What can businesses do about Climate Change? Interview with Dr. Chris Hope.

Chris Hope at TippingPoint

Stories of Change Project

Modelling climate change action

I’m Dr Chris Hope of the Judge Business School at the University of Cambridge. I work there on trying to help governments and businesses and even individuals decide what kind of actions they should take about climate change. The way I got into this was originally I trained as a physicist and then for my PhD I looked at renewable energy sources and trying to decide whether we should support them or not. Of course in order to make those kinds of decisions you need not just to look at the physics but you need to look at economics, you need to look at how we make decisions, how we deal with risks and all those kinds of skills were useful for me when, in 1991, the European Union was trying to decide what kind of action it should take on climate change ahead of the big Rio summit a year later and I was able to put those skills to use in developing a simple model to help them try and decide how they should split their effort between cutting back emissions of greenhouse gases and trying to just cope and adapt to the kinds of impacts that we would otherwise have, and I’ve been working on climate change issues ever since.

Modelling the impacts of climate change

The kinds of impacts that we might see from climate change are flooding in Asia, the melting of Arctic ice-caps. It’s really hard to try and put an accurate value on those kinds of impacts, particularly as they’re going to occur over many decades into the future. But the kind of modelling I do has the best go at trying to put numbers on that, just how serious will it be; taking account of all the risks that are there, the risks that we might actually end up melting the Greenland ice sheet. It looks as though the kinds of impacts that are being caused by our emissions of greenhouse gasses are something like $100-150 per tonne of carbon dioxide that’s put up into the air. So what we should be doing is charging a climate change tax on everybody who is emitting those kinds of greenhouse gases. Whenever they buy coal or oil or gas to burn they should be paying the climate change tax of $100-150 per tonne of carbon dioxide. What I’m trying to do is make sure that the calculations that I do take into account the best evidence that we have from the scientists and the economists; they’re finding out new things every year. In the Intergovernmental Panel on Climate Change, for instance, just recently as reported; try and make sure the estimates that I’m making with the modelling that I do stays up to date and gives us an accurate figure or as accurate as we can calculate.

The impact of Arctic ice melting

One of the most important things that has been happening over the last few years is that we’ve seen really big decreases in the amount of ice that there is in the Arctic Ocean. In 2012 the Arctic Ocean got almost ice free by the end of the summer and it has not been quite as bad in the last few years but even this year it has been the sixth lowest amount of Arctic ice extent there’s ever been. This has been a little bit of a surprise to some of the climate modellers and they’re working hard to try and understand why the Arctic ice has disappeared so quickly and is going so rapidly. They’re also trying to understand what kind of feedbacks there might be from that because the ice, when it’s there, reflects a lot of the sunlight and means that the ocean doesn’t heat up as much as it otherwise would have done. If the ocean heats up then it means that there’s lots of deposits of methane underneath the sea bed in the Siberian Sea which could be released if the ocean becomes ice free. There are all sorts of carbon dioxide and methane in the permafrost in the Arctic, what kind of impact could that have? So I’m working with a team of Arctic scientists and others to try and get the best information about what is likely to happen in the Arctic over the coming decades and then I can use that in the modelling that I do to say how much extra impact might that have on the world as a whole. From the preliminary results we’re getting it looks as though it could have tens of trillions of dollars of extra impact, huge amounts, dwarfing the kinds of impacts that we saw from the financial crisis, just from the fact that the Arctic ice is disappearing faster than people thought that it would.

Climate change tax

The kinds of actions that we need in order to tackle this issue are getting the prices right on emissions of carbon dioxide, a climate change tax. There are some countries and some regions around the world that already have taken this to heart and have put in that kind of tax. So British Columbia in Canada, for instance, has had a climate change tax of the order of thirty or more US dollars per tonne of carbon dioxide for several years and it has been a great success. It is politically accepted and in terms of carbon dioxide emissions, British Columbia has lower emissions and they’ve gone down more than other parts of Canada and their economy has been doing well. Those are the kinds of results that the model said should happen. So there are people who are taking it on board, it’s not something that has to be taken on board by every country in the world at the same time. There are great opportunities here for countries like the more progressive ones in the European Union, Canada, other parts of the rich countries to say, yes, we want to do this ourselves; we will get these climate change taxes in place; we will use the revenues that we get from them, which could be tens of billions of dollars a year, to reduce other taxes which are stopping people getting into work, for instance, if they’re national insurance or payroll taxes. We’ll reduce all those other taxes, it will allow our economy to grow faster and grow better. Those few countries can act as people who demonstrate that this is really a good thing to do and then other countries around the world will see that and we won’t have to twist their arms up behind their back to cut their carbon dioxide emissions because they’ll want to do climate change taxation themselves and get the benefits that you get from it. And that’s how it spreads throughout the world. It won’t be over the next few months, it probably won’t be over the next few years but within the next decade or so I would hope to see really big changes across the world.

Planet earth: optimist or pessimist?

When I look at what might happen over the next few years there are two things that worry me. One is that we will carry on expecting progress to be made at huge international gatherings that happen once every few years and then people just go away in between and forget about it. We’ve seen at Copenhagen in 2009 that that’s really quite a dangerous path to take, because it only needs one of those great big international conferences not to deliver and you’ve set back progress for quite a long way. So I really hope that we don’t go down that path and that we do begin, in the countries and regions that want to take action on this, not to feel that they’re held back but to be able to take their own actions, be able to institute climate change taxes which will allow them to generate revenues which will allow them to cut other taxes and grow their economy. When I’m feeling optimistic I think that will happen over the next few years in some countries and over the next decade or so in most parts of the world and we’ll be well on the way to dealing with this issue.

Let’s have a serious discussion about climate change taxes

The question that I would like to ask about climate change is why do we find it so difficult to have a serious discussion about strong, stable, comprehensive climate change taxes? Why is it that there always seems to be a knee-jerk reaction which says you can’t do anything which will increase the cost of energy, without having the complete discussion which goes round to saying you can have these revenues to reduce income taxes or sales taxes or payroll taxes and get a big benefit for your economy? I would like to put those kinds of questions to people who are in the treasuries of the most advanced countries.