palindromic repeats

DECC, Department of Energy and Climate Change

Defra, Department for Environment, Food and Rural Affairs

DDT, Dichlorodiphenyltrichloroethane

DETR, Department of the Environment, Transport and the Regions

DNO, distribution network operator

EFP, equivalent firm power

EMR, Electricity Market Reform

EU ETS, EU Emissions Trading System

GDP, gross domestic product

GMO, genetically modified organism

GW, gigawatt

HS₂, a planned high-speed rail project for England

ICT, information and communications technology

IEA, International Energy Agency

IEM, Internal Energy Market

IP, intellectual property

IPCC, Intergovernmental Panel on Climate Change

LED, light-emitting diode

LNG, liquefied natural gas

mbd, million barrels per day

MPC, Monetary Policy Committee

NDC, nationally determined contribution

NFU, National Farmers’ Union

OPEC, Organization of the Petroleum Exporting Countries

ppm, parts per million

PV, photovoltaics

R&D, research and development

RAB, regulated asset base

SUV, sport utility vehicle

TWh, terawatt-hour

UNFCCC, United Nations Framework Convention on Climate Change

USO, universal service obligation

VAT, value-added tax

WTO, World Trade Organization

INTRODUCTION

It is not going well. Thirty years ago, world leaders vowed to address the new great challenge – global warming. Thirty years later, the concentration of CO₂ in the atmosphere continues to grow unabated. Over three decades, it went up from around 355 ppm to well over 400 ppm, rising by around 2 ppm per annum. In 2018, it went up by 2.7 ppm. Not even a blip for the global financial crisis dents the relentless upward path. Only the Covid-19 lockdowns and associated temporary collapse of global GDP have checked its path. Global temperatures have already increased by nearly 1°C since the Industrial Revolution.

The world burns ever more fossil fuels. The last 30 years have been the golden age of the fossil fuels. Far more fossil fuels have been burnt in the past 30 years than in the entire nineteenth century. We have benefited from the cheap energy to fuel our cars, heat and power our homes and our digital equipment, and produce all the many things we are now convinced we need, from clothes, houses and flat-screen TVs, to fast food wrapped in plastics. Fossil fuels have transformed our lives and are a key reason why we have such a high standard of living, and why China and other emerging economies have been able to take so many people out of poverty. Everyone else wants what the first carbon economies have got. If you think we are kicking the fossil fuel habit, think again. We are doubling down instead.

If the objective set in 1990 was to reduce emissions and limit global warming, it has been an utter failure. We are not and have never been on a path to a decarbonised future. Sufficient carbon-based capacity is already installed in the world’s energy systems to bust the 2°C target.[1] The numbers for China alone are staggering: it has now exceeded 1,000 gigawatts (GW) of coal-fired electricity generation capacity (for a rough comparison, the total capacity for all types of generation on the British system is around 85 GW). Furthermore, China is building another 150 GW at home (equal to Europe’s total coal capacity, and not far short of that of the US) and promoting and financing hundreds of coal projects abroad. Those misguided enough to see China as leading the way to a greener energy future just need to look at these facts.

It is not just the emissions but the other side of the carbon balance too. While pumping out ever more carbon, we have simultaneously been reducing the ability of the natural environment to absorb it. The capacity of nature to mop it up by natural sequestration through absorption of carbon by trees, soils and peat has been decimated over the last 30 years. Brazil is accelerating the destruction of the Amazon rainforest (this major carbon sink is now being destroyed at the rate of 1 hectare per minute); the Mekong rainforest in Southeast Asia is threatened by huge Chinese dams upriver; and the future of Africa’s largest rainforest and thus carbon sink in the Congo looks grim. Summer fires rage in the peat bogs of Siberia – another immensely important carbon sink. Malaysia and Indonesia keep clearing their rainforests for palm oil. Intensive agriculture has released the carbon from the soil (and decimated its biodiversity), and depleted the peat bogs – degrading these great carbon sinks. Oceans are being acidified, thus decreasing their ability to absorb carbon.

Why is it going so badly? Weren’t the Kyoto Protocol and the Paris Agreement supposed to deal with this? Why has it all been such an utter failure?

The usual answers are all about the failures of world leaders and corporations. It is all Trump’s fault. It is down to the Chinese Communist Party’s addiction to coal. It is those evil oil and gas companies and the coal mining corporations. With one more big heave, encouraged by global demonstrations, increasingly demanding targets will be pledged by the main polluters and the global fossil fuel industry will be pushed towards oblivion as investors flee from their stranded assets. We can sail off into a new prosperity of a low-carbon transition, towards a net zero world. If we all declare a ‘climate emergency’ and sign up to net zero, all will be well, or at least a lot less bad.

To see why this is not going to crack climate change, the key thing to realise is that this is looking down the wrong end of the telescope. It looks at net zero emissions and production on a territorial basis and sees the solution to climate change as switching that production from high to low carbon in specific territories that adopt a net zero target. Get the producers to change their ways, and all will be well. Just get politicians to force them to do so.

While of course production has to decarbonise, there is much more to the climate change problem – and net zero – than this simplistic approach indicates. The right place to start is with consumption and us the consumers, and only then should we look to the producers. We have to remember that all this stuff that is made with fossil fuels, and thus causes carbon emissions, is made for us. When we temporarily stopped consuming so much during the Covid-19 lockdowns, such as shopping, eating out and travel, down went emissions.

In order to get a handle on the consumption side and our role in causing climate change, we need to take a close look at our own carbon consumption and understand not only how much climate change each of us is causing, but also what we can do about it. By understanding our personal carbon consumption, we can then work out how we can minimise our own impact, and what that means for our local community and therefore the collective responsibility for climate change. Net zero for us, for local government, and for the UK as a whole requires net zero carbon consumption – and net zero carbon consumption requires attacking both the production and consumption sides.

Some areas of carbon consumption are pretty obvious, and figures have already been calculated for us. Take our cars, or our travel by planes. It is not hard to work out the staggering emissions from an aircraft flying, for example, from London to New York. This might amount to a little less than a tonne per passenger, compared with the average per capita emissions of carbon production in the UK of around 10 tonnes per annum (average carbon consumption is likely to be much higher). Similarly, the emissions from different types of cars are documented. There are apps you can consult. To end your contribution to climate change you would need to stop flying (at least until there are very low-emissions aircraft, sadly a long way off), and switch to electric cars and public transport, although even here some carbon emissions will remain. The electric car is very much more carbon-intensive to build than a conventional petrol or diesel one; the electricity is not – and probably never will be – completely carbon-free, and nor will the trains, buses and other forms of public transport. To be truly carbon-neutral, you will need to work out how to offset what you cannot mitigate. That will be expensive for you.

Yet this is just the tip of the carbon consumption iceberg. To get a much more complete picture of your carbon consumption, and hence what consumption for all of us will need to look like in a truly net zero world, let me suggest an exercise for you. Try writing down (perhaps with the help of one of the websites or apps) a carbon diary, your very own carbon diary. The idea is simple, even if the detail is complicated. This will give you your best guess at the carbon embedded in everything you do in your typical day, from the moment you wake up to getting back into bed. Think how your day starts. Go to the toilet, and the toilet paper is energy-intensive to produce. Check your emails and download a newspaper, and the energy-intensive servers kick in. Breakfast comes in packaging and contains lots of fertiliser-based foods. Pesticides are probably involved too. Then there is the milk and the cows and the methane, and that palm oil mentioned above. Fry some bacon and eggs or eat a croissant, and think just how much carbon might be involved. You will be wearing carbon-intensive footwear and clothing, much of it washed in a machine using carbon-intensive detergents and energy. All of this before you travel to work, go for lunch, and have a night out on the town. Your lifestyle – and everyone else’s – is riddled with carbon. Put another way, our standard of living is utterly dependent on carbon, and it is this lifestyle as reflected in your diary which the developing world aspires to, and the extra 2 to 3 billion people coming along this century will want too.

The point of this is not to make you feel guilty, although you may well end up being very guilty. It is rather to reveal what the world will have to look like if we are to decarbonise. It is what would have to change on the consumption side, and it is way beyond replacing coal and gas power stations with wind turbines, solar panels and nuclear power stations, important as these steps are.

Try to imagine what your carbon diary would look like in 2050, supposing for a moment that net zero is achieved. Almost all of the carbon listed in your current diary would have to go, and anything left would have to be offset by measures to sequestrate it. By comparing the two, it is possible to recognise just how radical net zero is going to be. This is no walk in the park.

What your carbon diary will also tell you is that a lot of your consumption comes from overseas. It is not just home carbon emissions that matter. These carbon imports are the result of energy- and carbon-intensive production abroad. All that stuff ‘Made in China’ is for you – your mobile phone, laptop, flat-screen TV, household appliances, clothes and trainers. This stuff is all part of your carbon footprint. Other stuff, like palm oil and beef, might come from countries that are clearing their rain-forests to produce it, and hence the loss of the carbon sinks, the carbon leaking from the soils and the loss of biodiversity are all for you too. Many of the products in the supermarket contain palm oil, often under different names. The data servers are usually overseas.

Our kitchens and bathrooms are awash with chemicals; our clothes made from synthetic fibres; our food comes from fertiliser- and other chemically assisted agriculture; our houses are made with steel and cement; and an increasing number of gardens are covered with artificial turf. The list goes on. Even if you buy ‘renewable’ electricity, it has lots of embedded carbon in the turbines and the solar panels, and needs fossil fuels to back it up. Invest in an electric car, with an electric battery, and your carbon footprint will still remain a big one. Think of the cobalt in the battery, the materials in the car frame, bodywork and interior, and of course the tyres and brakes. An electric car takes twice as much carbon to produce than a conventional one.

My point is that this highlights just how unsustainable our lifestyles have become.[2] We are becoming addicted to a way of living in which flying is regarded as essential by many, and an aspiration for most. Even Greta Thunberg, in her noble efforts to get world leaders to take climate change seriously, had a support team flying backwards and forwards to the 2019 UN summit on climate change as she sailed in a ‘zero carbon’ yacht. They had, it was claimed, no option. Very few of us could afford the costs of Greta’s yacht. She demonstrated that it could be done without many emissions, but not in a way the rest of us could emulate. Others could simply have chosen not to travel. The actor Emma Thompson flew 5,400 miles (emitting around 1.6 tonnes of carbon) from and back to California to be in the Extinction Rebellion protest boat in London’s Oxford Circus, and Prince Harry used a private jet for his holidays, having preached the environmental message on climate change a few weeks earlier. What is wrong with fibre and video links? Wouldn’t that have been a much better example to all of us? This is something that the Covid-19 pandemic has taught us – it can be done without all the travel.

Now you see where consumption comes in. Our demand leads to production and supply. Without us consuming all these carbon-intensive goods and services, they would have no market. And once the focus shifts to consumption, a wider truth is revealed.

Climate change is pretty simple as a conceptual problem: it is about a small number of gases, and it does not matter where they are emitted. It is also about the ability of the environment to naturally sequestrate them – the ‘net’ bit in net zero is the carbon that we will keep emitting after we have done all the mitigation we can and hence must put back into trees and plants and soils and into the ground. What we need is to stop the emissions, wherever they are occurring, and to encourage natural sequestration to mop up as much as it can.

Now the radical implication. It is not enough to clean up our own backyard. This does not stop us contributing to global warming. It is a fantasy, propagated by politicians, the CCC and some activists, that if we could only get to net zero for our own territorial emissions – for our carbon production – that would mean that we would have crossed the Rubicon and no longer be causing any further global warming. It is an extremely dangerous delusion.

Worse still, net zero only at home could actually increase global warming. This is arguably what has happened under Kyoto, which resulted in the Europeans obsessing about their own carbon production and theirs alone. Think how you would quickly get carbon emissions down in the UK or indeed the whole of Europe. The best place to start is closing down energy-intensive businesses that produce the most carbon. Close down the remaining steel, aluminium, petrochemicals and fertiliser factories. Stop making cement. Do all this and territorial emissions will fall. Drive up energy prices to make sure these businesses face a serious competitive disadvantage.

That is what has been going on since 1990. There are virtually no large energy-intensive investments in Europe at all now. For the existing factories, shifting car production abroad, moving petrochemical businesses to the US and closing down the remaining bits of the steel industry will all help to push territorial emissions down further. Making sure that the servers for the digital world are all overseas helps too.

As long as we keep consuming all this stuff, global emissions will almost certainly go up as a result of importing from abroad rather than producing at home. It makes climate change worse. Think of all that coal burnt in China; think of the heavily polluting shipping to get this stuff to our home ports.

Once carbon consumption is taken seriously, all sorts of other unsettling results follow. Take the great carbon villain of the piece, the US and especially Trump. The simple mantra that the Europeans are the good guys and the US the bad guys is not quite as black-and-white as it seems. The US has a thriving, energy-intensive manufacturing base. As cheap shale gas has come on-stream, it is not only switching from coal to gas, but it is also reshoring lots of energy-intensive businesses from China and elsewhere, and attracting European investments too. It is swapping energy-intensive imports, based largely on coal, for domestic production based on gas. It is sobering to reflect that the US could even have a better record than Europe on carbon consumption, and without any of the European policies and their costs. Higher European energy costs to pay for the renewables may actually have contributed to the European companies switching their investments to the US.

Looked at this way, the European and UK approaches, and all the excitement about net zero carbon production targets, are a lot less convincing as a solution to global warming. A genuine net zero policy on a unilateral basis makes sense only if it is net zero carbon consumption, and hence applies the carbon policies and prices to imports as well as to home production. But this means higher bills, and a correspondingly lower standard of living. All that imported stuff in your carbon diary would be more expensive.

Looking through the carbon consumption lens helps to explain why so little has been achieved since 1990 (and why the Covid-19 lockdowns had such a big impact). Emissions know no boundaries, and the problem can be cracked only if everyone does their bit. The search for a global treaty is a noble effort to solve the classic collective action problem, but so far it has produced nothing by way of actual reductions in emissions.

Only the Europeans have been in the serious business of Kyoto and the efforts of the last 30 wasted years. They tried to set an example by starting to decarbonise their domestic production. By ignoring carbon consumption, the efforts have been largely in vain. If this poor outcome had been achieved at low cost, if it had created new global European renewables giants, and if it had avoided causing collateral economic damage, this might not matter too much.

Europe failed on all three counts. All the world’s great renewables companies are outside Europe. Many of those wind turbines in the North Sea and those solar panels harvesting the sunshine in Germany have come from China. China had a massive export market created for it and paid for by the European consumers and producers, and as these extra European energy costs drove down European industrial competitiveness, China’s export market to Europe for energy-intensive goods grew.

You might think that, notwithstanding this failure to date, it is only a matter of time before these shiny new renewables are going to come to the rescue and solve our climate change problems. Aren’t renewables already grid-competitive against the fossil fuels, so won’t everyone, including the Chinese and the Americans, be switching from fossil fuels anyway to remain cost-competitive against the Europeans?

Sadly, none of this is true. Current renewables, once all the costs have been properly taken into account, are not cost-competitive with the fossil fuels (and prices). Nor is nuclear. Worse, they are not going to be anytime soon. As fast as renewables costs are falling, so too are fossil fuel costs (and prices), and although there is great and welcome progress in getting the costs of renewables down, they will require subsidies for some time to come. If you believed the lobbying, and believed that renewables are already grid-competitive, then you would be witnessing demonstrations outside parliament demanding an end to renewables subsidies. Sadly, the cheap renewables cavalry is not about to turn up. Getting out of fossil fuels is going to be a lot harder and needs more subsidies, not fewer. There is no free lunch here.

The carbon consumption lens not only tells us why the efforts so far have been such an utter failure, but what needs to be done if we really want to tackle climate change, and have a stab at holding to 2°C warming. Consumption starts with us, at home. Instead of relying on the regular cycle of the annual UN COP, on Paris and its successors, we can start from the bottom up. We don’t have to wait: we can unilaterally decide that we want to at least ensure that we no longer cause further climate change.

This means adopting a net zero carbon consumption target. Thinking back to your carbon diary, you will immediately realise that this is altogether more radical. It must include eliminating not only the carbon in the stuff made at home, but for imports too. That will hit your standard of living much harder, but it is what is necessary to get onto a sustainable economic growth path, underpinned by sustainable consumption. We are living beyond our climate means, and we have to reduce our carbon-based consumption, and only then can the contribution of ideas and new technologies put us on a stable growth path.

How do we do this? How do we design a sustainable economy? There are three key principles: the polluter pays; the provision of public goods; and net environmental gain. They are all good 101 economics and a sustainable economy needs to implement all three of them.

Of these, the polluter-pays principle is the most important. Carbon and other greenhouse gas emissions are all examples of pollution costs that should be incorporated into the economy, not ignored. Pollution has to be costed and these costs have to be integrated into every decision made by businesses and consumers. Making polluters pay is just good economics. To leave these costs out is inefficient.

Now another radical implication. If pollution costs are built into the economy, then the prices of all the carbon-intensive stuff in your carbon diary are going to go up, and some by quite a lot. That is why you will be worse off. You and I, the ultimate polluters, will have to pay the price of our carbon-intensive lifestyles. Less-carbon-intensive goods and services will now be relatively cheap and, over time, as we strive to get to a net zero personal carbon budget, we will do a lot of switching.

Reflecting this carbon cost in the prices means there must be a carbon price at the border for imports, as well as for domestically produced stuff. Put simply, there is no point in pricing pollution at home, only to ignore it for imports. That is how we got to the mess we are in, and encouraged offshoring the carbon pollution and closing down energy-intensive businesses in the UK and Europe. The only way to unilaterally tackle climate change, bottom up, is to have a carbon price that applies to all the various sorts of consumption. There has to be a carbon border tax.

The second principle is the provision of public goods. When it comes to climate change there needs to be low-carbon infrastructures that are fit for purpose. Climate change won’t be addressed unless the transport, energy and fibre networks are designed for the sustainable low-carbon economy. This means full fibre and quickly to serve the emerging digital and electric economy. It means road and rail systems that embed smart charging and regional travel, and less aviation. It means decentralised smart energy networks and systems that incorporate storage and an active demand side.

Ironically, the good news is that the UK and many developed economies have infrastructures that are in very poor shape and need a major upgrade anyway. These new infrastructures will need to cope with the new technologies to make the transition to the low-carbon economy because the existing ones are not going to be able to do the job on their own.

Current wind turbines, current solar panels and current nuclear power stations are not enough. The first two are low-density, disaggregated generators, and the latter, in their current form, are expensive and hard to build. New technologies do not arise spontaneously. The good news is that R&D is comparatively cheap when compared with the rewards. A lot more of this vital public good is needed too.

The third principle, net environmental gain, is all about compensating for the damage caused by our consumption, and in particular dealing with the hard to avoid and hard to mitigate emissions. Net zero does not mean no emissions. It requires the residual carbon to be offset. Here is where carbon sequestration comes in. Some of this will be carbon capture and storage (CCS), but the real opportunity here is for natural carbon sequestration, the stuff nature does for us for free all the time.

These three principles, which underpin a sustainable economy and sustainable economic growth, have to be comprehensively applied. There needs to be a common carbon price across the whole economy and for imports; the infrastructures need to be economy-wide; and compensating for environmental damage should be required where and whenever damage is done.

Their application will have the biggest climate impacts on the three main polluting sectors – agriculture, transport and electricity. There is good news here too. There are practical measures that can and should be taken now on the path to net zero carbon consumption. Agriculture should be sequestrating carbon, not emitting it. Carbon in the soils is good for productivity and good for biodiversity. Soils, which hold four times the carbon of the atmosphere, should be husbanded, not depleted. Trees not only mop up carbon, but provide multiple other benefits, from biodiversity, water quality and flood prevention, to mental and physical health benefits. Peat bogs are fantastically valuable carbon stores, and restoration makes them even better.

A transport revolution is in the making. The internal combustion engine has to go. Electric cars are coming, and in due course they may be autonomous. Smart charging is also coming. Long-distance railways have the chance to displace aviation, at least regionally. Hydrogen via electrolysis offers the opportunity to do something about the gross pollution of shipping. All of these will improve our air quality too.

Transport and agriculture will be increasingly underpinned by electricity (even the hydrogen will be made from it). The future is electric, because the future is digital and everything digital is electric. The future is also electric because it is hard to envisage any other energy vector to get us to net zero. The good news is that, of all these sectors, electricity is probably the easiest to decarbonise. It will need new technologies, but right now just getting out of coal would be the single most important step towards decarbonising our world. Coal is really evil stuff, and the benefits of getting out of it globally go way beyond climate change. New solar technologies are coming, greatly increasing the efficiency with which we can capture the infinite supply of solar energy. There is no shortage of energy. Energy demand per se is not the problem. It is carbon-based electricity generation, carbon-based transport and carbon-based agriculture that are the problems.

Close in on carbon consumption and make us, the polluters, pay. Reorient our climate strategies and policies to the bottom up, and not the top-down world of Kyoto and Paris and the great jamborees that climate conferences have become. Jaw-jaw, yes, but don’t expect it to crack the problem. Price pollution. Apply a carbon price to imports, both domestically and at the border. Invest in the twenty-first-century infrastructures to facilitate a low-carbon economy, and invest too in R&D to bring on the new technologies we are going to need.

Stop pretending and recognise the brutal facts about what has been going on for the last 30 years and why it has been such an abject failure. It is realism, not spin and fake optimism about progress and costs, that we need. Only then can we get going on what will work. Focus on the natural environment and especially on natural sequestration. Bring the trees, the soils, the peat and the marine world into the carbon play. Agriculture should be centre-stage, not an add-on held at bay by farmers lobbying for subsidies.

Do all these things and we can have a better natural environment, lead healthier lives, empower ourselves to do something, and make sure we really do leave better natural capital for the next generation. This is what sustainable economic growth is all about: it can be a green and prosperous land, but not if we go on as we are.

You may conclude that this is all unrealistic, that it is never going to happen, because we will not vote for politicians and political parties who can make it happen. You may be right, but then you would have to resign yourself to the conclusion that would follow – that climate change is not going to be addressed. What is set out here is what would have to happen to crack the problem. It calls for a different economic model, and a fundamental rethink of our consumption, of our environmental footprint. This book sets out how to do it – a plan that could and would actually work. Do this, and a country can be sure not only that it makes no further contribution to global warming, but also that it has embraced sustainable economic growth and has not harmed other aspects of the environment in the process. It would then be an exemplar for the world.

Sticking our heads in the sand, as we have been for the last 30 years, will not make climate change go away. Tackling it will seriously impact on our standard of living. We may think we have a choice, but we don’t if we care about future generations.

PART ONE

1
NO PROGRESS

Thirty years ago, Prime Minister Margaret Thatcher gave a speech to the UN which summarised the science as it was then understood and highlighted the need for global action to address the great ‘new’ climate change problem.[1] This speech is about as green as it gets for a politician. Although a great deal of subsequent research has refined that science and our understanding of the immense and subtle complexity of our climate, the main planks of the analysis were already in place back then, and they have remained remarkably robust ever since. The greenhouse effect is a bit of nineteenth-century science. The increase in greenhouse gases was already documented, and the step from increases in emissions to high temperatures was a simple and obvious one to make. By 1990, nobody could reasonably claim that they did not understand what climate change was and why it mattered. The failure to act has flown in the face of the knowledge of what that failure will mean for future generations.

The UN decided that immediate action needed to be taken on the reasonable grounds that there was enough evidence to act, and delay was only going to make things worse. There followed the ground-breaking UN Framework Convention on Climate Change(UNFCCC),[2] signed in 1992, committing the signatories to action and drawing on the reports of the already established Intergovernmental Panel on Climate Change (IPCC). This in turn led to the Kyoto Protocol of 1997 and the Paris Agreement in 2015, with targets indexed back to the baseline of 1990.[3]

Apart from nuclear arms treaties, there has probably never been anything like the UNFCCC in human history. Hopes were high. The fact that the Soviet Union had imploded added to the sense that there was a new world order, capable of tackling this new and huge problem. The politicians declared a new dawn and promised to act. They have been promising ever since.

What was entirely absent from these groundbreaking global commitments was any sense of what was actually about to happen. The sobering truth is that, since 1990, the world has witnessed the golden age not of renewables but of fossil fuels, the environmental disaster that has accompanied (and been significantly caused by) China’s rapid economic expansion on a scale never previously seen in economic history, and a relentless increase in the carbon concentrations in the atmosphere. It is very hard to detect any positive benefits which have followed the adoption of the UNFCCC, and, as we shall see, some of the subsequent UN-driven institutional architecture, such as Kyoto and Paris, may actually have made things worse.

What has happened since 1990?

The first and most important fact, which cannot be repeated often enough, is that global emissions are still going up (but for the Covid-19 temporary lockdowns) as they have been since 1990. The result is that the concentration of CO₂ in the atmosphere is now well past 400 ppm, having increased from around 355 ppm in 1990, and from about 275 ppm before the Industrial Revolution.[4] This is evident in the charts below, which should be deployed on the wall of every politician’s office.

The key thing to note about the first chart (Figure 1) is that not only are emissions still going up, but it is roughly a linear trend, and there are no blips in this trend. The great negative economic shock, the global financial crisis in 2007/08, does not even register. (The effects of the Covid-19 outbreak are yet to be fully understood.) The 50 ppm increase in CO₂ since 1990 is around 60 per cent of the 75 ppm total increase since the Industrial Revolution (see Figure 2). The difference between the pre- and post-Industrial Revolution emissions is clear in the second chart. Just how ‘special’ the last 30 years have been can be seen by looking at the longer-term growth in CO₂ in the atmosphere, as illustrated in Figure 3.

Figure 1 Global CO₂ atmospheric concentration: global annual mean concentration of CO₂ (ppm)[5]

There are three main reasons why emissions are still going up: burning ever more fossil fuels; the irrelevance of renewables so far; and the destruction of the natural environment’s ability to sequestrate carbon.

Figure 2 Global CO₂ atmospheric concentration: global average long-term concentration of CO₂ (ppm)[6]

The golden age of the fossil fuels

The last 30 years have provided for a perfect fossil fuel combination: burgeoning demand, notably from China; the coming of gas and new technologies (notably shale); and the absence of any effective climate change policies. It could not have been much better from the perspective of the fossil fuel industries; from the climate perspective it could hardly have been worse.

The demand for each of the fossil fuels depends on its final market – and that is ultimately you and me. As illustrated in Figure 4, up until 1990 it was all about oil and coal. Gas was illegal to burn in power stations in the US and Europe until 1990, so it is very much a post-1990 fuel.

Figure 3 CO₂ during ice ages and warm periods for the past 800,000 years[7]

Figure 4 Global primary energy consumption,[8] measured in terawatt-hours (TWh) per year. Here ‘other renewables’ are renewable technologies not including solar, wind, hydropower and traditional biofuels.

Oil is used for transport and petrochemicals. For all the talk of electric vehicles, almost all of the world’s cars and trucks still use internal combustion engines, and, of these, diesel vehicles have seen the fastest growth. The growth of China has boosted the demand for cars, boosted world trade, and with it the shipping that has been using the dirtiest and cheapest oil, resulting in considerable sulphur and carbon pollution. Aviation has boomed too.

To put all this in perspective, since 1990 the world has added 100 million vehicles to the existing fleet of 1.2 billion, of which 30 million were produced in China.[9] The number of aircraft has doubled roughly every 15 years from around 5,000 in 1990 to 26,000. The volume of seaborne trade has risen from 4 billion tonnes in 1990 to over 10 billion tonnes now and accounts for 90 per cent of trade. Much of this huge growth has been container shipping, with an increase from 234 million tonnes in 1990 to 1,834 million tonnes in 2017.[10] This great transport growth has served to provide you and me with more car journeys, more deliveries to supermarkets and our homes, more flights for all those holidays, and all the goods that we buy that are packed into containers. We learned to appreciate just how much during the Covid-19 crisis. Almost all of this transport growth has been facilitated by oil.

Oil’s other main use is in petrochemicals. This shows up in the plastics and a host of other products we have come to rely on. Plastics have been in the news because they have become ubiquitous pollutants of our oceans and shores. They litter our streets and landscapes. Microplastics are everywhere – in your house, in your food, in your water – and they pollute every river, lake, seashore, and all the oceans, and can even be found in deep ocean trenches. You might naively believe you can go ‘plastic-free’, but that would simply reflect an ignorance of just how far our lives have become plastic-dependent. They are even inside you.

Petrochemical demand has grown strongly, especially in China. Petrochemicals are the main driver for the projected increase in oil demand of around 10 million barrels per day (mbd) through to 2030, overtaking transport.[11] None of this is compatible with the 2°C target. It all fits into the continued growth of carbon concentrations in the atmosphere, extending the pattern since 1990.

Oil does not have the petrochemical market to itself. Gas has been making big inroads as its sheer abundance becomes apparent. It no longer needs to be treated as a premium fuel to be reserved for the higher-value petrochemicals it helps to produce. There is so much gas that its supply is best treated as effectively infinite, and it too is in its golden age. Gas also provides a good energy vector for heating and, increasingly, industrial processes. Your house is probably gas-heated, and you may cook with it too. Much of your electricity is now generated by gas-fired power stations. From 1990, gas became the fuel of choice for power generation in both the US and Europe, as the old reliance on coal gave way, and as nuclear stalled. In 1990 the typical electricity system in the US and Europe was around 80 per cent coal and 20 per cent nuclear. It is now much more likely to be 40 per cent gas and less than 40 per cent coal. The closure of nuclear, through both ageing and anti-nuclear policies, has also made room for gas.

The switch to gas from coal for power generation reduces carbon emissions significantly – by around 20 and 40 per cent compared with oil and coal, respectively. The joker in the pack is methane and methane leakage, most of which comes from badly maintained pipelines and from leaking conventional and fracked wells. Methane leakage is troublesome because it is a very potent greenhouse gas – up to 80 times worse than CO₂ over 20 years,[12] although it does not stay in the atmosphere very long (and methane emissions from agriculture are more significant than those from natural gas).

Lots more coal since 1990

Coal is truly dreadful stuff. The story of coal since 1990 is remarkable, with its starring role in boosting carbon emissions. Chinese economic growth was (and still is) powered by coal, and this translates across to the growth of carbon emissions globally. In the 1990s growth in coal demand was rapid, but then began to level off at around 40 per cent of the world’s primary energy. The chart below illustrates how coal consumption in China accelerated and ultimately exceeded that of the rest of the world.

Under any serious interpretation of the ambitions to address climate change, reducing coal should (and would) have been the primary achievement in the last 30 years. While there have been some notable successes, these are largely lost in the noise, with the exception of the coal-to-gas switch in the US. The much-heralded UK squeeze on the coal industry, a rare example of successful carbon pricing, is just the flotsam of global coal-burn and therefore coal emissions. It takes only a few weeks for the world to replicate the entire coal generation capacity in the UK of a few years ago, and for most of the period from 1990 to now, the coal-burn held up in the UK anyway. The benefits of individual countries unilaterally closing coal come from the reductions of other pollutants (especially particulate matter PM 2.5 and its serious impacts on air quality), particularly close to cities, and to trees (notably sulphur and acid rain).

Figure 5 Coal demand in China and the rest of the world (2018 data is provisional)[13]

It is true that there are widely respected forecasts that coal’s days are numbered, and from an environmental perspective this would be good news. But what is presented as a reduction in the share of coal in the energy mix is not the same as a reduction in coal burnt. The International Energy Agency (IEA) forecasts that, globally, coal will fall from around 38 per cent to 25 per cent by 2040 if all ‘new policies’ (those currently announced) are fully implemented.[14] Reflect, however, on how much higher global GDP will be by 2040 on current growth rates and as the world’s economies recover from Covid-19. As noted, China, India and Africa may be four times bigger. Twenty-five per cent of a number four times bigger is a big increase, not a decrease, in the coal-burn, and all that coal burnt over the next 30 years will add to the carbon already up in the atmosphere. It is the coal burnt since the Industrial Revolution plus the coal-burn over the past 30 years, plus what is coming, and all of this in the atmosphere for more than 100 years to come. Peak coal is still a long way off.[15]

Corporate responsibility

Imagine you are the chief executive of an oil, gas or coal company. Imagine looking at these numbers. What you see is a large and, in most cases, growing market over the next 20–30 years. You look at all the fossil fuel projects that cross your desk. You do the analysis. Perhaps you take a pessimistic view about future fossil fuel prices, given the sheer abundance of the resources available, which make a nonsense of all those peak oil and peak gas forecasts that were peddled by politicians and analysts up until the price collapsed in 2014 and then again in 2020.[16]

You will be able to balance some of the possible price falls with cost reductions as technology keeps marching on, and every bit as fast as for the competing renewables. Every day the understanding of the earth’s crust deepens, and every day the drilling and extracting technologies improve. Soon you may have oil and gas platforms on the seabed available to you. The Arctic will be opened up. What do you do? Do you say: ‘I should stop exploration, stop new investments and wind down my business’? Or do you say: ‘I should carry on and it is up to governments to impose a carbon price, regulate my company and take action’?

While some activists think you should do the former, their understanding of how global markets and boardrooms work is at best naive and partial. More than 90 per cent of these fossil fuels are produced by state-owned companies, and they are going to carry on. Why? Because their economies and their economic growth depend on them, and because they can. Think of Saudi Aramco and its centrality to the Saudi economy. Think of Russia’s Rosneft.

And that is what they are doing, just like the tobacco companies, the manufacturers of sugary drinks, arms manufacturers, construction companies that use cement and steel, farmers who use fertilisers and pesticides, and so on. Every company in the FT100 index is embedded in the fossil fuel economy. Those who say that this is what is wrong with the ‘capitalist model’ need to consider just what would happen if we jumped off now, rather than over a sensible transition, and why there is no effective carbon price. The statist model is, from a carbon perspective, much worse. It is the work of Saudi Aramco and Rosneft. Climate activists attack European and US politicians and company executives. They don’t dare take on Vladimir Putin, Xi Jinping and Mohammad bin Salman. Gluing yourself to the HQ of Shell or BP is easy: doing it in Moscow, Beijing or Riyadh is much tougher.

The China factor

The growth of emissions since 1990 keeps coming back to China. The sheer scale of Chinese economic growth is unprecedented: nothing on this scale – or that of the environmental shock it has created – has happened before over such a short period of time. Only the Covid-19 outbreak has been able to make a serious dent, causing the economy to contract after decades of growth.

Think back to 1979. Most of the world’s attention was on the Iranian revolution and the oil shock it produced. Nobody gave much thought to the impoverished Chinese communist country oppressed since 1949 by Chairman Mao. The Great Leap Forward (1958–62) and the Cultural Revolution (1966–76) left around 70 million Chinese dead from famine and the intellectual class decimated. China was a poor country, insignificant except for its nuclear weapons and its challenge to Russia for communist leadership.

Few noticed too the changeover at the top. Deng Xiaoping, like the rest of the ageing leadership, was a hangover from the Mao regime, lucky to have survived being purged. His great opening of the Chinese economy took time to gather pace, and the fear of a loss of Communist Party control hung over the experiments, as well as the people, who found their new hopes and opportunities crushed in Tiananmen Square in 1989.

China’s GDP started to grow at around 10 per cent per annum, from its very low base, and it took until well into the 1990s for it to reach a size which would impact on global markets. When the Japanese economic miracle came to a shuddering halt in 1989, China was well placed to take up the slack, and gradually become the world’s great exporter. The Chinese model was based, like that of Japan, on very high savings, which the State channelled into investments, and which also provided the money to lend to the US and others to pay for the Chinese goods they bought, and finance their consequent trade deficits. China would end up owning well over $1 trillion US Treasury bills, a sum Japan has also run up.[17]

The advantage China had over Japan was that its growth was initially built on cheap labour, an abundance of peasants migrating to the cities. It was an export-orientated expansion based on its east coast, and its products were precisely those which the West was getting out of producing: heavy, energy-intensive (and carbon-intensive) goods like steel. What made the impact of China all the greater was that it relied overwhelmingly on fossil fuels, especially coal.

In the late 1990s, China exported coal. Now it represents over half the world’s coal trade.[18] Coal-based heavy industry took over markets from Europeans and the US, and China’s great environmental disaster started to unfold. The growth of China polluted the atmosphere and the nearby seas, impacted on the Mekong, and killed off much of the biodiversity in its other great rivers. The world’s plastic problem is largely ‘Made in China’ too.

After 2000, China started to buy up agricultural land and raw materials globally, and after 2010 it launched its One Belt, One Road strategy (now known as the Belt and Road Initiative), financing infrastructure and power stations (especially coal) elsewhere.[19] Its shipping emitted lots of sulphur and carbon too. China literally changed the world’s environment, and greatly boosted world trade and all its environmental costs. Put another way, had China continued to grow at its pre-1980 rates, there would be a significantly lower ppm carbon concentration in the atmosphere today. Coal consumption would be significantly lower and trade would be significantly lower too. There would have been a much better chance of holding global warming at 2°.

Part of the reason for this massive effect is that emissions are concentrated in a small number of very large sectors, and these feature strongly in China’s growth. China used a lot of cement in its industrialisation and the building of its great cities; it relies very heavily on fertiliser; and it has used a lot of steel domestically too. It has also exported all three of these, as well as petrochemicals.

The chart below is extraordinary in a chapter packed with the history of the great post-1990 growth. It shows the scale of the transformation. In 1990 Chinese GDP was around US$360 billion. By 2018 it was $13.6 trillion. That is 38 times bigger. To get your head around these astonishing numbers, the UK’s GDP in 1990 was just over $1 trillion, and now it is just over $2.6 trillion.

With all this GDP growth comes pollution, and in China’s case pollution on a planetary scale. Every other country in the world pales into insignificance in terms of added environmental pollution since 1990. The Europeans deindustrialised, and the US went sideways. From around 2005, the US had natural gas to substitute for coal, and hence it could both grow and limit its carbon emissions. On a carbon consumption basis, the net effect was relatively benign compared with what was going on elsewhere. China was off the scale in emissions.

Figure 6 The growth of China’s GDP in trillions of US$ between 1960 and 2018[20]

Table 1 CO₂ emissions by country, 2015.[21] Data is for CO₂ emissions from fuel combustion in tonnes in 2015.

| Country | Total emissions | Per capita emissions
| China | 904.07 million | 6.59
| US | 499.75 million | 15.53
| India | 206.60 million | 1.58
| Russia | 146.90 million | 10.19
| Japan | 114.16 million | 8.99
| Germany | 72.98 million | 8.93
| UK | 38.98 million | 5.99

As the table above shows, China has almost twice the total emissions of the US, but less than half the per capita emissions. Unless it caps and reduces its emissions very quickly, the 2° target and the Paris Agreement mean very little. Nor is the Chinese economic expansion over. On the contrary, it was still growing in early 2020 at around 6 per cent according to official figures (although it started to contract during the first quarter of 2020 as a result of Covid-19), and its emissions were rising steeply. Just imagine if China eventually reached the US’s per capita emissions.

Even if China does cap its emissions, India’s projected economic growth and its reliance on coal provide further scary statistics. Coal currently accounts for over half of India’s primary energy consumption, and its share might fall to a bit less by 2040.[22] But that might be for an economy four times its current size. In due course this could add another China to the global climate change problem. China could be just the first mega-example, followed by India and eventually Southeast Asia and Africa.

These are the fossil fuel facts. They describe the last 30 wasted years. The world’s climate cannot withstand more Chinese coal-based economic growth and its replication in India and elsewhere. Against this juggernaut of emissions from the golden age of fossil fuels, renewables have, despite the hype, so far made little more than a minor scratch.

Renewables – noticeable by their absence

Back in 1990, the challenge was to replace fossil fuels with renewables, sources of energy which would not only be low-carbon but would keep coming at no extra marginal cost. Thirty years on and it still is.

At that time, there were four main renewable technologies, just as now: hydro, bioenergy, solar photovoltaics (PV) and wind turbines. Solar and wind are disaggregated, low-density and intermittent technologies. Storage, except through hydro, has not featured much in the last 30 years, and the demand side in electricity has been largely passive. Smart technologies and batteries have been small niche part-players. To date, hydro has overwhelmingly dominated, often with detrimental side effects, as Figure 7 illustrates.

For all the media hype about renewables, the important point to make is that they are still an incredibly small part of global energy supplies, to the point of being trivial, as Figure 4 (page 21) shows.

The numbers can be made to look much more impressive if the focus is on electricity – in other words, leaving out the use of oil, gas and coal for direct energy supplies, rather than the proportion that goes into generating electricity. The much-hyped offshore wind is just 0.3 per cent of global power supply.[23] Even this overstates the importance of wind (and solar too), since capacity and energy are not the same thing. Intermittency cuts down their effectiveness considerably (wind flows vary a lot). Solar is useless at night, and weak under much of northern Europe’s cloudy skies. To date, wind and solar have needed fossil fuels to back them up, so for every unit of firm power added to electricity systems, the largest proportion of that unit continues to be fossil fuels in many cases.

Figure 7 Modern global renewable energy consumption,[24] measured in TWh per year. This data includes all renewable energy sources with the exclusion of traditional biomass. Here ‘other renewables’ includes modern biofuels, geothermal and wave and tidal.

It is true that substantial progress has been made on bringing down the costs of wind and solar, and increasing their technical capabilities. This has overwhelmingly been the result of heavy subsidies for mass production in China. There is a lot of scope in the next 30 years to push on with these cost reductions. But there are a couple of caveats. First, the cost reductions do not alter the fundamentals, and in particular the low density of energy that renewables produce; second, the fossil fuels have been showing remarkable technical progress too.[25] While the cost of solar panels has fallen, the cost reductions in shale and other non-conventional oil and gas, and in the conventionals, have been dramatic. Seismic technologies, robotics, artificial intelligence (AI), and the digitalisation of the oil, gas and coal industries have all had dramatic impacts.

These considerations lead to a general conclusion: the cost of energy has fallen for all technologies. There has been little relative gain in costs for renewables. Almost all have had absolute reductions across all energy sources. The cost of renewables has fallen, but so too has the price of oil. The oil price has maintained a long-term trend, gradually falling in real terms over the period since its inception as an industry in the late nineteenth century, with the exceptional interruptions of the 1970s and in the period running up to the peak in 2014. The renewables lobby is keen to argue that wind and solar are becoming grid-competitive. While they relied on a belief in peak oil this might well have turned out to be correct. But peak oil is nonsense: the renewables have not only to reduce their costs, but to do so faster than fossil fuels. The more successful renewables are, the lower the demand for oil, and hence the lower the price of oil as production centres on the incredibly cheap sources in the Middle East. The marginal cost of Saudi crude oil is about US$5 or less, compared with a much higher world price, even after the price falls in 2014 and 2020. There is a long way to fall.

The destruction of natural capital

While the fossil fuels have boomed and contributed the lion’s share of emissions since 1990, without much pressure from renewables, they are not the only cause of our climate problem. Climate change is a two-part act: the natural environment offsets carbon emissions with natural carbon sequestration through trees, vegetation, soils, peat and the marshes and oceans. The story here over the last 30 years is pretty bleak too – and, in a number of cases, because of the climate change policies we have naively been pursuing.

The fossil fuels on which we rely are themselves sequestered carbon, and for most of geological time this sequestration has been effectively permanent. This is ancient and stored solar radiation. Carbon is essential for photosynthesis and photosynthesis is what makes the planet work. It is also taken up by animals, as we can see in the seashells that litter our shores. Over time, these shells form the materials of the great limestone stores of carbon and what we use for cement.

Where these sequestration processes are allowed to play themselves out, a balance is established between oxygen and CO₂ in our atmosphere. The planet started out with little oxygen, and plants made our world habitable for animals, including ourselves. At times, oxygen was much more abundant, allowing super-sized animals to flourish.[26] In the great carboniferous age, oxygen was abundant precisely because, as the name implies, this was an age of great plant flourishing, which ultimately led to the formation of vast coal deposits.

The most obvious loss of this vital carbon-sequestering natural capital is the forests. They still comprise around 30 per cent of the global land cover, but we are cutting into this number at an alarming rate. Since 1990 roughly 1.5 million square kilometres have gone, including around 10 per cent of the Amazon rainforest.

On average, an area of tree coverage the size of the UK was lost between 2014 and 2018 – 90 per cent of which was tropical forest. Plants can both temporarily and permanently sequestrate carbon, and offset both the natural production of greenhouse gases and those emitted by our actions. Most of the current policies encouraging sequestration are temporary – and especially those implemented over the last 30 years – and many have been counterproductive. Planting a tree takes up carbon, and burning it releases it. Using biomass as ‘renewable’ energy closes the process. Over the life cycle of the plant, the best that can be achieved is carbon neutrality, but in practice producing biomass emits a lot of carbon. Why? Because not only does the planting and management require energy (and this tends to be tractors and fossil fuel-driven machinery), but it usually displaces something else, and that something else usually sequestrates carbon too. This is why we should be wary of treating ‘bioenergy’ as renewable.

Take the disaster that is the explosive growth of palm oil plantations to produce a ‘renewable’ fuel. Vast areas of natural rainforest are cleared. In Indonesia, so great are the fires that burn off the rainforests that many Southeast Asian areas suffer an annual smog. Attention has been paid belatedly to the impacts on biodiversity, but little attention has been paid to the net carbon accounting. In Indonesia, the underlying peat is set on fire too, adding to the environmental carnage.[27] The growth of sugar cane to produce ethanol in Brazil is another example of bioenergy which is less benign than it might seem. The sugar cane takes up land that had other uses, pushing out cattle farmers onto more marginal land. In Brazil’s case this contributes to the destruction of the great Amazon rainforest. While Brazil’s energy mix looks among the greenest in the world because of hydro, the reality is rather different. In the UK, anaerobic digesters use maize and rye grass to produce ‘biofuels’, with similarly dubious carbon-accounting justifications.

While the natural sequestration process of plants and soils should be soaking up carbon, agriculture (including forestry and other land use) contributes around 25 per cent of the world’s greenhouse gas emissions.[28] Modern agriculture is a carbon disaster from start to finish, from the ploughing of the land releasing carbon stored in the soils, through to the final produce on the supermarket shelf, often wrapped in plastic. Ever since the discovery of the Haber-Bosch process to produce ammonia, fertilisers have been energy-intensive, and that energy has come overwhelmingly from fossil fuels. (China accounts for around 30 per cent of the world’s total fertiliser use, with an application rate among the highest in the world.)

The statistics on what has happened to agriculture since 1990 and its contribution to the increase in emissions are less well documented than those of the fossil fuel industries. Emissions from power stations, coal mines, oil platforms and cars and ships are relatively easy to measure – now increasingly from space. Measuring the loss of carbon in soils, calculating the loss of rainforests and the net impacts on emissions, and working out the gap between ‘biocrops’ and what would otherwise have been done with the land are all technically more difficult. Yet we are not entirely ignorant of what we have done and the damage we have caused over the last 30 years.

The position in 2020

The last 30 years have witnessed an environmental disaster for the planet. We have not had the great transition away from fossil fuels that the architects of the UNFCCC promised. Things have never been better for the oil, gas and coal companies. As for the renewables, they have played at best a very small bit-part, and almost all has come from hydro and bioenergy. Even here the impact of the dams and some of the biocrops has had some awful environmental consequences.

The last 30 years have also been the best for the agrichemical industries, but terrible for the soils and the peat bogs which store so much of our carbon. They have been great for the loggers, the palm oil plantation owners and cattle ranchers as the great rainforests have been cleared. The last 30 years have been beyond the travel industry’s wildest dreams, with the great middle-class boom first in the developed countries, but now with China added too, all flying around the world for holidays. For shipping, the globalisation of the world economy, with China at its core, has vastly exceeded the expectations of 1990. George W. Bush was right: without China capping its emissions, little progress would be made. Almost every dimension of the climate disaster has China’s name written all over it.

The 30 years have therefore been wasted from a climate perspective. Much more carbon has been emitted; the concentrations have marched ever upwards without so much as a blip, except for during the Covid-19 outbreak; the fossil fuel industries have boomed and natural sequestration has taken a nosedive.

How was this allowed to happen, when it was all supposed to be very different? That story is about the UN and Europe’s efforts after 1990 – Kyoto, Paris, and the EU’s carbon policies.

2
KYOTO AND PARIS

The last 30 years were meant to turn out very differently. The UN was going to sort out climate change from the top down, by getting the nations of the world together and agreeing targets for each to limit its emissions. These targets had to add up to an overall cap in emissions, sufficient to stop climate change getting out of control. For reasons of expediency rather than any sense of an optimal climate, this was set at 2°C warming, and subsequently revised down to 1.5° as part of the Paris Agreement. Getting the world’s nations together is what the UN does, and climate change gave it a whole new role. This is what the UNFCCC back in 1992, followed by the Kyoto Protocol in 2007, and the Paris Agreement in 2015, are all about.

Thought of in this way, the climate change problem is how to get the recalcitrants like the US, those with targets well outside the overall envelope, and those who are not really trying to meet their targets, to change their behaviours. Put simply, the US has to get on board; Brazil and its neighbours have to stop destroying the rainforests; China has to take serious steps to deal with its coal and fossil fuel demand; and Africa and India have to get serious about both targets and actions on the ground. Fix these, and the problem will begin to get solved.

Except it hasn’t and it won’t. Why? There are two basic flaws: the design of almost any top-down treaty framework; and the way in which the UN and the parties have gone about it.[1] Even if the former were not fatal, the latter would at best produce a series of temporary fixes, limping from one ‘agreement’ to the next. It would keep the UN in the climate change business, but not do much about the underlying problems.

The fatal flaw

The ambition of the UN has been to create a carbon cartel. All countries are supposed to agree to limit their emissions by committing to caps, and these caps are together supposed to add up to reductions that will deliver a 2°C warming limit.

As a cartel, it suffers from all the problems of conventional fixes to markets – and some more.[2] Think of all the corporate villains in history who have tried to rig markets. They have used a series of bribes, extortion and even violence to get their way. Many have been simply criminal, with the Mafia perhaps the most notorious. Others have been encouraged by the State to bring economies of scale and hence greater efficiency. OPEC stands out as the international example.

What all have in common is the need to confront a basic incentive problem. In any cartel, each party has an incentive to encourage the others to restrict output (in this case, carbon) and benefit from the collective gains from a better outcome for all (less global warming). But each party also faces the costs of doing this. Hence the killer incentive: get others to do the hard graft, promise yourself to join in and then cheat. You get the benefits, but not the costs. It is what in economics is called the free-rider problem.

This perverse incentive is endemic in such agreements, and it is naive to pretend otherwise. All cartels and collusive agreements are designed with this incentive problem in mind, and, as we shall see, Kyoto and Paris are no exceptions. Most fail, and, to see why, let’s think about how the incentive problem could be cracked.

The first (and for the UN an important) option is to appeal to common mutual universal human interests, beyond those of the countries and companies that form the parties to the agreement. In the case of the Mafia, it is an appeal to family loyalty, but it breaks down when there are other families in the game. That is why they keep killing each other. In the case of OPEC, it includes an appeal to Arab unity, and to the interests of the Arab peoples over and above the specific Arab nations. The trouble with this one is that Sunnis and Shia do not see themselves as part of a common cause, and OPEC needs Russia and now the US to at least tacitly fall into line, as witnessed in early 2020. The results for OPEC are obvious: every time the Saudis try to jack up the price of oil, everyone else starts cheating, with the US and the North Sea as key examples. All OPEC efforts to create and sustain an oil cartel have run into difficulties, except in the very short run. For climate change and a carbon cartel, it is the medium and long term that count, and despite all the claims to the contrary, the UN’s carbon cartel has fallen flat. That is why emissions keep going up.

The appeal to universal interests

The initial cheerleader for what became the Kyoto Protocol was the US, and Bill Clinton in particular. In the heady days after the collapse of the Soviet Union, the zeitgeist was captured by Francis Fukuyama’s bestseller, The End of History and the Last Man.[3] The theme of the book is the recognition that, after trying almost everything else, including socialism, the rational enlightenment had produced its final end-product: liberal democracy. All nations would eventually converge on this model. Politics is a rational business, and to the extent that people are organised into nations, they would all come to share the democratic model, with markets to allocate most resources. Political dialogue would determine the success of this paradigm as it swept all other competing options away. Except it hasn’t.

At the time, with the tearing-down of the Berlin Wall, and the resulting extension of freedom and democracy across Eastern Europe, the nightmare of the Cold War and the threat of nuclear annihilation gave way to a universalism which left less room for nation states. There would be diversity, but all within a rational framework. As people got richer, because liberal markets worked, they would lend their support to the liberal model. They would not, it was easily assumed, act parochially and nationalistically, as the old nationalisms of the past withered away. There would be no Donald Trumps, Vladimir Putins and Xi Jinpings, and no Marine Le Pens or Viktor Orbáns.

Behind this end-of-history thesis lay a deeper intellectual idea, one that was instrumental in the very creation of the UN. It was that rationalism would prevail, with a universal appreciation of the rights of all people, wherever and whenever they lived. It would find its expression in Nicholas Stern’s The Economics of Climate Change.[4] Stern is a utilitarian who cannot see why we should discriminate between current and future people. It is easy to see why he thinks this. All humans are equal, and there is no moral reason to discriminate against any of them in favour of others.

The trouble with this particular argument and the rationalism on which it is based is that it is not how we humans behave. It is not what makes us human. We are partial, not universal, in our concerns. We do not transfer much of the GDP of developed countries to developing ones. We do not care about starving people in the Sahel as much as we care about our own children, our neighbours and our country. The UK struggles to persuade its voters to transfer just 1 per cent of GDP to those who could use it to much better effect than us – indeed, who could use it to stay alive. Climate change is partly a moral challenge, but it will not be solved by demanding conduct for which there is no evidence that we will entertain. Saints might, but not the bulk of the population who will be required to pay the costs.

In the heady triumphalism of the 1990s, and after the First Gulf War, it was not ridiculous to imagine that Russia would itself become a liberal democracy, and even join NATO and the EU. As for China, it was an easy assumption to make that capitalism and the liberalisation of its economy would usher in unstoppable demands for political liberty too. It might take longer for rogue states like North Korea, and even the religious regime in Iran, to fall into line. These countries in any event mostly depended on the protection of larger countries. As the government kingpins of Russia and China fell, they would find it hard to continue their authoritarianism.

Except it all turned out very differently. By 2019 there was Trump’s ‘America First’; Orbán’s ‘illiberal democracy’; Brexit; and Putin’s determined grip on power in Russia – and especially on its fossil fuel industries. For anyone not carried away with the liberal democratic paradigm, the signs were there much earlier. Tiananmen Square, to anyone who watched the Chinese Communist Party’s brutality in action, demonstrated that it was not going to lose its grip on power, and in due course Xi Jinping would consolidate power on a level parallel with Mao. Hong Kong and Taiwan are the next targets.

Those who thought that politics would treat foreigners as of equal moral status to residents, and that religious strife and conflict would become a thing of the past, should explain why religion and ethnic origins remain so potent in Europe and the US, and especially explain the heightened tensions between Saudi Arabia’s Sunnis and Iran’s Shias and their allies. The old threat of serious global conflicts has not gone away. The US and China may well come to blows over Taiwan and the South China Sea, and Ukraine looks like a powder keg placed on the fissure between Russia and the EU. Climate change will impact on these nationalistic concerns, but it will not make them go away, and they will not be put aside for the greater good of tackling global warming. Nationalism is the context within which global warming has to be tackled.

Appeals to a wider environmental conscience and for countries to act in mutual global interests – when the national self-interest incentive to free-ride remains – are not working, and they are not going to work. Such appeals make for great political speeches, and UN climate events are full of them. Hot air has so far been spectacularly ineffective, as witnessed by the continuing and relentless rise in carbon concentrations in the atmosphere.

Measuring emissions

Perhaps there is some other way around the free-rider problem? Take a look again at the conventional cartel dilemma. To fix output it has to be measured. Quotas have to be assigned to the parties; cheating has to be detectable, and the cheats have to be punished.

You can see where this is going. While we can measure the global concentration of carbon in the atmosphere, and while new satellite technology is getting better at seeing what is going on, it is work-in-progress to measure each country’s emissions. Some bits are pretty easy, such as power stations and vehicle emissions. But what about all the non-fossil-fuel emissions? What about losses from the soil and peat bogs? What about all those forests being cut down? Soil, with four times the carbon of the atmosphere, really matters. Yet if you go to the Outer Hebrides in the UK, the landscape is littered with plastic bags full of peat cut for heating and even cooking. The peat bogs of Ireland still supply peat not only to the horticultural industry, but even to be burnt in power stations. The English Fens give off carbon on an industrial scale. Light a fire in your garden, or watch farmers burning crops outside Delhi. Who measures these contributions of Scotland, England, Ireland and India to carbon emissions? And who measures national carbon sequestration?

Preventing cheating

Measurement is slowly getting fixed. Preventing cheating is altogether harder, and in practice unenforceable for the major contributors. It requires threats and bribes which are credible: to impose enough pain and pay enough to offset the costs of action. A moment’s reflection tells us that forcing the US, China, Russia, India and many African countries to reduce their emissions is a non-starter. What exactly is Europe, for example, going to do? Trade sanctions against Brazil? Possibly. Direct action against China, Russia and the US? Unlikely, in a world of China First, Russia First and America First.

A recent example demonstrates how difficult this is. The EU has negotiated a new trade deal with Latin America, the Mercosur Agreement.[5] It has been called the ‘cows for cars’ trade deal. As will be explored further later on, the ‘cows’ are partly coming from clearing Brazil’s rainforests. Even if we could measure the consequences of the burning, and not just for emissions from the flames but also the loss of natural carbon sequestration, what exactly is Europe going to do about it? For the ‘cars’ represent jobs in export markets, and so punishment would be costly for both the EU and Brazil. Post-Covid-19, these export markets matter even more.

Brazil is a significant country, but not a great power. It is just possible to imagine it being bullied into submission. It could simply say that it accepts its global responsibilities and it is going to protect the rainforests. There is, however, no evidence that it is going to do so, and certainly not before a lot more damage (and emissions) has been caused.

Is there another way? Brazil thinks so: pay us to stop doing it. Its argument is simple and compelling: you, the developed world, put all the carbon up in the atmosphere as part of the process of transforming your economies so that you enjoy the standards of living to which we, the poorer Brazilians, aspire. Rather than threats and punishment, bribe us. If the developed countries do not pay up, then you will suffer from climate change, and you can’t hit your 2°C target without us. The carbon cartel issue is therefore simple: transfer from the rich to the poorer countries whatever it costs to avoid the emissions that would otherwise enable the poorer countries to develop.

This way of thinking brings us to the old north–south divide, and the origins of the Brundtland sustainable development principle.[6] The Brundtland Commission was all about the distributional questions, and these are at the heart of the politics of the UN. Subsequently, the UN has tried to tack monetary transfers and funding arrangements onto climate change. So far it has failed, and for two reasons. The rich countries (and their electorates) don’t want to pay up; and there is no credible way to make sure the money is spent on decarbonisation. Indeed, the incentives are even more perverse: Brazil could add to the extortion game by threatening to increase the damage unless the rich countries pay up. As we shall also see, this problem besets the carbon-offsetting opportunities: Brazil could get companies to pay to stop them cutting down more trees, rather than planting additional trees for natural sequestration.

When it comes to the great powers, paying up to poorer countries is in addition to the cost of doing the decarbonisation to hit the 2°C target. It is true that the great powers spend a lot on developing countries. The European powers have a long history of colonialism through conquest and occupation. The US has its own economic imperialism; Russia had its empire and now has its expansive military adventures. China has joined the ‘great game’, with its massive Belt and Road Initiative, and the acquisition of agricultural lands in Africa and Latin America. What the carbon cartel requires is that the great powers not only take measures themselves, but also pay large sums into a general fund which they do not control. Why would they do this?

What about the great powers’ own actions and targets? There is a world of difference between talking the talk and walking the walk. So far, the EU, Russia and China have committed themselves to targets which are largely within their own interests. The EU, as we shall see, has been deindustrialising and its emissions were always going to fall anyway. The US is never going to sign up to a global treaty which gives the UN powers over it, without China signing up too. The Chinese Communist Party dictatorship is never going to do anything to jeopardise its power, and while it has a clear incentive to clean up the air pollution around its major cities, it needs its relative high economic growth trajectory to build its regional and global power and project its influence on the world – and even more so after Covid-19. It will, for expediency, adopt targets, but only those which it can meet anyway, and that is indeed what has happened. The Russians have the opening-up of Siberia ahead of them and the whole new global great game in the Arctic to play for.

There is one inevitable conclusion: the conditions for a credible carbon cartel are unlikely ever to be in place. But this has not stopped the UN from trying.

The UN’s game

The UN is never going to solve this. The failure is not because of a lack of commitment by the signatories, or a lack of earnest moral intent. They mean well. The problem is altogether more fundamental. There is never likely to be a legally binding international treaty, with the teeth to enforce and punish those who fail to deliver on their commitments. The UN works (a bit) when the ‘Big 5’ permanent members of the Security Council – the US, China, the Russian Federation, the UK and France – force smaller countries into line, or when the problems are precise and well defined and it is in everyone’s interests to fall into line. The UN has never resolved the Israel–Palestine dispute, and it has not driven nuclear disarmament. It is not going to crack the Brazilian rainforest crisis. It can be a very good mediator, and it can deploy peacekeepers, but unless all the Big 5 are on board, it struggles to get any traction. Nor does it have enough money to do the bribing.

The Big 5 do not agree on climate change, and they do not include emerging major polluters such as India and African nations. They don’t cover any of the world’s great rainforests. The positions of the Big 5 are clear: Russia’s elite has some interest in climate change actually happening in the short term, and, as noted, the US is never going to cede sovereignty. China talks a good talk but does not walk the walk. Of the two other smaller UN players, the UK is increasingly a bit-part player, especially after Brexit, and France is just not big enough and is in any event an outlier with its large nuclear energy system. The EU, the other really big bloc, is only indirectly at the table through France, but not Germany.

The UN Security Council is not and has never been the main act in global diplomacy, and has been a minor player of convenience in global crises. The action is bilaterally between the powers as they try to jockey among themselves for hegemony, and when important matters need cooperation it is typically the G7, G8 and G20 that provide the forums.

Notwithstanding the stony ground of geopolitics, the idea behind Kyoto was a grand one. Despite all the obvious cartel problems discussed above, and the interests of the big polluters, Kyoto was to be the first step in a process towards a global legally binding treaty, and that treaty would limit total global emissions to a level consistent with the IPCC’s 2°C target. To do this would involve the parcelling-out of emissions reductions between countries. Since some were richer than others, and since the developed countries are responsible for most of the stock of carbon pumped into the atmosphere since the Industrial Revolution, the rich countries should take on targets, and the developing countries should take measures only. Amazingly, the architects thought it would actually work, and all this naive optimism is there in the speeches and papers.

The UN was encouraged by the now largely forgotten fact that the US was all in favour initially. Yet this proved a false dawn: it rapidly became apparent to Bill Clinton that Americans did not buy into this approach. He did not risk trying to ratify the Kyoto Protocol because there were no votes for it in the Senate. The objections were dressed up as concern about China not having to have targets, and hence creating an uneven playing field. But in reality, as the only superpower left, the US was not about to cede sovereignty to the UN, and not about to find itself paying developing countries to decarbonise. No US president since Clinton has tried, and that is why the Copenhagen COP ended up with the Copenhagen Accord, and why Barack Obama could not sign up to a legally binding treaty at Paris. For all the very different styles and political outlooks, Clinton, George W. Bush, Obama and Trump have all taken the same US position. This is not about to change, and indeed at the time of writing it is being further reinforced by Trump in the run-up to the 2020 election.

Activists often present the US as the great villain of climate change, and understandably find it easy to demonise Trump. That bit is not difficult – Trump does on occasion dispute the science and give oxygen to the idea that it is some kind of hoax, or worse, a conspiracy against the US. A more mature reflection on the other great players critical to reaching an agreement tells a more general story. None of them is going to sign up to international intervention in their economies, to cede sovereignty over their conduct. Neither Russia nor China would tolerate the sort of international supervisions which would be required to make tough limits stick. And then there is India and Africa, and those countries that are content to wait for others to act first.

The miracle solution

Despite such obvious structural flaws, and despite no progress on limiting the rise in emissions, the advocates of the Kyoto- and Paris-type processes have not let up. Maybe it has failed so far, and maybe lots of the optimistic rhetoric was misguided, but with one more heave will it work? The way the advocates put it now is that the difficulties are going to be overcome not by threats and bribes, but by the changes in the underlying costs of decarbonising. It is widely claimed that renewables are cost-competitive with fossil fuels already. Hence the problems dissolve: decarbonisation is no more expensive than sticking with fossil fuels. Wind and solar electricity generation, electric cars, hydrogen ships and planes, and biofuels and biomass are the future anyway.

This is the miracle solution. We can decarbonise and it won’t cost us any more than not decarbonising. Even better, if we don’t decarbonise we will end up with higher costs, because the fossil fuels will be more expensive than the wind turbines and solar panels that we will all be rushing to install. Decarbonisation is a win–win strategy: we get to mitigate climate change and we get cheaper energy too. What’s not to like?

The trouble is, it is unlikely to be true, at least for the next crucial 30 years. Eighteenth-century philosopher David Hume, the religious sceptic, wrote that, when confronted with someone claiming to have witnessed a miracle, there are two possible responses. The first is to believe this person; the second is to seek some other rational explanation. In the climate change case, the believers turn out to be activists and some European political leaders. But, as Hume pointed out, belief does not make something true.[7]

Think what the consequences of the miracle scenario would be. Just for a moment, assume that renewables are cheaper than fossil fuels, or will be in the very near future. There is no benefit for any country from not acting now. What could we expect? The most immediate change is relief from all the subsidies paid to renewables and for the other decarbonising measures. There is no need for intervention: the transition will happen anyway, and quickly as the great polluters will find themselves out-competed in world markets. It will be the Europeans and the UK who will be the shining economic successes of the future. Financial markets will clobber any fossil fuel producer as the value of their investments will nose-dive with the collapsing demand for fossil fuels. Russia, Saudi Arabia and the US, the three big producers, will face ruin.

There are many reasons why some might be delighted to see Russia and Saudi Arabia, with their authoritarian regimes, under severe economic pressure.[8] Some activists might also relish a setback on this scale for the US’s new energy independence, built on cheap shale oil and gas. But the fact, as opposed to the desire or the belief, is that none of this is happening. It might, with new technologies from mid-century onwards, but not any time soon and certainly not soon enough. In fact, the news from the great fossil fuel producers is almost all good: Covid-19 aside as a temporary shock, the demand for oil, gas and coal keeps on going up, and all the mainstream forecasts and projections reinforce this message. As noted, the renewables (except hydro and some biomass and biofuels) have yet to make much of a dent. Just look at the market valuation at flotation placed on Saudi Aramco.

Nor are the activists campaigning outside parliament to end renewables subsidies. What they want is more, not less, money to compensate for their lack of competitiveness. The big 10 mbd oil producers – the US, Russia and Saudi Arabia – are not suffering from pursuing their narrow national interests. On the contrary, many of their problems stem from the falls in oil prices due to the superabundance of fossil fuels.

The UN’s role in this miraculous new world would wither away too. What is the point of all the theatre and spectacle and all the COPs and speeches (and all the air miles too) if the problem is going to solve itself anyway? If it is all already cost-competitive, what exactly is its role? It could campaign against the claimed fossil fuel subsidies, but such a fiscal matter is probably best handled through the International Monetary Fund and the World Bank. It could focus on development, but again this is a crowded field of international organisations. It might focus on the one bit that the miracle does not properly address – the destruction of natural capital and the capacity for natural carbon sequestration – and turn its efforts more to this natural capital agenda and biodiversity. Rightly, it already is. But in the round the miracle would push the UN back to its otherwise declining significance, reduce its staff, and further lower its profile.

The implication is pretty clear. The climate change question is: what to do, in the expectation that the top-down global agreement approach is not going to work, and even if it eventually does, not in time to avert significant climate change? And what to do, given the wall of economic growth – and therefore consumption – to come in China, India and Africa?

Europe takes the lead

If this is the question, it is one Europe chose to ignore, and is continuing to do so with some remarkably inefficient consequences. As Kyoto unfolded (it took until 2005 to come into force – 15 years after the 1990 baseline), it rapidly became a Europe-driven protocol.[9] The EU had three separate reasons for its enthusiasm. First, many Europeans took the challenge of climate change very seriously. Second, the EU institutions and their leaders were looking for new ways to engage with their electorates and especially the young, and wanted to co-opt the burgeoning green movements into the core of mainstream political parties. Finally, they knew that the targets would be easy to achieve and there would be few costs. The reason for this last point was the baseline – 1990. This was when the Soviet Union collapsed, and hence the new Eastern European members would have steeply falling emissions from 1990. The Western EU member states were also well into their own structural deindustrialisation. However, because of poor domestic policies, Germany would struggle to meet its own 2020 target; for many it was a cruise.

The baseline of 1990 had one other advantage. Of all the countries whose emissions could be assumed to fall sharply from 1990, Russia stood out. The Soviet heavy industries collapsed with the regime that supported and subsidised them. Emissions plummeted, and indeed Russia itself went bankrupt in 1998. The EU needed Russia to sign up to Kyoto to make the Protocol operational – to pass the minimum requirements. Russia needed something else which the EU could gift: support for joining the World Trade Organization (WTO). The deal was done: the EU got the Kyoto Protocol to come into force; Russia was accepted as a member of the WTO; and nothing changed in Russia at all in respect of climate mitigation policies.

The need to have Russia on board was all the more pressing because others were dropping out. Two very new countries in emissions terms saw their domestic carbon production rise sharply. Canada bust the limits early on and formally left in 2012, and Japan struggled to comply, and dramatically so after the 2011 Fukushima Daiichi nuclear disaster triggered the closure of all its nuclear power stations, and a dash for coal and gas to fill the gap. Japan was second only to France in terms of the size and share of nuclear in its energy mix. With nuclear gone, it was hopeless to try to meet the Kyoto targets.

From within the European climate change political bubble, it was quite difficult to get a perspective on what was going on in the rest of the world. The crucial and disappointing fact is that no other country was seriously trying to control emissions, except for very specific reasons like air quality in cities, or because large hydro dams solved the burgeoning electricity demand challenge. China saw the Kyoto Protocol through the prism of its industrial strategy. If the Europeans were going to buy lots of wind turbines and solar panels, here was a new industry it could master. It duly did, on a large scale and with massive state subsidies. There were two consequences: it largely wiped out the European competitors; and it got to produce the steel and materials using its overwhelmingly coal-based heavy industries. A not inconsiderable side benefit was that the cost of solar panels fell.

The debacle at Copenhagen

Kyoto was always meant to be a step in the direction of an all-embracing international treaty, and the UN pushed on through the mechanisms of the COP to try to create such an agreement. The arrival of Obama in place of George W. Bush gave the process a new vigour, on the mistaken assumption that his rhetoric could be matched by votes in the US Senate. The stage was set for the Copenhagen COP in 2009.

On display were all the fundamental flaws in the process, replicated at every subsequent COP. It pitched the activists and campaigners against the politicians. It brought in thousands of people, many by air. The negotiations followed the usual UN pattern. As much as could be agreed in advance was, but this turned out to be very little. The negotiators were locked into late-night sessions picking over draft texts. The politicians turned up at the end, to take credit for the ‘agreement’ and to sort out the final issues. Except they didn’t. So little of substance was agreed that by the time the key politicians turned up, the showcase event – Obama meeting Wen Jiabao – turned out to be the point at which it was recognised that there would be no Kyoto 2.

To save face, and avoid a clear rupture with the UN process, the ambitions were replaced by an ‘accord’. This listed the voluntary pledges and offers made by those attending. And that was it: allowing the UN process to live another day, and have another go at getting a legally binding agreement. The pledges, in the unlikely event that they would actually be delivered, did not add up to the 2°C target requirements, and by a wide margin. The major world polluters were not prepared to do what it would take. Failure led to a doubling-down on the approach. One more heave, and the UN assumption was that they could get a legally binding agreement over the line.

The next big event was the Durban COP in 2011. The UN team arrived with the same old book. Durban was supposed to pave the way for a legally binding agreement, to be agreed at Paris in 2015. The delegates went through the same process. Just keeping the process alive was declared an achievement in itself. The summit concluded with an agreement to try to get an agreement in Paris.

The denouement at Paris

The gathering at Paris was supposed to bring Obama, coming to the end of his term in office, the Chinese Premier and the rest of the key polluters together, finally, to sign up to a legally binding agreement.

The UN teams had spent the time since Durban flying from capital to capital, trying to cobble together an agreement. The EU pitched in early, and it was the EU that clearly led on ambition. It could, because Europe continued its deindustrialisation, whereas China and India were industrialising, and the US remained an industrial economy.

The outcome at Paris repeated what had gone before, with a few extra fixes.[10] There would of course be no legally binding targets, as intended since Durban. Countries would again make their pledges, this time called ‘nationally determined contributions’ (NDCs), but if they missed them there would be no repercussions. There is no credible top-down enforcement mechanism, because no sovereign nation is going to allow others to impose their wishes on it. It would not be UN First, but rather continue to be China First, India First, Russia First and America First, as it always has been and probably always will be.

The UN team might have been relaxed about this if the perverse incentives could be ignored. What if it was economic to meet the pledges anyway? What if renewables and all the other measures, like protecting rainforests and stopping the depletion of the soils, were cheaper than fossil fuels, logging and intensive agriculture? What if the miracle solution outlined above is true? Lots of activists and some politicians repeatedly make this claim. Even if it cost a bit, it would not be much. Given that the IPCC had spelt out the dire warning of Armageddon just around the corner, and activists proclaimed that ‘extinction’ was coming, would not the world’s big polluters decarbonise anyway?

This is where the pack of negotiating cards hit the floor. For if all this were true, if it was all economic, there would be no need for an international agreement, or protocol, or even a treaty. There would be no need for Paris or the continuing UN process.

Having failed to secure the legally binding targets, the UN’s climate bureaucracy fell back on a second-best. Instead, the parties would be legally bound to come up with further NDCs by 2020, and these would be compatible with the overall 2°C. It could then be claimed that there was a legally binding agreement, a triumph for Paris. If the current NDCs did not add up, at least there was a pledge to make sure they did in the future.

The trouble with this fig leaf is that that is all it is. How exactly is the UN to make sure that the new NDCs at future COPs are going to be in line with the overall 2°C? What happens if, say, China offers a certain reduction, and let us for the moment imagine this is close to zero? Does everyone else have to take this as given, and reduce their emissions accordingly? This is the nature of the game, and of the enforced carbon cartel the UN is trying to create. Countries can make all sorts of pledges, and they could even be made ‘legally binding’, but what exactly is the UN going to do when (a) the pledge is not deemed adequate from one particular country; and (b) it is breached? Send in the UN peacekeepers to Washington or Beijing or New Delhi? Invade the Philippines? Of course not. That is obvious. And what is also obvious is that there are never going to be credible legally binding and credible legally enforceable national carbon targets.

Think about how Paris stands up against other global agreements. Take the WTO and trade agreements. The WTO is a set of rules, not a set of outcomes. It is ultimately about contracts, state aids and competition policy. It is a global version of the EU’s competition regime and customs union. Members agree to abide by the rules. Except many do not. The current trade wars between the US and China are all about the flagrant and very public violations of the rules of fair trade. China grants massive state aids to its big companies, insists on technology transfer, and lacks an independent judiciary to enforce contract and property law. It is China First. The WTO is very limited, as the UK has found out in contemplating a hard Brexit path. Trade is governed by trade agreements, and mainly on a bilateral basis. Further trade rounds after Doha have got nowhere, and the WTO is going through dark days in the face of America First and China First. Its perilous state reflects the general retreat from multilateralism.

Take another global threat – nuclear war. The UN could lead on arms-reduction negotiations, telling the parties what weapons they can have and inspecting them. It does some of this: UN inspectors were sent into Iraq, for example. Yet this role is confined to what the UN does best: inspection, expertise and information. The UN cannot tell Russia to get rid of its nuclear weapons, and it cannot regulate the nuclear arsenals of France, the UK, China, Israel, India, Pakistan and the US. Indeed, the very institutional structure of the UN is designed to prevent this sort of interference through its Security Council and the deeply embedded veto powers. All its members are nuclear powers.

Having failed to get the parties to come up with pledges that add up to 2°C, the Paris Agreement instigated the new target of 1.5°C. As long as it is an aspiration, the parties could happily agree that this is ideally what all the parties together would like. All of them know there is no chance of it happening. Recall that global temperatures have already gone up by nearly 1°C, and the UN’s own IPCC scientists have spelt out the momentum that is climate change. Trying to halt the further temperature increases to 0.5°C is like trying to stop and turn around a supertanker. It takes time for the full impacts of what we have already done to the atmosphere to work through. It would take something like a major volcanic eruption such as that of Mount Tambora in 1815 to sufficiently darken the skies and throw the inbuilt warming momentum into sudden reverse. Yet even this was temporary as is the shock to global GDP from Covid-19. Nevertheless, 1.5°C is now the new target. Paris is not going to deliver it. We need something else.

Конец ознакомительного фрагмента.

Текст предоставлен ООО «ЛитРес».

Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.

Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.