Politicians will fail to solve the problem of global warming, but the market will succeed

China, the world's second largest oil user, is not going to hold back economic growth in the cause of conservation
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The Independent Online

This week has seen two new twists to long-running environmental stories. There was evidence of a sudden rise in the carbon dioxide content in the atmosphere, which would in all probability lead to faster global warming. And the oil price spurted up again, with the benchmark Brent crude passing $50 a barrel.

This week has seen two new twists to long-running environmental stories. There was evidence of a sudden rise in the carbon dioxide content in the atmosphere, which would in all probability lead to faster global warming. And the oil price spurted up again, with the benchmark Brent crude passing $50 a barrel.

The words "global warming" send a frisson of fear through many people, who envisage their homes being flooded by rising sea-levels and who worry that human greed is leading to changes in the global environment that will be impossible to reverse. That set of concerns is leading in Britain to the building of windmills on our hills and estuaries, to higher taxes on fuel-inefficient cars, and to an energy levy on industries that use a lot of power.

Those concerns, however, are more evident among people in Western Europe than it is in the rest of the world. In the US, which uses nearly double as much energy per head than Europe, suggestions of higher fuel taxation would be political suicide. In Russia global warming would be positively welcomed, for it would enable more of Siberia to become fertile agricultural ground. And the world's second largest oil user, China, is not going to hold back its economic growth in the cause of energy conservation.

There are some countries whose very existence would be threatened by rising sea levels, most obviously the Maldives,but also countries with low-lying river deltas, such as Bangladesh. But for much of the world some aspects of global warming would be rather welcome - at least in the early stages. As for the oil price, there are also two views. The majority view - that is of both the oil companies and Opec ministers - is that oil at the moment is more expensive than the long-term supply-demand equation would justify. At this price it becomes practical to bring on marginal fields, to spend more on extracting a higher proportion of the oil in existing ones, and to encourage substitutes.

There is, however, a minority view that the world is close to its peak oil production, as no really big new oil fields have been discovered in the past 30 years - or at least not comparable to those found in the previous 100 years. The prospect of declining production set against rising demand would suggest that the recent rise might herald a whole new era, as the world moves from cheap oil to expensive oil.

The two stories have quite different roots: the rise in carbon dioxide levels comes from the scientific observations of the US National Oceanic and Atmospheric Administration; the rise in the oil price is simply a market reaction to what is happening to supply and demand. But they mesh together in that the price of oil is the key determinant of energy prices in general and the price mechanism is much more likely to cut energy demand than global treaties on carbon emissions.

If that sounds harsh, consider the Kyoto Protocol of 1997, intended to hold down and ultimately push back carbon dioxide emissions in the main developed countries. It was rejected by President George Bush, who has been widely criticised for that action. But I don't think many people believe that it would have been possible to get the treaty through the US Congress or that a Democratic president would have behaved any differently. Russia has recently indicated that it would ratify the treaty, against the advice of its scientists, who apparently don't believe there is a link between carbon emissions and global warming. But many people see this as a political ploy, designed to win favour with the EU and smooth the way for Russian entry to the World Trade Organisation.

If they were really so keen on the Kyoto deal, why has it taken them seven years to get to the stage that they say they will ratify it?

In any case, the most important countries for future emissions, China and India, were not party to the agreement. China, as noted above, has passed Japan as the world's second largest user and importer of oil. It is also building each year as much new electricity generating capacity as the entire UK electricity industry can produce. Most of this is fossil-fuel driven. We plan to produce 10 per cent of our power from "clean" sources, mostly windmills. So the effect of the entire UK clean energy programme in cutting carbon emissions is offset every month or two by the additional capacity China is putting in. Europe is now using less oil that it was in 1978 (though a lot more natural gas); the US is using a bit more oil; but Asia is using more than double as much.

Indeed it has been calculated that even were Kyoto to be ratified and adhered to by all the signatories, it would only delay the growth of carbon emissions by three or four years over the next 70 years.

On the other hand oil shocks can work in cutting energy demand. If you look at a graph of global energy use, it held level in the late 1970s and early 1980s - and the oil component in energy production fell - after the two big rises in the oil price. It then climbed back again when the oil price dipped. At the moment, however, there does not seem to be any fall off in demand. That may be partly because the rise has been more gradual but it may also be because the surging demand for oil from China is not easily trimmed by oil that is expensive, but not prohibitively so. At some level the market will work but the price may have to be a lot higher than it is now.

So what is to be done, aside from giving a sotto voce welcome to higher prices at the fuel pumps and turning down the central heating thermometer? One radical view, promoted by Bjorn Lomborg, the Danish statistician who challenged the whole environmental lobby with his best-selling book, The Skeptical Environmentalist, is that tackling global warming should be a relatively low international priority. It would be better, he argues, to put resources into areas where they can be more effective, for example in improving public health and nutrition in the developing world, and particularly in Africa. That would bring much greater benefit to humankind as a whole. He also argues for much more research into alternative forms of energy, which fortunately do become better economic propositions as the oil and gas prices rise.

But it is difficult for politicians to acknowledge that they are pretty powerless to do anything about a generally accepted concern, such as global warming. The fact that what Britain does or does not do in energy use is irrelevant in the big world picture is not something that Tony Blair can say. He has to sound concerned, as he did last month when he warned that global warming would "radically alter human existence". But we should perhaps (and I know this is a bit of a cheap point) be cautious of politicians with grand ideas, such as creating democracy in the Middle East.

Mercifully, where politicians fail, the market will succeed. And that is really the best hope for ourselves and the other species with whom we share this wondrous planet. We will be forced to be more responsible in our energy use by the rising price of the stuff. Would that we had been forced to be more responsible a bit sooner.

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