Science in Society

TACKLING climate change will cost consumers the earth. Those who campaign for a green revolution are out to destroy our western lifestyles. Such are the cries of opponents of emissions cuts, and their message has political clout: a number of surveys, including one by New Scientist in 2007, have found that the enthusiasm of voters for policies to alleviate climate change falls off as the price tag increases.

However, a new modelling exercise conducted exclusively for this magazine suggests that these fears are largely unfounded. It projects that radical cuts to the UK's emissions will cause barely noticeable increases in the price of food, drink and most other goods by 2050 (see the figures). Electricity and petrol costs will rise significantly, but with the right policies in place, say the modellers, this need not lead to big changes in our lifestyle.

"These results show that the global project to fight climate change is doable," says Alex Bowen, a climate policy expert at the London School of Economics. "It's not such a big ask as people are making out."

Although it is impossible to precisely predict prices four decades from now, the exercise is one of the most detailed examinations yet of the impact of climate change policies on UK consumers. It provides a useful rough guide to our economic future.

Though its results speak directly to the UK consumer, previous research has come to similar conclusions for the US. In June, one study found that if the US were to cut emissions by 50 per cent by 2050, prices of most consumer goods would increase by less than 5 per cent (Energy Economics, DOI: 10.1016/j.eneco.2009.06.016). The findings are also consistent with analyses by the Pew Center on Global Climate Change in Washington DC. "Even cutting emissions by 80 per cent over four decades has a very small effect on consumers in most areas," says Manik Roy of the Pew Center. "The challenge is now to convince consumers and policy-makers that this is the case."

The Intergovernmental Panel on Climate Change recommends that wealthy nations cut their emissions to between 80 and 95 per cent below 1990 levels by 2050 in order to avoid the worst effects of climate change. The UK government aims to reduce its contribution by 80 per cent and leaders of the other G8 nations have discussed following suit. To meet this goal, industries will have to slash fossil fuel consumption, and low-carbon power sources will have to massively expand. Companies will have to pay increasingly higher prices for the right to emit greenhouse gases.

How will this affect the average citizen's wallet? To gauge the impact of the 80 per cent target on the UK population, New Scientist approached Cambridge Econometrics, a consultancy known for its modelling of the European economy. The firm used historic economic data to predict the impact of emissions reductions on prices in over 40 categories of goods and services (see "How the model works"). It compared the impact of the 80 per cent cut with a baseline scenario in which the government takes no action other than the limited emissions restrictions already in place as a result of the Kyoto protocol.

See the figures

Most of the price hikes are a consequence of rising energy costs, in part because coal and gas are replaced by more expensive low-carbon sources. The price of electricity is projected to be 15 per cent higher in 2050 compared with the baseline. In today's prices, that would add around £5 onto typical monthly household electricity bills. It will also result in higher prices elsewhere, as every industrial sector uses electricity.

But electricity and other forms of energy make up only a fraction of the price of most goods. Other factors - raw materials, labour and taxes - are far more important. The energy that goes into producing food, alcoholic drinks and tobacco, for example, makes up just 2 per cent of the consumer price. For motor vehicle purchases and hotel stays, the figure is 1 per cent. Only for energy-intensive industries does the contribution climb above 3 per cent: for example, energy's share of land and air travel costs is 6 and 7 per cent respectively.

As a result, most products cost just a few per cent more by 2050. At current prices, going low-carbon is forecast to add around 5 pence to the price of a loaf of bread or a pint of beer. The price of household appliances such as washing machines rises by a few pounds.

There is one major exception to the pattern. Airlines do not currently have a low-carbon alternative to jet fuel. Unless one is found, they will bear the full burden of carbon pricing, and average fares will rise by at least 140 per cent - raising the cost of a typical London to New York return trip from around £350 to £840.

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