Lord Lawson of Blaby
Main Page: Lord Lawson of Blaby (Conservative - Life peer)
Lord Lawson of Blaby
My Lords, I congratulate the Government on one of the decisions that they have taken, one which was criticised by the noble Lord who spoke for the Labour Front Bench; that is, the decision to take the £1 billion taxation in effect from the carbon-reduction scheme and apply it to reducing the appalling deficit with which this Government are landed, rather than keep with the idea of the previous Government. The purpose of taxation is to give money to the Treasury for the needs that it has in order to finance necessary public expenditure and to maintain public finances in good order. I congratulate the Government on that.
There is little else on which I feel that I can congratulate the Government. But I begin by declaring an interest as the founder and chairman of the Global Warming Policy Foundation, which celebrates its first anniversary later this month. As its name implies, it is concerned above all with the policy aspects, which we are discussing in this debate, of this whole multidimensional climate change issue. I speak, incidentally, for myself and not for the foundation, which does not have a corporate view.
Because various remarks have been made, I should say that the foundation is financed by a range of generous donors. But one thing is absolute: in order to show that there is no possibility of our not being independent, we do not accept a penny of money from the energy industry or anyone who has a significant interest in it. I am glad to say that this is monitored by my excellent board of trustees, most of whom are Members of this House. All the Benches are represented. I am the only Tory. There are two from the Labour Benches, who I am glad to say are in their places. There is one from Liberal Democrat Benches. There are two from the Cross Benches and one from the Bench of Bishops. It is fully monitored that we do not raise any money from the energy industry.
In his admirably brief opening speech, the Minister mentioned two things which the Government generally—I do not want to single my noble friend out because he was just speaking the Government’s policy—are trying to make out. They say that there is a real energy security problem, which we have to meet by decarbonising our economy, and that there are great economic benefits in our decarbonising our economy. Both those things are absolute nonsense. I have some knowledge of the energy scene, having been Secretary of State for Energy in the distant past, but these things do not change completely.
Carbon-based energy has never been more abundant than now. It is commercially extractable because, not least, of the exciting recent technological development of the commercial extraction of gas from shale. This not only increases enormously the commercially winnable carbon energy resources of the world, but it is fortunate that shale is abundant throughout the world—in North America, Europe, South America and so on. We do not have to feel that we are dependent on the Middle East, which may be unstable, or on Mr Putin, who may be unreliable. The development of the liquid natural gas business has also increased security on the gas front very significantly. So there is no energy security problem. In so far as there is an energy security problem, it is because we may come to rely too much on intermittent wind power, when the lights might indeed go out, but that is the only problem we have.
I turn to the idea of raising substantially the price of carbon. It is the essence of the Government’s policy because it is only way you can shift to so-called green energy, which is much more expensive. Somehow, it is claimed that this will produce an economic benefit and create jobs. I am reminded of the distinguished 19th-century French economist, Frederic Bastiat. He pointed out that if you went around breaking windows everywhere, you could create an enormous number of jobs for glaziers, but that did not mean that it was a sensible thing to do. That is a parable of the Government’s policy. When we debated this issue just before the Summer Recess, the noble Lord, Lord Giddens, who I respect and am glad to see will be speaking later, pointed out that the creation of jobs argument is complete nonsense and rubbish.
On this front, I want to mention two of the economic consequences of the Climate Change Act 2008, to which this Government, like the previous Government, are wedded. Perhaps I may quote from an interesting article on energy in the current issue of the Economist. It begins:
“Many factors were responsible for the industrial revolution. But the use of fossil fuels was clearly vital in driving a step change in rates of economic and population growth. So the current rise in the cost of extracting such fuels should be the subject of considerable concern”.
The article concludes with:
“That is a headwind the global economy could do without”.
The increase in the cost of extraction will be nothing compared with the increase in the cost of energy if we go from carbon-based energy to non-carbon energy. We in the United Kingdom do not use carbon-based energy because we have a love affair with or addiction to carbon, and we do not use it because the oil companies are so powerful that they force us to do so. We and the rest of the world use it, quite simply, because it is by far and away the cheapest source of energy. Anything else is more expensive. It may not be so for ever, but for the foreseeable future that is the case.
Despite energy savings, there will be a huge increase in fuel poverty in this country, something I do not want to see, as well as in costs generally. The Minister mentioned the green investment bank. This is what the chairman of the green investment bank commission had to say in an interview published in the Daily Telegraph on 3 July:
“The total estimated cost of meeting our current climate change carbon reduction targets is between £800bn and £1 trillion … There’s really been nothing like this since the post-World War Two reconstruction programme”.
That is the appalling burden we are saddling ourselves with, and what for? The purpose is to decarbonise, as it were, the world economy. My noble friend referred to the objective, which is to reach a global agreement in Cancun in December at the United Nations climate change conference to decarbonise the world’s economies, faster for the developed world, of course, than for the developing world, but it is accepted that it makes sense only if every country—China and India as well as the developed countries—takes its share. This is not going to happen. The lessons of the Copenhagen conference last December should have been clear. Why is that? The reason why the Copenhagen conference was a fiasco and no global agreement could be secured was because of the position of the developing countries, with which I have considerable sympathy. There was, incidentally, a prior meeting between the so-called BASIC countries—Brazil, South Africa, India and China—in Beijing on the eve of the Copenhagen conference, and they agreed that none of them would agree to a binding global carbon-reduction agreement in which they were participants. They were very happy for the developed world to cut back its carbon but they were not going to take part.
Why? Because they have a real problem with poverty and its consequences. Hundreds of millions of their people still suffer from preventable disease, malnutrition and premature death and they know that to get these people out of poverty as quickly as possible they need the fastest rate of economic development. That requires among other things—it is not the only thing—using the cheapest available form of energy, and that is carbon-based energy. That is why they would not agree at Cancun either, and they are absolutely right. That is why China is building a new massive coal-fired power station every week, and why it is the new imperial power in sub-Saharan Africa and is getting its hands on all the raw material resources it can, including gas, oil and coal. It is not making this great diplomatic, financial, economic and political expenditure because it does not mean to use them—it will use them. That is how it sees the future and it is absolutely right. So the idea that there will be a global agreement on this is unwarranted. There may be a global agreement on adaptation aid to the poor countries should that be needed—I would be content with that—but there is not going to be a decarbonisation agreement. As to us going it alone, the total amount of emissions that we are responsible for is less than the growth in emissions from China in one year.
Another reason the global agreement will not happen is because after China the biggest emitter of carbon dioxides is the United States. Unlike George Bush Jr, President Obama came in saying that he was going to get to grips with this issue. What has happened? Nothing. There is a Bill in the House of Representatives which is like a beached whale. After the mid-term elections today, the beached whale will be a dead duck. It is quite clear that if President Obama cannot get legislation through Congress when the Democrats have a majority in both Houses, there is no earthly possibility of it being agreed when the Republicans control at least one of the Houses and, with their friends the coal-state Democrats, effectively control the Senate as well.
There is no way this is going happen. It is complete madness; it does not make sense. As their predecessors did, the Government trumpet that we are the only country in the world to have a Climate Change Act which binds us legally to an 80 per cent reduction by 2050, when some of your Lordships—not me—might even be alive. They say that no other country has this commitment. Of course no other country has this: no other country is so stupid. The policy simply does not add up.
What is it all in aid of anyway? It is a fear that global warming, which has paused for the past 10 years, may resume. I do not know if it will—no one knows—and I am certainly prepared to confess that I do not know. I am one of the few people in this business who does not know what the temperature of the globe is going to be in 100 years. It may be warmer than it is today, but so what? We can adapt, which is what people do in different parts of the world where temperature varies enormously. As economic development takes place, capacity to adapt is greater than ever; as technology develops, the capacity to adapt is greater than ever.
The Intergovernmental Panel on Climate Change, which makes the projections on which the Government ostensibly base their policies, gives certain warnings for the next 100 years. It thinks that the temperature will go up between 1.8 degrees Celsius and 4 degrees Celsius. It says that a rise at the upper end, of 4 degrees Celsius, would mean a loss of global GDP of somewhere between 1 per cent and 5 per cent. We in this country will benefit from global warming, as most of us instinctively and intuitively sense, but there will be parts of the developing world which will not. Let us assume for the developing world a loss not of 5 per cent but of 10 per cent. That would still mean on the panel’s growth projections that living standards in the developing world in 100 years would be only eight times rather than nine times as high as they are today.
Lord Haskel
I draw to the noble Lord’s attention the clause in the Companion which says that it is best to limit speeches to 15 minutes.
Lord Lawson of Blaby
I speak very seldom in this House and I hope that I will be allowed a little bit of a margin on this issue, but I am so grateful to the noble Lord opposite for the reminder. I have often wondered what he spends his time doing. It is obviously reading the Companion, which is a very sensible thing to do. I shall conclude soon.
Noble Lords may say, “Well, surely the panel is being a little bit optimistic in projecting that this century is going to be far and away the best century economically that the world has ever seen”. Perhaps the panel is being optimistic in assuming great rates of growth in China, India and so on. It is perfectly plausible, but it may not happen. If the growth being projected does not take place, you will not get the growth in emissions, and if you do not get the growth in emissions—on the panel’s model—you will not get the warming either. You cannot have one without the other. The huge rise in living standards is an integral part of the projections that the panel makes.
I could say more, but I shall not. The only conclusion that I can reach about the Government’s policy, which is no different from the Opposition’s policy, is that it is both intellectually incoherent and economically illiterate.