Carbon Taxes and Global Warming
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CARBON TAXES AND GLOBAL WARMING HOUSE OF COMMONS LIBRARY Research Paper 93/106 25 November 1993 In recent years the issue of global warming has become of sufficient concern to the international community that the Climate Change Convention was agreed at the Earth Summit in Rio de Janeiro in June 1992 and has now been signed by 166 countries. Under the Convention, developed countries, including the UK, must adopt policies aimed at returning carbon dioxide (CO2 ) emissions to their 1990 levels by the end of the century. Different countries have proposed a variety of methods for reducing CO2 emissions. One of the most popular ideas is the introduction of some type of carbon or energy tax on fuel and the European Community has a well developed proposal for such a tax. Additionally, in March 1993 the UK Government announced the introduction of VAT on domestic fuel and power, justifying the decision partly on environmental grounds. This paper examines the environmental aspects of the introduction of such taxes, and discusses their effectiveness in reducing global carbon dioxide emissions. Further details of VAT on Fuel and Power can be found in Library Research Paper 93/36 (24 March 1993). Information on Carbon Dioxide Targets can also be found in POST Briefing Note 42 (April 1993). CONTENTS I. Introduction to Global Warming and the Greenhouse Effect p. 1 II. Climate Change Convention p. 7 III. Policy Measures to Reduce CO2 Emissions p. 9 IV. European Carbon/Energy Tax Proposals p. 11 V. UK's National Programme for CO2 Emissions and VAT on Fuel p. 13 VI. Effectiveness of Carbon Taxes p. 17 William Lea Science and Environment Section Library Research Papers are compiled for the benefit of Members of Parliament and their personal staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public. Research Paper No 93/106 1 I. Introduction to Global Warming and the Greenhouse Effect The Greenhouse effect is essential for life on Earth. Without the atmosphere, particularly water vapour and carbon dioxide, acting like the glass in a greenhouse, the Earth would be 33°C cooler and the oceans would be frozen solid [1]. However, in recent years, scientists have expressed concern that the changing composition of the atmosphere, with increasing levels of carbon dioxide and methane, might lead to global warming causing dramatic changes to the global climate and sea levels. For instance, in 1990, the Inter-Governmental Panel on Climate Change predicted that if emissions of greenhouse gases continued their current trend, the Earth would warm by about 0.3°C per decade resulting in a 3°C global temperature rise by the end of the next century, accompanied by a 65cm rise in global mean sea levels [2]. Conclusions of the Inter-Governmental Panel on Climate Change First Scientific Assessment 1990 • there is a natural greenhouse effect which already keeps the Earth warmer than it would otherwise be. • emissions resulting from human activities are substantially increasing the atmospheric concentration of the greenhouse gases: carbon dioxide, methane, chlorofluorocarbons (CFCs) and nitrous oxide. These increases will enhance the greenhouse effect, resulting on average in an additional warming of the Earth's surface. The main greenhouse gas, water vapour, will increase in response to global warming and further enhance it. • under the IPCC Business-as-Usual (Scenario A) [prediction of future] emissions of greenhouse gases, [there will be] a rate of increase of global mean temperature during the next century of about 0.3°C per decade (with an uncertainty range of 0.2°C to 0.5°C per decade); this is greater than that seen over the past 10,000 years. This will result in a likely increase in global mean temperature of about 1°C above the present value by 2025 and 3°C before the end of the next century. The rise will not be steady because of the influence of other factors. • under the IPCC Business as Usual emissions scenario, [there will be] an average rate of global mean sea level rise of about 6cm per decade over the next century (with an uncertainty of 3-10cm per decade), mainly due to thermal expansion of the oceans and the melting of some land ice. The predicted rise is about 20cm in global mean sea level by 2030, and 65cm by the end of the next century. There will be significant regional variations. Research Paper No 93/106 2 Scientific Explanation of the Greenhouse Effect The glass in a greenhouse allows short wavelength solar radiation, such as ultraviolet light, to pass though it and be absorbed by the plants and soil. These are warmed and then re- radiate longer wavelength infrared radiation much of which does not pass back out through the glass. Instead, the glass absorbs and then re-emits the radiation, raising the temperature inside the greenhouse. The Earth's atmosphere, particularly the greenhouse gases - water vapour, carbon dioxide, methane, chlorofluorocarbons (CFCs), nitrous oxide and others - perform a similar function for the Earth as the glass does in a greenhouse. This is shown in diagrammatic form in Figure 1 below: Figure 1: A simplified diagram illustrating the greenhouse effect Source: IPCC Scientific Assessment 1990 It is important that the greenhouse effect is not confused with the depletion of the ozone layer. Although CFCs are greenhouse gases and the ozone layer does affect the absorption of ultraviolet solar radiation, the major scientific processes involved are very different. Further details concerning ozone depletion can be found in Library Research Paper 93/63, The Ozone Layer: Science, Implications and Policy (27 May 1993). Research Paper No 93/106 3 Climate Modelling The greenhouse effect is a well established and well understood scientific process. But determining how changes in the magnitude of the effect, due to the changing composition of the Earth's atmosphere, lead to changes in the global climate are much more difficult to predict. The global climate is an immensely complicated system of interacting physical processes involving the land, the seas and oceans, the polar regions, clouds, the atmosphere and the sun. Many of the processes are inter-related, and the outcome of one process can affect the outcome of another. For instance, the polar ice caps currently reflect much of the incoming solar radiation rather than absorbing it. But were the temperature of the Earth to rise and the ice caps were to melt, then more solar radiation would be absorbed by the darker- coloured land revealed by the melting ice, creating even more warming. This is an example of a positive feedback effect. The whole of the Earth's climatic system abounds with such positive and negative feedback systems, making it very difficult to accurately predict future climate patterns. However, some attempt can be made using computer analysis of General Circulation Models (GCMs). GCMs are mathematical models of the Earth's climate which try to take account of the major underlying physical processes affecting climate change. They make an estimate of the magnitude of the different processes and how they interact, so that predictions can be made on future climate patterns. These models are constantly modified as more information becomes available on a particular effect. One area in which there has been much work is on the availability of sinks which can absorb carbon dioxide, such as the oceans (in which carbon dioxide can dissolve) and forests (which take up carbon dioxide by photosynthesis, and produce oxygen). It is very difficult to estimate the size of these sinks and to predict how they will be affected by global warming. However, having said all this, GCMs remain the only way in which future climate patterns can be predicted, and there does some to be quite a large degree of agreement between different models produced by different scientific research groups. The whole issue of climate change has been examined in detail by the Inter-Governmental Panel on Climate Change (IPCC) as described in the Introduction. The IPCC was established in 1988 under the auspices of the World Meteorological Organisation (WMO) and the United Nations Environment Programme (UNEP). Three working groups were established, one of which, Working Group 1, was set up to assess available scientific information on climate change. The Group produced its first report in 1990 [2], the main conclusions of which are reproduced in the Introduction, and produced a Supplementary Report in 1992 [3]. The reports are divided into separate sections dealing with different areas such as sources of greenhouse gases, climate modelling, detection of global warming, sea level rise and effects on ecosystems. Research Paper No 93/106 4 Contribution of Greenhouse Gases to Global Warming Different gases have different effects on the global climate and so contribute differently to global warming. A useful figure for comparing the effects of different gases is the Global Warming Potential (GWP). GWPs are calculated for each greenhouse gas and estimate the contribution the gas makes to global warming compared to an equivalent mass of carbon dioxide. The GWP depends on the ability of the gas to absorb solar radiation, its lifetime in the atmosphere, its molecular weight and the time period over which effects are of concern. For instance, methane has a GWP of 63 over a 20-year period but over a 100-year period its GWP is 21. The global warming potentials and the level of world emissions for the main greenhouse gases are shown in Table 1. For purposes of comparison, the magnitude of the effects produced by the different gases can be estimated by multiplying the level of emissions by the appropriate GWP.