Not Exactly Lying, But…

April 4th, 2008

Views: 744

Posted by ChrisG at 1:00 pm

An interesting point made sometimes in the literature on the ethics of risk is how the use of quantitative measures in risk assessment is a very useful way of clamping down on a troublesome policy debate by glossing over genuine uncertainties in favour of an entirely spurious level of certainty.

A nice example of this appeared in Wednesday’s Commons debate on the proposed third runway at Heathrow, which quickly became dominated by arguments over the extent to which the Liberal Democrats, who drafted the Early Day Motion that formed the centrepiece of the debate, had managed to substantially bugger up writing the thing, to the point where no-one felt able to vote for it.

Still, the debacle was notable for showcasing the efforts of Justine Greening MP to obtain documentary evidence of just how BAA helped the Government remove problematic data from the documents prepared for the public consultation, leaving only information favourable to the case for expansion. But the example I referred to above came about thanks to Ruth Kelly’s habitual ripe disingenousness

I may be out by a pound or two, but I think that the price that we are putting on carbon is about £25 per tonne of CO₂, increasing by 2 per cent. in real terms year on year. As Nicholas Stern pointed out, there is a range of carbon prices that could be used, but when he was asked on the “Today” programme whether we could view our current policy on aviation expansion and road building as compatible with meeting our CO₂ targets, he said, “I believe we can”. Not only that, the figures that we have put forward are robust to different scenarios for the shadow price of carbon.

The point about using the carbon price as a (rather blunt) means of assessing the costs and benefits of the Heathrow expansion is to “adequately” reflect the social cost of carbon, conceived of as what “society” would be willing to pay now so as to avoid the estimated global future costs of anthropogenic global warming. The use of the “shadow price” for carbon (SPC) reflects uncertainties involved in estimating future scenarios, based on changing policies on climate change, technological developments and so on.

The Stern Report set a social cost of carbon at £19 per tonne of CO₂ (/tCO₂) emitted (or £70 per tonne of carbon). The £25/tCO₂ figure Kelly mentioned was the shadow price of CO₂ set in a DEFRA document [PDF] dealing with how the SPC should be used in policy. The “robustness” of this figure – i.e. how well it reflects the degrees of uncertainty that might surround the future costs of CO₂ emissions – is the question. As the Treasury report Aviation and the Environment: Using Economic Instruments (2003, p. 19) points out, this figure does not take into account the possibility of catastrophic events arising from global warming or of social catastrophes, such as famines, mass migrations and so forth.

Leaving this dimension of extreme uncertainty aside (enough to note now that the degrees of uncertainty separating the two possibilities the 2003 report mentions are likely to be extremely large, as a small increase in global average temperatures could easily severely curtail food supplies), we need to look at the specific nature of the carbon costs in the case of airport expansion.

The DEFRA figure is a general estimate of carbon cost, across all areas of policy. Consequently, it does not reflect the recommendation from the IPCC that the effect of aviation emissions, given the effects of nitrogen oxide and water vapours at high altitudes (the “radiative forcing” effect), should be estimated at 2-4 times any figure attached to other forms of emissions. This would ramp up the cost to at least £50/tCO₂.

Kelly (and the DfT) have therefore not only managed to seriously underestimate the only (crude) measure they have for measuring the social cost of carbon emissions: in addition, Treasury policy on the use of economic measures means that they have failed to sensitize their spread of likely future costs to exactly the kinds of uncertainty they should be taking into account.