Speakers:

The Rt Hon Hilary Benn MP - Secretary of State for Environment, Food and Rural Affairs

Andrew Simms - Policy Director and head of the Climate Change programme at the New Economic Foundation's Centre for Global Interdependence

Chair

Tony Baldry MP

Hilary Benn said that his roles both at DEFRA and previously with DfID have meant him dealing with climate change issues, but in different ways. The actions are related to both economic growth and climate change.  The actions needed in the 21st century are that of managing carbon budgets and ‘living within means’ in respect to these. The high carbon growth path for developing countries will not work, but without growth less developed economies are not going to lift themselves out of poverty. Economic growth is fundamental to reducing poverty. In the last decade half a billion people have been lifted out of poverty (living on less than a dollar a day) but continued growth must be sustainable. Climate change will not only affect the worlds’ poorest people, but it may also put development into reverse.

Based on current projections, by 2080, 600 million people will suffer from increasing sea level rises and 1.8billion people will suffer from a lack of clean drinking water. This will mean disease, drought and migration and conflict. Some say that today’s climate change image of a polar bear may be replaced by an AK47. But, this view neglects that pursuing sustainable growth offers opportunities.

In response to the two questions posed as part of the invitation to this meeting, put simply the responses are ‘yes’ and ‘yes’. Developed countries need to decarbonise. The UK is committed to reducing CO2 emissions to a level 25% less than in 1990. This increases the opportunities for low carbon goods and services. Investing now will reduce the costs of low carbon technologies which will enable these technologies to be passed on to developing countries. A World Bank Strategic Climate Change fund has been set up to this effect, to which the UK has contributed £800million. The low carbon economy sector in the UK is worth around £25billion, it employs around 400,000 people and as an industry is on a par with aerospace and pharmaceuticals. The financial services sector within the UK are already engaged.

However, to coin a phrase - there is still an inconvenient truth. Even if the UK were to completely stop its CO2 emissions this would not solve the climate change problem.

The G77 group are all at very different stages of economic development. There is a need to develop a global carbon market in order to increase the price of bad production in terms of CO2 emissions, using market mechanisms.

Douglas Alexander has set out the five development tests that are needed in order to get the mechanics of the global carbon market, right. How do we divide up CO2 emissions given that the earth is finite, and has finite resources: how do we determine entitlement? How can we make initiatives work for the poorest countries of the world? Do we need to take a sectoral approach? How can we demonstrate investment strategies to reduce CO2 emissions on an economic scale? We need to show that low carbon investment strategies are possible, decarbonisation is the goal. We need the right institutions at a global level in order to do this. We have a deadline for achievement, but we need the right deal, it needs to be equitable and address poverty but also it must be respectful of human rights.  

Preparations are underway for the Copenhagen climate change meeting at the end of the year to achieve the post-Kyoto agreement. To have gotten world leaders together at Bali 2007 would have been unthinkable only a few years ago – but that has happened and there is momentum.

Speaker: Andrew Simms, Policy Director, New Economics Foundation

The title of Andrew Simms’ presentation was ‘Poverty reduction in a Carbon Constrained World’. Andrew set out his discussion through firstly discussing the environmental impact of our consumption and secondly, incomes. Presenting GDP and CO2 emissions, there is a strong upward trend of both. As world gross domestic product (GDP) increases so do carbon emissions (bn tonnes).

Looking at environmental impacts, with reference to research carried out by the Hadley Centre for Climate Prediction and Research by the mid 1990s around 2% of the world’s surface area was subject to extreme drought. By the end of this century, the percentage of land subject to extreme drought will rise to over a third. This has strong implications on food supply and the world’s poorest people, as these people are most likely to be dependent on rain fed agriculture.

The problem is current economic growth. Between 1990 and 2001, for every $100 worth of growth in the world’s per capita income, just $0.60 contributed to reducing poverty below the $1-a-day line. To achieve a single dollar of poverty reduction in the period 1990-2001, $166 of extra global production and consumption was needed compared to around $45 in the period 1980-1990.

The average environmental footprint per person has increased incrementally for those in the developed world but has barely increased for those in developing countries. We need to drastically reduce CO2 emissions well below current levels: put simply the scale of the challenge is enormous. Based on the current model of economic growth, what would it take to get all of the world’s poor living on $3 a day? In terms of world resource requirements, it would take another 15 planets worth of resources in order to meet this objective.

So how do we win this argument? Can we maintain the current quality of life whilst reducing our use of resources? Most research suggests that we can. But even though GDP has risen in the UK, life satisfaction has remained relatively stable.                 

There are different types of economic growth. There are carbon constraints on growth. But we have barely begun to think about the changes required in the current economic growth model. The export orientated growth model followed by East Asia, although combining growth with equity, has fuelled consumption in the North. Drawing on Herman Daly (2003) the concept of uneconomic growth has to be incorporated into our economic thinking if it is to be capable of expressing what is really happening in the world.

The key challenge remains that of poverty. We need to look at redistributive measures again. Reducing poverty within carbon constraints means we look at poverty measures directly and do not just rely on trickle down effects.  

Questions and Answers

Why is it that the World Bank fund to which the UK is contributing, is increasing fossil fuel consumption in developing countries? HB: There are serious equity and governance issues around this; how can we ask developing countries not to use carbon? We need to make the resources flow particularly into developing low carbon technologies here, so that the cost of these technologies reduces over time. This is particularly important leading up to the Copenhagen meeting in December. We need to build up trust, we need to lead by example, and we need to provide the finance in order to do this.  

AS: There are many innovative examples of the use of new and clean technologies, such as in India where wind and solar energy technologies are being adopted and used. It’s just that it’s typically the more powerful and better organised producers such as cola producers that get to the World Bank and to the Energy Investment Fund.  Civil society needs to organise and bolster its efforts to get cleaner technologies in wider use. 

Isn’t it a case of getting the right technologies? And isn’t this a case of getting the right incentives and a question of distribution? HB: It is absolutely a question of technology and incentive structures. The development of the carbon market therefore has a key role to play. We need to get the balance of incentives right so that instead of removing rainforests, it makes more economic sense to keep them.

AS: It’s important to make the distinction between high technology and low technology. The ‘Jevons paradox’ for example tells us that if we increase technological efficiency it doesn’t necessarily help us to reduce our consumption; to the contrary we may in fact increase our consumption in response to the lower cost. As technological improvements increase the efficiency with which a resource is used, total consumption of that resource may increase, rather than decrease. We cannot rely solely on new technologies to solve the problem. 

The Stern report estimates the costs of doing something but may have underestimated the costs of doing nothing. Some authors posit that what is actually needed is something more akin to a war effort, do you agree? AS: The Stern report seems to assume that it’s possible to buy back what we have lost, but this may not actually be the case. It’s a question of tipping points, given environmental feedback loops we cannot expect to stabilse. In terms of a war effort, the situation really is without historical precedent, there is a fundamental need to reengineer the economic growth process. 

HB: In a war effort the need for action may seem more immediate.  We are discussing a finite resource and it’s a case of changing bit by bit, and we need to engage the private sector. The Stern report managed to do this. We need to bring people, especially business people, together to discuss the issue in order to help drive the process of change. 

Isn’t there a need for a narrative on this issue which goes along the lines of working towards partnerships between less developed and more developed countries? Can we have a narrative given current EC trade policies for example, on biofuels?  HB: Biofuels are a classic example; in the beginning, environmentalists were lobbying hard for them and singing their praises, but now the situation has changed to “it depends”. We need more facts and more information, we need specific country examples. But we need to think globally. The fact is that it doesn’t matter where the emissions reductions take place - it’s that they take place. We need to regulate on a global scale and we need to work out carbon budgets on a global scale.