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Green and pleasant lands

The Carbon Crunch - review

The Carbon Crunch: How We’re Getting Climate Change Wrong – and How to Fix It
Dieter Helm
Yale University Press, 304pp, £20

Climate change is a real threat, but greens have hindered attempts to tackle it; the Kyoto Protocol is counter-productive; the solution is a global dash for gas driven by import duties on high-carbon products. That is the thesis of the economist Dieter Helm’s bracing but flawed The Carbon Crunch. It will doubtless influence opinions. But for all its bravura, its expert diagnosis is followed by an unrealistic remedy. It’s a bit like a football coach dissecting the failings of a parks team striker, then recommending the purchase of Ronaldo.

Let’s start with the bracing bit, Helm’s dismemberment of the teetering UN climate process. He notes that since the Kyoto Protocol set a limit on greenhouse gases 15 years ago, emissions have soared. The US, which is the world’s biggest polluter, refused to join, and China and India were exempted because they were relatively poor. The UN has finally accepted that emerging nations must be carbonconstrained too, but Helm is understandably sceptical about the likely success of the UN’s latest all-in-together plan for 2020, partly because, on the current trajectory, by 2017 the world will have overshot the threshold associated with the risk of disastrous climate change.

Helm excoriates Europe’s politicians for grandstanding in the climate talks. He highlights the uncomfortable truth, reported by me and others, that if you measure CO2 consumed in the UK, the total has gone up, not down. We blame the Chinese for the emissions they produce when creating the goods that we buy.

Helm scorns the EU’s crippled “flagship” climate programme, the EU Emissions Trading System (ETS). It was inevitable, he says, that the system would encourage industry lobbying and result in a surplus of carbon permits. (The US insisted on carbon trading in the Kyoto negotiations, before leaving the EU holding this policy grenade.)

He also pillories German Greens for securing the closure of the country’s nuclear plants, leading to a new generation of power stations fired by the dirtiest fuel of all: coal. And drawing on projections from the UK government’s energy economist David Mackay, he expresses disbelief at the idea that we will smother our land and seas with windfarms to meet targets by 2050.

The task of tackling emissions, he insists, is much greater than politicians admit. “Consumers must be able to pay,” he writes. “And if they can they must be willing to vote for politicians who force them to pay.” Helm’s solution is a dash for gas. This may be favoured by the Chancellor, George Osborne, but it is feared by others, including Ofgem, who warn that it may leave consumers vulnerable to price spikes as China expands its demand and gas becomes unaffordable on the global markets.

Helm asserts the unknowable premise that gas will be plentiful and cheap. Gas, he insists, is the transition fuel towards the low-carbon economy. All we need is to tilt China and India from dirty coal to cleaner gas to slow down dramatically growth in global emissions.

But this transition from one fossil fuel to another will still take us above the 2C risk threshold mentioned above. And here’s where Helm swaps his sword of truth for what some will see as a magic wand, because when we ask why the Giants of the East will abandon their mines of black diamond, the answer is . . . border taxes and investment in energy research and development. Rich countries, he argues, should impose levies based on the carbon embedded in imported goods. That will protect low-carbon industries from Chinese manufacturers freeloading on the global atmosphere with coal fuelled energy.

This solution has long been advanced by some economists. But supply chains for manufactured goods can contain items from 50 different countries, each with its own shifting carbon intensity. Imagine how long the trade negotiations will be spun. And, in the meantime, hear the Chinese sabre-rattling over the scheme to include aviation in the EU ETS – a plan that is simple, transparent and, the EU believes, legally defensible. China threatens a trade war because this is the thin end of the carbon wedge.

The other wishful solution to climate change is to divert funding from what Helm regards as the inadequate technologies of wind and solar power into lavishly supported government research for new energy sources. First, it’s most unlikely that governments would use any spare cash for research. Second, there are plenty of inventions already – what is lacking is the cash to get them from the demonstration stage to the commercial stage, through the so-called industrial valley of death. The massive German government solar programme has radically driven down PV costs by providing certainty to private investors, yet that is just the sort of targets- inspired policy that Helm disparages.

I challenged Helm recently on a few of his key recommendations: I suggested that nations would be probably be unwilling to provoke a trade war by introducing border taxes on carbon; warned that if governments scrapped renewables subsidies they wouldn’t spend the cash on energy innovation; and said the key to new technology was not blue skies innovation but coaxing existing inventions through the so-called Valley of Death to commercial scale.  

He replied: “I don’t disagree with your points.” If that’s so, one wonders why his book's conclusions are so confidently asserted.

Roger Harrabin is the BBC’s environment analyst. @rogerharrabin