Select Committee on Economic Affairs Second Report



The Committee, having considered various aspects of the economics of climate change, calls on the Government to give HM Treasury a more extensive role, both in examining the costs and benefits of climate change policy and presenting them to the United Kingdom public, and in the work of the Intergovernmental Panel on Climate Change (IPCC).

We have some concerns about the objectivity of the IPCC process, with some of its emissions scenarios and summary documentation apparently influenced by political considerations.

There are significant doubts about some aspects of the IPCC's emissions scenario exercise, in particular, the high emissions scenarios. The Government should press the IPCC to change their approach.

There are some positive aspects to global warming and these appear to have been played down in the IPCC reports; the Government should press the IPCC to reflect in a more balanced way the costs and benefits of climate change.

The Government should press the IPCC for better estimates of the monetary costs of global warming damage and for explicit monetary comparisons between the costs of measures to control warming and their benefits.

Since warming will continue, regardless of action now, due to the lengthy time lags in climate systems, and since there is a risk that international negotiations will not secure large-scale and effective mitigation action, a more balanced approach to the relative merits of adaptation and mitigation is needed, with far more attention paid to adaptation measures.

We are concerned that UK energy and climate policy appears to be based on dubious assumptions about the roles of renewable energy and energy efficiency and that the costs to the UK of achieving its objectives have been poorly documented. We look to the Government, with much stronger Treasury involvement, to review and substantiate the cost estimates and to convey them in transparent form to the public.

We think that current nuclear power capacity, before further decommissioning occurs, should be retained.

We urge the Government to replace the present Climate Change Levy with a carbon tax as soon as possible.

We are concerned that the international negotiations on climate change reduction will be ineffective because of the preoccupation with setting emissions targets. The Kyoto Protocol makes little difference to rates of warming, and has a naïve compliance mechanism which can only deter countries from signing up to subsequent tighter emissions targets. We urge the Government to take a lead in exploring alternative "architectures" for future Protocols, based perhaps on agreements on technology and its diffusion.

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