George Osborne is likely to be fuming over a report by the Committee on Climate Change this week that not only supports the existing carbon budget set in 2011, but says that it should be tightened. Even more irritatingly for the Chancellor, who seems to have a warm working relationship with energy firms, the Committee says that there is no environmental, economic or legal case for lowering the carbon budget.
The Chancellor believes that the budget reduces competitiveness, and announced a strategy on Thursday last week alongside his Autumn Statement that suggested a plan to build another forty new gas plants. The problem is that this would totally upset efforts to meet the UK’s carbon budget. This was originally put in place as part of the UK’s plan to manage its efforts to meet targets for the reduction of legal emissions levels. The justification for taking this approach in the strategy paper is that the UK government refuses to go further in reducing emissions targets than other EU countries. It says that the existing emissions caps under the EU Emissions Trading Scheme aren’t strict enough to force countries to deliver on their commitments.
The government had asked the CCC to review the carbon budget to see if changing circumstances would allow the UK to ease off on its targets – provided for under the Climate Change Act. The Committee has returned to say that there have been no changes in the science underpinning the requirement, or changes in either international policy or at a domestic level to justify a relaxation of targets. The cost to household bills is estimated to be an additional £100 a year by 2020.
By contrast the CCC believes that investing the time and technology now will save more than £100bn if gas prices remain stable, with even higher savings as gas prices go up. Other benefits include a lowered reliance on importing fuel, lower noise pollution and an improvement in air quality. Their economic arguments for continuing to cut emissions over the next ten to fifteen years are that the UK will be effectively providing insurance against increased costs, the cost of repairing climate-related damages such as the recent surge tides that hit the east coast of the UK, and alternative sources that would reduce the upward direction of energy bills.
There is considerable debate over how the Committee has made its calculations though, especially where it comes to the cost of laying out appropriate infrastructure investments and in the assumption that the price of emitting carbon is going to continue to rise as countries around the world are forced to deal with climate change. The worry is that the UK economy may be in danger if it forges on with tackling climate change and nobody else does. At the same time there is worry that the confidence of investors to put approximately £100bn into renewing the UK’s electricity generation system is being affected.
Perhaps the area for pressure that seems to be being sidestepped is the reluctance of the EU to follow through on its own carbon budget commitments. Hopes are being laid on the upcoming 2015 UN climate summit in Paris to further address these differences in opinion.