Traded Away

A cunning new loophole has wrecked the government’s Climate Change Bill.

By George Monbiot. Published in the Guardian 24th July 2008

For the past two years I have been fretting over a mystery. Though Labour seems to have done everything possible to ensure that it stays out of office, there remains a possibility that it might form another government at some point between now and 2050. This means that its climate change bill, which will become law in the autumn, could come back to haunt it. Despite its evident flaws, this is radical and unprecedented legislation. It imposes a legal obligation on future governments to cut carbon dioxide pollution by 60% or more by 2050, with binding interim targets every five years.

The government has some good climate policies. It also has some bleeding disastrous ones, which appear to commit the United Kingdom to high carbon pollution for the entire period covered by the bill. A future Labour government would find itself snared by its own current policies. Surely it wouldn’t be foolish enough to set such a trap for itself?

One policy alone seems to doom future governments to prosecution: the planned doubling of the capacity of the UK’s airports by 2030. Using the Department for Transport’s projections, I estimate that by 2050 aeroplanes will account for 91% of all the greenhouse gases the country should be producing. Under the less optimistic figures published by Defra, the environment department, the proportion rises to 258%(1).

Until now this hasn’t been a problem: the government has refused to include aircraft pollution in the 2050 target. But following an amendment in the Lords, the draft bill imposes a duty on the government either to include it or to explain to parliament why it hasn’t done so, within five years(2). The government claims that it might not be possible to add these gases to the UK’s carbon budget because, “in the absence of an internationally agreed methodology”, no one knows how to calculate what proportion of this pollution belongs to us(3).

It’s a knotty problem, isn’t it? If you were the government and you knew that 67% of the passengers using UK airports were residents of this country(4), could you work out what proportion of aircraft emissions should be counted in the UK’s carbon budget? No? Me neither. Wouldn’t know where to begin.

This ridiculous excuse can’t be sustained for much longer. At some point aircraft gases will have to be included in the carbon target. Throw in the government’s road-building programme and its intention to approve new coal-burning power plants and you can see that it has a problem.

The only factor now holding down carbon emissions is the price of energy. They fell by 2% last year, and the government admits that this “was largely explicable in terms of price relativities.”(5) In other words, it has again become cheaper to burn natural gas in power stations than to burn coal, while the cost of oil has encouraged people to drive less. The 2% reduction means that the UK’s carbon budget is now a grand total of 0.8% smaller than it was in 1997(6). The government can post a 16% cut in greenhouse gases since 1990 only because of the accidental reductions made during the dash for gas under the Tories and the sharp reduction in methane and nitrous oxide from rubbish dumps and industry. Neither of these cuts can be repeated.

But this doesn’t even begin to describe the government’s problem. Its new climate change report contains a tantalising figure. It is expressed in such a back-handed way that you have to perform half a dozen small calculations to discover what it means. The report boasts that even when emissions in countries exporting goods to the UK are taken into account, “the total annual reduction of UK greenhouse gas emissions since 1990 was around 240 million tonnes of carbon dioxide equivalent [MtCO2eq] below business as usual”.(7) The government says that “business as usual” would have led to an increase of 40% in emissions since 1990. This gives us a figure of 1079MtCO2eq(8). Subtract 240 from 1079 and you get 839, or 187 MtCO2 eq above current emissions(9). This means that instead of declining by 16% since 1990, as the government insists, the greenhouse gases for which the UK is responsible have risen by 9%.

When I finished this sum I sat still for quite a long time. The UK’s entire climate change programme is based on a statistical artefact. The only reason our pollution appears to have declined is that we have outsourced our emissions. A fair account of our carbon emissions would include those we import minus those we export: a balance that can only worsen in a post-industrial economy.

So how can the government reconcile its energy policies with future political hazard? Well the mystery has at last been solved. The key to the puzzle is found in a minor briefing note just published by Defra. It explains that, during the latest stage of the bill, the government “remov[ed] the quantified limit on the use of internationally traded credits in meeting the UK’s targets”(10). In other words we could buy the entire cut from other countries.

Given that we are outsourcing some of our greenhouse gases, you might think it makes sense to outsource our carbon cuts as well. But there are three problems. The first is that we are exporting emissions that are difficult to address and importing, through carbon trading, the easiest and cheapest cuts.

The second is that while the emissions we export are certain and verifiable, the cuts we buy through carbon credits are often fraudulent. For example, as the writer Oliver Tickell documents, 96% of the carbon credits from hydroelectric dam construction were issued after construction had begun: the dams would have been built without the carbon market, so no additional cuts have been achieved(11). Around 30% of all carbon credits comes from the sale of trifluoromethane cuts by Chinese and Indian companies making refrigeration gases. Many of them are still producing this pollutant only because they make so much money from cleaning it up: the carbon market pays them 47 times more for these cuts than the gas costs to remove(12).

Behind these problems lurks a much greater one, which is mathematically impossible to resolve. You can trade your way out of trouble when the cut you are trying to achieve is a small one. But when the global cut required to prevent two degrees of warming is 60 or 80 or 90%, then every rich nation must reduce its emissions by roughly the same amount. Otherwise half the world would have to buy credits equivalent to 180% of the emissions produced by the other half.

The government will have to impose some kind of cap on carbon trading. But I bet it will be set high enough to cover any failures in domestic policy, as measured by the rigged accounting methods civil servants use. This means that successive governments will have no legal incentive to change their energy policies. The carbon trading provision torpedoes the useful content of the entire bill.

But at least the mystery has been solved, and it will no longer keep me awake at night. Now I can focus on the real nightmares.


1. The calculations are explained here:

2. Draft Climate Change Bill, as amended in public bill committee, part 29.

3. Defra, 15th July 2008. Climate Change Bill: Update following House of Commons Committee Stage.

4. Sally Cairns and Carey Newson, September 2006. Predict and Decide: aviation, climate change and UK policy. Environmental Change Institute, University of Oxford, p8.

5. Defra, July 2008. UK Climate Change Programme. Annual Report to Parliament, July 2008, p17.

6. The figure for 1997 was 548.1MtCO2. The provisional figure for 2007 is 543.7 MtCO2. See Table 2, Defra, July 2008, ibid.

7. Defra, July 2008. UK Climate Change Programme. Annual Report to Parliament, July 2008, p18.

8. The 1990 figure was 770.8MtCO2eq. Table 2, Defra, July 2008, ibid.

9. The latest figure (2006) for all ggs is 652.3 MtCO2eq. Table 2, Defra, July 2008, ibid.

10. Defra, 15th July 2008, ibid.

11. Oliver Tickell, forthcoming. Kyoto2: how to manage the global greenhouse. Zed Books, London.

12. ibid.