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Alan Rudge: CO2 And Climate Change: The Impact Upon Industry And The UK Economy

Paper presented at the Royal Academy of Engineering Fellows Meeting 22nd April 2010

The 2008 Climate Change committed the UK to at least an 80% reduction in greenhouse gas emissions by 2050. The Government introduced this law with the enthusiastic support of the various environmental lobbies but with little forethought as to the impact upon UK Industry or the economy at large.

There will be business opportunities arising from the current anti-carbon fervour; and products and services which improve the efficiency of our use of carbon fuels are to be encouraged if they are commercially viable. However, we must be realistic since there is no real reason to suppose that UK industry is better placed to benefit than their competitors. Many of these opportunities will exist only due to substantial Government subsidies and any company venturing into the field must takes into account the fact that the winds of politics may be as variable and unreliable as those which drive our wind turbines.

The CO2 legislation and the subsequent Government policies will impact particularly severely on energy costs; and the timescales imposed will demand the early closure of existing coal-fired power stations. Their replacement with nuclear generation, currently the only realistic option for base-load electricity, is well behind schedule. The proposed wind power programme would involve 3000 windmills in the North Sea by 2020 and this is equally unlikely to be met.

To meet emissions targets over the past decade the UK has benefited from exporting its manufacturing industries and importing finished goods. This effect is apparent in the increasing deficit in the UK’s balance of trade in manufactured goods. [Figure1].

The UK may be domestically emitting less carbon than in 1990, but it is actually responsible for increased global emissions over this period. If emissions caused by importing overseas produce are added to the transportation emissions, the UK’s carbon footprint actually increased by 19 per cent between 1990 and 2005.


Figure 1


Another key piece of legislation is the EU’s Renewables Directive (2008), under which the UK has a target of 15 per cent of its final energy consumption by renewable sources by 2020. Electricity generated from renewable sources is officially projected to rise from the current 5.5 per cent to around 30 per cent by 2020. Few commentators believe that this target is achievable.

The Royal Academy’s report on UK Energy Systems concludes that the emission targets could be met, but the engineering challenge is massive. So massive that it would represent the biggest peacetime programme of change ever seen in the UK. To have any prospect of success it would have to be led and co-ordinated by Government and commenced virtually instantly. While engineers cannot resist an engineering challenge, and hate to say no, it is clear that this could only be achieved by effectively mobilising the nation on to a war footing with this as the single objective. Like World-war II this would bankrupt Britain.

The Government’s climate change strategy is already proving costly for both domestic and business energy consumers since current policies will raise electricity costs significantly. In their recent Online paper Lea and Nicholson identify three ways in which costs are imposed:

The Renewables Obligation: This 2002 RO is the obligation placed on licensed electricity suppliers to deliver a specified amount of their electricity from eligible renewable sources.

The EU’s Emissions Trading System: This is an EU-wide “cap and trade” scheme from 2005. The allocation of free permits is due to be substantially reduced under phase III (2013-2020), which will increase the price of electricity generated from fossil fuels.

The Climate Change Levy: (This 2001 levy is a tax on the use of energy in industry, commerce and the public sector, to reduce energy use and hence CO2 emissions. There are exemptions but nuclear-generated electricity is not one of them.

On the basis of these three obligations alone, business could be facing additional costs on electricity bills of up to 70 per cent by 2020. The Government’s own figures show that the net costs of the strategy for the period 2010-2030 as £55bn to £65bn.

But will the UK’s low carbon policies put our industry at a disadvantage compared with other EU members? The UK’s share in meeting the Directive is greater than any other European nation and has been estimated at around a quarter of the total EU costs. This is partly due to our poor starting point relative to most of our competitors, and our choice of intermittent wind power which is particularly costly and inefficient. This Directive alone clearly disadvantages the UK and will encourage a further migration of energy-intensive industry away from the UK.

Under the Climate Change Act the UK is disadvantaged further by its extra-tight carbon targets of 34 per cent by 2020, compared with the EU’s 20 per cent. Few countries outside the UK appear to be adopting tough low-carbon policies and the deterioration in Britain’s energy competitiveness will be even more acute outside the EU.

Not only is CO2/Climate Change legislation a burden for industry at a time when the UK needs to grow its industrial base, but it represents an impending disaster for heavy energy users. While it is extremely unlikely that the UK will meet these targets, the political decisions resulting from attempting to do so are likely to be very damaging to industry and the economy and are unlikely to be compensated by competitive opportunities in new low-carbon industries.

The scale and negative impact of these carbon-reduction impositions should provide a healthy stimulus for the engineering profession to draw breath and examine more carefully the evidence for anthropogenic CO2 as the principle forcing factor for climate change. In view of the economic penalties involved it beholds us to weigh up the level of threat and the uncertainties involved.

The UK contributes just 2% to the total CO2 emissions. [Figure 2] We are a small and economically fragile nation and not a wealthy empire. We have been engaged in ‘strutting on thin air’ for all too long. We must consider the facts, and our strategic response, with care, if we are to deploy our limited resources effectively and avoid rushing lemming-like into bankruptcy – a situation which will do nothing for the environment or future generations. This is too important a matter for the engineering profession to remain passive – it needs to be on top of this issue rather than on tap.


Figure 2


A year or so ago the evidence for anthropogenic global warming appeared overwhelming. It included drowning polar bears, hockey stick global temperature characteristics, rapid glacier melting, reducing Arctic ice coverage, disappearing islands in the Indian Ocean, environmental refugees from islands off Australia, droughts increasing numbers of hurricanes and other exceptional weather events.

It was generally held that the science was settled and that there was a consensus of scientists to this effect. To question any of this was to be labelled a fool, a denier or a flat-earther. However a plethora of recent publications from authoritative sources have challenged all of these claims and shown them to be either doubtful, false, or providing no clear distinction between anthropogenic warming (or AGW) and naturally occurring climatic cycles.

There are many significant issues still to be resolved but it is clear that at the present state of knowledge there is a significant degree of uncertainty and a diversity of scientific opinion for and against AGW . The science is certainly not settled.

The core evidence for AGW has been arrived at by the coupling of scientific studies of atmospheric CO2; with a claim that current global temperatures are unprecedented; and the predictions of some very large but imperfect computer models of the Earth’s complex climate system. The models are unable to deal with clouds or water vapour effectively, although water vapour constitutes 83% of greenhouse gases. The spectra are very informative. [Figure 3]



Figure 3

In figure 3 the red area of the Sun’s spectrum is absorbed by the atmosphere and the Earth’s surface. The warmed surface emits infrared radiation as indicated by the white areas on the individual molecule’s spectrum. The grey areas are the parts of the spectra that are absorbed by the atmosphere. The blue area on the Earth’s emission spectrum is known as the infrared window through which most of the Earth’s radiation passes to space unhindered by being absorbed by any of the greenhouse gases.

CO2 constitutes ~16% of the atmospheric greenhouse gases. To double it to twice its pre-industrial level would involve consuming all the known gas and oil reserves and one third of the world’s coal deposits. But the CO2 effect is logarithmic and even a doubling of the gas in the atmosphere does not produce a worrying increase in global temperature. To predict substantial change it is necessary to assume some form of positive feedback to accelerate the warming effect. The models include this feature and provide predictions which have been consistently wrong for the past decade. Nevertheless they continue to provide the alarming predictions which have fuelled the anti-carbon legislation.

The UN’s Intergovernmental Panel on Climate Change (IPCC) have politicised the science and made it a key issue of our time. The science of climate change is diverse and few, if any, can claim to be experts across all of the disciplines involved. However, the literature on the subject is growing rapidly and the Fellows of this Academy certainly have the necessary skills and ability to read intelligently around the subject and to consider the arguments of Alarmists and Sceptics alike: before deciding whether the actions we are taking are appropriate for the level of threat and uncertainty which is revealed.

Rather than accept the status quo and blindly follow these political edicts, with their huge implications for the nation’s economic future, we may find ourselves doing a greater service to UK science, industry, the economy, the environment and future generations, by first satisfying ourselves on the case upon which it all rests.


The sustainability of the UK economy in an era of declining productive capability ERA Foundation 4th Report Feb 2010 (available online)

R. Lea & J. Nicholson: British Energy Policy and the threat to Manufacturing Industry Civitas Online Report April 2010

Generating the Future: UK Energy Systems fit for 2050: The Royal Academy of Engineering Report March 2010 (available online)

J. Barrett & D. Bellamy: Climate Website