Climate Change

A green revolution is not expensive

According to the New Scientist

Témoignages.re / 4 December 2009

Fear that it will be costly for consumers to address climate change is largely unfounded, a new modeling exercise conducted for the magazine New Scientist suggests. Radical cuts to the UK’s greenhouse gas emissions will cause barely noticeable increases in the price of food, drink and most other goods by 2050, indicates a model developed by Cambridge researchers for the magazine New Scientist.

«Tackling climate change will cost consumers the earth. Those who campaign for a green revolution are out to destroy our western lifestyles. Such are the cries of opponents of emissions cuts, and their message has political clout: a number of surveys, including one by New Scientist in 2007, have found that the enthusiasm of voters for policies to alleviate climate change falls off as the price tag increases.

However, a new modelling exercise conducted exclusively for this magazine suggests that these fears are largely unfounded. It projects that radical cuts to the UK’s emissions will cause barely noticeable increases in the price of food, drink and most other goods by 2050.

Although it is impossible to precisely predict prices four decades from now, the exercise is one of the most detailed examinations yet of the impact of climate change policies on UK consumers. It provides a useful rough guide to our economic future. (…)

Though its results speak directly to the UK consumer, previous research has come to similar conclusions for the US. In June, one study found that if the US were to cut emissions by 50 per cent by 2050, prices of most consumer goods would increase by less than 5 per cent (Energy Economics, DOI: 10.1016/j.eneco.2009.06.016). The findings are also consistent with analyses by the Pew Center on Global Climate Change in Washington DC. "Even cutting emissions by 80 per cent over four decades has a very small effect on consumers in most areas," says Manik Roy of the Pew Center. "The challenge is now to convince consumers and policy-makers that this is the case." (…)

The Intergovernmental Panel on Climate Change recommends that wealthy nations cut their emissions to between 80 and 95 per cent below 1990 levels by 2050 in order to avoid the worst effects of climate change. The UK government aims to reduce its contribution by 80 per cent and leaders of the other G8 nations have discussed following suit. To meet this goal, industries will have to slash fossil fuel consumption, and low-carbon power sources will have to massively expand. Companies will have to pay increasingly higher prices for the right to emit greenhouse gases. (…)

Most of the price hikes are a consequence of rising energy costs, in part because coal and gas are replaced by more expensive low-carbon sources. The price of electricity is projected to be 15 per cent higher in 2050 compared with the baseline. In today’s prices, that would add around £5 onto typical monthly household electricity bills. It will also result in higher prices elsewhere, as every industrial sector uses electricity.

But electricity and other forms of energy make up only a fraction of the price of most goods. Other factors - raw materials, labour and taxes - are far more important. The energy that goes into producing food, alcoholic drinks and tobacco, for example, makes up just 2 per cent of the consumer price. For motor vehicle purchases and hotel stays, the figure is 1 per cent. Only for energy-intensive industries does the contribution climb above 3 per cent: for example, energy’s share of land and air travel costs is 6 and 7 per cent respectively.

As a result, most products cost just a few per cent more by 2050. At current prices, going low-carbon is forecast to add around 5 pence to the price of a loaf of bread or a pint of beer. The price of household appliances such as washing machines rises by a few pounds. » (…)

More informations at http://www.newscientist.com/article/mg20427373.400-lowcarbon-future-we-can-afford-to-go-green.html


Figures

«
- 1% on clothing: A £500 men’s suit will become £5 more expensive
- 2% on electronics: A £1000 laptop would cost £20 more
- 1% on food: The average UK household spends £50 a week on food. This increases by less than £1
- 15% on electricity: A typical UK household spends £400 a year on electricity. This will jump by roughly £60
- 0% on communications: UK phone bills will be essentially unaffected
- 140% on air travel: A return flight from London to New York would jump from £350 to around £840
- 2% on tobacco: Barring new taxes, the cost of a pack of 20 cigarettes will rise by roughly 10 pence
- 2% on alcohol: The cost of a pint of beer will rise by about 6 pence by 2050
- 1% on cars: A new Toyota Prius, currently about £20,000, will cost £240 more in a low-carbon 2050
- 2% on household goods: The price of a washing machine will rise by a few pounds»


How the model works

«The model is based on the idea that future emissions cuts will depend on the UK government restricting the amount of carbon that companies can emit. This already happens under the European Union’s Emission Trading Scheme.

Companies that exceed a predefined cap must buy emissions allowances from firms that undershoot their target. Emissions can then be progressively cut by tightening these caps. The Cambridge Econometrics team assumed that firms not subject to these limits will have to pay a carbon tax, which will also be steadily increased.

As the cost of emitting carbon rises, so will the price of electricity from fossil-fuel power stations. Petroleum-fuelled vehicles and gas boilers will also become more expensive to run.

Technologies that use less carbon - including nuclear energy and small-scale systems that use the waste heat from power plants to run heating systems - will face smaller price increases. This leads to more investment in low-carbon technologies, which become more attractive as the cost of emitting carbon increases. Consumers will also use less of the goods and services that become more expensive, such as air travel. These effects lead to a fall in emissions.»


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