The Guardian (UK)  [Printer-friendly version]
August 31, 2006


Cameron's Conservatives have recognised that we can benefit the
economy and the environment at the same time

[Rachel's introduction: In England, the Conservative Party has
adopted the precautionary principle for global warming: "The argument
in favour of taking strong action to counter climate change is
overwhelming, which is why the Conservative party's Quality of Life
Policy Group has taken as its starting point an assumption that
climate change is real enough to justify the precautionary

By Zac Goldsmith

The Archbishop of Canterbury recently described the economy as "a
wholly-owned subsidiary of the environment". Calling for an immediate
response to climate change, he said "the Earth itself is what
ultimately controls economic activity because it is the source of the
materials upon which economic activity works".

His view, echoed by the likes of Nobel economics laureates Amartya Sen
and Joseph Stiglitz among a great many others, is that we need a new
type of market economics -- an approach that actually takes the planet
into account. It may seem like an obvious call, but it's an approach
that until recently couldn't have been further from that of our
current, or previous governments. We have had strong words -- but
little action.

But that is changing. Climate change -- for so long an abstract
concern for an academic few -- is no longer so abstract. Even the Bush
administration's Climate Change Science Programme reports "clear
evidence of human influences on the climate system". The strength of
that consensus is such that we are presented with a window of
opportunity between the denial of yesterday and the despair of
tomorrow. We are at a fork in the road -- on one side is complacency
and the pursuit of short-term economic growth, on the other the
pursuit of innovation, the development of new technologies, and the
realisation of our ability to reconcile economic growth with long-term

George Osborne, the shadow chancellor, speaking in Japan today, will
describe environmental pollution as a market failure. "It is a classic
case of what economists call an externality. Because the pollution is
external to the market, polluting can make life easier, while the true
cost is paid not by the polluter, but by everyone else." Given what we
can expect if even the most conservative climate change predictions
are accurate, failure to correct this market failure is not an option.

Christian Aid, for instance, recently warned that 184 million people
in Africa alone could die as a result of water and food shortages
caused by climate change before the end of the century. The
International Red Cross has said that it does not expect international
aid to be able to keep up with the impact of climate change. And
according to the world's biggest insurer, Munich Re, economic losses
linked to climate change have increased by a factor of eight since the
1960s. The UN environment programme's insurers believe worldwide
annual losses will exceed $300bn in 50 years time.

Clearly it is impossible to make a definitive prediction on the future
impacts of climate change, but we have only to take into account the
horrific effects of Hurricane Katrina, both in human and financial
terms, to glimpse the potential climate change has for wreaking havoc
on our infrastructures.

The argument in favour of taking strong action to counter climate
change is overwhelming, which is why the Conservative party's Quality
of Life Policy Group has taken as its starting point an assumption
that climate change is real enough to justify the precautionary
principle. And, contrary to the government's negative approach, the
Conservative party recognises that, while climate change presents an
unprecedented risk, it also presents real long-term economic

We cannot, for instance, radically reduce greenhouse gas emissions
without major investment in new, clean technology -- there are
opportunities to be found in the need for change. For those at the
forefront of delivering a low-carbon economy, these opportunities will
come from developing high-value jobs, greater energy efficiency, and
secure, affordable energy supplies.

The UK has the opportunity to become a leader in new renewable energy
technologies, with London becoming a major financial centre at the
heart of trading carbon and raising capital for the "new investment
frontier". In doing so we will enhance our competitive advantage, not
reduce it.

Indeed, where companies have already begun to invest in low carbon
technologies and energy efficiency, they are being rewarded
financially. Dupont, for instance, has reduced its emissions by 72%
since 1990, saving more than $3bn in the process. GE has promised to
double its investment in environmental technologies to $1.5bn by 2010.
Goldman Sachs, Wall Street's best-known investment bank, is currently
ploughing more than $1bn into clean technologies.

These initiatives are happening both as a result of consumer pressure
and because they make financial sense. But it is the role now of
government to provide a more stable, long-term policy framework in
order to help unleash the wave of innovation that is needed.

Recently, the Corporate Leaders Group on Climate Change wrote to the
government calling for more support for this transition to a low-
carbon economy. It is these long-term policies that the quality of
life policy group is helping the Conservative party to develop. We
must establish how to build consensus in society on high-impact
actions to reduce greenhouse gas emissions, and seek ways to
revitalise the international political process around global solutions
to climate change. Britain can be used as proof that you can reduce
carbon emissions without losing economic advantage or sacrificing
quality of life.

We need to look again at the range of current incentives and what
messages they send to business and consumers. Without a doubt, a more
honest application of the principle that the polluter pays is needed,
along with long-term innovative and sustainable market mechanisms such
as emissions trading schemes, eco-labelling programmes, renewable
energy targets, cleaner public transport, improved building
regulations and so on.

And, as George Osborne will point out in Japan, we will need to make
more use of eco taxes. "We should move some of the burden of taxation
away from income and capital, and towards taxes on environmentally
damaging behaviour. Instead of a tax system that penalises hard work
and enterprise, we need to move towards more effective and fair taxes
on pollution."

Climate change presents us with an uncomplicated choice. If we are
wrong about the dangers, these initiatives come with no downside. But
if we are right and we fail to act, the consequences don't bear
thinking about.

Zac Goldsmith is the deputy chair of the Conservative party's quality
of life policy group.