Catastrophe Confusion: The economics of climate change

Greta says the house is on fire. Panic is racked up by opportunistic celebrities, academics – and now the UN. Lifestyles, apparently, will have to change drastically – immediately – if the planet is to survive. But will they? Victor Hill enquires.

We’re all doomed!

Some of us – following in the footsteps of unsung heroes like HRH the Duke of Edinburgh – have been conservationists since before it was fashionable. But these days it is not sufficient to be mildly concerned about the degradation of the global environment. One is required to rush about screaming portents of doom with flailing arms. Hence the Labour Party wishes to proclaim a national emergency. (They presumably think that exuding more hot air will combat global warming.) But there arebasically three reasons to worry.

First there is pollution which we have long understood to be deleterious to health, especially poor air quality. These days air quality is a live issue. The high court recently granted a new inquest into the death of schoolgirl Ella Kissi-Debrah, who died of an asthma attack thought to be linked to illegal levels of air pollution near her south London home[i]. The child’s family believe air pollution should be cited as the principal cause of the nine-year-old’s death, in what would be a legal precedent. That would exert additional pressure on the government to combat the problem.

Second there is climate change which, so the experts tell us, has now passed the point of no return. Limiting the rise in ambient global temperatures to no more than 1.5 degrees Celsius now looks highly optimistic. On Wednesday last week (01 May) the House of Commons held a debate on the “climate emergency”. The next day a report was published by the Parliamentary committee on climate change headed by Lord Deben (aka John Selwyn Gummer – a serial cabinet minister under Mrs Thatcher, now in his 80^thyear). This proposes that the UK should aim to be net carbon neutral by 2050. Net neutral, if I have understood correctly, means that any CO2 emissions should be countered by carbon capture technology.

No one has yet formulated a coherent strategy as to how this could be achieved. The usual response trotted out by such luminaries as Labour’s Ms Rebecca Long-Bailey, is that we just need to crank out more renewable energy (solar arrays and wind turbines) and then we can wave goodbye to fossil fuels. The problem is, as I have tried to explain in this column before, that one of the greatest engineers of our time, the late Professor David JC Mackay, explained in meticulous detail why this way of thinking was “delusional”[ii]. Even if you covered half of the UK in solar panels you would still not generate sufficient electricity to meet our current needs. While we have plenty of wind in these islands, our winters are long and dark, and even in summer (as we well know) the sun doesn’t shine consistently – so solar panels don’t function most of the time.

The only way to phase out fossil fuels at current levels of consumption is to do what the French have done and roll out a massive network of nuclear power stations. But the Greens (and Labour, apparently) are vehemently opposed to that. Britain has a fleet of nuclear power stations which generated about 21 percent of total electricity consumed in 2016. However, all but one of these is due to close by 2030. The only new nuclear plant under construction in the UK right now is Hinckley Point C in Somerset which will use technology supplied byEDF (EPA:EDF) and China General Nuclear Power Group (owned by the Chinese state). EDF is guaranteed a price of £92.50 per megawatt hour of electricity (rising with inflation) for 35 years. So the electricity produced at Hinckley will be expensive. (Steel makers such as Tata Steel (BOM: 890144) have already complained that the electricity price in the UK is higher than in Europe thus making its Port Talbot plant uncompetitive).

Sizewell C is due to be upgraded in the late 2020s – but even these two facilities together will have insufficient energy to displace fossil fuels. Moreover, the electrification of transport implies that electricity output will have to be massively increased overall to keep our electric cars and trucks running. How will the shortfall be made up? Nobody seems to know.


Carbon capture and storage (CCS) technology has progressed disappointingly slowly. There is an experimental plant in operation in Iceland which sucks carbon out of the air which is powered by geothermal energy. The problem with CCS is that you have to expend energy in order to capture CO2. The most basic method of CCS is to plant trees. Alternately, Professor Klaus Lackner of the University of Arizona has developed mechanical trees which suck CO2 out of the atmosphere. These will be commercialised by an Ireland-based company called Silicon Kingdom which is backed by a number of oil industry veterans. This kind of technology will be centre stage at the newly announced Centre for Climate Repair in Cambridge.

Actually, the UK produces less than one percent of total global carbon emissions so even if we were to become net CO2 neutral tomorrow the world would continue to warm. But we are apparently supposed to set a good example to others.

Third there is the dramatic decline in biodiversity – an epidemic of extinctions. One estimate going round is that 30-40 percent of the estimated 8.7 million species of plants and animals on planet Earth[iii] could go extinct by 2050 if current trends continue.

On Monday (06 May) the United Nations published an alarming press release (the full report is still in preparation) which predicted a biodiversity calamity. One million species are at risk of imminent extinction chirruped the BBC. But, as Toby Young points out in this week’s Spectator the International Union for Conservation of Nature (IUCN)’s Red List of Threatened Species states that “more than 27,000 species are threatened with extinction”. How the UN gets from 27,000 to the one million figure is murky.

Much of the species depredation currently underway, especially of insects and birds, results from agricultural methods which are intended to boost crop yields but which cause habitat loss. With a growing global population, more humans must eat; and, arguably, intensive agriculture is less damaging to the environment than so-called organic agriculture because the latter requires the use of more land to achieve the same yields. If today’s world population were to be fed using the mainly organic yields of 1960, we would have to farm 82 percent of the world’s land area, whereas actually we farm about 38 percent. Professor Andrew Balmford of Cambridge University found that organic dairy farms cause 30 percent more soil loss and take up twice as much land as conventional dairy farming for the same amount of milk produced.

Concerns about biodiversity are not new – it was top of the agenda at the Rio de Janeiro Earth Summit as long ago as 1992. The problem is that the biodiversity issue has been eclipsed by the climate change stroke global warming issue. In countries like Indonesia and Ghana, rain forest has been cleared to grow palm oil and elephant grass to be used as biofuels. (Or what about pellets of straw being shipped from America to be burned at the Drax (LON:DRX) biofuels power plant in Yorkshire?) In this way climate change zealots have actually accelerated habitat loss and thus the decline of biodiversity.

The science writer and commentator Matt (Lord) Ridley has an interesting angle on biodiversity[iv]. He argues first that species extinction rates peaked in the 19^th century (mostly because of ships taking rats to islands). Stone-age hunter-gatherers caused mass extinctions of flora and fauna in North and South America, Australia, New Zealand and Madagascar with no help from modern technology or capitalism. Second, what really diminishes biodiversity is a large but poor population using subsistence agriculture. As countries get richer they generally reverse deforestation. For example, Bangladesh is now rich enough to be reforesting, not deforesting.

Matt Ridley recently demonstrated with scientific rigour why the recent report that all insects will become extinct by the end of the century was, in his words, pseudoscience. Rich countries are even re-wilding and re-introducing lost species. Wolves have been re-introduced in the French Pyrenees. Otters, ospreys, eagles, kites, cranes, beavers and deer have been re-introduced in Britain.

Calm down, Private Fraser! We’re not doomed yet.

The good news

Over the May bank holiday weekend (03-06 May) the UK went for more than 100 hours without generating electricity from coal-powered plants. This was achieved, according to National Grid (LON:NG), because windy weather boosted wind turbine power production. Coal now accounts for less than ten percent of Britain’s power production and by 2025 that is planned to reduce to zero as the last remaining coal plants are closed.


Moreover, increased efficiency means that overall demand for electricity is falling. Since the start of 2019 Britain has only used 2.9 terawatt hours of electricity. That compares with 8.6 terawatt hours consumed by early May 2018 – a drop of almost two thirds. No doubt that is partly due to the fact that this last winter was milder than the year before but I find this little-known fact astonishing.

The world’s first public coal-fired generating plant opened at Holborn Viaduct in 1882. Virtually all electricity production in the UK was generated from coal until the 1970s when North Sea gas came on stream. Gas-powered plants were supplying about one third of the UK’s power consumption by the 1990s. Gas is much cleaner than coal in that it results in fewer particulates – but it is still a fossil fuel that creates carbon dioxide when burnt.

The new Secretary of State for International Development, Rory Stewart MP, wants to spend more of Britain’s £14 billion foreign aid budget on the environment. That sounds promising.

What we can do

There are essentially three imperatives. First, the transition to electrification of transport should be accelerated – electric cars should replace those powered by the internal combustion engine by 2030 rather than 2040. Second, we have to reduce waste – especially food waste which is a national scandal. Third, we have to massively increase the efficiency of our homes. None of this is rocket science.

Overall, the automotive sector has been slow to respond to the challenge of electrification. New kids on the block like Tesla (NASDAQ:TSLA) have stolen a march on established players despite massive barriers to entry. The established automotive manufacturers, with all their brilliant engineering resources, have shown themselves to be bureaucracies. Even Daimler AG (ETR:DAI) is a long way from offering a full range of electric cars at prices equivalent to their existing gas-guzzlers. The sector needs, so to speak, a kick up the rear axle.

In the UK about one third of all food purchased ends up in the bin – largely, I think, because of poor household management – or perhaps because food is too cheap. This in my view (sorry to go all Calvinist) is a moral outrage. Not only is it a massive source of unnecessary carbon emissions but the cost of disposing of the waste is huge. People need to be much more conscious of their food consumption habits – freezers are part of the problem as they encourage food-hoarding. Please could some bright spark out there invent an app that monitors people’s food purchasing and disposal habits!

Poorly insulated homes in the UK are costing us dear. EcoHaus UK designs and builds affordable homes which consume about one fifth of the energy consumed by the average British home. Single person households are also to be discouraged. I’ll have more to say about this shortly – in the USA new forms of communal living are on the rise.

What about air travel?

CO2 emitted at high altitude remains in the atmosphere for longer and intensifies the greenhouse effect. Burning kerosene also creates other nasties such as carbon monoxide and methane which is a greenhouse gas about ten times more potent than CO2. A report out yesterday (09 May) suggests that very few air travellers take up the option to offset their carbon emissions by planting trees.

While we might get short-haul electric powered aircraft in the medium term, long haul electric aircraft are not yet on the radar – unless battery technology is transformed in ways we can’t imagine.

I suspect that we are very near peak air travel, which is why I’m quite bearish on airlines. (Though some are better positioned than others.) It’s not just about environmentalism. People want a pleasant travel experience and the airport experience is getting ghastlier. Look at how cruises have mushroomed as a holiday option – especially no-fly cruises. Moreover, if we could regenerate our coastal towns which have been much neglected, we could persuade more British people to take staycations.

The elephant on the sofa

The key issue which will determine the future of the planet is the one virtually all politicians in the western world find impossible to articulate for fear of offence. That is population: the number of people and thus mouths to feed competing for limited resources in this world. The world’s population is growing because people in the more developed north are living longer and people in the less developed south are still having babies at well above the replacement rate. Developing countries (with a few exceptions) also – happily – are benefiting from lower infant mortality and increased life expectancy.


There are currently 7.7 billion people in the world[v]and this is projected to rise to over 10 billion in 2050 (the year when the UK will supposedly become net carbon neutral). If there were fewer people on the planet, carbon emissions would be less than now and there would be less pressure on the land to produce food. (The world economy would also be smaller and – as I have argued previously – there would be deflation in a world of declining populations, just as there is now in Japan and Italy.)

Of course, the green-reds (or are they red-greens?) will argue that it’s all about equality. Americans emit about twice as much CO2 per capita as Europeans; and Europeans emit twice as much per capita as people in middle-income countries. Thus this becomes an argument about equality of outcomes. Rich people, so the green-reds argue, will have to make more sacrifices than the poor.

The Irish pop-star and all-round do-gooder, Bono, says he’s entirely relaxed about the forthcoming population explosion in Africa. (Nigeria’s population will double from just under 200 million today to about 400 million by 2050.) But then he, like Dame Emma Thompson, travels to LA regularly business class.

[i]See: https://www.theguardian.com/uk-news/2019/may/02/ella-kissi-debrah-new-inquest-granted-into-air-pollution-death

[ii]His main work was Sustainable Energy without the Hot Air (2009). But check out the interview with Mark Lynason YouTube which was made about a week before his untimely death from cancer in April 2016.

[iii]That figure has an estimated margin of error of around 1.3 million either side. Who knows how many species have not yet been discovered or catalogued? Last week’s New Scientistreported the discovery of two new stick insects in Madagascar.

[iv]See: https://reaction.life/biodiversity-threat-wont-tackled-alarmist-biologist-hype-dismantling-capitalism/

[v]See the worldometer population clock at: https://www.worldometers.info/world-population/