Richard S.J. Tol is a Professor at the Department of Economics, University of Sussex, the Professor of the Economics of Climate Change, Institute for Environmental Studies and Department of Spatial Economics, Vrije Universiteit, Amsterdam, the Netherlands, and a Research Fellow of the Tinbergen Institute and CESifo.
Formerly, he was a Research Professor at the Economic and Social Research Institute, Dublin, the Michael Otto Professor of Sustainability and Global Change at Hamburg University and an Adjunct Professor, Department of Engineering and Public Policy, Carnegie Mellon University,
Pittsburgh, PA, USA.
He has had visiting appointments at the Canadian Centre for Climate Research, University of Victoria, British Colombia, at the Centre for Social and Economic Research on the Global Environment, University College London, and at the Princeton Environmental Institute and the Department of Economics, Princeton University.
He received an M.Sc. in econometrics (1992) and a Ph.D. in economics (1997) from the Vrije Universiteit Amsterdam. He is ranked among the top 150 economists in the world and among the top 50 most-cited climate scholars. He has well over 200 publications in learned journals (with 100+ co-authors), 3 books and many minor publications. He specialises in the economics of energy, environment, and climate, and is interested in integrated assessment modelling. He is an editor for Energy Economics, and an associate editor of economics the e-journal. He is advisor and referee of national and international policy and research.
He is an author (contributing, lead, principal and convening) of Working Groups I, II and III of the Intergovernmental Panel on Climate Change, shared winner of the Nobel Peace Prize for 2007; an author and editor of the UNEP Handbook on Methods for Climate Change Impact Assessment and Adaptation Strategies; a GTAP Research Fellow; and a member of the Academia Europaea. He is actively involved in the European Climate Forum, the European Forum on Integrated Environmental Assessment, and the Energy Modeling Forum.
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Stories of Change project
Richard Tol Interview
RH: = Roger Harrabin interviewer
RT: = Richard Tol, Economist, participant
RH: Richard Tol, thank you very much for coming in to talk to the Open University and to Radio 4 Documentaries.
RT: Thanks for having me.
RH: We're starting all our interviews in this series with a question: when did you first get interested in energy?
RT: <Chuckles> that's a very difficult question to start with. I studied Economics and Environmental Science. Energy already was then a very big component of Environmental Science I think 25-30 years ago.
RH: Where did you study?
RT: Free University in Amsterdam.
RH: And what intrigued you about it at that time that made you want to pursue it?
RT: I started more from an environmental angle than from an energy angle.
RH: You were an environmentalist at that time? Or maybe you still consider yourself an environmentalist, I don't know.
RT: Environmentalist, of course, has all sorts of overtones <chuckles>.
RH: Exactly, I'm leaving it to you to define.
RT: Maybe when I was younger I could be classified as an environmentalist. I was a member of Greenpeace, Friends of the Earth and all those things. Later on I became an environmental scientist. I guess I was interested in how these things work, particularly how environmental policy works, rather than campaigning for a particular solution.
RH: Just looking at you now and from the point of view of the listeners, you look rather different from the average climate contrarian. They tend to be suited and booted and you have long hair and beard and a t-shirt. It's a different look.
RT: It is a different look, yes.
RH: When you go to contrarian meetings, you'll stand out a bit.
RT: I rarely go to those meetings.
RH: OK. Tell us about your t-shirt.
RT: My t-shirt is by Cartoons by Josh. It says 'Blackout Britain.' It's essentially about the risks that fortunately did not come true last winter about major blackouts in Britain. We may actually be looking at major blackouts coming winter.
RH: Is that something you seriously fear?
RT: I don't think fear is the right word <chuckles>, but it's something that we should realistically consider, yes. Last winter we were on a knife edge; this winter demand will probably be higher and supply will definitely be lower.
RH: Let's go back slightly to the start. So we talked about energy. When did you start getting interested in climate change and energy and the interface between them and the economics thereof?
RT: My master's thesis way back when was actually about climate change. Energy then automatically comes after. I've been interested in this for the last 25 years.
RH: OK. And what were you thinking then and how has your thinking changed over the years?
RT: The very start of my career was about trying to show that CO2 and other greenhouse gases cause climate change. We were one of the first to establish that on a satisfactory statistical basis.
RH: You did that as an economist? That would normally be a physical science exercise.
RT: I did it as a statistician, I would say, rather than an economist.
RH: So you were one of the people that helped prove that human fingerprint was on climate change?
RT: We were the first to show that in a statistically sound way.
RH: Congratulations. I think probably not a lot of people know that <chuckles>.
RT: Very few people <chuckles> know that. After that, because of essentially funding reasons, I switched more to the economics of climate change and I would say that the first five years or so of my career I tried to prove Nordhaus wrong.
RH: OK, just explain that to people.
RT: Nordhaus of course having in 1992 established that yes, climate change is a problem and we should be taxing greenhouse gas emissions, we should be putting a price on carbon, but also argued that the price should actually be fairly low and we should very gradually deviate from a 'no policy' scenario and we should very modestly reduce greenhouse gas emissions initially but much more stringently.
RH: So you were trying to prove that wrong?
RT: I was trying to prove that wrong and I must admit that I completely failed there. After five, perhaps ten years of trying, I essentially found that Nordhaus was right. It is true that you can reconstruct the problem such that you would be able to justify a much higher carbon tax than Nordhaus initially found, but the assumptions that you need to make I don't think are realistic or acceptable.
RH: I find the argument quite compelling that you should start off low and then steadily increase your carbon taxes. It gives a very clear signal to business of the direction of travel, massively helps with long-term investment. The problem is it relies on government commitment - steady government commitment - unremitting over decades and that's something we'll never see.
RT: That's exactly one of the problems with climate policy, right? The only solution to the climate problem is if we decarbonise the economy, right? We need to go to zero emissions. We probably will need a century to do so, that's the order of magnitude. And that means that climate policy will have to survive 20 electoral cycles.
RH: It's interesting to hear you talk like this. The G7 recently said we need to decarbonise by the end of the century and that was welcomed by a lot of environmentalists. It sounds like you're in the same ballpark really.
RT: Yes. A century, give or take 20 or 30 years?
RH: Yes, exactly. But the thing is when would you start? And how do you deal with the issue for instance like developing countries now want to build coal which will then last for a further 50 years or 60 years? Where do we go with this?
RT: We should have started a long time ago which means that we should start now very gradually. The problem with developing countries is a different one. If you're talking about a country like the UK then we should have started ... actually we have started. We haven't started in the most brilliant of ways but we have started and I think that is correct. Developing countries is a different story. At the moment, and it's very simple, the cheapest way to provide electricity is to use coal. Not having electricity is a great hindrance to economic development not just in terms of consumption growth but also in terms of education, in terms of healthcare and so on and so forth which, even if you don't care much about material wellbeing, are great goods. And the cheapest way to deliver that is through coal which means that if you think it is right these people get richer in every sense of the word, which I think is right, then you would have to accept that they will emit more greenhouse gases. I mean the solution there is not to deny them access to energy as DFID at the moment is trying to do, as the World Bank at the moment is trying to do, as a lot of environmentalists seemingly advocate. But the solution there is to provide them with better technology than we used at the beginning of our economic development.
RH: So that would mean countries like the UK, the US having to pay to help countries like Bangladesh for instance get an energy system that wasn't reliant on coal.
RT: Or at the very least use the most efficient conversion technologies.
RH: Because as an economist you can't be satisfied that coal is cheaper but it's only cheap because it doesn't pay for its externalities, the costs it imposes on someone else either in terms of health or ...
RT: But even if you start including those externalities then coal would still be cheaper than renewables and most other fossil fuels actually.
RH: Do you think that is true for sunny countries now, where solar is already registering the sort of prices you would see from gas, which is cheap at the moment.
RT: If there's no grids then at the margin, solar is cheaper than coal and other grid-based technologies. But if you compare full-scale delivery then building a grid and fuelling it with coal is still cheaper than renewables. The big problem with solar is of course that it's unreliable and the cheap solar doesn't help you at night when you need it most.
RH: Unless you can store it of course.
RT: Yes. But then you're not talking about photovoltaics but you are talking about different solar technologies which are actually more expensive.
RH: Should we be looking at them in your opinion?
RT: Of course. We should be looking at all energy sources that there are.
RH: So you've done major work for the Intergovernmental Panel on Climate Change on the costs of CO2 and also, in your view I think, the benefits. Can you talk me through your thinking on this?
RT: A lot of my work is about the impacts of climate change and what that would do to human wellbeing. It's not just me that is working on that but there is a number of people working on that and one of the general findings there is that climate change is a problem and climate change would reduce human welfare but that welfare loss is actually not that great. And if you just believe the central estimates and just look at the global average then you would find that a century worth of climate change is about equal to losing a year's worth of economic growth in terms of human welfare. It's another very big impact and certainly does not make climate change the biggest problem of humankind as some people are trying to convince us of. Those best guesses and looking at the global average is perhaps not the most informative. If you start to include that negative surprises are much more likely than positive surprises, if you start to include the distributional implications, poor countries are much more vulnerable to climate change than are rich countries then I think you can credibly defend the statement that a century of climate change is about as bad as losing a decade of economic growth. It still doesn't make it the biggest problem of humankind.
RH: It still makes it a very big problem though and one worth tackling I think from what you ...
RT: It's a problem worth tackling but it's not as bad as joining an inappropriate monetary union for instance if you look at Greece or a civil war if you look at a country like Syria.
RH: Yes, not many things are as bad as that, luckily. So where does this take us in terms of our thinking of how much we should be investing, in your point of view, in clean technologies?
RT: That's the total economic impact of climate change, which is largely irrelevant because we cannot take away climate change in its totality. We should really be looking at how much additional damage is done if we emit one extra ton of CO2. And then you're talking about a carbon tax that is in the order of 10, 20, 30 dollars per ton of CO2 and that would translate into a few pennies per kilowatt-hour or a few pennies per litre of gasoline.
RH: There are many, many estimates, of course, as to the true cost of CO2 and they vary massively, don't they? From a few dollars to hundreds of dollars and ...
RT: Actually they vary from minus a few dollars to thousands, tens of thousands of dollars <chuckles>.
RH: OK <chuckles>, so we're already looking at a level of uncertainty trying to model the global climate. Some people consider it impossible to model an organism of such enormous complexity with its multiple negative and positive feedbacks. You're then trying to extrapolate upon that. I'm minded of a British academic, Canadian academic I beg your pardon, John Adams, UCL; who used to say: 'Roger, if you multiply funny numbers by funny numbers you get hilarious numbers.'
RT: Oh, that’s very true and we should not underestimate the scale of the issue here or the scale of the problems here. And it's not just that future climate change is very uncertain; future population growth is very uncertain, future economic growth and energy use are all very uncertain. But a lot of the vulnerabilities to climate change are intimately related to technology and development and those sort of things. I'm old enough to recall the days when malaria specialists were agreed that a malaria vaccine is impossible and now we have seen the first trials and they are actually going into production. And that is of course one of the big uncertainties that you have in projecting the impacts of climate change; that a lot of these impacts are contingent on such things as medical technology. Earlier this week I was reading this piece about gene editing that will actually make malaria go extinct much more quickly than a vaccine would. If that comes true, if that technology is realised then of course we take away all the worries about what climate change will do to malaria because there would be no more malaria. And that is one of the uncertainties that you need to take into account and that's part of the projections and it makes it very, very complicated. And this is of course an example ...
RH: When you say complicated, don't you mean impossible?
RT: <Chuckles> well, it's not impossible ...
RH: You're an economist, of course you have to believe in the figures. Some other people looking at the figures will say, 'Well frankly, we don't know what to believe here. It looks like a problem but can we quantify the problem?' It's very hard. It comes down to politics, surely, not economics.
RT: What you can do is stick all these factors into a big computer model, run them and see what happens. That is not very informative. A number will come out but what is much more interesting is if indeed you can show for a range of credible assumptions that you find a relatively narrow range of results. And that is what we should be trying to do and we should also be very frank that for some of these things, the results are indeed fragile to alternative equally credible assumptions. That happens all the time in this field.
RH: You talked about nasty surprises en passant that would be more likely than less likely. We're more likely to get bad surprises than good surprises. Talk me through a few of the scenarios that might happen that are impossible to feed into the computer calculations.
RT: You can make a computer do anything, right? <Chuckles> so it is not so much that it's impossible to do, it is just very implausible and sometimes sticking your neck out and producing these numbers results in scorn rather than that people take you seriously. So it's more an academic impossibility to publish and talk about these results than it's impossible to get a computer to spit out these numbers. One of the scariest scenarios of climate change is something as follows and it also will give you an idea of how impossible it is to quantify these things. Sea level were to rise by a metre or so; may happen by 2100, maybe by 2150. Under current conditions that would mean evacuating 30, 40, 50 million Bangladeshis, in the future perhaps a bit more because of population growth. Where would they go? If you look at the current political situation in Bangladesh there's actually a low-level civil war going on. You would essentially force the Bengali out from the flats into the hills where there's people who do not really like the Bengalis that conflict would probably intensify. A whole lot of them would actually move into Myanmar, move into India where they're also not very keen on Bangladeshis. That may lead to civil conflict there, at which point the Pakistanis would probably be escalating to 'Hindu versus Muslim' type of conflict at which point the Pakistanis may decide to come to the rescue of their Muslim brethren. And because of sea level rise, you're talking about nuclear war on the Indian subcontinent. That's a scenario that you cannot say is impossible. You cannot say that this sequence of events will not happen. You can actually make it sound plausible, even.
RH: It sounded to me like you did believe it was plausible. I was quite convinced as you were spinning it out as a possibility <chuckles>.
RT: My old friend, Gary Yohe, for these sort of stories prefers the words 'not implausible.' You cannot exclude that this will happen and if it would happen and if it would happen as a consequence of climate change, that is a big, big negative. Would you be able to put any sort of quantification on this? And probably on the scale of human misery, you can say, 'Yeah, this will probably be a few hundred million deaths.' But how likely is this? Nobody knows. If a metre of sea level rise would fall on the Indian subcontinent tomorrow, you can be pretty sure that it would cause major misery. If you look back at Europe 85 years ago, we were on the brink of war. And the South Indian continent at the moment is continuously at the brink of war, right? But in 85 years from now, when you could reasonably expect the metre of sea level rise, it may be as prosperous and as peaceful as Europe was a few weeks ago.
RH: But it still couldn't afford to lose that amount of land mass. I've heard people talk about, 'Oh, well engineers can sort out Bangladesh like they sorted out Holland.' But I've been to Southern Bangladesh and it's a mosaic of land and water, it's difficult sometimes to see where they join. It's just completely impossible to defend it from sea level rise.
RT: No, that is not true. The big problem in Bangladesh is politics rather than engineering. In many ways, Bangladesh is very similar to the Netherlands was 200 years ago: a mosaic of land and water, very densely populated, at risk from storms, at risk from floods from the sea, at risk from floods from the river. What has happened in the Netherlands is essentially that mosaic of land and water has been changed into hard lines between the two. And Bangladesh can be done the same. I mean you would not ...
RH: It would be engineering on a scale completely unprecedented.
RT: So? <Chuckles> I mean we always do things that are completely unprecedented, right?
RH: Yes. Let's have a look at some of the other tipping points. I mean what, for instance, if the vast deposits of methane in the Arctic start to melt if we warm the Arctic more? We've no idea where that tipping point is.
RT: Exactly. There are a few people who claim they do and the predictions have always come out wrong, right? Which shows that we don't really know what is going on there. That could be a major problem, yes, because that would lead to very rapid warming.
RH: So given the potential magnitude of the impact, how urgently do you think we need to move on climate change? Given that we can project a certain number of bad outcomes, probably more negative than positive and we know that other traps may or may not lie ahead. But if they do, they could be pretty catastrophic. How do we measure a sensible policy on this?
RT: As I said, we should have started and actually throughout Europe, we have started already and the question really is: what is politically feasible, how fast can we push this? It is clear that climate is a problem that needs to be solved.
RH: Well how fast do you think it ought to be pushed? I mean the UK, for instance, we've had our programme subsidising renewables, we're bearing down on coal and we expect to be decarbonised in the electricity sector by around 2030. We have a long-term climate plan. I mean is that enough, is the UK a model for the rest of the world and how to tackle this, do you think?
RT: No, the UK is, and that's pretty unfortunate, given the influence that the UK has through the Commonwealth and the English language, the UK is clearly a model on how not to do it. If you look at the last 20 years or so of UK climate policy, a few things have happened. One thing that has not happened is that emissions have fallen in any measurable or substantive way. But what has happened is that most people got a little bit poorer because energy's more expensive, or a little bit poorer because they had to pay higher taxes. A few people got a whole lot richer because of climate policy. There has been all sorts of distortion imposed on the market but emissions have not budged. So the UK is very clearly a model on how not to implement climate policy.
RH: Well to be fair, domestic emissions are on a slow downward trend. To say they haven't budged would be unfair.
RT: Yeah, but that's not because of climate change; that's because of slow economic growth, that's because of economic restructuring, that's because of technological progress. It's not because of climate policy.
RH: The government would disagree with you a bit there.
RT: Of course they would <chuckles>.
RH: So what alternative policies would you have advocated?
RT: Well Tinbergen actually has said fairly reasonable things about this in the 1950s; unfortunately a lot of people have forgotten about this. If you have a single problem, you need a single solution. If you have a single actionality, as climate change is, then you should come up with a very simple instrument: a carbon tax and a carbon tax only. There's alternatives to that: you could go for emissions trading, you could go for subsidies, you could go for technology mandates. But the crucial lesson there is that you should do one or the other. Instead, the UK government over the last 20 years has basically tried to throw every instrument at the problem, mainly creating distortions, but actually never really pushing climate policy in a coherent manner.
RH: So what specific policy would you have done? Put you in the position of being Chancellor of the Exchequer or Energy Secretary 20 years ago, what would you have done?
RT: A simple carbon tax. A carbon tax can be managed by perhaps ten civil servants in the Treasury, that's all you need. Instead we have a large department of climate change that employs many, many civil servants, all of whom are making up silly rules. And I would simply abolish that whole department and replace them with a working group of ten civil servants or so in the Treasury and that's all we need.
RH: OK. So the result of the carbon tax would be clearly that you would force industries to move towards cleaner sorts of power and whatever was the cleanest option at that given time. What it wouldn't have done is, like the Germans did with their Quixotic decision to install a million solar roofs in cloudy Germany, what they did is they created a mass market for solar which brought in billions of dollars of venture capital investment and has brought the price of solar panels plunging by 70%. So now solar is a kind of global benefit, a world gift from the Germans, which would never have happened if they had just followed a simple carbon tax.
RT: That's one reading <chuckles> of what has happened.
RH: OK, well is it true? What bit of that is not true?
RT: I'm not a specialist in the solar industry.
RH: OK, I'm just saying that a carbon tax would not have brought that about, that extraordinary technological leap.
RT: Exactly. what has happened with the German subsidies is that a lot of solar was displaced, solar that would have been built in Italy and Spain and Portugal was instead installed in Germany and was ...
RH: Well, it might have been built in Spain or Italy and Portugal. The German market that it created, and I spoke to venture capitalists in California about this and they said, 'OK, we've been pulled into this area because we can see there's a huge market in Germany and we expect that others will follow.'
RT: Yeah, yeah, yeah, yeah.
RH: And sure enough, that is exactly what happened.
RT: And the main beneficiaries were actually a few Chinese tycoons, right?
RH: Yeah, a few Chinese tycoons and millions of people round the world who can now get power where they never could have got it. And they can get it very cheaply without a grid where they could never have got that.
RT: The drop in prices is not really to do with major breakthroughs in technology but major breakthroughs or essentially scaling up of production. It's economies of scale.
RH: I mean it's partly both, isn't it? And all I'm saying is if you'd imposed a simple carbon tax, you would not have achieved that objective. I'm just taking issue with one policy being good enough.
RT: No but is it an objective to push through one particular technology rather than a solution to the problem? Is it the objective to enrich a couple of Chinese to a great extent?
RH: No, I'm sure that's not the objective; that's the accidental outcome. But the other outcome, the desired outcome, is cheap solar power for the world.
RT: No, no, no, no, no. Well ...
RH: I mean it looks like solar is going to get cheaper and cheaper and cheaper as well. You know, soon we may be able to just clad it onto buildings; an extraordinary result... my only point is it would not have come about as a result of a simple carbon tax. So I'm suggesting that you may be wrong.
RT: Yeah, of course I may be wrong. But there's no evidence that suggests that because of the German subsidies, the downward trend in the price of solar has accelerated. There is no evidence at all to suggest that and these technological advances may have come anyway. As I said, I'm not fully up-to-speed with what is going on in solar. With wind, that is definitely what has happened. At one point the subsidies for wind in Germany were so generous that you could build a wind turbine indoors and still make money.
RH: <Chuckles> I'd like to believe that's true, that's a good story.
RT: It was true for a couple of years. What we have seen in wind is that technological progress has actually slowed down because everybody who knew about how to improve wind turbines essentially got lazy and started making money rather than improving their product. They went into production, they went into sales rather than into technological progress. And as a result of the over-generous subsidies, initially from Germany, later also from the UK, technological progress in wind powers actually slowed down rather than increased. And I would not be surprised if the same is true for solar.
RH: But even so, it's on a path to be on a par with gas within a couple of years' time, onshore wind in the UK.
RT: Yeah, yeah. But that doesn't ...
RH: So surely that's a good thing, isn't it?
RT: That's a good thing, of course. I mean better …
RH: And again, wouldn't have happened without the subsidies.
RT: Better technology is a good thing. It is not at all proven that this was because of the specific interventions of the UK government or the German government. That is widely disputed, whether this is just the normal trend that just continued. For wind, we're actually relatively certain that policies have slowed down technological improvement rather than accelerate it.
RH: I think that's true for onshore wind, it's certainly not true for offshore wind. How would you treat … for instance, the EU has tried to separate the different forms of heat and electricity and power. How would you, for instance, if you were worried about greenhouse gas emissions, how would you bear down on home heating, for instance? Just simple carbon price?
RT: A simple carbon price. From the perspective of the atmosphere, it doesn't matter where the CO2 comes from and therefore it also doesn't matter where the CO2 reduction comes from. If you impose a carbon price then you give everybody who emits CO2 an incentive to emit less and you let the market and the households and companies sort out what is the best way to do it, or pay the price if it can't be done.
RH: And why do you think governments have been so resistant to imposing a carbon price?
RT: Part of it has to do with the tendency of civil services to try and grow and it's much easier if you're in charge of climate policy if you do it through direct regulation and through mandates and through subsidies and so on and so forth. Then your desk is growing and you have more subordinates to work for you and that means that you have more power and more status as a senior civil servant and that is part of it.
RH: Well then also civil servants probably believe that they ought to try to control policy 'cause that's their job, that's what they're paid for.
RT: Exactly. And for politicians it's of course also much easier to promise subsidies to specific groups who might vote for you than to impose a carbon tax. So yeah, the politics and the nature of the civil service militates against an effective and an efficient solution to climate policy.
RH: Let's talk a bit more about who the subsidies go to and who they're paid by. Because the way the system was set up in the UK, subsidies go onto household bills so the poor disproportionately pay. And it is undoubtedly true that the rich disproportionately benefit if they have enough land to put wind farms on or if they've got properties that they can put solar panels on, of course the rich benefit. So it has been regressive, that policy. As an economist, if you had been persuaded, and it sounds like you are, that tackling climate change is a public good, wouldn't it have been more rational and more fair to put those costs onto the taxpayer rather than the bill payer?
RT: No, exactly.
RH: You mean you agree with that?
RT: Yeah. The outsourcing of public policy to privately owned or publicly owned companies … smacks of China rather than Britain, I would say. It's not how you would want to run public policy, those things should not be outsourced. It actually has increased quite substantially, these private companies, the Big Six, are now expected to run all sorts of social programmes and so on and so forth. That's not their job; their job is to deliver electricity and gas, that's what they should be doing. They should not be running public policy.
RH: And the government should be paying, if it wants to continue these subsidies, it should be paying through the central Exchequer.
RT: Yes, yes.
RH: Would you find much support for that among contrarians? I mean you deal with a lot of them. It strikes me as probably being a very unpopular move.
RT: I don't know who you mean by contrarians but a lot of people accept the argument that a carbon tax is the best way forward. But there's also a great many people who would immediately counter that you can't trust the government with tax increases.
RH: And a carbon tax of course would also be regressive, be disproportionately paid by the poor.
RT: Exactly. Any policy that makes energy more expensive, and any climate policy will make energy more expensive one way or another, is necessarily regressive. The advantage of a carbon tax is that you have government revenue and you can use that revenue to actually counter the regressive effects.
RH: So how would you do that? In Bangladesh, for instance, historically they've had kind of a block tariff where you get a certain amount of electricity at a very low price and then the next tranche comes at a higher price. And eventually, by the time you get to rich people living in Dhaka with the air conditioning on, they're paying an awful lot for their marginal electricity. Is that the sort of thing that you would favour, is that rational?
RT: Non-linear pricing is rarely rational. No, you would impose a carbon tax and use the money to increase benefits for tax credits.
RH: Let me move onto an issue where you were involved in quite a big controversy, which is over the Intergovernmental Panel on Climate Change report. Can you tell me about your involvement in that? You were one of the lead authors for one of the sections of the economic assessment. Tell me about how you saw that work through.
RT: I've actually been involved with the IPCC since 1994. In the Fifth Assessment Report, I was a convening lead author in Working Group II, co-responsible for Chapter Ten on the economic impacts of climate change. That was all reasonably fine, we delivered a good chapter, I think; given the circumstances and given all the constraints that are imposed on you, I think we did a reasonably good job. The controversy was really about the Summary for Policymakers. The IPCC is of course a summary or an assessment of the literature, which by now is fairly extensive. IPCC report now measures into the thousands of pages, so nobody reads them, so what really matters is what is said in the summaries rather than in the underlying chapter. And the summary then of course becomes a summary of a summary, and that is then further summarised by journalists like yourself into a few headlines. So essentially, a 10,000 page report reflecting …
RH: Or 120 words for a morning Radio 4 bulletin piece, for instance.
RT: Exactly, exactly. So we have a literature that's perhaps measured ...
RH: I hope you have sympathy for us <chuckles>.
RT: <Chuckles> yeah, yeah, yeah. In the hundreds of thousands of pages that is indeed summarised in 120 words in a sound byte on the radio. So there's a lot of competition as to what is the key message of the IPCC Working Group II's about the impacts of climate change.
RH: And what did you think the key messages were?
RT: I think that the Fifth Assessment Report in the initial drafts of the Summary for Policymakers that actually came through I think very loud is that the new insight, is that many of the more dramatic impacts of climate change are really symptoms of mismanagement and poverty and can be controlled if we had better governance ... And more development. That was actually the key message of the first draft of the Summary for Policymakers … and the problem of course is that the IPCC is partly a scientific organisation and partly a political organisation and as a political organisation, its job is to justify greenhouse gas emission reduction. And this message does not justify greenhouse gas emission reduction. So that message was shifted from what I think is a relatively accurate assessment of recent developments in literature, to the traditional doom and gloom, the Four Horsemen of the Apocalypse and they were all there in the headlines; Pestilence, Death, Famine and War were all there. And the IPCC shifted its Summary for Policymakers towards the traditional doom and gloom message. By the way, we now have 25 years or so of experience with climate policy; as I argued before, it's not been very successful in reducing emissions. And every time there is a major policy revamp then the environmentalists come with their doom and gloom stories. And that has apparently not really convinced the population, let alone the people who actually make the decisions about these things, to reduce our emissions. So I think it's also the wrong way of bringing the climate message. So the IPCC shifted from, 'This is a manageable problem if you go about it in a smart way. Not without risk but manageable' to the traditional, 'We're all gonna die' story. And at that point, when it became clear that the IPCC wanted to do that, my opinion about the impacts of climate change is well known, I decided that it would not be credible if my name was on a document with this particular message. I told Chris Field, the Chairman about this and I quietly withdrew. Then six months later, I was chatting to one of your colleagues, Matt McGrath, about something else entirely <chuckles> and in 30 seconds, he also asked me about the IPCC so I thought the interview was about something else <chuckles>. So I told him this story that I had withdrawn and of course the next day that was world news, which was very unfortunate, never my intention. I had withdrawn quietly. I think that the climate problem is too serious for this sort of story-telling.
RH: But then you became a hero then for contrarians who said, 'Oh, here's a principled man who is saying, 'Actually, we're all going to be fine and there's no need to worry.''
RT: Of course, of course, of course. Yes.
RH: Do you feel comfortable in that role?
RT: You're cast in the role that people cast you, right? In the beginning of the interview, we talked at length about how I would organise climate policy and that I think it's a problem and that I think it's really human-made and that I advocate a carbon tax, which sort of makes me the bad guy in both camps, right? <Chuckles> because on the one hand, I argue for climate policy and on the other hand, I argue against the doom and gloom that a lot of environmentalists ...
RH: It seems to me from what you've said, that your main argument with the IPCC was not that, 'There is this doom and gloom scenario that may happen and this is very serious.' Your argument isn't with that. Your argument was that the newest findings were highlighting that actually something could be done about it, at least to an extent, if we adopted different policies. So it seems to me your argument was not really about substance, it was more about presentation.
RT: Exactly. It is about which of the many stories that you can tell about climate change that you highlight.
RH: OK. So there is a different way of looking at it, which is the IPCC every seven, however many it is, years produces its report and it is the best summary at that time of the state of play of climate change. So someone like yourself, following the literature, you know you're interested in what's new, what new things are people thinking? To the world policy-makers, they don't need to know what's new; they need to know what's most true, if you like. And there's many truths in this but they need to know what's most true. So you may have called that one wrong.
RT: Of course I may have called that one wrong. You may also say that Chris Field called it wrong, right? time will tell, right? But in my defence, I will argue that the IPCC have tried the doom and gloom story four times in a row and has not made an impact. So if you've tried four times and failed then perhaps the fifth time, you should try something different.
RH: OK, well that's a different thing. That's you kind of mentally taking over policy of what the IPCC ought to do, isn't it?
RT: Yeah but as a convening lead author, that is part of your responsibility.
RH: No, of course, of course. And you're allowed your opinion. I want to ask something about something ...
RT: No, I don't think this is a matter of opinion.
RH: But it is a matter of opinion how it should be presented.
RT: Yeah, yeah, of course. But it is your duty as a convening lead author to help shape the final message of the IPCC.
RH: No, no, of course I take that point of view.
RT: So I was not an outsider trying to muscle my way in; I was an insider, I am an insider saying, 'Perhaps you should try it differently this time.'
RH: So one specific thing that there's been controversy about has been your calculations of the benefit of CO2 in terms of fertilising forests and improving agriculture. Can you tell me a bit about your calculations on that?
RT: I don't think there's a controversy there. The academic literature is actually pretty unanimous on this stuff. So there's a couple of benefits of climate change: one is a reduction in cold in winter, which would lead to a reduction in heating costs unambiguously. It would also lead to a reduction in cold-related morbidity and mortality, people getting sick and dying.
RH: Yeah, it might do. Somewhere I read a paper recently that suggested that most winter deaths are not actually to do with cold, they're to do with the fact that there's more influenza and bugs prevalent in the winter, rather than the cold itself.
RT: Yeah, yeah. There's more influenza in winter because it's cold outside and therefore we huddle inside and we're in closer contact with other people. So if winters become shorter or less cold, we would do less of that and it would actually also stop the spread of influenza, to a degree. So there's those two factors, which are undisputed in the literature and both are of course unambiguous benefits. And they fall primarily on rich countries and cold countries. But of course CO2 is a fertiliser for plants; I mean CO2 is the basis of photosynthesis. If there's more CO2 in the atmosphere then plants simply grow faster and this is particularly true for plants that are under water stress. So this is a particular boon for agriculture in arid and semi-arid areas, many parts of which are actually fairly poor. So that's another unambiguous boon and people disagree about the size of the effects but not about the sign or that the effect is not there at all. So these things are actually uncontroversial. Now there's also many negative impacts of climate change; of course when you have positives and negatives and you start adding them up, you may end up with a net positive or a net negative. And the literature is divided on that one: if you add up all these things, is it positive or negative? Most people would argue that slight warming is probably beneficial for human welfare on net, if you measure it in dollars, but more pronounced warming is probably a net negative.
RH: And where do you put the boundary line between those two?
RT: According to my latest calculations, it's sort of around 1.1 degrees of warming relative to pre-industrial, so that's ...
RH: OK so we're almost there already.
RT: We're <chuckles> almost there, yes.
RH: We're almost at the point where the benefits start to get outweighed by the consequences.
RT: Yes. So in academic circles, this is actually an uncontroversial finding. The ...
RH: I mean I'm intrigued on this because other contrarians are talking about, 'Oh well, we'll have benefits up to two Celsius.' Matt Ridley, for instance, says, 'Oh, anything up to two Celsius of warming, the earth will probably benefit.' Do you disagree with that?
RT: I think that's a bit too optimistic, yes.
RH: He references you in order to make that conclusion.
RT: All sorts of people put all sorts of things in my mouth. I would not hold it against Matt Ridley. I mean compared to what other people have put in my mouth, Matt is actually a good guy.
RH: But you think he's over-optimistic?
RT: I think he's over-optimistic.
RH: And that doesn't even take into account the nasty surprises that we might get. Even on a regular run of things, he's over-optimistic.
RT: Exactly, exactly. Yes, yes. Now, the ...
RH: But to … no, just stay on that for a second because we are inexorably at the moment heading for the CO2 emissions which are linked to a two Celsius rise so we're heading …
RT: No, no, no, no, no. We're gonna get much warmer than the two degrees target is a past station, right? We should be looking towards three, four, five degrees.
RH: When you say we should be looking, you mean that's what we should expect given current trends?
RT: Yes, exactly. We're nowhere near staying below two degrees.
RH: So from what you were saying earlier on, I mean, that would worry you a lot.
RT: Me personally?
RH: You personally, yes.
RT: <Laughs> no, we're ...
RH: You personally. I mean you won't be alive to experience it….
RT: We just established that climate change is primarily a problem of the poor, right? I am not poor and I'll make sure that my children aren't poor either.
RH: But Europe is not going to fare very well under four degrees, or even three degrees, is it?
RT: Oh, Europe will cope.
RH: What, heat waves, appalling heat waves by previous standards if we get that much warmer.
RT: Oh no, no, no. If you add three degrees to London, where are you? Barcelona, Sevilla, Madrid? <Chuckles> that's not a disaster scenario.
RH: So you think Europe will be OK with that sort of warming.
RT: Yeah, yeah, yeah <chuckles>
RH: But developing countries are going to face some pretty serious problems.
RT: If they are still developing countries by then, yes. Climate change will hit the poor the hardest and it really depends where you look in the developing world whether you should be positive or negative <chuckles> or optimistic or pessimistic.
RH: OK so just on the macro then, do you think the world generally can cope? And that's a pretty slack term. Is it desirable that we get a warming of three to four Celsius? How hard should we be trying to prevent it?
RT: Desirable, no. Manageable, yes.
RH: Three to four degrees?
RT: Yes. And I mean we should be trying to decarbonise the economy as fast as we can but I think we will need a century to do so.
RH: Because of the politics.
RT: Because of the politics, because of the big benefits of having cheap and abundant energy and reliable energy. Energy uses long-lived capital and longer-lived blueprints and at the moment, we don't really know how to run an economy without emitting carbon. And hopefully we will figure that out by the mid of this century but then before all the old capital stock is flushed out, you're at 2100. And I mean at the moment, China and India are still building coal-fired power plants at a very rapid pace. And these things ...
RH: And Africa wants to build them and South East Asia.
RT: Yeah. These things will still be in operation in 2060 and 2070 because that is the lifetime of a coal-fired power plant.
RH: And from what you were saying earlier on, that puts even more onus on us to cut. But let me just end with the question we're asking all of our interviewees at the end, which is: how optimistic are you about this? Project forward to 2100: how optimistic are you that we've got this problem manageable?
RT: <Laughs> I'm reasonably optimistic … I mean there's clear dangers out there with climate change but as I said, most of these dangers have to do with underdevelopment and if by 2100 large parts of the world are still underdeveloped then I think that is their bigger problem than climate change will be.
RH: So that's optimism on climate or optimism on development or …?
RT: That's optimism on climate; not so optimistic about development but we'll see.
RH: And what if we get the nasty surprises that you talked about? With four degrees they increase obviously; the chances of a catastrophic surprise increases massively, of course. And we don't know how to quantify that.
RT: Issues with sea level rise and stuff, I think we now got reasonably under control and also the ocean currents. I think these things are simply too unlikely to take too seriously. Methane is a different issue; methane of course has an atmospheric lifetime of only ten years. So in that sense, it is perhaps less worrisome than some people think but there is a risk there, yes.
RH: Except it would greatly accelerate warming
RT: For a few decades but not for a prolonged time.
RH: No, but put it into serious acceleration, which would be highly undesirable.
RT: Yes, exactly. Yes.
RH: Ocean acidification, I mean the models for ocean acidification are very simple. The chemists who are looking at it are very confident of how the ocean will acidify over coming decades. What they're not sure about is the biological consequences, they say there are huge uncertainties, probably unpleasant. It looks like almost certain that coral reefs as we know them won't exist by the end of the century. Some parts of the Arctic are projected to be too acidic for marine shellfish within the next decade or two. Give me your thoughts on ocean acidification.
RT: I mean you're right that the physics and the chemistry is very simple, the biology is very complex. I don't think that the biologists have quite got their act together to confidently predict what would be the consequences of this. In terms of human welfare, ocean acidification may not be the biggest problem that we face. I mean truth is that we simply do not care a whole lot about other species, we simply do not care a whole lot about what is going on with species that we hardly see, that are underwater. So I don't think it will affect humans that much. In terms of the oceans as a source of protein and food, that is actually shifting towards aquaculture at quite a rapid pace at the moment.
RH: They're also a source of climate stability of course, as well, the oceans. And the biota in the oceans may be destabilised. We don't know at the moment, this is all open to conjecture.
RT: Again, I'm speaking outside my area of expertise but most of the carbon cycle in the ocean is actually abiotic rather than biotic. That is I think what most people would tell you. So I would not fear too much about what the implications of ocean acidification for carbon cycle are <chuckles>. In terms of what would it do to human food production, the impacts will probably be minor because in aquaculture, acidification can actually be controlled by adding chemicals and those sort of things. So I don't think that ocean acidification will in any way or in a major way affect food markets.
RH: Just catching the tone of your voice there, it sounds as though you personally are not happy that we don't care about other species. It sounds like you do rather care about other species.
RT: I'm probably a bit of an outlier in the general population that I care more about marine animals than most people do, yeah.
RH: And other animals as well? Because climate change will undoubtedly affect other species as well; many species will run out of range and possibly, probably be driven to extinction if climate change goes three or four degrees, I think.
RT: Yeah and I would greatly regret that, yes.
RH: You agree that that's likely as well?
RT: It is pretty obvious that if you have a period of rapid climate change on top of all the other stresses that we put on the natural environment that some species or a fair number of species will not make it, yes.
RH: Isn't that a failure in economics, that that doesn't factor in your calculations? Aren't wildlife, other creatures on the planet in some way a benefit to humans?
RT: In our economics models, we do take these things into account but only in as far as they matter to humans. We look at the welfare of other species through the eyes of humans and we only care about them in as far as we care about them, not in as far as they would care about themselves. And truth is that most people don't care.
RH: We're into philosophy here, I mean do you think creatures have intrinsic rights, plants have intrinsic rights?
RT: <Laughs> philosophy, theology, right? I would indeed say, and I think that most Brits would agree with me, that definitely higher animals have intrinsic rights just like we do. And just as I'm not allowed to kill you, I'm not allowed to kill an animal.
RH: You talk about theology, are you religious yourself?
RT: I grew up as a Roman Catholic but I've lapsed. But this sort of sentiment that we're expressing is more Buddhist than Catholic. Well, until the latest Papal letter, right? <Chuckles>
RH: What do you think about that, the Pope's encyclical?
RT: Well the most striking thing was indeed about this. I mean the principle of Universal Communion is not a Catholic concept at all, it's a Buddhist concept, right? 'Cause essentially the Pope suggested that we should extend communion to animals and that means that they have a soul and therefore the same rights and duties as we do. And that is quite a revolution in Catholic learning.
RH: And you have some sympathy with that, personally?
RT: I do have sympathy with that as a person, yes. I don't think that many people agree with me and the Pope on this.
RH: Richard Tol, thank you.
<End of Interview>