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Economic Affairs Committee: Economics of climate change

22 April 2005

Understanding and tackling the effects of climate change will require collaboration between natural scientists, social scientists and economists.

In our response to the House of Lords Economic Affairs Committee inquiry into the economics of climate change, we highlighted that the scientific understanding of climate change is now sufficiently certain to justify taking steps, without delay, to reduce global greenhouse gas emissions. However, we note that uncertainty in the economics of climate change has been used as an argument for not taking action now to reduce carbon dioxide emissions.

Our submission included the Societys report on Economics instruments for the reduction of carbon dioxide emissions (2002), and recommended the introduction of well-designed economic instruments, such as a carbon tax or auctioned emission permits, as the most cost-efficient way to reduce carbon dioxide emissions. Although the impact of a tax or auctioned permits may be large on some sectors within the economy, substantial long-term reduction in global emissions is, even in its narrowest sense, affordable.

Following publication of the House of Lords report we raised concerns, in a press release prior to the G8 Summit in Gleneagles that it fails to recognise adequately the overwhelming scientific consensus that climate change is happening.