Select Committee on Economic Affairs Written Evidence

Memorandum by Dr Ian Castles, Asia Pacific School of Economics and Government, Australian National University, Canberra

  1.  In a press statement issued in Milan on 8 December 2003, the IPCC charged that:

    In recent months some disinformation has been spread questioning the scenarios used by the IPCC as developed in its Special Report on Emissions Scenarios (SRES). Like all reports published by the IPCC, this publication was based on an assessment of peer reviewed literature available at the time of the preparation of the report and subject to the review and acceptance procedures followed by the IPCC. As the work of the IPCC proceeds further any new literature that becomes available will be assessed.

  2.  The statement identified "so-called `two independent commentators' Ian Castles and David Henderson" as the source of the "disinformation" about the IPCC scenarios. The IPCC has dismissed our critique of the scenarios and has determined that the SRES provides "a credible and sound set of projections, appropriate for use in AR4."

  3.  Some months earlier, the process of assessment, review and acceptance of the SRES that was summarised in the IPCC press statement was outlined in detail by 15 of the SRES authors themselves:

    Over the period of more than three years, the IPCC writing team developed a set of long-term emissions scenarios and documented them in a Special Report on Emissions Scenarios (SRES, 2000). The international and interdisciplinary writing team that assessed the scenarios literature and developed the set of 40 emissions scenarios consisted of 53 Authors and four Review Editors. In addition to scientists, the interdisciplinary writing team also included experts from NGOs and the private sector. The work on the scenarios included an "open process" that invited modelling groups and individuals to contribute to the scenario development. Six leading modelling teams participated in formulating the scenarios that included systems-engineering as well as macro-economic models . . . The scenarios were extensively reviewed both by 89 experts and by governments prior to IPCC approval and publication in 2000. Based on these reviews, first the writing team and then the IPCC Working Group III plenary session in Katmandu, Nepal, March 2000, modified and subsequently approved the [SRES]. It was published by Cambridge University Press . . . and is also available through the IPCC website (Nakicenovic et al, 2003, "IPCC SRES Revisited: A Response", Energy and Environment, volume 14, nos 2 and 3: 188-89).

  4.  In an article recently published in the quarterly Newsletter of the Royal Economic Society and submitted in evidence to the Committee, Professor David Henderson has written:

    In relation to our own subject interests, we question the claims to authority and representative status that the IPCC makes on its own behalf. We do not question the numbers of those involved, their diligence, or the existence and observance of formal review processes. But we think that when it comes to the treatment of leading economic issues, the milieu is neither fully competent nor adequately representative. We also hold that building in peer review is no safeguard against dubious assumptions, arguments and conclusions if the peers are all drawn from the same restricted professional milieu.

  5.  Professor Henderson and I have given many examples of "dubious assumptions, arguments and conclusions" in the joint critique of economic aspects of the work of the IPCC that we have put forward over the past two or three years.

  6.  In this submission I draw attention to eight further errors in the SRES and/or in the responses of the SRES Teams to our critique, in addition to those identified in our previous papers. My purpose is to provide additional evidence in support of the view that the IPCC should not be accepted as the authoritative source of information on the economic aspects of climate change.

  7.  My submission is made in an individual capacity. I do not speak for any interest or organisation.


  8.  The relationship between economic development and energy intensity is presented in the SRES as follows:

    Although there are consistent differences among regions and energy paths, the level of energy intensities in developing countries today is generally comparable with the range of the now-industrialized countries when they had the same level of per capita GDP . . . Global energy intensities diverge across different scenarios, as shown in the shaded wedge in Figure 2-10. The wedge clearly illustrates a persistent inverse relationship between economic development and energy intensity across the wide range of scenarios in the database (SRES, s 2.4.10, pps 97-98, emphasis added).

  9.  In fact there is no persistent inverse relationship between economic development and energy intensity if economic development is measured, as it must be, in GDP(PPP). This is apparent from the estimates presented by Professor Angus Maddison in Table 4b of his submission to the Committee. These estimates show, for example, that in 2001 the level of energy intensity in the United States was higher than in most developing countries and regions, including China, India, Other Asia and Latin America—and that this was also true (with the single exception of China) in 1973. If there were an inverse relationship between economic development and energy intensity, one would expect energy intensity in the United States to have been lower than in developing countries in both years.

  10.  The myth that there is an inverse relationship is widespread, and arises as a consequence of the belief that GDP(MER) is "the preferred measure of economic growth" (see, for example, Nakicenovic et al, 2003, "IPCC SRES Revisited: A Response", Energy & Environment, volume 14, nos 2 and 3: 187 and 199). For reasons that have been explained in detail in our articles, estimates of GDP(MER) do not measure relative volumes of output, and should not be used as indicators of levels of economic development.


  11.  Appendix III to the SRES—entitled "Definition of SRES World Region (sic)"—lists 207 countries and territories in the world, and shows how they are allocated to the four SRES regions. All countries and territories of any significance in the world are included in the IPCC list, with one significant exception: the United Kingdom. It is surprising that the British Government participants in the processes described in the quotation in paragraph 3 above did not notice the absence of their country from the list. The other 207 countries and territories in the world are listed at


  12.  There are many differences in estimates of regional and global GDP in the base year of the projections (1990), even among scenarios in the same modelling group. In the case of the OECD90 region, for example, the estimated GDP(MER) in 1990 is only US$15.3 trillion for the A2 MESSAGE scenario, but US$16.4 trillion for the other eight MESSAGE scenarios. The estimated GDP(PPP) in 1990 for the OECD90 region is US$14.067 trillion for all nine MESSAGE scenarios.

  13.  It is possible that the reason why the estimate of GDP(MER) in 1990 for the OECD90 region in the A2 MESSAGE scenario is about US$1 trillion less than the corresponding estimate for the other MESSAGE scenarios is that the GDP(MER) for the United Kingdom (which was of the order of US$1 trillion in 1990) was inadvertently omitted (see paragraph 11 above).


  14.  The estimated GDP(MER) for the World in 1990 is reported as US$20.9 trillion for all nine of the MESSAGE scenarios. This corresponds to the total for the four SRES regions for eight of these scenarios. However, the total of the four regions in the A2 MESSAGE scenario is US$20.080 trillion, or about 4 per cent less than the estimate given for the World for this scenario.

  15.  It is possible that this is because, for the A2 MESSAGE scenario, the United Kingdom is included in the estimate for the World but not in the estimate for the OECD90 region (see paragraphs 11 and 13 above).


  16.  The "Glossary of Terms" in the SRES (Appendix IX) defines "scenario" as "a plausible description of how the future may develop on a coherent and internally consistent set of assumptions about key relationships and driving forces" (SRES, p 594, emphasis added).

  17.  Some of the SRES scenarios are not internally consistent because the composition of the four world regions is defined differently for different parameters in the same scenario. For example, Turkey is listed as part of the "OECD90" region in Appendix III to the SRES, and is presumably included in that region in all parameters in the MESSAGE scenarios, including B1 MESSAGE.

  18.  However, it is clear from the distribution of the global population between regions in the B1 IMAGE scenario that Turkey is not included in the OECD90 region in this scenario so far as population estimates and projections are concerned: the estimated population of this region in 1990 in B1 IMAGE was 859 million, compared with an estimated population in the same year of 919 million in the B1 MESSAGE scenario. The population of the ALM region (Africa, Latin America and the Middle East) was correspondingly higher in the B1 IMAGE scenario than in B1 MESSAGE (and most other) scenarios.

  19.  Yet Turkey is not excluded from the OECD 90 region for purposes of the GDP estimates and projections in the B1 IMAGE scenario: the GDP numbers for this region are virtually identical to those for the B1 MESSAGE scenarios in all years. The population estimates for the OECD 90 and ALM regions in the B1 IMAGE scenarios are therefore inconsistent with the corresponding GDP estimates for the entire period of the projection. The population estimates for these two regions in 1990 and 2000 must also be inconsistent with the corresponding emissions numbers, which are standardised for all scenarios and follow the SRES Definition of World Regions throughout.


  20.  Under the heading "Comparing apples and oranges", the SRES Team allege that:

    . . . in their critique Mr Castles and Mr Henderson systematically confuse MER and PPP GDP growth measures as reported in SRES and elsewhere, both in terms of comparing the scenarios to each other as well as in comparing the scenarios to both the historical and prospective (scenario) literature. In short, they systematically construct a case out of comparing apples and oranges. For instance, throughout their critique an inappropriate comparison is made between the historical growth rates reported in the formidable statistical work of Angus Maddison, that reports GDP in PPP, with the MER growth rates reported in the SRES report, whereas a valid comparison would have considered the SRES PPP scenarios instead (Nakicenovic et al, 2003, op cit: 196-97).

  21.  As pointed out in Castles and Henderson, 2003, "Economics, Emissions Scenarios and the Work of the IPCC, Energy and Environment, volume 14, no 4: 422-23, the so-called PPP-based figures in the MESSAGE scenarios are not genuine measures of GDP. The implied growth rates cannot therefore be compared with the historical growth rates reported by Angus Maddison—see William Nordhaus, 2005, "Alternative Measures of Output in Global Economic-Environmental Models: Purchasing Power Parity or Market Exchange Rates?", Prepared for IPCC Expert Meeting on Emission Scenarios, US-EPA Washington, DC, 12-14 January 2005, revision dated 12-14 January 2005:

    A final issue concerns how to construct panels of countries with PPP outputs or expenditures . . . The most common practice is to combine the cross section of a base year (which is a PPP measure) with extrapolations forward and backward for each country using that country's prices and outputs . . . This procedure is used by the World Bank, the OECD, and Angus Maddison (p 11, emphasis added).


  22.  In another example under the heading "Comparing apples and oranges", the SRES Team claim that:

    Likewise, in his critique of the MESSAGE scenarios, Mr. Henderson . . . wonders why the 1990 to 2000 GDP growth varies between 20.6 and 35.4 per cent . . ., simply ignoring that the former (lower) number refers to PPP, while the latter (higher) number refers to MER . . .

  23.  This is not correct. Both numbers refer to the reported growth in GDP(MER) in the MESSAGE scenarios. The lower number refers to the A2 scenario, which projects an increase in GDP(MER) from $20.9 trillion in 1990 to $25.2 trillion in 2000 (SRES, p 481), and the higher number refers to the B2 scenario, which projects a corresponding increase from $20.9 trillion to $28.3 trillion (SRES, p. 561). These increases in absolute levels of GDP represent growth rates of 20.6 per cent and 35.4 per cent—ie, the numbers quoted by Professor Henderson and repeated by the SRES Team.

  24.  The corresponding GDP(PPP) projections from the MESSAGE scenarios are readily available from the same tables in the SRES, and imply an almost equally wide range in the rates of growth—from 21.4 per cent for the A2 scenario to 35.2 per cent for the B2 scenario.

  25.  These very wide ranges in the projected growth rates for a decade that was already over when the SRES was published should have been considered in the Report. The SRES Team's false charge that Professor Henderson had confused the MER and PPP measures suggests that they did not realise the implications of their own results: they even claimed that "It is an added bonus that they (the projected GDP increases from 1990 to 2000) turned out to be quite robust in forecasting actual short-term historical development", and that "This is a tribute to the enormous efforts that went into calibration of the base year in the six models and the short-term dynamics such as the capital vintage structures" (p 203). In fact, the projections for the 1990s do not show this. On the contrary, as Professor Henderson correctly observes,

    . . . the SRES treatment of developments over the 1990s seems curiously detached from what actually happened . . . Neither the spread of these scenario figures nor their relationship to actual events is the subject of comment . . . Consideration of the reasons why some model results diverged sharply from actual developments over the decade—in respect of energy consumption and CO2 emissions, as well as GDP—could well have been given in the Report, both as part of the assessment of past trends and in commenting on the properties and performances of different models (Castles and Henderson, 2003, "The IPCC Emission Scenarios: An Economic-Statistical Critique", Energy and Environment, volume 14, 2 and 3: 183).


  26.  In their second response to Castles and Henderson (Grubler et al, 2004, "Emissions Scenarios: A final response", Energy and Environment, volume 15, no 1), the SRES Team state that "three of us (Grubler, Nakicenovic and Rogner) have developed jointly with other colleagues the first set of PPP-based long-term emissions scenarios in a joint study between IIASA and the World Energy Council (Nakicenovic et al 1998) which was quoted by C & H as an example of how PPP can be used in such scenarios (p 16, emphasis added).

  27.  This is untrue. We stated clearly and emphatically that "The MESSAGE GDP series expressed in PPP terms is not such a measure—it is mislabelled" (Castles and Henderson, 2003, op cit: 423). This comment applies equally to the GDP(PPP) series in the MESSAGE SRES scenarios and to those in the IIASA-WEC study (Nakicenovic, Grubler and McDonald, eds, 1998, Global Energy Perspectives).The PPP-based series which we quoted as examples of how PPP can be used in long-term emissions scenarios are listed in the sentence beginning "Among the PPP-based studies . . ." at the foot of p 418 in our second paper in E&E. These do not include GEP.

  28.  The fact that the GDP(PPP) series in the GEP scenarios are not genuine GDP series was recognised by two of Professor Nakicenovic's colleagues at IIASA (Leo Schrattenholzer and Yoshiyuke Fujie) in Schrattenholzer et al, "A longer-term outlook on future energy systems", 2000, in International Journal of Global Energy Issues, volume 14, nos 1-4: 348ff. In this paper, Schrattenholzer et al attempted a comparison between average annual changes in the global energy intensity of GDP in the IIASA-WEC A2 scenario in Nakicenovic et al, 1998, op cit with those in the POLES scenario. After noting that there are significant differences in the profile of changes in the global energy intensity between the two scenarios, Schrattenholzer et al make the following comment:

    Note, however, that the comparison is made using the units with which GDP is measured in the two models. IIASA-WEC uses the more conventional market exchange rates to convert GDP from different currencies into US dollars. In contrast POLES uses the concept of purchasing power parity (PPP) for the same purpose. Using POLES GDP growth rates per world region on base-year GDP values expressed in the conventional (market exchange rate) way, gives different values of primary energy intensities and its changes (p 356).

  29.  If Schrattenholzer et al had believed that the MESSAGE PPP projections were genuine GDP numbers, there is no reason why they could not have compared them directly with the POLES projections which, as they note, are expressed in PPP. Instead, these experts were obliged to convert the POLES projections into a spurious GDP(MER) series, in order to compare apples with apples. It is unfortunate that the sound GDP(PPP) projections reported in World Energy Council, 1993, Energy for Tomorrow's World were replaced by two unsound sets of projections (MER and the so-called PPP-based numbers in the MESSAGE scenarios) after the IIASA-WEC partnership was formed in 1993.

1 March 2005

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