Climate Change: Climate Change Bill and Policy Overview Robin Mortimer Office of Climate Change June 2007
Transcript
Slide 1
Climate Change: Climate Change Bill and Policy Overview Robin
Mortimer Office of Climate Change June 2007
Slide 2
2 Context and background Rationale for climate change
legislation Key elements of the Bill Next steps on Bill Analytical
basis of wider Government strategy
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3 Global temperatures have been rising particularly over the
last few decades Global average surface temperature increased over
the last hundred years (1906- 2005) by 0.74 C with particularly
strong warming since the 1970s
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4 The effects are shown by glaciers retreating There was a
widespread retreat of mountain glaciers in non-polar regions during
the 20 th Century Figure from Oerlemans, J., Extracting a climate
signal from 169 glacier records, Science, 29, 308, 675-677, 2005.
Photo credit: Lonnie Thompson, OSU 1978 2004 For example, Qori
Kalis, Peru
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5 and sea levels rising Global mean sea level has risen by
12-22cm during the 20 th Century Figure taken from IPCC Fourth
Assessment Report (2007)
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6 1C2C5C4C3C Sea level rise threatens major cities Falling crop
yields in many areas, particularly developing regions Food Water
Ecosystems Risk of Abrupt and Major Irreversible Changes Global
temperature change (relative to pre-industrial) 0C Falling yields
in many developed regions Rising number of species face extinction
Increasing risk of dangerous feedbacks and abrupt, large-scale
shifts in the climate system Significant decreases in water
availability in many areas, including Mediterranean and Southern
Africa Small glaciers disappear water supplies threatened in
several areas Extensive Damage to Coral Reefs Extreme Weather
Rising intensity of storms, forest fires, droughts, flooding and
heat waves Possible rising yields in some high latitude regions The
effects could transform the physical and human geography of the
planet The risk of serious irreversible impacts increases strongly
as temperatures increase Stern Review (2006)
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7 and will hit the poorest hardest Graphic: IPCC Fourth
Assessment Report (2006). Examples: Stern Review (2006) these are
illustrative impacts only, drawn from a range of studies there are
unavoidable uncertainties about the exact impacts. A 2 o C rise:
crop yields will fall by 510% in Africa A 2 o C rise: 40-60 million
more malaria cases in Africa A 3 o C rise: 13 million more die from
malnutrition A 3 o C rise: 20-50% of species will face extinction
Impact on our development goals:
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8 Climate models demonstrate that natural factors alone are not
sufficient to explain the pattern of global temperatures observed
over the last 150 years Climate models can only reproduce the
global mean temperature record over the last 150 years by including
both natural and man-made factors Natural factors only Natural and
man-made factors Figures taken from the IPCC TAR The figure shows a
comparison between observed (red) and modelled (green) global mean
surface temperature. On the left, only natural factors (volcanoes,
solar variations) are included in the model. On the right, both
natural and man- made factors are included.
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9 Stern Review (2006); ppm = parts per million concentrations
in the atmosphere. The global challenge is to stabilise global
emissions at levels which avoid the risk of dangerous climate
change
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10 Low carbon electricity is already possible and new
technologies will be key to our longer term success Current
Emerging Future Renewables & Nuclear Nuclear fusion Carbon
capture and storage (CCS) Even with very strong expansion of the
use of renewable energy extensive carbon capture and storage will
be necessary* * Stern Review (2006). This is not an exhaustive list
of current or future technologies.
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11 For heating, decentralised power generation and energy
efficiency will drive decarbonisation Traditional insulation Zero
carbon buildings Community Combined Heat and Power (CHP) Demand and
supply of win-win energy efficiency measures could be improved
through regulation and better take-up incentives Current Emerging
Future This is not an exhaustive list of current or future
technologies.
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12 In transport, we will need a transition to technologies that
are just emerging now Petrol hybrids & bio-fuels Decarbonised
fuel supply? Electric/ hydrogen ? Innovation is required to deliver
low-carbon alternatives especially in aviation where global
emissions are estimated to grow three-fold in absolute terms by
2050* < 2050: Hybrids, bio-fuels, fuel efficiency of
conventional vehicles and some electric/hydrogen > 2050: Totally
decarbonised through electric/hydrogen? * Stern Review (2006). This
is not an exhaustive list of current or future technologies.
Current Emerging Future
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13 The costs of stabilising the climate are manageable delay
would be dangerous and much more costly Delay is dangerous because
damages from climate change rise disproportionately with
temperature. Adaptation is crucial to respond to unavoidable
climate change There are limits to how much it is possible to adapt
to the worst effects. 5% GDP Income losses if we do nothing: market
impacts only 20% GDP Income loss including non-market impacts, risk
and equity 1% GDP Costs of mitigation to stabilise emissions at
550ppm by 2050 vs Stern Review (2006)
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14 Context and background Rationale for climate change
legislation Key elements of the Bill Next steps on Bill Analytical
basis for wider Government Strategy
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15 Rationale for the UK Climate Change Bill To strengthen the
international and domestic policy framework through: maximising the
UKs leverage internationally; creating a framework to improve
carbon management in the UK.
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16 Maximising international leadership Experience shows that
there is no realistic prospect of getting developing countries on
board unless developed countries set credible targets and take
action to meet them demonstrating how this can be consistent with
economic and social objectives Proposals in the Bill are consistent
with new European emissions reduction targets of 20% by 2020 (and
30% if there is a new global agreement), and at least 60% by
2050.
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17 Improving carbon management in the UK UK greenhouse gas
emissions (MtCO 2 e) UK GDP per capita, 1990-2004 (US$) Source:
OECD
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18 Improving carbon management in the UK (cont) There is a
strong case for unilateral UK action: To provide business certainty
in how carbon will be constrained so they can plan and invest with
more confidence; to reduce the risk of locking-in high carbon
technologies, resulting in greater long-run costs; to incentivise
energy efficiency savings (with potential economic and social
benefits). But equally there needs to be flexibility within the
system to ensure the UK can respond to the significant changes
internationally or domestically; and avoid risk to
competitiveness.
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19 Context and background Rationale for climate change
legislation Key elements of the Bill Targets and Budgets Committee
on Climate Change Enabling Powers Reporting Next steps on Bill
Analytical basis of wider Government strategy
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20 Key elements of the Bill (1) Targets and budgets Enabling
Powers Committee on Climate Change Reporting Long and medium term
targets: CO 2 emission reductions of 60% by 2050 and 26-32% by
2020, through action in the UK and abroad. Five-year carbon budgets
to set out our trajectory. An independent body to advise Government
on its carbon budgets and where least cost savings could be made.
To introduce emissions trading schemes more quickly and easily. The
Committee on Climate Change to report annually on progress towards
targets and budgets. Government to report at least every 5 years on
adaptation.
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21 Carbon budgets explained 2 nd budget period 3 rd budget
period 1 st budget period See below for detail Average annual
emissions during: -2 nd budget period -3 rd budget period -1st
budget period Average annual emissions required during budget
period
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22 Key elements of the Bill (2) Targets and budgets Enabling
Powers Committee on Climate Change Reporting Long and medium term
targets: CO 2 emission reductions of 60% by 2050 and 26-32% by
2020, through action in the UK and abroad. Five-year carbon budgets
to set out our trajectory. An independent body to advise Government
on its carbon budgets and where least cost savings could be made.
To introduce emissions trading schemes more quickly and easily. The
Committee on Climate Change to report annually on progress towards
targets and budgets. Government to report at least every 5 years on
adaptation.
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23 Key elements of the Bill (3) Targets and budgets Enabling
Powers Committee on Climate Change Reporting Long and medium term
targets: CO 2 emission reductions of 60% by 2050 and 26-32% by
2020, through action in the UK and abroad. Five-year carbon budgets
to set out our trajectory. An independent body to advise Government
on its carbon budgets and where least cost savings could be made.
To introduce emissions trading schemes more quickly and easily. The
Committee on Climate Change to report annually on progress towards
targets and budgets. Government to report at least every 5 years on
adaptation.
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24 Key elements of the Bill (4) Targets and budgets Enabling
Powers Committee on Climate Change Reporting Long and medium term
targets: CO 2 emission reductions of 60% by 2050 and 26-32% by
2020, through action in the UK and abroad. Five-year carbon budgets
to set out our trajectory. An independent body to advise Government
on its carbon budgets and where least cost savings could be made.
To introduce emissions trading schemes more quickly and easily. The
Committee on Climate Change to report annually on progress towards
targets and budgets. Government to report at least every five years
on adaptation.
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25 Context and background Rationale for legislation Key
elements of the Bill Next steps on Bill Analytical basis of wider
Government strategy
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26 Next steps Draft Bill was published for consultation and
pre-legislative scrutiny on 13 March 2007. PLS will be via a joint
Committee of both Houses, EAC and Efra Select Committee all likely
to report in June/July. Government will respond and Bill will be
introduced in Autumn 2007; expecting Royal Assent by around
April/May 2008. The Committee on Climate Change will be set up in
shadow form in Summer 2007 so that it can produce recommendations
on the first three carbon budgets by mid-2008.
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27 Media and stakeholder reactions We are delighted that the
Government has recognised the need for a new law to tackle climate
change Friends of the Earth Climate Change Bill strikes right
balance CBI A historic moment for British politics The Independent
The Bill that makes action on global warming a reality The
Independent Legislation of tremendous potential and ambition The
Guardian A step in the right direction The Times
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28 Context and background Rationale for climate change
legislation Key elements of the Bill Next steps on Bill Analytical
basis of wider Government strategy
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29 Conceptual framework for Government interventions:
addressing three types of market failure (Stern report) Carbon
pricing The first of Sterns market failures: the damage costs
imposed on the world by greenhouse gas emissions are an externality
that needs to be reflected in the prices of goods Technology policy
The second of Sterns market failures: uncertainty and knowledge
spill-overs mean that carbon pricing alone will not be enough to
induce low carbon technology at the pace and scale needed Removing
other barriers The third of Sterns market failures: imperfections
such as information asymmetry and capital constraints mean that
abatement will be more costly if you rely on carbon pricing alone
Carbon pricing is a necessary but not sufficient tool for a
low-cost transition Complemented by action to change attitudes to
climate change. International cooperation overcomes risks of
free-riding, as the climate is a public good Stern Review
(2006)
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30 On carbon pricing, Stern recommends equalising the carbon
price but we have many different carbon prices, not all of which
are apparent Illustrative unit carbon prices for electricity (pence
per kWh) EU-ETS Regulations (e.g. RO) CCA kWh For example, for a
given carbon-based source of electricity (e.g. coal) a different
price results depending on its end-use CCL Although the ordering of
these prices is correct the price ratios between different
instruments are illustrative only they could be higher or lower
Notes: EU-ETS = European Union Emissions Trading Scheme; RO =
Renewables Obligation; CCA = Climate Change Agreement; CCL =
Climate Change Levy; kWh = kilowatt hour (unit of electricity).
Carbon prices can be imposed explicitly or implicitly through
taxes, trading or regulations - all of which may serve other policy
ends (e.g. revenue)
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31 On technology policy Stern recommends that global effort
should more than double * Deployment support is defined as
technology specific interventions - this excludes carbon taxes and
emissions trading because these do not target specific
technologies. ^ As a proportion of GDP. Output of low-carbon energy
must increase 20-fold over the next 40-50 years to reach 550ppm. To
do this Global annual public energy R&D expenditure must
double: $20bn 0 50 100 150 200 2004Stern recommendation $bn/yr
Global annual support for deployment* of low-carbon technologies
must increase 2-5 fold: x 5 x 2
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32 On Sterns other barriers, we have no shortage of policy
measures * Building regulations apply to new build and substantial
refurbishment only. Energy Efficiency Commitments Reduced VAT for
domestic efficiency measures EU Energy Performance of Buildings
Directive EST information campaign Better billing and metering Low
Carbon Buildings Programme Enhanced Capital Allowances Support for
sustainable public sector procurement Carbon Trust Revolving loan
fund Code for Sustainable Homes Climate Change Agreements/Levy UK
Energy Performance Commitment (proposed) Building regulations* Key
Household Business Public sector Combination Stamp duty relief for
zero carbon homes Warm Front For example, all of these policies
were introduced into the buildings sector with the intention of
tackling other barriers Some have a carbon pricing effect Some have
a technology effect Planning policy Some of these are sticks
(regulations) and some are carrots (e.g. grants/loans)
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33 Internationally, there are 4 key areas where Stern
recommends cooperation Emissions trading Stopping deforestation
Adaptation Technology cooperation
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34 Stern analysis suggests different market failures require
different policy responses Identify the market failure Identify the
nature of the policy intervention required Identify the detail of
the policy design Carbon externality Innovation market failures
Other market barriers (information asymmetry, capital constraints,
etc) Tax, trade or regulation R&D, deployment support, etc.
Information provision, grants, loans, regulation, etc. Details of
exactly how the policy is designed (e.g. up/downstream; national or
international intervention; mandatory or voluntary, etc) should
then be decided by the outcome of cost-benefit analysis, fit with
existing policies, etc.