Tony Blair once called climate change "the biggest long-term threat facing our world." After ten years as prime minister, Blair left behind an ambivalent legacy. His efforts to turn the United Kingdom into the world's leading country in the fight against climate change, however, could earn him a place in history books.

In autumn 2006, the government-funded Stern Report on the staggering costs of climate change delivered a wake-up call to governments and businesses around the world still reluctant to take the expensive measures to fight global warming.

Following up, the British government introduced a Draft Climate Change Bill in March 2007 that aims to reduce national carbon dioxide emissions by 60 percent of 1990 levels by 2050. With its service-oriented, carbon-low industry, and an overarching public consensus on the threat of climate change, Britain is well-poised to reach such an ambitious goal.

Exploding Emissions from Air Travel

The question becomes how. Up to now, the focus of UK policymaking has been on raising public awareness about climate change, changing consumer behavior, and reducing the industrial carbon footprint through mandatory emissions caps and trading. It is clear, however, that such efforts will have to be ramped up if Britain is to reach its targets.

One challenge will be reducing emissions from air travel, which now produces 5.5 percent of emissions created in the UK, home to Europe's busiest airport, London Heathrow. And this figure doesn't even take into account that the warming effect of greenhouse gases emitted in higher layers of the atmosphere is worse than at sea level.

Given the current rate of growth in the era of discount airlines, air travel could account for as much as a quarter of all UK emissions by mid-century or earlier. Britain must also improve energy efficiency in homes, currently responsible for around 27 percent of all national emissions.

Business Opportunity of the Century?

More "green" taxes are an option, but government is also considering alternatives. Britain has been the first country to propose the idea of domestic carbon trading, which would set limits on household annual carbon dioxide emissions, and allow people to trade their surplus. Former Environment Minister David Miliband said the concept could be preferable to "carbon taxes," because it would give households more flexibility and could eventually lead to substantial emissions reductions. Critics say such a scheme is not yet feasible.

Britain is also trying to cultivate the idea of climate change as not just a challenge, but also a profitable business opportunity. Since the advent of the EU Emissions Trading Scheme, London has become a central hub of the European carbon trading market. And while prices for most of the commodities traded in London crashed in 2008, net value of the EU carbon market soared from 14.6 billion Euro in 2006 to 67 billion euros in 2008.

Meanwhile some of the largest British corporations - British Telecom, Virgin, HSBC, and BP, to name a few - have invested millions of pounds to develop products for a low-carbon economy, or have saved millions by improving efficiency, purchasing renewable energies, and reducing emissions.

United Kingdom Climate Change Profile Part 2: Fact Sheet

Facts and figures about the United Kingdom and climate change.

Greenhouse gas emissions in the UK by sector and energy sources (Graphic: Allianz/WWF)

Britain's Carbon Footprint at a Glance

Country: United Kingdom of Great Britain and Northern Ireland

Population: 60.6 million people

Estimated annual CO2 emissions (UNFCCC): around 562.4 million tons (2004, 7th largest worldwide)

10 Facts About Britain and Climate Change

01. UK emissions of CO2 currently account for about two percent of the global total. Officially, Britain's greenhouse gas output is 15% lower now than in 1990.

02. If pollution from aviation, shipping, overseas trade, and tourism is included then emissions of UK greenhouse gases have risen 19% since 1990, according to study from Oxford university.

03. By 2020, London could see twice as many days exceed temperatures of 25 degrees Celsius (77 degrees Fahrenheit) in London each summer. By 2050, there will be between three to five times as many hot days in the British capital.

04. Across the country, the UK Environment Agency spends around 500 million pounds on flood defenses. Authorities expect this figure to double over the next 20 years.

05. Nine out of ten hottest years in British history have occurred in the last 20 years.

06. Air travel, one of the most carbon-intensive human activities, is expected to increase more in Britain in the coming decades. Passenger movements at UK airports are expected to more than double from around 200 million pounds per year to around 470 million by 2030.

07. The autumn and winter floods in 2000 in the UK were the worst in 270 years in some areas. Flooding that year cost the farming industry more than 700 million euros.

08. Since 1998, the cost of repairing damage from extreme weather events and floods in the UK has increased by 60 percent.

09. The growing season for plants in central England is now a month longer than it was in 1900.

10. Average sea level around the UK is now about 10cm higher than it was in 1900.

Sources: WWF-UK, Friends of the Earth, BBC, DEFRA, Guardian

United Kingdom Climate Change Profile Part 3: Impact on Environment and Society

A telephone box sits in flood waters in Sheffield in June 2007. Annual damages from flooding could reach 22 billion pounds in the UK by 2080, fifteen times what it is today (Photo: Reuters)

England has the world's longest climate record, which goes back to the 1660s. But nine out of ten hottest years recorded in England occurred in the last 18 years. The impacts of this trend are already visible around the British Isles.

Rainfall and Agriculture

For one, precipitation will change: winter rainfall is expected to get heavier, while summer rainfall will slightly decline. Summers will be drier; winters will be milder and wetter. Summer heat waves are happening more frequently than in centuries past. Migratory birds arrive earlier than before. Changes are also evident in insect populations, soil composition, biodiversity, river flows, and the growth of vegetation and crops.

Unlike many other countries, where climate change will only exacerbate food and water scarcity, British farmers may actually see some "benefits" from a warming climate. Warmer and longer summers give farmers the opportunity to grow exotic teas, grapes for wine, and "energy crops," such as grains and oilseeds to produce biofuels. In the long-run, however, various impacts of climate change, including winter cold spells, drier soils, changing precipitation, and distribution of parasites may present difficult challenges for UK farmers.

Ocean Currents and Floods

Researchers are also looking at the impact of a slowing Atlantic Gulf Stream, a strong ocean current that affects weather in Britain and Europe. The Gulf Stream may be sensitive to global warming, and a slowing or collapse of its North Atlantic branch would likely have a significant cooling effect on Britain and Scandinavia.

Rising sea levels will, as elsewhere, affect coastal erosion and increase the flood risk along the British coasts. Much of London, for example, is located in the floodplain of the River Thames and its tributaries, making the city more prone to flood damage than any other urban area in Britain. According to a government report, climate change could increase the flood risk in the UK capital, home to over 7 million people, by increasing the intensity of storms and rainfall.

Economic Losses

These effects naturally have economic consequences, as highlighted by the 2006 Stern Review on the Economics of Climate Change, which Blair called the "the most important report on the future published by the Government in our time in office." The study suggested that climate change could eventually cause annual damages worth anywhere between 5 and 20 percent of global gross domestic product (for reference, one percent of global GDP is currently around 400 US billion dollars).

According to a 2006 Friends of the Earth report, annual damages from flooding alone could reach 22 billion pounds in the UK by 2080, fifteen times what it is today. Summer hot spells would also have costly effects. An extreme example was the European heat wave in 2003, which killed around 20,000 people (2,000 in the UK), and caused an estimated 10 billion US dollars in agricultural losses.

Sources: Stern Review on the Economics of Climate Change, The Guardian, DEFRA, UK Climate Impacts Programme, Tyndall Centre for Climate Change Research, Potsdam Institute for Climate Impact Research, BBC, Reuters, Forum for the Future, Friends of the Earth

United Kingdom Climate Change Profile Part 4: Strategy

Britain's Prime Minister, Gordon Brown, commissioned the Stern Review on the costs of climate change during his time as UK finance minister (Photo: Reuters)

The ruling Labour government considers the scientific evidence for global warming “overwhelming.” Former Prime Minister Blair vowed to make Britain a low-carbon model. What exactly does that mean?

According to official figures, Britain is on track to meet its Kyoto Protocol commitment of reducing GHG emissions by 12.5 percent of 1990 levels by 2012. According to government statistics, Britain’s emissions are down over 15 percent, and are projected to be over 23 percent below 1990 levels by 2012.

A group of economists around the Oxford-based Dieter Helm, however, have called this progress an "illusion". They recalculated the UK's emissions including pollution from aviation, shipping, overseas trade, and tourism–which are not measured in the official figures–estimating that emissions of UK greenhouse gases have risen 19 percent since 1990.

National Policies

The ruling Labour government considers the scientific evidence for global warming "overwhelming." Former Prime Minister Blair vowed to make Britain a model demonstrating to the world that a low-carbon economy does not mean a weak economy. Despite this commitment, authorities have announced that the country might miss their self-imposed target of a 20-percent reduction by 2010.

Meanwhile the government has set more ambitious long-term goals. A Climate Change Law was passed in November 2008 commiting Britain to a 80-percent reduction in GHG emissions from 1990 levels by 2050, and a 26-percent reduction by 2020. Although generally welcomed by environmental groups, such as Friends of the Earth and WWF, it was also criticized for not including emissions from shipping and aviation, the latter of which has surged in the UK and Europe in recent years.

The Climate Change Law follows a spate of recent UK government policies aimed at reducing the national carbon footprint through renewable energies and energy efficiency, through changing public behavior and consumption, and through taxation.

Recent policies include the Climate Change Levy from 2001, a tax on energy produced from fossil fuels and nuclear power. The levy exempted renewable energies, and was meant to increase energy efficiency and reduce carbon emissions. The Renewable Transport Fuel Obligation from 2005 requires 5 percent of all road vehicle fuel to be supplied from sustainable renewable sources by 2010.

Institutions and Initiatives

Income from the Climate Tax Levy is being used to fund the Carbon Trust, an independent company that invests in low-carbon technologies and supports companies with tax breaks, interest-free loans and advice to improve efficiency and reduce emissions. An Energy Saving Trust was established to deliver similar benefits to private households.

The Environment Ministry (also known by the acronym DEFRA) is also investigating the feasibility of "personal carbon allowances," which would introduce the concept of emissions trading to each household in Britain.

Part of the government's challenge in implementing anything like a personal carbon trading scheme and to reduce overall emissions is mobilizing the necessary public support. To these ends, the government has launched the Climate Change Communications Initiative, while non-governmental institutions such as the Tyndall Centre for Climate Change Research and the Institute for Public Policy Research (IPPR) have studied how global warming policies resonate with the British public.

Opposition and the Monarchy

The current Labour government is not the only force in British politics demanding a low-carbon economy. In editorials in the mainstream press, Conservative leader David Cameron has called for revisions to the Climate Levy and "a greater sense of urgency about climate change." Prince Charles, next in line to the British crown, called climate change the "greatest challenge to face man," and said a £15 billion annual program was required to halt deforestation or the world would have to live with the dire consequences of a rapidly changing climate.

International Policies

Gordon Brown says the UK must take a leading role in international efforts to slow climate change. Along with its Kyoto Protocol commitments, Britain is also a key country in the flagship European Union Emissions Trading Scheme (EU ETS), which will serve as an example for future emissions trading markets.

In April 2007, former British Foreign Secretary Margaret Beckett initiated the first-ever debate about climate change in the UN Security Council. Although some nations protested that the council was not the appropriate venue for discussing the issue, Beckett said that global warming could threaten global security and stability through mass displacement and widespread food and water scarcity.

The British government has also begun a number of bilateral partnerships, such as a new UK-China initiative to develop "near-zero emissions coal" and carbon capture and storage (CCS) technology, and a joint study with India about technology transfer.

Sources: DEFRA, The Guardian, BBC, The Independent, Foreign Affairs, Financial Times, The Climate Group, IPPR, The Carbon Trust

United Kingdom Climate Change Profile Part 5: Opportunities

Workers install solar panels on the roof of London City Hall. The UK government wants 10 percent of all electricity produced in the country to come from renewable sources by 2010 (Photo: Reuters)

Britain is home to some of the world’s most forward-thinking institutions and businesses with regard to climate change – those that recognize it as a risk and, as the Financial Times suggests, possibly “the greatest business opportunity of the century.”

Emissions Trading

EU climate policymaking, including the pioneering Emissions Trading Scheme, has given Britain and Europe a head-start in finding ways to profit from the world's transition to a low-carbon economy. London has become a hub for international carbon trading.

London-based Climate Exchange plc owns not only the Chicago Climate Exchange, but also the European Climate Exchange, which reportedly handles 80 percent of European carbon trading. Meanwhile Climate Change Capital, also based in the British capital, controls a billion-dollar investment fund focused on the market mechanisms created by the Kyoto Protocol, such as emissions trading and Clean Development Mechanism (CDM).

Business and Investor Initiatives

Britain has also seen a number of major campaigns to get businesses to see the opportunities of climate change. The London-based Carbon Disclosure Project (CDP) surveys thousands of large companies with the support of 280 institutional investors controlling assets of several trillion dollars.

In April 2007, the government helped launch the "We're in this Together" initiative to support major UK businesses, including British Gas, O2, and BSkyB, in developing products to help consumers reduce their household emissions. Steve Howard, director of The Climate Group, which co-organized the initiative, said these companies could help "allow consumers to do their bit" and potentially save 25 million tons of CO2 emissions.

Renewable Energy

The renewable energy sector in Britain is also a major area of growth and opportunity. Due to the emissions of coal-fired power plants and the unpopularity of nuclear plants, the British government wants 10 percent of all electricity produced in the country to come from solar, wind and hydropower by 2010. Their current stake is less than 2 percent.

According to a study from Ernest&Young, the UK holds Europe's most interesting wind power potential. London Array, a consortium of major energy and oil companies, is currently planning the world's largest off-shore wind park 20 kilometers off the coast of the Thames estuary. According to their figures, the park would provide 1,000 Megawatts, enough to meet the electricity needs of 750,000 homes.

Energy Efficiency

Some of Britain's biggest companies have found that climate-friendly policies can also save big money. British Telecom, for example, has saved 119 million pounds since 1991 by improving energy efficiency and have committed to purchase almost all of its energy from renewable sources like wind, solar, tidal or hydropower.

Sources: Financial Times, Carbon Disclosure Project, The Climate Group, Climate Change Capital, National Energy Foundation, The Carbon Trust, The Independent, CNBC

Editor: Valdis Wish
Originally published: May 28, 2009
Source: Allianz Knowledge