LORD TURNER OF ECCHINSWELL AND MR DAVID KENNEDY

26 MARCH 2008

  Q40  David Taylor: I am sorry, December of this year. Are you convinced that there will be time in your hectic life with your responsibilities in this place and the ESCR, et cetera, to deliver on these very crucial early stages of the CCC?

  Lord Turner of Ecchinswell: I think the answer is, yes. If I was to stick remotely to the three or four days per month described in the job description, the answer would be, no, but given that I have made it plain that I will put whatever is required into it, the answer is, yes.

  Q41  David Taylor: Do you think you have been misled, or were the people that wrote that description—

  Lord Turner of Ecchinswell: They were optimistic as to what could be achieved within a certain amount of time.

  Q42  David Taylor: They were deluded, perhaps, were they?

  Lord Turner of Ecchinswell: I think it was an under described necessary commitment of time.

  David Taylor: That is a useful phrase we can use in the future.

  Q43  Chairman: Just before we move on, you mentioned your role as an economist. In the Government's Climate Change Bill Final Impact Assessment the range of costs of the measure which have got to be taken to deal with climate change appear to range from a low figure of 30 billion to a high figure of 205 billion. Do you think your committee might be able to refine that a bit so that we know a little more clearly what the costs are actually going to be of responding to that?

  Lord Turner of Ecchinswell: Is that the total costs from now to 2050?

  Q44  Chairman: Yes

  Lord Turner of Ecchinswell: The answer is one may not be able to refine it very, very precisely, but what we can have an assurance of, I believe, is that the total cost as a percent of GDP is not very large, and that was the key conclusion of Sir Nicholas Stern's (now Lord Stern) analysis. He said, and I agree entirely, and these are figures that he and I debated extensively for quite a long time, that the cost to a develop-rich economy of cutting our carbon emissions by, say, 60 or 80% by 2050 is likely to mean that by the end of that process our GDP per capita might be of the order of 1 to 2% below what it would otherwise be. I could take you through the logic of why it is not going to be 5 or 6 or 10%, it is going to be 1 or 2%. The way to then think about that is that what that means is that the UK would then have to wait until some time between June and December 2050 to reach the standard of living it would otherwise have reached in January 2050, a standard of living which is likely to be about two to two and a half times the present level. That is what you mean when you say that you have given up 1 or 2% of GDP in 2050. You have slipped the pace, because GDP normally grows at 1 to 2% per annum. I do not think we necessarily will be able to get it much closer than that because I think it is just not doable to get it closer, but I think that we should proceed on the basis that the cost is actually not very large. Compared with the great challenges of the twentieth century, fighting world wars, where we were giving up 30 or 40% of GDP, the amount of sacrifice of prosperity that we have to make to deal with this problem is really quite trivial.

  Q45  Chairman: It is noteworthy that benefits are defined in a much smaller range of 82 to 110 billion pounds, but we will move on.

  Lord Turner of Ecchinswell: Not in the Stern Committee's report. In the Stern Committee's report—

  Q46  Chairman: I did not say it was in the Stern Committee's report. It is in the Governments own Final Impact Assessment of the implications economically of the Climate Change Bill.

  Lord Turner of Ecchinswell: Right. I would be surprised. If you are forward thinking about the total adverse consequences to human welfare of climate change, which you avoid by mitigation, I think they are potentially an order of magnitude higher than that.

  Q47  Paddy Tipping: Can we return to the work you have got to do by the end of December? It is pretty daunting, three budget periods and to comment on the 60 target by 2050. Can you do it?

  Lord Turner of Ecchinswell: The answer is we will do it as best possible. In an ideal world I would have a longer timescale. If you look at the work of the Pension Commission, we actually did 15 months before we produced a report which was merely descriptive of the situation and then another year before we produced a report which said: here is what the policies should be. I think, though, we are where we are. In an ideal world it would have been great if the Climate Change Bill had gone through Parliament last year and the committee had been set up earlier and could get on with it quicker, but we are making a set of legal commitments to have a set of budgets which start on 2008-12, so we have to get on and answer that as quickly as possible and so we are going very, very fast. The secretariat has been set up for four or five months now, it now has about 22 people in it, these are very high quality people and they are doing great works, so we have lots of stuff in place. So we have hit the ground running in terms of the presentations that the committee has seen at these first two meetings, but I accept entirely, there is a hell of a lot to do and we will simply have to do the best we can by then. Necessarily when you are faced with that you sometimes have to say: some things maybe have to be tentative. Maybe we will not have fully bottomed-out the other two CO₂ gases and we say all we can say at the moment is let us proceed on the CO₂ budget to begin with but we propose that we should produce a really high quality report on the non CO₂ gases, the other GHGs, by a bit later and bring it in at that stage. It may even be on the 60/80, that way it should be at the very least 70, but we want a bit more time to tell you before it is 75 or 80. I am not saying we are going to do that, but I think there are ways whereby one can manage those problems over time. The thing that we clearly have to do, because it just needs to be done to meet the requirements of the Bill, is we have got to have those three budgets fixed, and they have got to be more than 26% below 1990 by 2020 but we have got to get on and do it. So, that is the bit which has got to be done by that stage. Would I like another six months in an ideal world? Yes, I would love it, but it is not an ideal world.

  Q48  Paddy Tipping: What about extra staff? You have got 22 staff. Is that enough?

  Lord Turner of Ecchinswell: We are going up to about 24, 25. I would not want to put in more. In dealing with a problem like this there is a size of team beyond which, if you doubled it again, you would spend so much time in managing the interfaces. I think it is a very high quality team and I think it is the correct size for the job, and so I do not think one can speed that up by chucking in more resources, we have to work within the resources that we have got.

  Q49  Paddy Tipping: Let us just return to the 60% target by 2050. You have been sold a bit of a book on that: "The Government has been under a lot of pressure to raise the target, it is all very difficult politically, Lord Turner sort it out for us again." What is your provisional thinking on increasing that target?

  Lord Turner of Ecchinswell: Let me describe the methodology that we are going to use; then I will give you a feeling on the initial thinking. I think the way to proceed is, first of all, to start from a global point of view and then the UK within it, and the global point of view you have to synthesise, and all that it is is synthesis, because we are not going to do new scientific work, obviously. We have to synthesise, listen to, pull together, and read and summarise the best recent scientific thinking on what is dangerous for the world in terms of degrees of centigrade, of warming, and I think the answer is, in an ideal world we would not go above two degrees, three degrees is getting really worrying and four degrees, most people would agree, is very, very scary indeed. We will fine-tune that and we will write out stuff which references the best scientific evidence on that. That is what we will do on that. The crucial thing then is what is the stabilisation of CO₂ and other greenhouse gases in the atmosphere which leaves us with a high probability of staying below two or three or four degrees. There are versions of those sorts of probability tables in the Stern Report. The Hadley Centre produces them and the Hadley Centre will be helping us and we will look at some of the other centres as well. We will look at those probability estimates and they say things like if you stabilise at 450 parts per million, then you have a 95% probability of avoiding going above four degrees centigrade, but you still have a 60% probability of going above two degrees centigrade. We cannot re-do those probability tables but we have to work out what is the range of those probability tables by respected scientists around the world. We do not have to put that into a judgment, and this is the bit where it is pure judgment, there are two judgments, first of all, what is dangerous, two, three or four and, secondly, what is an acceptable probability, because if you want to reduce it to a .01% probability of going above four degrees centigrade we had better be dragging carbon out of the atmosphere already, so there is something there which is entirely judgmental. Out of that we will make a judgment which says we think the world in total should be on something like this trajectory, and we will then say here on a variety of principles of burden sharing here is what the UK's target ought to be as our contribution towards that, and that is what we will do, and you cannot do more of that. There are lots of scientists who have to do the underlying work for that but the synthesis work is to pull that together. I think it is highly likely that we will suggest that 60% is not enough and here is why: the 60% target came out when the Royal Commission on Environmental Pollution reported in 2000, and that was a figure that they came up with at that time. Since then two things have happened, first of all, I think in the scientific community there has been an increasing understanding of the sheer complexity of the climate system and the presence of amplifying feedback loops within it which mean that if you go above a certain level of temperature you are in danger then of accelerating away, and that pushes you towards much greater caution than before, and so the people like the Hadley Centre are really questioning whether 550 parts per million, which some people used to think was an acceptable stabilisation park, are now talking about 450 parts per million. That is one thing that has changed. If anything, we know that since the 60% was discussed, the science has been pushing us towards more worry rather than less worry. Secondly, the total level of emissions in the world is going up significantly faster than we then anticipated because of the faster rate of growth and the very high carbon intensity of growth of, in particular, India and China. We are increasingly aware of the pace at which their emissions are growing and therefore we do not have the luxury of saying we will get the developed world down to a semi adequate level by 2050 and then to a really adequate level by 2100, and the developing world will catch up with us in the late 21st century. The fact is that China could have a higher level of per capita emissions than Europe by 2020 or 2025, so they are going to have to be on a downward path, as are we, so there are much greater emissions being put out, earlier than we thought, and that again argues that the target is almost certainly going to have to be more stretching than 60%. I think the Prime Minister said that in a speech before Christmas. However, I do think it is a perfectly sensible thing to hand to the Committee to express a point of view on, rather than simply leap into let us not do 60, let us do 80, because I think there is a value (even if we do end up simply saying yes, 80% is the right figure) in setting out the reasoning of why it is and also perhaps exploring a set of alternatives because we do not have to say 60 or 80, we could say 70. We could say 70% in 2050 but 90% by 2070; we could say 70% as a UK unilateral commitment but 85 as part of an international agreement, so I think it is sensible to give the Committee the task of thinking through all that, but I would be very surprised if we simply came back and say 60% is absolutely fine, end of story.

  Q50  Chairman: Just before we leave that point, I can understand the macro breakdown, the burden sharing and the arrival at a more demanding target, and that is certainly the conclusion that this Committee reached when it looked at the Bill originally, but coming from the other way round, the bottom up, and practically how we are doing it in this country, I am still concerned because at the moment all of our target-setting seems to be on a simple linear progression of one per year. If we go back from 1990 through to 2050 that is what we have got to do but we are running behind already.

  Lord Turner of Ecchinswell: We are running behind.

  Q51  Chairman: And we made our biggest leap forward by the move to gas-fired power stations. We know that domestic emissions are still rising, we know that we have not cracked the transport emissions and we are about to add in aviation and shipping, and I am struggling to understand, it is all right ramping up the target to 80 but how much of your recommendation is going to be informed as to can we actually do it?

  Lord Turner of Ecchinswell: I should have added something further. In addition to looking at what the world needs to do and what the UK should do within it by 2050, we will also set out a technological vision of what is going to be possible by 2050, so we will be talking about the different technologies which are currently available, or might be available in future at different costs, to drive down our emissions. I think the answer is there is a high degree of confidence that it is possible, with one tricky area. The trickiest area, bluntly, is international aviation because so far there is no clear technological fix to international aviation. It is possible to decarbonise pretty much the whole of electricity production if you use all the different technologies which might be available, which can include renewables, can include nuclear, can include carbon capture and storage, and of course there are supporters of all three of those technologies, but we start from a point of view that all three of those are on the slate of things that you can use. It is possible to do that and if you can decarbonise electricity production, ultimately, you can decarbonise surface transport as well because you can run all your cars on electricity; aviation is trickier. I think the most difficult thing in the doability is not actually 2050, it is 2020. I think it is more difficult to describe the path whereby we are going to get to 26% by 2020, or indeed to the sort of level that we ought to be at by 2020 to do good progress to 2050, than it is 2050 simply because one is 12 years away and the other is 42 years away. There are simply some constraints in the short term. If you want nuclear as part of the mix you have to start acting pretty soon to have them on stream by 2020. If we want renewables to be in the electricity mix to be in line with the 20% by 2020 renewable energy target, we have really got to start freeing up some of the planning constraints and grid connection constraints which at the moment are creating a big bottle neck. These are not technical doability things; they are simply speed of implementation things, and that is the biggest worry about how rapidly we can start doing that to hit the 2020 target.

  Q52  Paddy Tipping: Is the 2020 target right then? Is it achievable?

  Lord Turner of Ecchinswell: I think it is good for it to be stretching. It is certainly doable by way of the buy-in of credits. I think it is good that we have said even if we cannot find a way to do it all domestically, we are going to buy in the credits. My colleague in the Lords, David Puttnam, described buying in credits as a "get-out-of-jail-free card". I did point out to him that it is not it is a get-out-of-jail-free card; it is a get-out-of-jail-at-$40-a-tonne card, so it is not costless, and that is a discipline, and indeed that is a discipline on government because if it is not brought in within the EU ETS, it has to be government-to-government purchases within CDM and the Treasury is going to think carefully about that. I think it is very good that we have a target of 26%. Having said that, let us be clear that the target which is compatible with the European Union's 30% within international arrangement or which is a reasonable path towards, say, 70% by 2050, will have to be higher than 26%.

  Q53  Paddy Tipping: Let me ask you a final question which is the call for evidence that you put out last November. Presumably you have had a lot of responses?

  Lord Turner of Ecchinswell: Yes.

  Q54  Paddy Tipping: Just give us a feel of how many responses and the kind of organisations that are replying.

  Lord Turner of Ecchinswell: I do not know the answer to that but I have a man behind if I am allowed to consult him. We had a couple of hundred in addition to the Climate Change Bill consultation and indeed we used the people who put in written consultations at that stage as the basis for the invites for the stakeholder events which we have just held in London, Cardiff, Glasgow and Belfast.

  Q55  Paddy Tipping: And do you think consciousness is changing, that the public mood has changed, that people really now take this on as a serious issue?

  Lord Turner of Ecchinswell: I think people are taking it on as a serious issue. There is a window of opportunity for political leadership to take advantage of that and I think if we do not take advantage of it and do not have clear policies, we may end up with exhaustion level and we may find that some of that public commitment dissipates over time. Right at the moment my judgment is that there may be a greater willingness among the public to accept bold policy actions than sometimes is believed at political level.

  Chairman: Three quick supplementaries.

  Q56  Mr Drew: You have not mentioned rationing and personal carbon allowances, which some of us feel, certainly in the field of air transport, are actually inevitable. Is this too political for you or are you going to have the guts to say, "Look, you can have all this trading, you can have all these wonderful technological solutions but unless individuals and households are prepared to accept some level of rationing, we have not got a hope in hell of getting to the sort of figures for carbon reduction that we need to get to"?

  Lord Turner of Ecchinswell: I think that is an issue which we will look at later.

  Q57  Mr Drew: You have said yourself the difficult time is 2020.

  Lord Turner of Ecchinswell: Yes. I doubt if it is necessary to hit the 2020 targets. I think there is a very very long-term issue whereby if there is not a technological fix available on international airlines that we may find out that the unrationed level of international airline traffic in 2050 in itself might put out more carbon emissions than the absolute maximum that the whole world will have at that stage. Of course, there is one answer to that which is simply you put it as part of a global emission trading scheme at that time; the price is the price, and you ration through price, but if there is no technological fix to aviation, you may have to limit it in the long term either by a personal rationing system or by price, and of course a personal rationing system with free trading of those ration tickets is just price by another mechanism.

  Q58  Lynne Jones: Should you not stop talking about "burden sharing" and start talking about "opportunity grabbing"?

  Lord Turner of Ecchinswell: Funnily enough, we were having exactly this debate at the Climate Committee last week. I guess the terminology of burden-sharing is the technical term which has been used at EU and international level for once you have got an EU target of 20%, do you take 15%, do you take 30%, et cetera. I accept entirely that it is an unfortunate term which implies that there is some massive economic cost, which I do not believe there is and which does not stress some of the benefits, so the answer is I was probably failing to remember one of our conclusions from our Committee just last Thursday when we said that we ought to start using a word other than burden-sharing.

  David Lepper: Opportunity-sharing in view of what you have said about public acceptance and willingness.

  Lynne Jones: Opportunity-grabbing not sharing, getting a piece of the action.

  Q59  David Lepper: I prefer sharing. You stay with the Thatcherite agenda if you like; I will go for sharing! Just a minor point of detail about the responses that you received, your colleague behind you said something like 200. Could you just give us a flavour of the range of organisations.

  Lord Turner of Ecchinswell: This is David Kennedy and he is the head of the Secretariat so I suggest he responds to that.

  Chairman: You are on the record now, David.