The Economics of Climate Change

My interest in the economics of climate change comes about because, for over forty years, my main research efforts have been in the field of energy economics and policy. The production, distribution and consumption of energy products all have impacts on the environment and so energy policy has, in recent years, come to be dominated by environmental issues and, in particular, by the view that governments and international institutions should take action to combat the effects of human activities on world climate. In the British government’s February 2003 White Paper on energy,1 for example, the principal theme is that an expensive programme of promoting “renewable” sources of energy, combined heat and power and energy conservation is justified by the need to “... put (the UK) on a path towards a reduction in carbon dioxide emissions of some 60 per cent by about 2050”.2 In various recent publications,3 I have expressed scepticism about the predicted extent of global warming and about the counter-measures proposed. In this brief memorandum, I summarise the reasons why one should look critically at the global warming consensus that now so influences policy in many countries and I suggest some issues that the Committee might wish to consider. The memorandum is intended to help set the scene for the Committee’s deliberations.