Transition Culture

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30 Jun 2013

An interview with Lord Adair Turner

Lord Adair Turner

I met Lord Adair Turner (I’ll let him introduce himself in a minute) in his office near Hyde Park on a beautiful morning in June.  I was fascinated to get his sense of where we find ourselves in relation to climate change, and in terms of the government-led responses to it.  Call it depressing (“I don’t think we’re going to stay below 2°C”) or call it realistic, our time discussing these issues was fascinating.  You can either listen to the podcast or read the transcript below. I started by asking him to introduce himself.

I’m Adair Turner, at the moment I’m writing a book about the trouble with finance but I have been chairman of the Financial Services Authority till the end of March and before that I was also chairman of the UK’s Climate Change committee, which is responsible for recommending to government our greenhouse gas emission reduction targets and also recommending how we achieve those targets. I was the first chairman of that from 2008 to 2012.

Lord Stern recently stated he felt things in relation to climate change were far more serious than he had recognised when he wrote the Stern Report and if he were writing it now he’s do it very differently. What’s your sense of where we are in relation to climate change?

I think we need to say the following things: first, it is obviously the case, and the sceptics about climate change focus on this, that the average global temperature, land surface temperature, having increased far faster than the models suggested in the ’80s and ’90s has over the last 10 years been at some sort of plateau.

I think it’s incredibly important that those of us who believe very strongly that climate change is occurring are open to looking at the data and seeing what it tells us. But I don’t think it does change the point of view as to the long term trajectory. There are these oscillations over time. What is strange in some ways is that that fact, that there has been a stalling of the rate of increase of the average measured temperature for these 10 years is combined by other things which actually suggest change occurring at a faster pace, for instance the decline over the last 10 years in the coverage of Arctic summer ice is running clearly far faster than anybody anticipated 10 years ago.

I think in the science, I’m not sure that much has changed. I don’t think the balance overall has changed. I don’t think we are sitting there saying we know that climate change, global warming, is going to occur faster but equally I don’t think it’s going to occur slower than we originally predicted given any given level of carbon emissions. I think what has changed is that bluntly, a lot of our optimistic beliefs that by 2016 we would reach a peak in global carbon and greenhouse gas emissions and then start a reduction are looking extraordinarily optimistic.

The amazing continued economic success of China since Nick wrote his report has been at one level a great positive for the Chinese people and I think we have to recognise that, but it has been incredibly carbon-intensive, it’s been very heavy industry-intensive.  I think we’re now looking at a set of forecasts of the pace of global carbon emissions growth, which makes the achievement of the sort of reductions that Nick was talking about in his report by 2050 very difficult but still very important to achieve.

So I think we are at the point where the focus really has to turn back to what is it that we need to do to actually get the greenhouse gas emissions on a downward path?

The environmental philanthropist Jeremy Grantham recently said “capitalism does millions of things better than the alternatives, it balances supply and demand in an elegant way that central planning has never come close to. However it’s totally inequipped to deal with a small handful of issues. Unfortunately they are the issues that are absolutely central to our long-term wellbeing and even survival.” Do you think that capitalism and getting climate change really under control are compatible?

I think that capitalism, the market economy, is remarkable system for delivering growth and increases in prosperity, which over a certain range of income is a very important thing to do. I also think that beyond some level of average income, and maybe it’s roughly where the rich developed world got to 20 or 30 years ago, further improvements in average GDP per capita are not the most important thing. But I still believe that even in that environment where that is less important, the market economy still has a lot of contribution to make and a planned economy actually addresses a lot of environmental issues worse than a market economy. The Soviet Union was a planned economy and was a complete disaster from an environmental point of view!

Where I would agree with Jeremy Grantham is that when we face what economists call these very large externalities, these things which the private sector, an individual, will not take into account because they’re caught in a “well, why should I take it into account if nobody else isn’t” type trap. We need to manage capitalism. So to me it’s not are we going to have a capitalist and market economy or not. I see no real alternative to that, and don’t think there is political support for that. I think the alternatives are less advantageous. It has always been the case that there are some aspects of capitalism that need to be managed.

I am, in the book I’m now writing, struggling with one of those aspects which is the financial system, which needs managing more than the market for restaurants. The market for restaurants works pretty well – if you want good restaurants, just let a thousand entrepreneurial flowers bloom, some will work, some won’t, consumers will decide what they like etcetera. The market for finance works pretty badly. It careers off in all sorts of crazy directions and needs to be managed.

I think where Jeremy Grantham is right is that the challenges of climate change in particular are one where we need to not rely on capitalism and the market economy to solve the problems but manage it and constrain it and place it within public policy so that it can help solve them. We’ve got to make the market economy help solve the problems of climate change rather than ever assuming that it will, completely left to itself.

Is it possible, in the time that we have, to decouple economic growth from carbon emissions?

That’s a very interesting point. My overall point to you is that when you get beyond a certain standard of living, economic growth is not the most important end. It is also my point of view that if you allow economic freedom – and I think economic freedom is a value in itself, which is a point that Amartya Sen makes, that the freedom to decide where to work, what to do, who to contract with, what to consume, that is a freedom of value irrespective of whether or not that freedom produces economic growth.

If you have that freedom I suspect we will still have something which will be called growth and will still produce an increase in the thing which we measure in GDP per capita, remembering that GDP per capita is an extraordinarily arbitrary invention. It is what it is and you should never understand it as being anything other than the set of definitions that drive it.

But I suspect that there are very different paths, each of which would produce some growth in GDP per capita, some of which are compatible with containing climate change and some are not. I don’t think people should get hung up on “I want to produce a path where GDP per capita no longer increases”. I think one should want to produce a path where we are certain that we are dealing with challenges like climate change. I think that path will probably still, as it happens, produce an increase in measured GDP because people will be doing things that show up in measured GDP because other people value them. But I don’t think that’s the most important thing to concentrate on.

I did an interview a while ago with Kevin Anderson at the Tyndall Centre for Climate Change. His analysis was that the developed world needs to be cutting emissions by 10% a year starting now and that that is fundamentally incompatible with growth.  

I think if we need to cut it 10% a year starting now, bluntly I think we have a huge problem. I think in the climate change committee we thought that the rich developed world, UK, is quite capable of cutting at 4% per annum, could achieve a reduction of 80% below 1990 levels by 2050, and could do that in way which will politically work.

I fear that if it is really right that we have to cut at 10% per annum, we may fail in this endeavour. Now that would be terrible and would be harmful for future generations. I think there’s a pace beyond which your fundamental problem is your installed capital stock. We have a whole lot of cars out there on the road that people do not feel they can afford to change except about once every 7 years.

However fast you improve the efficiency of cars, that 7-year cycle creates a limit to how fast you will get down grams per kilometre because you have a person who has bought a 200 grams per kilometre car and even if you can convince them this was a crazy thing to do, they’re sitting on that and they can’t afford a new one. So I hope he’s wrong. I hope he’s wrong because if we really do need to go that fast, which is faster than other people have suggested, I think we’re going to find it incredibly difficult politically to get the support to achieve that.

You’ve moved within the corridors of power in your role on the Climate Change Committee. From the outside it looks as though tackling climate change has taken a back seat to economic growth. Owen Patterson on Any Questions on Friday said climate temperature has not changed for 17 years and was very dismissive – our environment minister essentially doesn’t believe in climate change!What’s your sense of that? Can we expect any leadership on climate change from government or where is that going to come from?

I think it’s going to be difficult to get leadership. It’s still the case that when the Climate Change Committee back in 2011 proposed the budget for the mid 2020s, there was a dispute in government but we won, and there was a commitment to a very stretching target which is now legally embedded. So you can still say of this government that in things like the overall targets, they have still stuck to it.

I think what is the case is that there is – you are absolutely right, we have an Environment Secretary now who is a sceptic about this. I think he’s completely wrong but he is a sceptic on it and from that quote you just gave is guilty of picking a particular fact which supports his case and not another fact which would support the alternative case such as the extraordinary reduction in the Arctic summer ice.

We also have a difficulty which is partly a difficulty of a perverse success. The fact is that UK greenhouse gas emissions are running below the targets of the Climate Change Act for the simple fact that the financial system managed to cook up a whacking great recession. Now this is the worst possible way to achieve, I think, a reduction in emissions but it does enable some people in government to say “well hang on, what are you talking about? We’ve set these targets and we’re going down faster than these targets”.

As the Climate Change Committee has pointed out, the danger is that if your emissions simply go down because you have a recession, you’re not achieving the long-term transformation of the economy, and as the economy recovers, we will be back to the problems as before.

So I think it’s a mixed bag. I think that the overall story is that climate change in the UK, after having reached a sort of apogy of political support at the time of the passing of the Climate Change Act which got a quite formidable and extraordinary degree of cross-party support, that it has moved on to the back burner. But I think that’s why it’s important to keep up relentless pressure on particular aspects of policy which are important for the long term.

We recently passed 400 parts per million for the first time. As someone who’s been involved in all of this, how did that affect you?

As I said earlier, I think the difficulty for those of us who believe this is a huge problem that we’ve got to deal with, is that we’re simultaneously looking at two facts. One, the slowdown, which I think the best science suggests is entirely cyclical, the increase in global temperatures, and that enables the sceptics to say – haven’t you overstated it, even if it’s occurring, isn’t it occurring slower than we thought.

But Two, the growth in emissions and concentrations is just marching on a continual upward path. The 400 parts per million measurement has been reached as rapidly as any of the forecasts in the IPCC reports suggested. The idea that we have the capacity to stop this occurring at 450 ppm I think is looking extraordinarily optimistic, and that is depressing. It’s depressing.

If Kevin Anderson were right, and staying below 2°C is incompatible with economic growth as we have known it, what for you might a post-growth economy look like?

Can I say I don’t think we’re going to stay below 2°C. The Climate Change Committee always had the point of view that that was extremely difficult to achieve. We focused very strongly, and I fear that the world simply has to accept that it is highly likely by the end of this century we will warm by 2°C. We therefore need an adaptation strategy as well as a mitigation strategy.

How do you see the balance between those two?

Well, I think the mitigation strategy on climate change has got to make absolutely sure that we do not hit catastrophic levels of climate change. I think there’s a reasonable interpretation of the evidence that an increase of 2°C is bad news, variable news across the world, but includes balance of positives as well as negatives, and with an enormous amount of effort is manageable. An increase of 4°C takes us into territory where really extreme events have occurred and it could be potentially catastrophic.

We therefore defined, on the Climate Change Committee, that one of the crucial aims of public policy should not be to get fixated with – can we be certain that it won’t go above 2°C, because I think to be certain that it won’t go over 2°C you’ve probably got to go on a trajectory where your mean expectation is 1º or even less than that. You really have to do extraordinary things to the nature of modern life to be certain of it, for 2°C to be, as it were, off the edge of the probability distribution. We said the most crucial thing is, you should keep the chance of going above 4°C less than 1%.

So that is a different attitude and I do think we need an adaptation approach as well. The other thing I need to say about 2°C and I think this is difficult, is I don’t know what it will do to North-West Europe but it’s probably manageable in North-West Europe. We know of course in the UK the whole of global warming might make us colder. The fact is our regional climate models aren’t good enough to forecast exactly what will occur. I think in temperate maritime environments like the UK it is unlikely that 2% global warming will cause a catastrophe. I think in the North Indian plain or the Sahel even 2°C can do horrendous things to human life but I think we may be in an environment where they’re unstoppable.

Do you have a sense of if there was an economy that was a post-growth economy, what that might look like?

Not necessarily post-growth, but post-carbon. The crucial thing is, we’ve got to completely de-carbonise electricity. There are then some highly controversial things in that. The Climate Change Committee did express support for nuclear as well as wind.  We took the point of view that this was a sufficiently important challenge and we have to throw everything at it. We identified that it’s impossible to imagine a modern economy which has anything like the lifestyle we presently have, and we’ve got to discuss whether you’ve got to change lifestyle a bit, but something like the lifestyle we have, unless we completely de-carbonise electricity.

We think it’s possible to completely de-carbonise electricity. By the mid 21st century we could be producing our electricity not at an average grams per kw/h of 500 but at an average grams per kw/h of 20. I think in the long term the key technology is solar PV. One of the great and encouraging things of the last 5 years is the dramatic reductions of solar PV prices. Maybe that’s coming in so fast that it might even squeeze out the need to go big in nuclear en route to that, which we always thought of as a transitional technology.

I think by a combination of solar PV, of wind, of tidal, of nuclear, some combination of these, we can de-carbonise electricity. Once you can de-carbonise electricity, we can have the individual car. I don’t think we need to get rid of the car economy. I wish we had smaller, more locally environmentally friendly cars, I think it would be a tragedy if we electrified a car fleet and electrified a whole load of SUVs. But my worries about that are almost as much about the ludicrous effect of those on noise, on urban environment, on urban transition.

So my vision would be urban environments, great city environments, which have been very significantly not automobile based, probably small, private electric transport things which you hire on the street. I think the future of the Boris bike is also the Boris electric bike and the Boris micro electric vehicle. These are technologies which can actually work. I think it will make the urban environment far nicer! Once we get petrol and diesel fumes out of London, I hope I live until 2050, I’ll be 95 by then, I would love to see a London with hardly any petrol cars in it.

It would just be a nicer place to be, a nicer place to walk, a nicer place to sit at streetside cafes, a nicer place to sleep at night, with more attractive, cleaner air. We can electrify surface transport. We can electrify our entire railway system. We can electrify or radically improve the efficiency of the insulation of our houses. We can deliver the manufactured goods that we like having, like consumer goods, in radically more efficient manufacturing sites and we can power them with low-carbon electricity.

So once you’ve defined that, and this may disappoint some at the more radical end of greenery, you haven’t fundamentally changed people’s lives. Hopefully you can encourage them to do sensible things like get out of whacking great silly SUVs but they’ve still got personal transport mobility.

I think there are some things which are very difficult. The one I find most difficult is air flights. Air flights are a wonderful thing, they’re one of the wonderful things of growth, the ability of young people to go from one end of the world to another. Some people only use it to lie on the beach but other people do use it to meet other people and see different cultures. 

The way in which air flights have become available for ordinary people, for average income people and no longer just for the rich, I think that’s a fantastic development. But we have a huge problem here. Because whereas we can I think make low-carbon electricity drive an awful lot of the rest of the modern economy, we’re never going to get a plane off the ground with a battery because we just can’t compete with the enormous energy density of fossil fuels.

The intriguing thing about the internal combustion engine is that it’s an unbelievable inefficient engine attached to an unbelievable dense energy source. Whereas the problem with an electric engine is it’s a beautifully efficient engine which at the moment is powered by a horribly undense energy source. To me that’s one of the great challenges in business and R& D, the battery. If we can have more energy-dense batteries then we’ve solved this problem, but I think we’re going to find it very difficult to get batteries energy-dense enough to take a plane of the ground.

That’s the bit that I find really tricky and ethically the most difficult.  If I think of my own carbon footprint… I’ve cut it to bits in everything except flights because I know how to cut it to bits in everything except flights. I have very fuel efficient cars, I cycle around town, I buy local food, I don’t over heat the house, I have solar hot-water panels, all of that’s doable. But as part of my business I fly a lot and that’s a pretty big carbon footprint.

In the Portas Review that came out recently, they said that 97% of all food and groceries are now sold through just 8 supermarket outlets. But we know that the 3%, the local independent economy delivers more jobs per pound spent, commits to more civic engagement, makes more money in the local economy, but the government push for economic growth seems to be all about growing the 97% rather than growing the 3%. Is this right?

This is where you get back to the economic growth issue. My point of view on economic growth is that we should not be planning to stop it, but we should be planning to stop worrying about it. I think it’s highly likely that even if we have a low-carbon, environmentally sustainable way of life combined with economic freedom we will produce improvements in productivity which end up being measured in GDP per capita as growth.

But I attach almost no importance to whether, over the next 30 years, the average rate of UK growth is 1.7% per capita per annum or 1.5%. I think it will make almost no difference to people’s happiness, people’s welfare etc. And that is why I think we have allowed ourselves to become fixated with these ideas of increasing growth and we then end up saying “in order to have growth we have to achieve the productivity improvements that are achievable through superstores etc”.

I think we should simply say “no”. If local communities through local political processes say – we would rather have the vibrancy of a local town centre, the job intensity of local jobs, a local supply, a sense of community which comes out of a relationship between local shops and local suppliers, I don’t think it should be for national government to say no you can’t do that. I think that’s a decision that local people should make, and I think they should make that not terrified by stories about the need for growth. Now, I think the bigger problem, when you get that local argument, then becomes twofold.

You will have some local people who just want the cheap food. Let’s be clear, that development of the superstores, the somewhat anonymous out-of-town superstores, has been driven in part by I think a mistaken national fixation with minute differences in national productivity growth, and we have the ability to put a stop to that. But you’ve still got the problem of even once you localise the decisions, some people want their cheap food and it’s quite difficult to say no to them.

Now I hope we will have an environment where there is an increasing focus on quality and on quality of experience, but I think one of the things that goes against that is the rise of inequality. In an environment of increasing inequality and the bombardment of people with messages about what the materialist life can give, people are not surprisingly fixated with how far up that spectrum of an unequal distribution of income they can crawl, and therefore want the capacity to have cheap food so they can spend money on all the other things that advertising is telling them that they need to have. I think the continual rise of inequality is quite corrosive of our ability to pursue shared collective objectives.

At the moment when you have communities that have a majority who say – we don’t want a supermarket opening in their local high street-or-out of town, at the moment the planning system is unable to distinguish between an independent shop and a chain shop. Do you think that it could be possible to make that kind of distinction or is that just not feasible?

The answer is I don’t know. I haven’t thought about that detail of the balance between chain shops…you’re now talking about not a superstore versus small stores in the high street but the stores in the high street being independent versus the stores in the high street being chains. It’s quite interesting. If you look in London at the high mark of the upmarket end of the Marylebone high streets, where you have an intelligent, dominant landlord – and intelligent, dominant landlords have the right to accept as tenants whoever they like – they, in order to create an environment where people want to go shopping and therefore where the rents back to them are high, actually do have a strategy of not allowing it to be entirely dominated by the chain stores but having a mix of different types of store which creates an environment where people want to go.

That is a very high end, high income, high price environment and I don’t know whether that applies, when you’re dealing with a country town high street, but that’s the landlord making a decision, whether the local authority should have the right to make… I fundamentally think they should have the right to make the decision.

I think there is a general point of view, one general thing about Britain is that we have an incredibly centralised political structure. We became that over the years. It was cross party. All of the parties talked about localism and all of them slowly degraded local decision making. We both ended up with most local government finance coming from national government, a huge step in that direction was the result of moving towards the idiotic poll tax. In order to get out of that, one of the things that national government had to do was increase yet more the extent to which it provided the money and it provides the money, it thinks it has the right to set the decisions.

I don’t know how we roll that back. I think across much of Europe where there are areas which have been more effective at maintaining a sense of a local identity and a local vibrant community, it is often embedded in local political power structures: the commune, the mayor of the small town in France, Germany’s decentralised systems. We’re a very centralised political system and it would be good to roll it back but extremely difficult.

Jay Rayner in The Observer recently said that we should import apples from New Zealand because the carbon emissions of doing so would be less for a New Zealand apples and lamb and they have a better climate and landscape for it*. How do you view that from a climate perspective? You were talking before about local food…

I think we’ve got to be fact based about this. And I think people then have to make decisions which are their own trade-off on the most important things. If it is the case that everything combined, both the transport and the nature of the production back in New Zealand, that New Zealand lamb and apples do turn out to be low-carbon, I think it’s important that people know that and people have a right to that trade off. I’m sure there are many many other vegetables and food products where that will not be the case, where the nature of the transportation costs will favour the local, and therefore I tend to favour local food because my gut feeling is probably that it’s lower carbon.

If somebody could convince me that New Zealand apples were low carbon – and if I liked the apples, and if they were organic and therefore supporting biodiversity – I might buy them. I don’t think we should get absolutely fixated on one or other dimension of these things. I think on the other hand, flown-in raspberries from across the world in January don’t tick any boxes, and we know that.

My last question was that you’ve spent years surrounded by climate change and reading all the reports and the science and everything. What keeps you going? Do you think this is a solvable problem?

Well I’m a little bit out of it now because I’ve been dominated by the financial system for the last year. But when I was doing the Climate Change Committee until last year and I used to spend about 2 days a month on it, I would always come home at the end of it saying what an enjoyable day I had had, compared with struggling with the problems of the financial system. I think I’d make the following distinction.

On the one hand, climate change is far more worrying, but also far more understandable. What happened in the financial system is a completely self-inflicted wound. There’s no reason why this crisis had to occur, it wasn’t imposed on us through war etc.  Climate change is a real external constraint. Human beings have wanted to grow, wanted to get more prosperous. Nobody knew this when we started on that path 200 years ago. The achievements of industrial capitalism are fantastic but unfortunately it turns out that one of the things it relies on which is digging fossil fuels out of the ground, is going to do some nasty things. So it is externally imposed but at least we don’t feel – oh my God we’ve done this to ourselves, it’s a real problem.

It’s a real problem that has to be overcome. It’s intellectually fascinating and the complexity of it is intellectually fascinating and it is solvable. We are capable of having low carbon lifestyles which preserve that which is important about the achievements of the extraordinary transformation of the last 200 years. So whenever it’s frustrating how difficult it is, at least one is kept going by the fact that it is doable.

Editor’s note: Jay contacted me after this interview was posted to state that my question had misrepresented his question.  He wrote: “Actually I didn’t just say that we should get all our apples from there. The point was that while there are reasons for buying local, sustainability is not necessarily one of them. The New Zealand produce report was the best way of pointing up this fact. This was an extract from a book, in which I go into much greater detail and actually argue for enhanced regionalism over localism. There are very good reasons for supporting British produce over kiwi”.  My apologies for any confusion caused.