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Energy and the environment: the essential next steps

A Note by the Director (Ditchley 2006/09)
 
13-15 October 2006
 
Ditchley’s mid-autumn conference, with the trees beginning to turn and the mist thick on the lake, brought us to perhaps the most important long-term issue of all, secure energy supplies in a clean and sustainable environment.  We had hoped that the timing of the event would follow the publication of Sir Nicholas Stern’s economic review of this subject, but the calendar for that had changed.  We nevertheless developed a vigorous discussion of how climate security and energy security policies could be brought into alignment.  There was no doubt at all around the table that urgent progress was essential. 
Neither the science nor the economic costs of climate insecurity were contested.  It was brought home to the conference at an early stage that, of the last thousand scientific papers on changes in the global climate, all had shown that temperatures were going up and so were carbon emissions.  Action had to be taken, whatever the degree of human responsibility for these changes.  There was no question of avoiding the conclusion that, while action could now be taken at an affordable cost, the price of inaction would be enormous.  Even if governments now implemented most of the best recommendations for action, it would still be necessary to adapt to climate change and mitigate certain of its irreversible consequences.  As an example, we were told that the United States, China and India, which together possessed half the world’s reserves of coal, would be likely to use it as a major source of power generation.  If we did not deal with the carbon emissions that resulted from that, the world might as well throw in the towel on environmental policy.  Even if energy consumers cleaned up their habits now, the growth in economic activity, energy use and population would still set an enormous challenge.  Yet policy-making, and the political environment within which it worked, were behind both the science and the growing environmental awareness in public opinion.   Much of our debate therefore focussed on ways to generate more urgent and more far-reaching government action, nationally and internationally.  Even if the UK had started to move, others were lagging.
Participants took a careful look at the reasons why the arguments might not be getting across.  For a start, the terminology needed to be altered.  Climate change had become a security issue, just as vital as the security of energy supply.  Decision-makers had not been mobilised in a catalytic quantity to give climate security the priority which it deserved.  Other related policies – on international trade, on investment and on competition – had not adjusted to the need to take the environment into account.  Short-term economic arguments, comparing the “sacrifices” that might be made to reduce carbon emissions but focussing on the near-term bottom line, provided a hiding place from longer-term analysis.  International activity (particularly on the Kyoto Treaty) had lost momentum;  and national interests in the developed world differed according to each country’s energy position.  Those able to move were reluctant to do so unless everybody came with them.  There was a noticeable gap between rhetoric and action and complacency over partial progress.  These factors for short-term inertia were alarming.
Most participants agreed that there was no particular problem about the supply of energy if the world remained reasonably organised.  Fossil fuels remained available in enormous quantities, especially coal.  The development of a global gas market was under way.  The price of oil would support new or unconventional exploration and production.  Renewable energy sources would make a contribution, though in the medium term not a huge one.  Nuclear energy, while unlikely to become the environmental answer because of its other downsides, would form an increasingly important part of the mix if improved technology on safety and efficiency was taken into account.  Demand would rise, but in theory there was no shortage of supply.  In other words, it was all about reducing carbon.
There was some concern that the scientific forecasts of climate change covered such a wide range of prediction that governments and public opinion alike were confused as to the real urgency.  We were told that forecasting was gradually improving in quality, not least because larger computers were now coming into play.  The UK and Japan were cooperating on a programme for the new Earth Simulator Computer which would refine predictions.  The best models were beginning to show that the minimum rise in global temperature would be no less than 2oC and could be higher.  Human activity undoubtedly carried a large degree of responsibility.  The essential point in this area was to convey the broad scientific agreement about the scale of the threat to the wider government and media community, so that the voices of those doubting the need for urgent action could lose any credibility they might have.  Then the problem would become more directly one of political will and of understanding the true timescale for action.
We also asked ourselves whether, if the penny had not dropped by now, a real shock was needed to galvanise the necessary action.  The phrase “benign catastrophe” entered the room.  Some participants asked whether, if Hurricane Katrina was not enough for the US, and if governments in Indian Ocean countries had not felt able to respond to clear scientific warnings about the 2004 tsunami, any single event would generate the catalytic force required.  The experience so far of the public effect of Al Gore’s film “An Inconvenient Truth” indicated that public awareness was arising fast.  Yet Gore had offered no prescriptions for remedial action in that film and governments were still far apart on precise policy.  The answer appeared to be that repeated demonstrations of the science, more intensive cycles of education and advocacy and growing public discontent with inaction were all more likely to compel governments to recalculate their priorities than particular examples of environmental threats. 
The conference therefore began to examine the areas where action could most effectively be taken, with a strong emphasis on measures and incentives to reduce carbon emissions.  Fiscal policy was one important area.  If not enough had been done under this heading, would public opinion bear a more intensive approach?  Most participants appeared to think that a gradual scaling up would be the most  likely line of action.  Funding new technologies, particularly on renewables, was another essential area.  Technology on its own was unlikely to solve the scale of the problem by itself and those governments which placed their reliance on this should be asked to think again.  But the private sector was highly active in this area and a benign context should be created to encourage companies to continue, not least with R & D.  More intensive international negotiations would also be necessary, though the world could not afford to wait for everyone to be on board before anyone moved.  Some leadership was necessary.  If there were some free-riders, the cost for those who decided to move would not be that great – nothing like as great as the cost of taking action at a later date.  Finally, the messages had to be hammered home to the public, to governments and to a broader swathe of the media that inaction or purely adaptive policies were unaffordable.
In looking at the strategic objectives for policy changes, the conference emphasised the following:
  • Energy security and climate security could not be allowed to compete with each other – they should be aligned;
  • A globally efficient market system for energy should be developed with carbon fully priced into the world economy;
  • Forecasts should be made more precise and credible;
  • There should be a campaign to maximise public awareness of the long-term trends
  • And international negotiations should continue for a collective approach at the fastest pace possible.
Within these broad objectives, participants advocated a number of essential next steps:
  • Public awareness.  The window for effective action might be quite short, because if public opinion absorbed the current atmosphere of raised concern without feeling the effects of remedial action, it might become complacent.  Pilot schemes in conservation should be widely publicised.  Leading voices should talk about the need to change habits and about the essential requirement to insure against climate change.  The true long-term cost of reducing carbon should be constantly mentioned.
  • New fiscal instruments should be designed, even if they were introduced at a low cost in the first instance.  They should include a carbon tax and/or improved measures for carbon trading, together with incentives for carbon capture and storage.
  • Measures to improve forecasting should continue and the message put out that the range of predictions was narrowing. 
  • The new infrastructure necessary for evolving technological approaches, not least carbon capture and sequestration, should begin to be planned now, given the lead times involved.
  • The blockages and obstacles identified should be addressed and priorities should be re-ordered.  The European Union should play a role by encouraging member states to take action in areas, such as tax policy, where capitals held the responsibility. 
  • More deliberate decisions should be taken as to whether action should proceed at the national, regional or global level.  The West on the one hand and Asia on the other should not wait for each other to take the first move.  China and India, much discussed at this conference, were considered to have their own compelling national reasons for giving climate security priority and would not be far behind in taking action.  The mood in the United States was beginning to change.  Nevertheless the mechanisms for global debate and broad consultation should be adapted and developed.
  • On energy supply, a mix of technologies and different energy sources was preferable to concentrating on the cheapest or the most available in the medium term.  R & D should be further encouraged.
  • Adaptation to climate change as well as mitigation of the factors driving it should be assumed to be necessary now and detailed planning should accelerate.
  • Finally, the crossover between timescale and affordability should be more widely understood and discussed.  The terms of the debate was beginning to shift and cycles would develop of learning, correction, questioning, repetition and finally action.
Essential to all these suggested moves was that politics should be braver.  Politicians were underestimating the degree of cost which the public would bear if they understood the need.  Peer pressures should develop within groups that shared a long-term interest.  Industry’s worries about competitiveness, which politicians took carefully into account, should only be given a certain weight:  at present, they tended to be exaggerated.  In short, the boundaries of political imagination should be stretched.  What would it really mean if the world failed to respond?
We agreed that none  of these thoughts, taken on their own, could be regarded as particularly new.  Yet it was generally agreed that not everything that could be done was being done;  and that the effect of comprehensive action could be significant.  The “snowballs of excellence” should start rolling.  While the conference had to recognise that its particular collection of expertise and environmental concern pushed it naturally towards the advocacy of urgent action, the analysis we shared was a reasonably objective one and the result of our failure to convince others would be disastrous.  If the Stern Review picked up the same messages, then the chance of a new atmosphere being generated would rise markedly.
This was a good exchange, with a variety of moods:  feisty, jovial, poetic, but with a firm pragmatic colouring.  It was a particular pleasure for Ditchley to be in harness with the Windsor Energy Group, who do so much to promote sensible international discussion in all these areas  We benefited greatly from the participation of practitioners involved in current policy-making and international negotiation, not least our Chairman, whose experience, firmness and touches of wise guidance helped us to generate a natural momentum in the debate.  We now have to see what happens beyond it.
This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.
 
 
PARTICIPANTS
Chairman      :     Professor Sir David King
Chief Scientific Adviser, Office of Science and Technology (2000-);  Professor of Physical Chemistry, University of Cambridge (1988-).  Formerly:  Master, Downing college, Cambridge (1995-2000);  Head, Department of Chemistry, University of Cambridge (1993-2000).  A Governor, The Ditchley Foundation.
 
CANADA
Professor Mark Jaccard
Professor, School of Resource and Environmental Management, Simon Fraser University, Vancouver (1986-).  Formerly:  Chair and CEO, British Columbia Utilities Commission (1992-97);  Intergovernmental Panel on Climate Change (1993-96).
Mr Gordon Lambert
Vice-President, Sustainable Development, Suncor Energy Inc (1997-).  Formerly:  director, Sustainable Development, TransAlta Corporation (1995-97).
Mr David McFadden QC
Partner and Chair, National Energy and Infrastructure Industry Group, Gowlings, Lafleur, Henderson, LLP;  Chair, Board of Directors, Ontario Centres of Excellence (2004-);  Chair, Stakeholders Alliance for Electricity Competition and Customer Choice (1996-).
Professor James Meadowcroft
Canada Research Chair in Governance for Sustainable Development;  Department of Political Science and School of Public Policy and Administration, Carleton University, Ontario.
Dr Indira Samarasekera PC
President, University of Alberta (2005-).  Formerly:  Vice-President, Research, University of British Columbia (2000-05).
EUROPEAN UNION
Mr John Richardson

Head, Maritime Policy Task Force, European Commission (2005-).  Formerly:  Ambassador and Head of Delegation of the European Commission to the United Nations (2001-05).
FRANCE
Mr Arthur de Montalembert

Vice President, International and Marketing, Areva, Paris (2001-).  Formerly:  Director, International Development COGEMA (2000-01), Head of American Affairs, Corporate Strategy and International Development Division (1995-2000).
Mr Christophe-Alexandre Paillard
Head, Industrial and Technological Trends, Strategic Affairs Directorate, Ministry of Defence, France.
JAPAN
Professor Tatsuo Masuda

Professor, 21st Century Center of Excellence Program, Tokyo Institute of Technology (2005-).
EUROPEAN COMMISSION
Dr Samuele Furfari

Deputy Head of Unit for ‘Sustainable Energies’, Directorate General for Energy and Transports, European Commission, Brussels (2004-).
OECD 
Mr Kiyotaka Akasaka

Deputy Secretary-General, Organisation for Economic Co-operation and Development (2003-).  Formerly:  Japanese Ambassador to the United Nations (2000-01).
Dr Michael Oborne
Director, Global Science Forum, International Futures Program and Multidisciplinary Issues, Organisation for Economic Cooperation and Development, Paris.
UNITED KINGDOM
Mr John Ashton

Special Representative for Climate Change, Foreign and Commonwealth Office (2006-);  Co-Founder and Chief Executive, E3G (2002-);  HM Diplomatic Service (1978-20020.
Sir Graham Boyce
Chairman, Middle East Advisory Board Lehman Brothers (2006-);  Co-Chairman, Windsor Energy Group (2005-);  Chairman, Middle East Advisory Board Invensys (2005-).  Formerly:  HM Diplomatic Service (1968-201);  Ambassador to Egypt (1999-2001);  Ambassador to Kuwait (1995-99).
Professor David Cope
Director;  Parliamentary Office of Science and Technology (1998-);  Formerly:  Professor, Energy and Resource Economics, Doshisha University, Kyoto, Japan (1997-98).
Dr Michael Daly
Group Vice President, Exploration and Long Term Renewal, BP.  Formerly:  Vice-President, Middle East and South Asia.
Professor Peter Davies
Chief Economist, BP plc;  Honorary Professor, Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee.  Formerly:  President, International Association for Energy Economics.
Mr Alan Duncan MP
Member of Parliament, Conservative, Rutland and Melton (1992-);  Shadow Secretary of State for Trade, Industry and Energy (2005-).  Formerly:  Shadow Secretary of State for International Development (2004-05).
Mr Chris Farmer
Speechwriter and Adviser on Energy Policy to Alan Duncan MP, Shadow Secretary of State for Trade, Industry and Energy and Secretariat of the Conservative Party Energy Review.
Mr Simon Fraser
Head of Cabinet to the Trade Commissioner Peter Mandelson, European Commission, Brussels (2004-).  Formerly:  HM Diplomatic Service (1979-2004);  Director for middle East and North Africa, Foreign and Commonwealth Office (2004).
Professor Nigel Brandon
Energy Research Fellow to the UK Research Council’s energy programme (2006-);  Executive Director, Imperial College Energy Futures Lab (2005-);  Shell Chair, Sustainable Development in Energy, Imperial College (2004-).
Ms Laurel Green
Group Climate Change Executive, Rio Tinto plc, London.
Sir John Guinness
Director, Mithras Investment Trust (1994-).  Formerly:  Chairman, Trinity Group Finance Ltd (1999-2003);  Chairman, British Nuclear Fuels plc (1992-99);  Permanent Secretary, Department of Energy (1991-92).
The Rt Hon Lord Howell of Guildford
Opposition Deputy Leader and Chief Foreign Affairs Spokesman, House of Lords (2000-);  Co-Chair, The Windsor Energy Group.  Formerly:  Chairman, UK-Japan 21st Century Group (1984 2002).
Mr Charles Hue Williams
Director, Lambert Energy Advisory Ltd (2002-).  Formerly:  Director, Investec Henderson Crosthwaite Securities (1992-2002);  Director, Kleinwort Benson Holdings (1989-90);  Managing Director, Kleinwort Benson Securities Ltd (1989-90).
Dr Steven Koonin
Chief Scientist, BP (2004-).
Mr Philip Lambert
Chief Executive, Lambert Energy Advisory Ltd, London (1999-).  Formerly:  Head, Global Energy Investment Banking Team, Dresdner Kleinwort Investment Bank.
Mr Ian Leggett
Director, People and Planet.  Formerly:  Consultant, Comic Relief;  Regional Manager, Oxfam East and Central Africa.
Sir Roderic Lyne KBE CMG
Special Adviser, BP plc (2004-).  Formerly:  HM Diplomatic Service (1970-2004);  British Ambassador to Russia (2000-04);  UK Permanent Representative at Geneva (1997-2000);   Private Secretary to the Prime Minister (External Affairs, Defence and Northern Ireland) (1993-96).  A Governor, The Ditchley Foundation.
Mr Paul Newman
Managing Director, ICAP Energy Ltd (2000-).  Formerly:  Director, Intecapital Group Ltd (1992-2000);  Director, Rudolf Wolff & Co Guernsey Fund Management Ltd (1999-93);  Chief Executive, Elders Securities Ltd, Director Capital Markets and Trading, Elders Finance Group Ltd (1986-89).
Mr Geoffrey Norris
Senior Policy Adviser on Trade, Industry, Energy, Employment and Planning, Prime Minister’s Policy Directorate, 10 Downing Street.
Lord Oxburgh of Liverpool
Life Peer (1999-);  Adviser, Climate Change Capital, London;  Adviser of Research to the Government of Singapore.  Formerly:  Chairman, Shell Transport and Trading plc (2004-05);  Chairman, House of Lords Select Committee on Science and Technology (2001-05).
Mr Paul Tempest
Executive Director, Windsor Energy Group;  Vice-President, British Institute of Energy Economics and President of PTA London.  Formerly:  Director-General, World Petroleum Permanent Council and Congresses (1991-99).
Sir Crispin Tickell GCMG KCVO
Director, Policy Foresight Programme, James Martin Institute for Science and Civilization, University of Oxford.  Formerly:  Chairman, Climate Institute of Washington DC (1990-2002);  Warden, Green College, Oxford (1990-97);  HM Diplomatic Service (1954-90);  Permanent Representative, United Nations (1987-90);  Permanent Secretary, Overseas Development Administration (1984-87);  Ambassador to Mexico (1981-83).  Author.  A Governor and Member of the Council of Management, The Ditchley Foundation.
Lord Turner of Eccinswell
Life Peer (2005-);  Non-Executive Director, Standard Chartered plc, Siemens Holdings plc, United Business Media plc and Paternoster Ltd;  Visiting Professor, London School of Economics and CASS Business School, City of London.
Mr Ian Walker
Director, Windsor Energy Group.
Dr Simon Weeks
Head, Strategic Research Centre, Rolls Royce plc.
Mr Graham White
Director, Energy Strategy and International Unit, Department of Trade and Industry (2006-).  Formerly:  Department of Trade and Industry:  Director, Energy Markets Unit (1999-2005);  Director, Energy Policy and Analysis Unit (1992-99).
Professor Joel Witz
Commercial Manager, Technology Natural Gas, BHP Billiton, London;  Visiting Professor, Offshore Mechanics, Cranfield University.
UNITED KINGDOM/AUSTRIA
Ms Carola Hoyos

Energy Correspondent, The Financial Times.
UNITED KINGDOM/SYRIA
Mr Ghayth Armanazi

Director, Windsor energy Group;  Executive Director, The British Syrian Society;  Writer and Broadcaster, Middle East Media Centre.  Formerly:  Ambassador, League of Arab states;  Editor-in-Chief, ‘Arab Affairs’.
UNITED KINGDOM/UNITED STATES OF AMERICA
The Hon Barbara Thomas

Chairman, United Kingdom Atomic Energy Authority (2004-);  Director, Private Equity Investor plc (2004-);  Non-Executive Director, Department for Constitutional Affairs (2004-), Deputy Chairman, Financial Reporting Council (2003-);  Deputy Chairman, Friend’s Provident Plc (2001 ).  A Governor and Member of the Council of Management, The Ditchley Foundation.
UNITED STATES OF AMERICA
Mr Howard Gruenspecht

Deputy Administrator, Energy Information Administration, Washington (2003-).  Formerly:  Resident Scholar, Resources for the Future (2000-03);  Director, Economic, Electricity and Natural Gas Analysis, Office of Policy, US Department of Energy (1993-2000). 
Dr David Victor
Director, Program on Energy and sustainable Development, Center for Environmental Science and Policy, Institute for International Studies, Stanford University (2001-).  Formerly:  Director, Science and Technology Program, Council on Foreign Relations, New York.