Archive for March, 2011


The decision by the UK Government to cut fuel duty in the budget this week comes from a noble aspiration to make life easier for those on lower and middle incomes. Doing this by cancelling the fuel escalator and cutting fuel duty, however, encourages people to consume more petrol and diesel and provides less incentive for individuals and for businesses to switch to alternatives where they are available. Supporting them by raising income tax threshold higher, faster, would have the same benefits but be better for the planet and better preparation for a world where fuel prices can only go up in the long-term.

In his budget speech, chancellor George Osborne argued: “The price of petrol has become a huge burden on families”. His solution was to cut fuel duty by one penny per litre and to cancel the ‘fuel escalator’ of the previous government which added a penny of tax every year to the cost of petrol above inflation. True, this must be put in the context of the combination of a high VAT rate as well as rising prices, but there are still better ways to offset that extra cost.

A central plank of the coalition agreement (page 30, if you’re looking) is the increase in the bottom rate of tax threshold, a key Lib Dem policy, which is to creep up to £10,000 over the course of the government. This is a much more sensible policy, helping people through tax relief so that they can make their own choices about how to spend that money. Giving that money back through a tax cut rather than a fuel duty increase  allows people to make environmentally sound choices because they become cheaper.

Taxes on petrol follow a fundamentally sound concept: the polluter-pays principle. If you’re going to pollute, you should pay society an amount of money equivalent to that pollution. The cheaper gas-guzzling cars are to run, the higher their cost to society through pollution.

It will never be possible for everyone to switch to bikes, walking and public transport, especially for those who live in rural areas or small villages poorly served by public transport. There are baby steps to take, however, choosing cars that get more miles to a gallon, or, even buying a hybrid, or learning to drive in a more fuel-efficient way. Finding solutions for people in these situations will be harder, and more expensive. This does not make those solutions less necessary.

Oil Prices: Only going one way in the long term (Image source: bybusiness.net)

Taking those steps has a second benefit: they prepare society now for the reality of rising oil prices and the likelihood of steadily rising carbon prices, both of which will make petrol more expensive. As the Arab awakening only grows in force and unpredictability and oil prices remain over $115 a barrel (not long ago it made headlines by crossing the $100 mark), the risk of short-to-medium-term price fluctuations is very high as old dictatorships fall and new regimes are, gradually, set up. The reality of long-term rising oil prices is even clearer. Also in the budget was a £16 price floor for the UK carbon market, which will increase the cost of most fossil-fuel based operations. This will only rise with tougher future legislation. To cut taxes on petrol is to deny the realities of rising oil prices and the growing need for tougher CO2 emissions regulations. The short-term pain relief will make the shocks of rising prices harder for people to manage or more and more expensive for the government to offset in the future.

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I write this following news of the many-layered disaster in Japan. At the point I am writing, the literal dust has settled but the metaphorical dust remains hovering in the air in the confusion. The literal fallout from the nuclear reactor has been gauged and thankfully found under control, but the metaphorical fallout is just beginning. In trying to write about the situation it is striking how many clichéd metaphors have to be avoided because of their literal relevance. It is perhaps a sign of the scale of the tragedy when what is usually the language of exaggeration (“open the floodgates”, “go nuclear”) fits the facts.

When disaster strikes there is always a pregnant pause while the world watches and the commentariat suspends their rational brains as they engage with the situation. Radical intellectual Naomi Klein is eloquent on the risks of governments using that pause of reason to push though radical agendas before the bloggers, the columnists and the public intellectuals have processed the situation. She warns us to be wary of big changes made while nations are reeling. That period is now ending and the thought process beginning. It is not known as I sit at my computer now what the big discussions will be about in the coming weeks, let alone what conclusions will be drawn, what changes made.

There are two areas to follow closely from a climate change perspective. The most obvious is the future of nuclear power. With the British government pushing the nuclear option hard in recent months, the events at Fukushima may radically shift both public and expert opinion.

Fukushima No.1 plant exploded twice more today. Radiation has risen to dangerous levels

At the point of writing there has just been a third blast at the No. 2 reactor and concerns about radiation are now at the front of everyone’s mind. Michael White on the Guardian website is arguing that if “the underlying lesson of Fukushima will turn out to be that, even after a magnitude 9.0 earthquake, nuclear plants – 40-year-old nuclear plants – can be built that survive, more or less in tact. Touch wood.” One suspects this will not be the only side of the argument to emerge in the next few days. Germany is one of several countries to be already seriously rethinking its approach to nuclear power.

Perhaps the less obvious conversation this may shift is the conversation about hazard management. Let me first clarify some terms: a hazard is a potentially risky event, like an earthquake in a crowded area. A disaster is what happens if this turns into a humanitarian catastrophe. This need not be the case: where Hurricane Katrina is widely considered to have been disastrously managed, Cuba survived the onslaught of a Hurricane Ivan (which, like Katrina, reached category 5 status but struck while at category 3 size), relatively unscathed the year before. In the area of climate change adaptation, good disaster management practice is understood as key to reducing the impacts of the increased likelihood of hurricanes, floods and heatwaves that we can expect as a result.

What happened in Japan, however, was unusual: in fact Japan has often been seen as excellent at earthquake management. This BBC news story from back in 2003 praises that ability effusively. The problem here was that two disasters struck in rapid succession. A plan for one, or even both, falls apart when hit by two in combination. The best example of this is the nuclear power station’s unit 1, where disaster struck first. When the earthquake hit, the plants all shut down, leaving hot fuel (uranium) needing to be cooled. This should have been happened using an electric water pump. The power-cut, however, knocked out this option. The backup system was a diesel pump that would have taken over successfully had it not been for the Tsunami shortly afterwards, which is thought to have disabled it. The second backup system, the Reactor Core Isolation Cooling system is battery-powered, and continues to supply water for as long as its batteries last: eight hours. Normally this would be enough to get power back up. In this situation things are more complicated. (See the reports by the Union of Concerned Scientists for detail.)

It is difficult to know what kinds of multiple-layered hazards may strike as the impacts of climate change become more serious. Some, like agricultural failure, may be more gradual. Imagine, however, a scenario let’s say in the U.S.A. where heat-waves damage food supplies in the country and heat the towns, rising sea-levels drive people from coastal cities and together lead to overcrowding and civil unrest in inland cities. If a hurricane, or a non-climate related hazard like an earthquake then strikes, the potential for disaster is huge, and the need for complex, well-funded and well-integrated disaster planning becomes key.

The detailed lessons for disaster management will be one of many areas to watch as the aftermath of the crisis plays out. This combination of earthquake and tsunami was, sadly, fairly predictable: geologists know where the fault lines are and know that earthquakes cause tsunamis. If this situation was not adequately accounted for, what about stranger combinations of hazards?

Huhne in 'The Observer': "We cannot afford to go on relying on such a volatile source of energy when we can have clean, green and secure energy from low-carbon sources"

It is reassuring to see in today’s Observer, on the front page no less, that the UK government is treating the unrest in the Middle East as a reason to get serious about sustainable sources of energy. It is, and they should, but the devil will be in the detail of the plans outlined this coming week. It may be that the protests throughout the arab world will achieve what the most hardened environmentalist protester may struggle with: whipping up political will and public support for renewable energy.

With the very real impact of the recession on things governments and the population generally have prioritised for 30 years – growth, employment and now inflation – it is understandable that environmentalism has been pushed onto the backburner. Annoying, yes, unhelpful, definitely, badly timed from an ecological perspective, absolutely. But understandable, nevertheless. What rising oil prices bring with them is a sense of reality to them that, despite the overwhelming evidence and genuine world-wide impacts, discussion of climate change cannot seem to manage.

As primarily a Financial Times reader, I am always struck by that paper’s unwillingness to talk about climate change, preferring to frame such issues as clean technologies in ways that quietly sidestep mentioning it. This is probably not a bad thing – ill-informed but vocal critics highjack almost any discussion of climate change, especially on online article comment boards. The Financial Times is, however, always happy to write about oil prices. During the uprising in Egypt the tabloids reported on the experiences of British tourists (presumably because Johnny Foreigner is not real a real person who experiences real things, and even if they do, who cares?), The Independent and The Guardian got excited about the winds of change sweeping the world (as only the liberal left can) and The Financial Times reported “Oil Surges as Egypt Protests Grow”. Because we wouldn’t want to get too excited by this politics nonsense when oil prices are rising, now would we? The Telegraph appeared not to notice Egypt for most of the period.

Oil: As we approach the 100th anniversary of the break-up of Standard Oil on the 15th May this year (buy your balloons now before they sell out) it's making the world go around as much as ever

The truth is that it is neither obvious nor straightforward that oil prices damage the well being of the man on the street. You have to understand that oil prices drive inflation, and particularly food inflation, which makes life more expensive. You also have to know that electricity and gas prices tend to rise in line with oil prices, even though neither comes from oil. On the face of it this is like saying “of course the price of tables will rise – the price of plant pots has risen”: on the surface at least it’s a little weird. These facts have, however, filtered down into the decision-making end of the public as received wisdom, and enough that the whole political spectrum is rattled. In economic good times, seriously rising oil prices are only inflationary. In bad times we’re talking about the dreaded stagflation, where the two horsemen of economic apocalypse, inflation and unemployment, ride out together.

(I would also like add, in passing, that this resolution seems to me further evidence of the value of having Lib Dems in the current government. Accusations of impotence and of “selling out” run rife in newspaper comment pages – and in most episodes of The News Quiz on a Friday night – but this may be one of many occasions when a Lib Dem minister or a Lib Dem presence has huge impact on the detail of policies that fly beneath the radar of many such critics. Nor is it an isolated case – I count two or three news stories a week highlighting compromise decisions or finely balanced Conservative-Lib Dem influences.)

With the future of the Middle East as uncertain as ever, future oil shocks may hit the world economy hard. The political unrest of Egypt and Libya may have pushed prices up, but they only produce 0.74 and 0.6 million barrels of oil per day. Iran produces 3.66 million, and Saudi Arabia more than 9 million barrels (source: FT). Even if these shocks don’t materialise, there is a simpler truth here – that the world supply of oil is finite, so in the long-term the price is only going to go one way: up.