A new slogan for the environmental pressure groups: Some Gain, No Pain

By Anatole Kaletsky (THE TIMES, 02/11/06):

Like almost every other rational human being who is not in the pay of the US oil industry or the Bush White House, I believe that doing whatever we can to prevent, or at least mitigate, global climate change is one of the most important tasks facing the world today. Like almost every other media commentator and economist, I therefore welcome the Stern report published this week by the British Treasury and I strongly support Tony Blair’s promise to take urgent and decisive actions to put its conclusions into effect. In contrast to many of my colleagues, however, I will not respond to Sir Nicholas Stern’s extremely convincing admonitions about the horrors that lie ahead if the world continues to spew out carbon by suggesting that we restrain air travel.

I will make no promises to take the train instead of driving. And I will not disfigure my house with ugly double glazing, install a windmill or turn down the thermostat on my central heating now that the winter has set in.

Does this make me a hypocrite? I don’t think so, because I intend to do something more constructive — and in the present climate of opinion, more difficult — to advance the cause of environmental sustainability.

Unlike most other commentators who have emphasised the visions of apocalypse conjured up in the Stern report, I will focus on the report’s economic and political logic — and take it a step beyond the formal conclusions into territory where I am sure Sir Nicholas would have ventured, were it not too controversial for a Blair government official.

The logic of the Stern report implies that the greatest enemies of constructive policies on climate change today are not President Bush and Exxon, culpable though they are. They are the environmental pressure groups and anti-capitalist zealots who have persuaded the public, the media and the political classes that any serious action against climate change will require huge economic sacrifices and a virtual abandonment of the modern, materialistic way of life. These are the real enemies of the planet: the people who chant that the world will come to an end if we go on flying, driving and consuming, who inveigh against globalisation and economic growth, who form human chains to stop nuclear power stations or hydro-electric dams.

What the Stern report makes clear is that global warming can still be mitigated with actions that will not be very costly in economic terms and which will create plenty of economic gainers as well as losers. The most important of these actions have to be taken not by individuals, but by governments, electricity generators, heavy industry companies and forestry businesses. The costs of these actions –— for example, the removal of subsidies for coalmining, or the imposition of carbon taxes and quotas — will ultimately be borne by consumers, but they would be very modest and not require any big changes in Western lifestyles. Ignoring climate change, by contrast, would entail much higher economic costs and much bigger changes in lifestyles (including forced relocation from some coastal cities such as New Orleans), not only for future generations, but also for businesses, consumers and voters today.

To appeal for more ambitious policies on global warming, therefore, is not to demand self-sacrifice and austerity, but on the contrary, to create conditions for higher living standards, more consumption and faster economic growth. This is by far the most important message of the Stern report. It is particularly relevant in the case of Britain, because of the two specific mechanisms for tackling global warming proposed by Stern. These are carbon emissions trading and energy research.

Global subsidies for energy research are now running at a pitiful $10 billion annually, compared with the $250 billion spent on subsidising the extraction of fossil fuels (mainly on the most polluting of all energy sources, coal). Stern suggests that public funding of energy research could be doubled to $20 billion, still well below the levels spent by governments on medical and aerospace research. A far larger global research effort would do infinitely more to address climate change than discouraging tourists from flying or commuters from driving cars. London is already the centre of the global emissions trading market and also has a comparative advantage in scientific research. Thus policies that would expand the present European emissions-trading scheme to a global level and promote global energy research would be hugely beneficial to the British economy, easily outweighing the modest costs that consumers would have to pay in higher petrol and electricity bills and more expensive airline tickets. Britain, in other words, would almost certainly be a big beneficiary, even in the short term, from serious global action against global warming. This may be one of the reasons why this issue has suddenly acquired unanimous crossparty appeal.

But what about the rest of the world? Why should the Stern report’s arguments appeal to voters and consumers in other countries, especially America? The answer for America is clear. First it has a huge geopolitical incentive to wean itself off dependence on Middle Eastern oil. But beyond that, America, even more than Britain, has a natural competitive advantage in scientific research. A shift in the global economy that put a much higher price on technological progress, would benefit the American economy, almost certainly outweighing the costs of restraining carbon use.

The slogan of the hair-shirt environmental zealots today is “No Pain, No Gain”. One gets the impression that environmentalists will never be satisfied unless Western consumers are made to suffer. This emphasis on austerity is a huge political misjudgment. The great achievement of the Stern report is to show that a sensible policy on the environment need not be particularly painful and would create many economic gainers.

It is time for sincere environmentalists to reverse their slogan to one politicians and voters in a democracy are much more likely to support: “Some Gain, No Pain”.