The Failure of the UK Climate Change Act

The Belgian think tank Bruegel points to data showing that the United Kingdom’s GDP has returned to pre-economic crisis levels, as shown above. This allows us to do a quick and intuitive examination of how much the UK economy has decarbonized over that time period, and how that rate of decarbonization compares to that implied by the UK Climate Change Act.

As a refresher, decarbonization refers to the rate of decline in carbon dioxide emissions to GDP. In order for the UK to hit the targets prescribed in the UK Climate Change Act for 2022, it will need to achieve consistently an annual rate of decarbonization of  more than 3%, for any GDP growth rate greater than 1% per year. For more detail, and a full exploration of the quantitative implications of the UK Climate Change Act for decarbonization of the British economy, see my 2009 paper in ERL (open access).

With the UK GDP in 2014 at the same level as it was in 2008, it allows us to calculate a simple rate of decarbonization, as it will be exactly equal to the annual rate of emissions decline.

The 12 month (ending 2nd quarter 2008) carbon dioxide emissions for the UK for 2008 was 536.1 million metric tonnes (data here in XLS).  The trailing 12 month (ending first quarter 2014) carbon dioxide emissions for the UK for 2014 was 507.9 million metric tonnes (data here in XLS).

These data imply a rate of decarbonization of -0.9% per year. This is far less than would be needed to hit the targets of the UK Climate Change Act. Last year I calculated an update of the UK decarbonization rate through 2012, which resulted in a similar result. That calculation is shown below.

The approach to emissions reduction embodied by the Climate Change Act is exactly backwards. It begins with setting a target and then only later do policy makers ask how that target might be achieved, with no consideration for whether the target implies realistic or feasible rates of decarbonization. The uncomfortable reality is that no one knows how fast a major economy can decarbonize. Both the 2022 interim and 2050 targets require rates of decarbonization far in excess of what has been observed in large economies at anytime in the past. Simply making progress to the targets requires steps of a magnitude that seem practically impossible, e.g., such as the need for the UK to achieve a carbon efficiency of its economy equal to that of France in 2006 in a time period considerably less than a decade.

Further, the focus on emissions rather than on decarbonization means that it would be very easy for policy makers to confuse emissions reductions resulting from an economic downturn with some sort of policy success (cf, McGee 2009). However, as implicit in the Kaya identity, a lower GDP does very little to change the role of energy technology in the economy. So during a downturn emissions may level off or even decrease as policy makers of course seek to preserve (and even accelerate) economic growth. Consequently, a more directly useful metric for policy success for efforts to stabilize carbon dioxide concentrations in the atmosphere is the decarbonization of the economy, represented in terms of carbon dioxide emissions per unit GDP.

A focus on decarbonization as the central goal of carbon policy rather than emissions reductions means that to achieve specific stabilization targets the rate of decarbonization of the UK economy must not only exceed the rate of economic growth, but it must exceed rates of decarbonization observed historically in the UK and in other developed countriesNote5. Because no one knows how fast a large economy can decarbonize, any policy (or policies) focused on decarbonization will have to proceed incrementally, with constant adjustment based on the proven ability to accelerate decarbonization (cf Anderson et al 2008). Setting targets and timetables for emissions reductions absent knowledge of the ability to decarbonize is thus just political fiction. . .

The failure of the UK Climate Change Act is yet to be broadly recognized, but when it is, it will provide an opportunity to recast carbon policies in a more effective manner.