CLI­MATE-SHAPED HOLE IN THE BUD­GET

Cli­mate and en­ergy pol­icy were miss­ing in a Bud­get where all the de­tails were widely leaked be­fore­hand, writes Colm Mc­Carthy

Sunday Independent (Ireland) - - Front Page - Colm Mc­Carthy

PASCHAL Dono­hoe’s Bud­get last Tues­day, suf­fi­cient unto the day, was so widely leaked that it will be re­mem­bered more for its omis­sions than for the mi­nor tax re­liefs and rather larger spend­ing com­mit­ments, that were an­nounced.

If eco­nomic growth con­tin­ues and ex­ter­nal con­di­tions prove be­nign, all will be well: if the econ­omy hits an early set­back Bud­get 2019 will look like an­other gam­ble with the pub­lic fi­nances.

One of the omis­sions was the ab­sence of any pol­icy mea­sures on cli­mate or en­ergy pol­icy. The in­ten­tion had been flagged to move the ex­cise tax on diesel closer to the rate on petrol and Ire­land is ex­posed to an over­shoot on am­bi­tious green­house gas tar­gets it has agreed with the EU.

Petrol and diesel have sim­i­lar car­bon diox­ide emis­sions per litre, but diesel emits low-level pollutants in ad­di­tion: pub­lic health agen­cies have queried the tax dis­count. There is a sep­a­rate car­bon tax on sev­eral fuel types in Ire­land, in­clud­ing coal, which the min­is­ter also left un­touched, ig­nor­ing calls for an in­crease from sev­eral quar­ters.

The pol­icy hori­zon for ef­fec­tive ac­tion on global warm­ing, in Ire­land and ev­ery­where else, is mea­sured in decades and the is­sues in en­ergy pol­icy sim­ply can­not com­pete for the short at­ten­tion span of pol­i­tics and me­dia.

The In­ter­gov­ern­men­tal Panel on Cli­mate Change re­leased an im­por­tant up­date re­port in Seoul the day be­fore the Bud­get which re­ceived brief global pub­lic­ity. In truth there was noth­ing star­tling or new in the IPCC re­port. Es­tab­lished 30 years ago un­der UN aus­pices, the IPCC is the largest col­lab­o­ra­tive sci­en­tific project ever un­der­taken, in­volv­ing sev­eral thou­sand of the lead­ing ex­perts from around the world.

It seeks to es­tab­lish and pub­li­cise the best avail­able ev­i­dence on cli­mate change and to pro­vide guid­ance to pol­i­cy­mak­ers.

The mea­sure­ment of cli­mate change is dif­fi­cult and the con­se­quences in the fu­ture hard to pre­dict. The IPCC has how­ever con­cluded, re­peat­edly and for many years past, that the ev­i­dence sup­ports some im­por­tant broad find­ings: • The planet’s cli­mate is chang­ing and the changes over the last cen­tury can be traced to hu­man ac­tiv­ity. • A prin­ci­pal con­se­quence is global warm­ing: the earth’s av­er­age tem­per­a­ture has in­creased by close to 1°C since 1900 — way ahead of pre­vi­ous episodes of cli­mate change and can­not be ac­counted for by purely nat­u­ral pro­cesses. • The chief cul­prit is the com­bus­tion of fos­sil fu­els, mainly oil, coal and nat­u­ral gas. • At cur­rent lev­els of fos­sil fuel us­age, the world­wide cli­mate change will con­tinue. • And there will be neg­a­tive con­se­quences, in­clud­ing sea-level rise and more fre­quent ex­treme weather events, with se­ri­ous eco­nomic costs.

The IPCC’s ac­cu­mu­la­tion of ev­i­dence on cli­mate change is so per­sua­sive that the re­al­ity is ac­cepted by all but a hand­ful of sci­en­tists. There is less agree­ment about the ex­tent of the longer-term dam­age, and about the speed with which re­me­dial ac­tion needs to be taken. The al­ter­ation of the earth’s cli­mate by hu­man ac­tion is un­prece­dented and un­cer­tainty about the fu­ture pat­tern of events is in­evitable. But there are hardly any cli­mate ex­perts who doubt that ac­tion to con­tain emis­sions is ur­gent and that pol­icy re­sponse to date has been in­ad­e­quate.

There is good news about the cli­mate chal­lenge: the eco­nomic anal­y­sis shows that one fairly straight­for­ward pol­icy is avail­able which would in­cen­tivise the most ef­fi­cient, and low­est-cost, meth­ods to cut emis­sions. This is the im­po­si­tion of a charge on the con­sump­tion of items or ser­vices whose pro­vi­sion en­tails the com­bus­tion of fos­sil fu­els.

Last Mon­day, Wil­liam Nord­haus of Yale Univer­sity was awarded the No­bel prize for Eco­nom­ics, largely for his work on the eco­nom­ics of cli­mate change. Nord­haus has been the prin­ci­pal ar­chi­tect of a con­sen­sus among econ­o­mists that prac­ti­cal mea­sures are avail­able which would ar­rest global warm­ing at af­ford­able cost.

He is not, how­ever, op­ti­mistic that the path cho­sen by the world’s politi­cians is de­liv­er­ing a co­her­ent cli­mate pol­icy.

His non-tech­ni­cal guide The Cli­mate Casino (Yale Univer­sity Press, 2013) is a mas­ter­piece of ex­po­si­tion. I doubt if Nord­haus re­ceived a well-de­served con­grat­u­la­tory tele­gram from the White House: Trump has de­scribed global warm­ing, ac­cepted as real and threat­en­ing by Shell, BP and Exxon, as a ‘hoax’.

The earth has just one at­mo­sphere but has about 200 na­tional gov­ern­ments. Nord­haus in­sists, in line with the sci­en­tific ev­i­dence, that ev­ery tonne of emis­sions, from what­ever source or coun­try, has ap­prox­i­mately the same ad­verse ef­fect.

But some coun­tries re­lease very lit­tle of the world’s to­tal, a small frac­tion of one per cent in the case of Ire­land. If the sci­ence was telling us that the earth would burn to a cin­der 50 years hence (the sci­ence is not quite that scary), the im­me­di­ate and to­tal elim­i­na­tion of Ire­land’s emis­sions would de­lay the planet’s in­cin­er­a­tion by a few weeks.

There is no pay-off to a small coun­try for in­cur­ring the costs of emis­sion re­duc­tion, since the ben­e­fits ac­crue al­most en­tirely to oth­ers.

Even China, the world’s largest emit­ter, is re­spon­si­ble for only one-quar­ter of world­wide fos­sil fuel com­bus­tion, the USA for about one-sixth. The EU coun­tries burn just one-tenth be­tween them: even a prodi­gious fur­ther ef­fort in Europe, which has done more than oth­ers, would be un­suc­cess­ful un­less re­cip­ro­cated.

If planet earth had the good for­tune to be colonised by a su­pe­rior species from outer space the new rulers, anx­ious to main­tain their colony in work­ing or­der for an­other few cen­turies, would quite likely hire Bill Nord­haus and would quickly dis­solve its 200 com­pet­ing gov­ern­ments.

There would be just one world­wide cli­mate pol­icy. First up: who amongst the 200 squab­blers has been pur­su­ing de­struc­tive poli­cies that en­cour­age emis­sions?

Ga­so­line taxes are too low in the USA — cost per litre at the pump is around half the fig­ure for most Eu­ro­pean coun­tries; but it is not the worst of­fender. There are some big coun­tries which ac­tu­ally sub­sidise the re­tail price of petrol in­clud­ing Egypt, In­done­sia, Iran, Malaysia, Nige­ria, Pak­istan, Rus­sia and about 50 smaller ones.

There are no taxes at all, world­wide, on ma­rine fuel and on jet kerosene for in­ter­na­tional trans­port, re­spon­si­ble for 4pc and ris­ing of to­tal emis­sions.

In Europe, brown coal (lignite) for elec­tric­ity gen­er­a­tion, the high­est-emit­ting fuel source, is sub­sidised in Ger­many, cur­rently the Con­ti­nent’s virtue cham­pion in all mat­ters en­vi­ron­men­tal.

Peat gets the same treat­ment in Ire­land which sub­sidises both the least and the most dam­ag­ing meth­ods of power gen­er­a­tion.

Nord­haus would ad­vise the alien rulers that pro­duc­tion equals con­sump­tion for the planet as a whole and that only a sin­gle planet-wide pol­icy makes sense.

There is lit­tle point for Europe to bathe it­self in virtue by adopt­ing pro­duc­tion-based tar­gets with greater en­thu­si­asm than oth­ers if car­bon-in­ten­sive in­dus­tries sim­ply trans­fer to the de­vel­op­ing coun­tries, ef­fec­tively out­sourc­ing emis­sions.

Far bet­ter to dis­cour­age con­sump­tion of car­bon-in­ten­sive prod­ucts ev­ery­where and let them be pro­duced in the most favourable lo­ca­tions.

‘Europe can’t bathe it­self in virtue by out­sourc­ing emis­sions’

BLOW HARD: The af­ter­math of last week’s Storm Callum along the South Wall from Pool­beg Light­house, Dublin. Photo: Steve Humphries

NO­BEL LAU­RE­ATE: Wil­liam Nord­haus has in­ves­ti­gated the eco­nom­ics of cli­mate change

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