Evidence heard in Public Questions 1 - 32


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Oral EvidenceTaken before the Energy and Climate Change Committee on Thursday 21 June 2012

Members present: -

  • Mr Tim Yeo (Chair)
  • Dan Byles
  • Dr Phillip Lee
  • Laura Sandys
  • Sir Robert Smith


Witness: John Ashton CBE, Outgoing UK Special Representative for Climate Change, gave evidence.

Q1 Chair: Good morning. Thank you very much for coming in.

John Ashton: Good to be here.

Chair: This is a unique session for the Committee. We have not had a valedictory report from anyone, certainly not from someone who has been doing the job you have been doing for the last six years. I have explained to Members that you would like to make a short opening statement and, after that, I would like us to have as discursive an exchange as we can. Do not feel constrained by our questions. If you want to raise topics we have not raised directly, you will not be out of order in doing so, and we may raise a fairly wide range of topics. Before you say what you wanted to by way of introduction, let me just say you are very welcome here and I have much enjoyed the interaction we have had with you, both formally and informally, in the last few months.

John Ashton: Thank you, Chairman. The enjoyment has been mutual. Thank you very much to the Select Committee for the invitation to come today. It is good to have an opportunity to draw some conclusions after six years as a special representative for climate change serving three Foreign Secretaries. Only by deploying the assets of foreign policy can we hope for success on climate change. We need to build the political conditions for a binding global climate agreement in 2015, and that means using diplomacy to shape the conversations in capitals now that will allow negotiators in 2015 to have sufficiently strong mandates to make ambitious commitments to each other.

On the other hand, failure to deal with climate change would amplify already dangerous stresses arising from food, water, energy and security. That poses a potentially unmanageable combination of systemic risks to the security and prosperity of our country. So climate diplomacy is now core business for diplomats, as the FCO has recognised. That was the basis for my role there, acting as a direct extension of the will of the Foreign Secretary to drive up ambition in the response to climate change. We are way off track at the moment for keeping climate change within 2°C, but the FCO has shown how a foreign-policy-led programme of climate diplomacy can catalyse transformational change in other countries. It has built an asset that is widely admired, and it played a critical role in establishing the conditions for success at Durban last year against prevailing expectations.

The implications of this experience have not yet been fully understood in our national debate, including in parts of Whitehall. Britain is a global player on climate change. We can have far more influence than is genuinely recognised. Our role will be critical for success in 2015, and an important source of strength for us is the consensus across the political spectrum at home on the level of ambition required. A lesson of the past six years, however, is that our influence globally depends on what we are doing at home. What used to be seen as purely domestic policy is now a critical part of our foreign policy and the issue here is not emissions, it is the security and prosperity of 60 million British citizens. Some people ask, "Why should we make such a big effort when it is what bigger economies do that really matters?" Those people miss the point. We certainly do need to raise ambition elsewhere in order to protect our security and prosperity and our diplomacy can accomplish that, but only if we are willing to do ourselves what we are asking others to do. You can’t ask people to follow if you stand at the back.

Some people also say, "We should slow down lest we damage our competitiveness by getting too far ahead of the field". That is just plain wrong. The danger isn’t that we will get too far ahead. The danger is that we are already being left behind as the world’s most dynamic economies successfully harness the potential of low-carbon growth to drive innovation, modernise infrastructure and reduce vulnerability to oil and other price shocks. So internationally we need to resolve the false choice exacerbated by the current crisis between economic security and climate security. We need to use our diplomatic assets to win the argument that a rapid shift to a low-carbon growth model is essential for security and prosperity, not an intolerable risk to competitiveness, jobs and growth. In Britain, we must redouble the effort to build a low-carbon economy that works and that is seen to work. Politically we need to address this not as a distraction from our current problems, but as part of the solution to them. We need to do all of that at the forefront of a European effort, both to make a reality of low carbon growth and in leveraging the diplomatic assets of our European partners because, for all its current difficulties, the EU remains the world’s largest integrated economy and a coherent European effort will have far more impact on the world than the individual efforts of individual member states.

Finally, in my six years in the role, successive Governments have struggled to come up with a comprehensive statement of the UK’s national interest in relation to climate change based on a thorough assessment of the risks and opportunities for our security and prosperity. Climate has been seen too often simply as another green issue. That is not a criticism, because the challenge is genuinely difficult, but it really is time now for a serious national debate about this. A good way to open that up within Government and to build a stronger connection between how we handle the domestic and foreign policy choices would be for the National Security Council to look at how we might deal with our own exposure to the systemic risk arising from food, water, energy and climate insecurity. If there is one lesson of the last four years, it is surely that systemic risks are best addressed before they become systemic crises. Thank you.

Q2 Chair: There are a lot of issues there, and we will come back to them as we go through, but could I just start with your own role. As you say, you have been doing the job for six years and for three Foreign Secretaries. I have two questions. First, has the work that you have been able to do in this rather unusual position raised the level of priority attached to climate change issues by the Foreign Office generally? I must say my experience of a number of posts abroad is quite encouraging because the level of commitment that we have seen is, I think, extremely welcome and does much credit to the office. The second question is: do you think it is important that someone else should continue this work with a similar position in the future?

John Ashton: I think fundamentally the challenge has been a cultural challenge. It always is when you ask a big institution with a long and proud history to do something new or something different. Looking back over the six years, I think the question of climate diplomacy was part of a wider debate that went to and fro between, if you like, what you might call modernisers and traditionalists within the Foreign Office. Every organisation has a similar debate in changing times. What I drew encouragement from at the start of that was that the younger generation of diplomats simply did not see that as a debate that needed to be had because intuitively they understood that modern diplomacy encompassed climate diplomacy, and of course, lots of other things too, but climate diplomacy had to be core business for the Foreign Office.

Time will tell. Cultural change is always difficult but I think that, by the time I left this role two weeks ago, my impression was that there was a critical mass of support for the notion that this is now core business for the Foreign Office. That will be tested by multiple challenges and distractions in coming years. I think the question of the role that I happen to fill is important in that regard. I think we showed over that time that you need a role of that kind. You need a way of enabling the Secretary of State, who is, of course, always having to deal with a broad and fast-moving agenda and respond to crises. If the Secretary of State wants to pay sustained personal attention to an issue, the idea of having a special representative is quite a good one. I am delighted to say that in my last conversation with William Hague, just before I left, he told me that he had decided to retain the role. So my understanding is that there will be a successor.

Q3 Chair: The effectiveness of the successor and the value they can add will depend, of course, on their own interests and commitments very heavily. It is not like just saying, "Okay, let’s find a new First Secretary for Seoul", or something like. It is rather crucial. It has to be someone who has a high level of understanding of the issue.

John Ashton: Yes. Of course you need to have an understanding of the issue and you need to have, in a sense, a vocation for it because it is not a sort of classical Civil Service role. You are a member of the Civil Service, but in the end it is political role. Because it is a personal appointment and it is the extension of somebody else’s political will, it is a political role. So you have to be ready to adopt not a party political persona, but a political persona. The most interesting thing for me personally about the last two weeks, my first two weeks outside the role, which I didn’t anticipate, was that it feels rather different being somebody else’s representative. That is a mantle that you have around you 24 hours a day, seven days a week and then, all of a sudden, you are no longer a representative and you have to remember what it is like to be you. That has been a learning process.

I think anybody who comes into the role needs to come into that with open eyes. It is intensely rewarding, but it is also an enormous privilege to be trusted in that way and, of course, it is a huge responsibility as well. Knowing something about climate change is important, but climate change is such an all-embracing topic. It reaches into so many areas of expertise-economics, diplomacy, the law, foreign policy, every aspect of domestic policy-that you can’t encompass in a single individual all of the expertise there is now available about climate change. It is much more important to be able to understand where you need to tap other people’s expertise but to have the core sense of what foreign policy is about and how to use foreign policy not just in reactive way, but how to exert influence proactively and strategically.

Q4 Chair: Clearly it is has been an outward-looking role, internationally I mean, and we will explore some of those issues in a moment. I think from where we sit as a Committee, we are aware that the climate change issues cut across a great many areas of policy, in domestic policy as well, and some Departments are very much more engaged with the debate in a constructive way than others. I repeat that we think the Foreign Office is one of the ones that is clearly engaged in the debate. I would try to encourage you to be as indiscreet as possible, but there was a memo that eventually reached the public print that the Foreign Secretary sent recently inside Government. Do you see the Foreign Office as also being influential in the internal debate in Whitehall about how urgently we should up our response to climate change?

John Ashton: I do and I think part of the challenge for the Foreign Office is that it has to be comfortable and confident exerting that influence, because this is not just a point about climate change, it is a wider point about the nature of living in a world characterised by interdependence. We used to have quite a clear dividing line between foreign policy and domestic policy and what interdependence has done is to collapse that dividing line so that all of a sudden a lot of areas where we thought we were just making domestic choices become part of our foreign policy, like it or not. So we had better try to understand the effect that it has on our ability to achieve our goals of foreign policy. The goal of foreign policy, I guess, is to maintain the external conditions in which British people can enjoy a prospect of security and prosperity. How we deal with our domestic energy choices for example is germane to that. So I think it gives the Foreign Office a chance to influence but, yes, an additional responsibility to assess those international implications and to be a voice in the domestic debate, pointing them out and trying to make sure that there is an alignment between the domestic imperatives and the foreign policy imperatives.

Q5 Laura Sandys: I wonder what you thought were the greatest threats to our current leadership role and what you felt the role of public opinion was. We have just discussed this issue about being connected to the public opinion in the UK, and I just wondered what you feel that mood is and how do you feel it is looking going forward. Do you feel that the Foreign Office has a great enough connection with what is going on domestically?

John Ashton: Health warning: I have never been an elected politician, so all of you are in a better position to judge public opinion than me. Having said that, I think the greatest risk to our diplomacy at the moment is the question of clarity of purpose at home. When there is an international perception that we have clarity of purpose, that gives us a huge multiplier for our diplomatic influence, and when there are questions about our clarity of purpose, the levers that you pull start to come off in your hands.

This is a key moment in the journey from a traditional high-carbon economy to a modern low-carbon economy in this country. There are some very big choices being made now and coming up over the next few years. There is a perception at the moment, rightly and understandably I think, that a lot of those choices are debated, but we need to make sure that what comes out of the choices presents a clear picture of a country that is moving in a very clear direction towards a low-carbon economy. I think what happens over the next year or two on electricity market reform, on carbon capture and storage and on renewables is all part of that.

One of the insights that diplomacy can bring, that the Foreign Office can bring-and I mention this in my statement-is that at the moment a lot of our peers and competitors are not way in the distance behind us. They are getting well ahead of us. Korea invests 2% of GNP on laying down the infrastructure for a low-carbon economy. China is investing enormously in all forms of renewable energy, in a rapid process of replacing internal combustion engine vehicles with electric vehicles, in building what will be probably the world’s first ultra modern smart grid. I have had meetings with people in China on all those subjects in the last few months. Germany is undergoing what they call an energy shift whose consequence will be a dramatic acceleration in the deployment of renewable energy and also in energy efficiency in Germany. Japan is doing the same thing. There was an announcement earlier this week that the Japanese Government is about to introduce a new feed-in tariff scheme, the result of which is expected, according to Nomura, to be the installation of 4 gigawatts of new solar generation capacity over the next three years. So I think this perception that we are kind of in danger of getting too far ahead really needs to be challenged and, if we challenge it successfully, our diplomacy will be more effective.

Q6 Sir Robert Smith: Specifically, when we were looking at China you suggested the UK could be doing more on the CCS to try to help encourage China. What sort of things do you think the UK should be doing in this regard?

John Ashton: Despite the rapid rate of deployment of other forms of electricity generation technology in China, coal is going to remain a very significant part of their energy mix for a very long time and that has a very clear consequence for climate change globally. It means that, unless there is a strategy for accelerating the deployment of carbon capture and storage in China, there will not be a credible strategy for keeping climate change within 2°. It is that simple and that stark. So if, as we say we do, we want to keep climate change within 2°, we have to have that strategy. We have worked with China through our diplomacy over the last few years to encourage the formation, if you like, of a pro-carbon capture and storage constituency in China. CCS is on the radar in China now in the way that it wasn’t six or seven years ago and many people at that time said would be impossible by now. I think there is interest in China, to some extent thanks to British diplomacy, that sees CCCS as an opportunity in China’s own national interest to drive innovation and to get Chinese technology into new global markets. From the point of view of climate change, that is not a bad thing. It is a very good thing, but I think there is a lot more we could do to be building on that.

We initiated with the Chinese an EU-China project called the Near Zero Emissions Coal Plant in 2005 when the UK had the presidency of the EU. My impression is that the momentum of that has rather flagged, but it gives us a basis for building now a much more ambitious conversation on CCS in China. If we tap into the assets that are available in China, that can help us domestically on CCS as well, because China is producing more affordable engineering and technology graduates than any other economy in the world. Its capacity to deploy technology cheaply and rapidly is better than that of any other country in the world and therefore its capacity to drive a demonstration stage technology down the cost curve is greater than other countries. That that is why some of the UK companies or UK multinationals with interest in the CCS value chain have themselves been trying to build partnerships with China, because it is a value to them to tap into that capacity to drive technology forward quickly. Of course, there is a balance between the competitiveness factor and the incentives for co-operation, but I think perhaps in Whitehall there has been a little too much emphasis on the competing with China perspective and less on the opportunities that can come from enhanced co-operation.

Q7 Sir Robert Smith: What is interesting on that efficiency of their ability to get costs out of engineering, one of the people we met out there, when asked about the worry of losing intellectual property, said, "Well, the benefits obtained by the cheaper engineering outweigh the fact that you’re going to start to lose the value of your intellectual property and you’ve just got to come up with new ideas and take advantage of their efficiencies".

John Ashton: I was working from outside Government before I came into this role on the ideas that led to the Near Zero Emissions Coal co-operation between the EU and China and listening very carefully to private sector voices in Britain and in Europe at that time. That is invariably what they all said, that the benefits outweigh the costs and, anyway, the window of technology leadership is going to close very rapidly whether we like it or not. So it is much more attractive for us to build partnerships with China, to get access through those partnerships to the Chinese market, even if we need to share some of the profits from doing that. I think that is probably all the more true now than it was five or six years ago.

Q8 Dr Lee: Clearly you make, dare I say it, the obvious point that it comes down to China curbing its carbon emissions. Five hundred million people in China live on $2 a day and do not have regularly access to electricity or guaranteed access to electricity. The fabric of that nation is predicated on 8% GDP growth annually. The reality is we are relying upon that remaining an autocracy aren’t we?

John Ashton: I am not sure I follow the full sequence of that.

Dr Lee: My point being that 500 million people want a better life. They plug into the internet if they are allowed to, to view websites if they are allowed to. They see in existence a world that they crave. In fact, the top 10% desperately want to be western in their lifestyles, as evidenced by their consumption patterns. If you do not deliver as a Government, then you are going to have social strife, and there is evidence of that in western provinces already. The problem is, if you have social strife and breakdown and formation of a democracy over decades, which is probably the likely sort of scenario, at that point I would suggest that getting carbon capture and storage up and running comes second to putting food on the table and giving people plasma screens.

John Ashton: I have been much struck in conversations I have had over the years in the China by the recognition there, which is, I think, stronger than the recognition here and in many other European capitals, that posing the problem in that way is a false choice. There was a very interesting and quite significant report that was published a couple of months ago under the sponsorship of the current Vice Premier of China, Li Keqiang-the person who is apparently designated about to become Premier in the leadership transition-jointly with Bob Zoellick, the Head of the World Bank, called China 2030, and it is a kind of prospectus for the next stage of the Chinese economy.

It is a fascinating document because it was written in China, it was produced by the State Council in China, and it says that the growth model that has brought us so much success over the last generation has now outlived its usefulness and, if we continue to cling to it, it will very rapidly-I am paraphrasing, it is not World Bank drafting-drive us over a cliff and that our national interest lies not in waiting for other economies, but being in the first economy to make the successful transition to an ultra low carbon, ultra resource efficient, much more resilient economic model, including with much more diversity in our energy system and by using key energy technologies to drive innovation. I can’t remember whether it mentions CCS explicitly, but I think it does from memory.

Certainly you can find a lot of people in decision-making positions in China, not only in Beijing, who have escaped from, if you like, the shackles of that false choice. As for China’s political development, I think it was Karl Marx who first noticed or observed that economic change has political consequences and no country has been changing economically faster than China over the last generation. Yes, of course, there are enormous political challenges and challenges in their political system. I suspect they will be largely resolved from within rather than from outside. So, whatever others may wish for, they are probably not going to have a dramatic influence on those choices. I think they may have some, but not a dramatic one. I think it is also enormously in our interests that China succeeds and, if it really is setting out to build a low-carbon resource efficient economy, we need it to succeed.

Q9 Dr Lee: On that I would not disagree at all, but I think you are being rather optimistic about 500 million people playing ball here. We have enough problems in our current political circumstances where we have a Treasury that is bearing down on DECC and, dare I say it, probably having a word with the FCA as well because it has seen that going green is going to slow down the growth that we all need. So if you scale that up to a country like China, we do not have 500 million people living on $2 a day in Britain. It is a much bigger picture of difference between the rich and the poor when the poor are in significant numbers. They switch off electricity in a province because they know they have to hit their carbon targets. Try doing that in Merseyside. The whole thing is predicated upon a ruling elite controlling things at the moment, and that is my worry, as someone who wants to see them go down a low-carbon route. Of course, because we saw the evidence of it in China, all the pictures on the screen, they get it more so than, dare I say it, most of the politicians in this country get it. I do not have a problem with that. It is just they do not have a democratic mandate and they have 500 million people who are living in abject poverty from which you get avian flu because they live with chickens. Come on, let’s look at the reality on the ground. I do not see how it stays together and we need it to stay together to deliver the low-carbon targets, I would suggest.

John Ashton: I think the question you are posing is more a question about the political challenges ahead for China in relation to all of the decisions they need to make, rather than specifically a question about whether they will meet their carbon objectives. What I would say-you put that in terms of reading across from the situation here to the situation in China. I think it is dangerous to make that read-across. I do not spend an enormous amount of time in remote Chinese villages. I do occasionally go to them, but I think there is a willingness to be pragmatic about economic choices at all levels in China, which is quite extraordinary compared with, if you like, the more ideological flavour that one picks up in economic decision making in some countries, including parts of our own establishment. Deng Xiaoping famously said that it doesn’t matter whether a cat is black or white, as long as it catches mice. I think that is the watchword for China’s economic choices. I don’t want to be over-optimistic. I think there are huge challenges about whether they will succeed in building the kind of economy we have been talking about, but they are not challenges that come out of the carbon problem. They are challenges that come out of the problems arising from China’s political evolution.

Q10 Dan Byles: I would just like to come back on this whole debate about green versus growth. There is a real concern among certain sections of industry and society that that is the choice. I think it is no secret that-no, perhaps that is the wrong phrase. The press have been speculating that some elements of the Treasury might share that assessment. Now, I understand your point that other countries are doing this as well, it is not just us, but is in the case, Ernst & Young have said, that UK, for example, is the top destination in the world for offshore wind investment at the moment. Offshore wind is a very expensive way of generating electricity. We have had it suggested to us by a number of investors in the energy sector that perhaps the UK is taking quite a big risk in that we are embedding structurally higher energy costs into our economy by leading the pack on wind and that in 15 years’ time the cost per kilowatt hour of offshore wind will be a lot lower than it is today. There is an argument that says, why are we doing it now? Why are we leading the pack and embedding our economy with higher-cost energy? Why don’t we wait 15 years and find another way to plug the gap in the meantime, a cheaper way, and then in 15 years’ time we can build all the offshore wind farms we like, and make use of all that wonderful wind resource that we have at a much lower cost per kilowatt hour going forward?

John Ashton: The debate about offshore wind and the wider electricity debate in this country is full of traps and distortions that arise from the particular interests and perceived interests that different players in that debate have, and you know them better than I do. You have much more expertise on these issues than I do, but just a couple of observations from where I have been sitting. You put it in terms of, are we taking a risk? If you try to assess the risk of making that choice, you also have to compare it with the risk of not making that choice and what happens if we do not make that choice. For example, do we want to end up with a less diverse energy system that is much more dependent on gas? There are widespread predictions that, whatever happens with shale gas, the price of gas in this country is going to rise not fall and indeed, if we lock in too much gas without carbon capture and storage, we will not be able to meet the carbon budgets that we have made legally binding on ourselves through the Climate Change Act. Those are a legally binding reality that we have to accept.

On the other side, I think you have to consider also the benefits of being an early mover. Early mover status in different technologies is always hotly debated, but we have very attractive circumstances, it seems to me, from which to be an early mover in offshore wind. We have huge traditional expertise in marine engineering that has come from the offshore oil and gas industry. We have one of the world’s best offshore wind resources. If we do, in the meantime, lock in a lot of power generation from other technologies, then the opportunity will diminish to be a leader in that field. There are other economies that I think are also going to have to move very aggressively in the direction of offshore wind.

I have mentioned Japan already, but I think Japan is a very interesting case in point. Japan also has one of the world’s best wind resources as an offshore island. Currently I think the proportion of renewables in Japanese electricity generation is something like 1%, possibly just a little bit under 1%. Many people, if you go to Japan, tell you that there has been a kind of artificial suppression of the scope for renewables. A consequence of less nuclear in Japan-and after Fukushima there is going to be less nuclear than would have otherwise been expected-will be more renewables. That is why they have passed their new feed-in tariff legislation. We want British companies to be able to have a stake in that rapidly growing business. I would bet a lot of money on this being a very rapidly expanding sector globally, not just in Britain, and the first-mover advantages in the end will outweigh the risks and costs.

Q11 Dan Byles: As a national, I would suggest we are betting hundreds of billions of pounds that you are correct.

John Ashton: I am not sure this is entirely equivalent to going into a betting shop and putting money on a horse.

Dan Byles: It was suggested to us by a senior investor at Citi Group that Europe is taking a $3 trillion futures punt on future costs of fossil fuels rising significantly.

John Ashton: That perhaps tells you more about how the City have been accustomed to view investment choices than it tells you about the real significance of this landscape of risk and opportunity for the country. We need to keep the lights on, we need to meet our carbon targets, we need to attract hundreds of billions of pounds of investment into our energy system, come what may, and we need to make grown-up, well-informed choices about where they are going. You could describe any choice, whatever you decide, as a punt and, if you wanted to scale it up to European level, you could have a larger number and describe that as a punt, but I am not sure it advances the debate very far.

Q12 Dan Byles: Of course, it is those same City investors, though, who need to attract that investment. So if they are wary of the economic advantages or benefits of what we are doing, we might struggle to get the investment we need.

John Ashton: No, it is, and that is why I think the core challenge in setting out the policy framework for investment in the electricity system in this country is building confidence among investors that we know what we are doing, that we have a coherent plan. I think the Energy Bill, the EMR, is the first step in that but we have a long way to go before we can really establish that confidence. For example we need to get beyond a kind of beauty contest between different technologies and start telling a story about how the technologies on the supply side and also what we are doing on the demand side, investing in a smart group that has active demand management and a very aggressive programme of energy efficiency, all fits together. We have at the moment pieces of jigsaw on the table, but they have not yet been fully put together. Again, that is not a criticism, because it is a very challenging thing to do. It is the biggest reform of our electricity system for a couple of generations.

Q13 Dan Byles: Slightly unrelated, you obviously travel the world and speak to Governments all across the world, so what is your current view of nuclear and where it might sit not just for the UK, but obviously we have the German decision following the Japanese incident? Our Nuclear Inspectorate has said that is not an impediment for going ahead here and we are apparently going ahead there, although we seem to be struggling to find anyone that can build them. What is your sense globally of the position of nuclear now?

John Ashton: That is the question that I was probably most often asked in my six years as a climate change envoy, and it is certainly the one that I most often ducked, because the politics of nuclear energy are so emotive in so many places, and if you start to take a strong public position, you become typecast on it. I don’t have any ideological-

Dan Byles: I am not really asking for your opinion. I was asking for your understanding of other people’s opinions.

John Ashton: I am just trying to give you a context for what I am about to say. I don’t have any ideological inhibitions about nuclear power, provided it is done in a way that is genuinely safe and where there are safeguards against proliferation. Then, just as a passing observation, I would say that over the years all of the serious proliferation worries that we have had around the world have had their roots in an allegedly civil nuclear programme that one or another country is trying to put in place.

Two observations in answer to your question; one is that nuclear is certainly not, under any circumstances, going to be a big part of the solution to the climate problem globally. The reason for that is you can’t build enough new nuclear capacity quickly enough. China has the world’s most ambitious programme of new nuclear build, I think 20 gigawatts over the next few years it wants to install, but even when it has done that and even, at the same time, when it is being as aggressive as it is being on renewable energy and on energy efficiency, it will still have an electricity system that is over 70% coal. So it just makes the elephant in the living room a little bit smaller. It is still an elephant, if you like, of coal.

I am not an expert on the economics of the nuclear industry, but domestically the issue is clearly one of cost and cost effectiveness, as I see Ed Davey was saying in the Financial Times the other day.

Dan Byles: Thank you very much.

Q14 Dr Lee: Often when I look at energy policy and climate change policy and then I look at political realities and the vested interests, I do sometimes wonder whether we would be better off deciding, "Right, this is where we are, this is what we are doing", and then sending like people you out to work with that model, as in, "We’re going to go nuclear to 20%", or whatever it is. Do you think it would be better for Britain to decide where its interests lie, which incidentally happen to be a low-carbon future? We are fortunate in this, I think, that our best interests are served by low carbon so we do not have over-subsidise as such. Do you sometimes get frustrated at the fact that there seems to be dither in terms of energy policy, for instance, over the last 10 or 15 years, that the political "realities" come into play; where if we were perhaps a bit more strategic-and I keep banging on about the absence of strategic thinkers in Whitehall, period-about things it would make your job and your successor’s job a lot easier?

John Ashton: The short answer to your question is yes. I think we have, over the years and over successive Governments, missed the opportunity to be as strategic as we could have been in this area. There was an editorial in the Financial Times the other day about energy policy and it said, "Really, what we should do is let the market sort it out. All you really need to do is put a carbon tax on and stand back and it will come together as if by magic". That is an example of an ideological position that gets in the way of strategic thinking in this area. The fact is that this is a market that is beset by market failures. Climate change itself is a market failure. Energy insecurity, arising from insufficient diversity in the energy system, is a market failure. Vulnerability to price shocks is a market failure because the market has no way of pricing in the value of making yourself less vulnerable as an economy as a whole to price shocks. So I think all of those are reasons not to be interventionist just for the sake of being interventionist; that is an ideological trap as well, but for being very clear about the kind of energy system that we are trying to build in order to address those market failures. We are not there yet and we have taken too long to get as far as we have. I would agree with that.

Q15 Dr Lee: For example, our defence spending, I don’t think, reflects our energy policy and our climate change policy. There is just no joined-up thinking. The best thing we could do is to use our energy more efficiently. So we could do this. We could have a close relationship with Norway and Iceland with the interconnectors. We could build a lot of nuclear power stations, and then our defence policy would reflect the fact that we have to defend those interconnectors and the gas terminals at either end. So we would have a navy and that would be the quid pro quo with Norway, for example. But, no, what we do is we dither around and then we worry about Iran kicking off and the likelihood of other Gulf states going the way of Syria. This Shi’a-Sunni thing is playing itself out. Yet we don’t seem to put the two together and we don’t seem to go, "Well, okay, what fundamentally does Britain need to defend and protect, and how do we make that defendable, i.e. how do we become less dependent on the Qataris, less dependent upon Russian gangsters and everything else?" I get quite frustrated because we doing a draft Energy Bill at the moment that seems to be completely in isolation from the Strategic Defence Review. In terms of the National Security Committee, or whatever it is called, "Well, what are they doing?"

John Ashton: I think I would be uncomfortable going back to the Foreign Office and arguing that nuclear policy in Iran and the situation in Syria are not first order foreign policy challenges, but at the same time I have a lot of-

Dr Lee: But they reflect our worry about the instability of an area of the world that we are dependent upon for our energy.

John Ashton: I was about to say I have a lot of sympathy with the intent behind the point you are making and, as I said in my statement, we now have a National Security Council. I think it is a major step forward in our machinery of government for foreign policy and it is an opportunity to look, in a more strategic and systemic way, at some of these risks. The situation you are describing is another example of how domestic and foreign and, in this case, defence policy no longer have clear dividing lines between them. We need to adapt to that new reality. I think the nub of it, to come back to what I said, is that it is a very fundamental responsibility of Governments, in return for the taxes that taxpayers pay, to ensure the conditions for food, water and energy security, and those conditions break down globally in the absence of climate security. I think it is high time in this country that we had a systemic look at the implications of that nexus of risks, if you like, for both national security and for prosperity. A good place to start that would be the National Security Council.

Q16 Dr Lee: What comes first, do you think? Is it where do we get our energy from? Is it how do we use our energy, and I include in that food? What comes first? There is a sense with the draft Energy Bill at the moment that they are trying to juggle lots of balls and you can’t actually work out what the priority of the draft Energy Bill is. Is it to deliver security of supply? Is it to deliver a low-carbon future? Is it to be part of an industrial policy that allows UK plc to have future? I cannot quite work it out, and my fear is that it is actually a blancmange. It is just, "We’ve got to try to please him, him, him and him", and it ends up being what it is, which is a bit of a dog’s breakfast at the moment and incredibly complex-so complex that it is dissuading investors already. So what should come first in your mind? Is it, "Right, we’ve got to make sure that we have energy? Forget the affordability, just make sure that we have energy"? Where do you think we start from? I worry about this because I don’t know whether it starts from foreign policy or defence policy or from climate change policy. Where does it start?

John Ashton: I think, in a sense, it is a question more for Ministers of DECC, but just on the basis-

Q17 Dr Lee: Okay, I will change it. In your travels to other countries, where are they starting from?

John Ashton: That is the angle that I was going to come to at it from. I think it is very instructive to start by looking at what some of the most dynamic economies in the world are doing. How are they approaching these dilemmas? They are trying to escape, exactly, from false choices. They are trying to say, "How can we find a way of keeping the lights on and making sure that people who have limited disposable income can afford lighting and heating and basic energy needs for themselves, while at the same time being part of an effective global response to climate change that drives innovation and low-carbon value creation in our country?"

That is, as I understand it, the debate that is taking place in countries such as China and Korea. It is the debate that, to some extent, is taking place in Germany nearer to hand and in Denmark where they have just passed an extraordinary new law that provides for wind energy to provide 50% of Danish electricity by 2020, which has cross-party support and comes with a full financing plan. But that has come out, I think, of a very careful debate inside Denmark that tries to align all of those things. Governments have to be able to walk and chew gum at the same time. It is not enough to say, "We’re just going to focus on the single objective", because otherwise the political pressures are high.

Q18 Dr Lee: Just one final question; I do not know whether you can answer this question or not. In your travels, predominantly the people you have been dealing with, what is their background? Are they classicists or engineers?

John Ashton: Gosh, I have dealt with an awful lot of people. I am a physicist by training.

Dr Lee: You are a rarity, I think, around Whitehall.

John Ashton: This is maybe just the chauvinism of physicists, but I think Whitehall would be a better place if there were more physicists.

Q19 Dr Lee: I guess that is my point. The other day I had a representative in from a company in my constituency, Petrochemicals. I told him I had been slogging through the draft Energy Bill prior to seeing him and he said, "Oh, it’s simple, isn’t it? Just build nuclear and insulate". Have you seen the draft Energy Bill?

John Ashton: I haven’t read it word for word, but-

Dr Lee: I thought to myself the clarity of that seems to be missing around Whitehall and I wonder whether perhaps the countries you allude to, who seem to be ahead of us, may have a different education background among their officials. Is that possibly the case?

John Ashton: Yes. I am not sure about that. I think equally there is a danger in having too many engineers in a decision-making process because all decision-making processes have to land in one place and that is politics. You have to build narratives that can engage people, that can inspire people. You have to be able to assess and balance different interests in your society. That is complex and I am always a little bit cautious of false simplicity, particularly if it comes with a certain sort of impatience attached to it, because that seems to me to be the thin end of a wedge that is quite anti-democratic. We live in complex societies and you can’t escape the complexity, and, when you do try to cut through and have clarity, it is important to be clear about the right thing.

The Climate Change Committee is on the record as having said that we need to have essentially a carbon-neutral electricity system in this country by 2030, and that is what you need in order to be compatible with the role that we can play in a 2° response to climate change. That is a very helpful piece of clarity. I am less bothered about the different proportions of different technologies that will make that up. Clearly you want diversity and you want to make sure that, where there are commercial opportunities for this country because there are rapidly expanding global markets elsewhere, policy is constructed so as to capture them.

There is a statistic going around at the moment that suggests that low-carbon goods and services in Britain, that part of our economy is growing at something like 4.7% a year. I think that was the figure I saw. That is very impressive. That tells you something about where to be putting some of that policy effort. You need engineers, you need physicists-certainly you need physicists-and you also need economists and social scientists but, above all, you need politics and politics that work so that people will back the choices that Governments make in the end.

Q20 Chair: Can we just move back internationally for a moment? Before we get on to the EU and the UNFCCC, just on China one last point. The Chinese leadership is at a pivotal moment now and people have talked about the possibility that they will make a decision to become more engaged in international diplomacy, and that will obviously have an implication for climate change policy, or they may simply conclude that this is the Chinese century and flex their muscles and start to throw their weight around a bit internationally. I am not concerned, certainly for this discussion, about the defence implications of that, though they may be considerable. Just on the climate change policy, it seems to me that they are committed to moving to a low-carbon economy despite the incubus of all this coal that they are going to burn and the problem that poses if we don’t have CCS. But do you think it might paradoxically almost be helpful if they chose the "let’s throw our weight around a bit" route, because that might force the international community to start thinking more about climate change and more about how quickly we need to move to avoid lagging behind what they are doing?

John Ashton: The question calls to mind a conversation that I had probably four or five years ago now in the margins of one of the UN climate meetings with a senior Chinese official-it was before Copenhagen-who came to us in the British delegation and said, "What on earth can we do together about the United States?" Then he explained why he said that, which was that he was concerned that if the deadlock, which there was at the time on climate policy in the US and which there still is, wasn’t quickly resolved in favour of a more aggressive approach to building a low-carbon economy in the US, then that would damage China’s national interest. It would mean that the global response to climate change would be too slow.

If you are suggesting a stronger Chinese voice in the global conversation saying, "We need, in our national interest, an effective 2° compatible response to climate change", I think that would be helpful. In a sense that is what we saw in Durban. When the Chinese Government in Durban, at the UN negotiation last year, made it clear that it was willing to acquiesce in a project to build a global, comprehensive, legally-binding deal with, by implication, legally-binding commitments for China, even knowing that that was not something that the United States is enthusiastic about, I think-I remember, looking at that- one felt the US coming out of the shadow of the political cover provided by the US position.

Having said that, I think there is a kind of deeper question. If you look at historical examples of countries as they become stronger in the international community and the effect that that has had on global stability, it is not surprising that people asked questions about whether a rising China is going to be a China that is more inclined to co-operation or more inclined to being assertive and trying to impose its will on others. It is not for me to assess China’s national interests perhaps, but, again, I come back to what I said about interdependence. There is not a route for anybody to securing fundamental national interests now on the basis of assertiveness. We have to make co-operation work. We have to make multilateralism work.

That is part of the wider significance of the UN climate negotiations. I firmly believe that if we can make them work, that will be very good for the prospect of multilateralism more generally. If they fail, that will be extremely damaging, possibly terminally damaging, to the idea of a world where we are solving our shared problems on the basis of agreed rules. I really do think we need China to be investing in that co-operation and multilateralism rather than in trying to impose its will, because in the end it will find that that is just a populist course. It does not lead to the outcomes that China itself needs.

Q21 Chair: Would the most effective way for us to have influence over these evolving issues, particularly in terms of what China might choose to do and the concern that I am sure we share about lack of progress in the US-certainly a lack of political progress, there is a bit more encouragement on the business side-be through the EU rather than just bilaterally or perhaps a combination of the two? Looking at the global situation, the EU is still a very big chunk of world GDP and, therefore, if it spoke with a clear single voice on the climate change issues, it would surely be an equal partner for the time being of China.

John Ashton: I think that is absolutely right, as I said in my opening statement, and let me give you a practical example. The Chinese Government 18 months ago announced that it was designating five provinces and eight cities, encompassing 350 million people, as low-carbon pilot zones; in other words, with a licence to experiment with radical low-carbon growth and development policies. That was a Chinese decision in China’s national interest but it came out of a diplomatic dialogue between the EU and China, which in turn had been catalysed by British diplomacy with that outcome in mind.

That was an example of how I think we can have much more leverage if we work with our European partners. Particularly under current circumstances, beset as we are by difficulties, there is a tendency in the EU to undervalue the assets that we have built up, the collective institutional assets to shape the direction that the global economy is taking. A very good example of that, a little known example, lies in the question of setting technology standards. One of the key bits of architecture of the single market is that we single technology standards in the EU, and so we have a very technocratic process to set those technology standards. What has happened, without any deliberate effort on the part of the EU, is that other economies, including China, now tend to simply import European technology standards and apply them themselves, which in a sense gives them a kind of partial connection to our single market and therefore drives down prices of the technologies in Europe.

As I say, we have not really tried to use that proactively as a diplomatic asset, but it is the kind of thing that we could get much more mileage from if we did. You could view the whole climate problem as a challenge to set global technology standards in the shift from a high-carbon economy to a low-carbon economy. So it is a central issue, and the EU has to be a core part of our diplomacy. I have no doubt about that. You say the EU, and people immediately think Brussels. Yes, of course there is a Brussels dimension, but there is also a very important dimension that is working with Governments in other European capitals.

I think the German experience is going to be absolutely critical in the next stage of this process because the decision to phase out nuclear power in Germany is transformational in the German economy. Germany is the world’s fourth largest economy in its own right. So more renewables in Germany is going to drive down global prices and drive down prices in Britain. They are going to need some offshore wind and access to our offshore wind probably in the North Sea. They will be better able to achieve their goals in the energy shift if, by working with us and other partners, they can embed that in European decisions; for example in grid investment.

Q22 Sir Robert Smith: On the EU question, are we fully appraised in the UK of when to go through the EU route and when to go through the direct bilateral route?

John Ashton: Can you just expand? I am not quite sure-

Sir Robert Smith: Because the EU is a single market, it is quite often a surprise in this country that we are not directly involved necessarily in all the international negotiations because obviously in a single market you have to have one agreement that involves the whole EU. Do you think as a country we have fully taken on board just what that means?

John Ashton: I think as a country probably not. Trying to have an evidenced-based debate about that in the context of such an emotional national debate about the EU and Britain’s place in Europe is quite a challenge. Institutionally, we probably have been quite good at that. We are probably better at that than some of our European partners because we are quite well plugged in to European processes, and we are quite good at making the connection between conversation in capitals and conversations in Brussels. It doesn’t always penetrate the wider national debate and I think that is partly a challenge for the others who are taking part in the national debate, but perhaps also a challenge for the institution of Government to communicate better into the national debate about that. That example of low-carbon zones in China was a very good example of how it all came together coherently. It took a lot of effort to bring it together coherently, but the lesson was if you make the effort, the reward can follow. Sorry, I am not sure whether that is a complete answer to your question.

Q23 Dan Byles: While we are on the EU, obviously the economic elephant in the room that we haven’t discussed is the whole eurozone crisis that is going and the euro crisis. How worried are you that that is going to start spilling over into Government cutting feed-in tariffs and subsidies, which, of course, is already happening but in a fairly uncontrolled way; not as part of the sort of thought-out process? Does it represent a risk to the whole decarbonisation project?

John Ashton: To that and many other things. Would you permit me just to add one further point to my answer to the previous question and then come back to your question? I think what really matters is that we have a culture in this country, a political culture and a culture in Government, that is comfortable looking at, if you like, the opportunity side of our membership as a European Union, to use the EU to get extra leverage and, as a multiplier, to be creative in that and to be comfortable with that. The problem is that if the national debate becomes too defensive and too emotive, then you tend to get a much more inward-looking-it becomes harder to be creative and confident in getting the full value out of our European membership.

I think that is a problem at the moment, if I can make that observation from where I now sit, as it were, and I think the current crisis or interlocking crises in the EU dramatised that very clearly because it is clearly a dangerous crisis. It means trying to line up all the kind of diplomacy we have been talking about suddenly becomes, if I can use an extravagant metaphor, like trying to play snooker on the deck of a ship that is trying to sail through a Force 12 hurricane. I have no doubt of two things. First, if you want to have a successful global response to climate change you have to have a strong and confident European project, with a strong and confident British part in that European project helping to drive that forward.

Clearly we do not, at the moment, have a strong and confident European project. So there is a political challenge to rebuild that strength and confidence. Explaining to European citizens the value for them and for their security and prosperity in re-energising growth, in building an energy system that is fit for purpose, in modernising infrastructure-we are not the only European country where the infrastructure is in urgent need of modernisation-all of that is part of how you address the political challenge of revitalising the European project. It is a two-way thing, but I do not want to be starry-eyed about the risks that we are currently beset by. There are plenty of commentators who are taking the position that, if the current instability in the eurozone can’t be resolved, that is not just a threat to the eurozone, it is a threat to the political integrity of the EU as a whole. As someone who is concerned about climate change, I worry deeply about that.

Q24 Chair: Just moving on to the UNFCCC, because you have made some quite substantial statements about the importance of that if we are going to achieve an eventual successful outcome, it has always been plagued with frustration, and I think, even as an observer at the last three COPs, the process seems to be fraught with difficulties, although obviously at Durban it represented a bit of a move in the right direction at the last minute. Are you confident that in practice we will reach a binding agreement with a sufficiently large number of the major players through this process, or should we be looking now, at least as a possibility, at some alternative?

John Ashton: I think it is important not to see those two things in an either/or way, but let me explain that. First of all, I do not think one can assume either that that process is going to succeed or that it is going to fail, because we are not in the position of detached observers looking through a telescope at a distant galaxy. We have agency in that. Whether it succeeds or fails depends on the choices that many people, including people in this country, make. The challenge is to use that agency so we maximise the chance of success. In order to maximise the chance of success it is certainly not enough simply to send negotiators to successive meetings of that process because negotiators carry with them instructions and if those instructions are not, when you put them all together, compatible with the kind of response we need, then we will get failure.

The question is, how do you build the political foundation that the agreement needs to rest on that will allow the negotiators to have instructions that enable them to go further? That lies not in negotiation, but in diplomacy and in engagement with domestic political forces. It essentially means that you have to have enough of the players coming to the view by 2015 that the role they would need to play in a 2° response to climate change is not only compatible with but essential for their fundamental requirements for security and prosperity. That is what I meant when I talked about aligning the requirement of economic security with the requirement of climate security.

I think that political alignment is there to be built; it is available to be built. Some economies, some societies, are coming more rapidly towards that than others. I do not think any major economy is all the way there yet, but in some you can certainly see a direction. I would not underestimate the scale of the challenge over the next three-and-a-half years-I nearly said four years, but half a year has already elapsed since Durban. Durban took us through a door and it is a door we have been struggling to get through. We failed to get through it in Copenhagen. It is the right door-it leads to the right set of corridors, if you like, but it only took us through the door. The challenge now is to do the much more difficult thing of getting to the agreement that we need to get to.

There have been siren voices for a long time who have said, "This UN process is a shambles. There are too many voices. Why do we constrain ourselves in a situation where if the Solomon Islands disagrees then they can hold it up" I am not making a point about the Solomon Islands by the way, for anybody reading this later. I think that type of argument misses the point completely because this, in the end, is not about the architecture. It is about the political will that people bring to it. If you bring enough political will from enough places you can make the architecture work. It was fascinating as an outsider to see how quickly the agreement that led to the formation of the current Coalition in this country was done. There have been times in Britain when it would have been impossible to reach such an agreement even if you had 20 years in which to do it but, because the circumstances generated the political will, the agreement happened.

I have no doubt that we can make this process work if we invest in building political will. One of the greatest damages that you could do to that effort would be to say, "Actually, we need another process", because, in the end, this is a problem. It is really the only problem that human beings have ever faced that affects everybody. We need a way of talking about it and building a response in which everybody has a voice, however cacophonous that is. It is particularly important that those who are most vulnerable to the immediate consequences of climate change feel that they have a voice, feel that the world is not turning its back on them. If they do feel they have that voice then they will be an upward force on the ambition of everybody else. That is what we saw in Durban. Durban was the first time when there was a concerted raising of the voice on the part of the most vulnerable countries and that was critical in, as it were, creating the conditions that led to the agreement that we eventually got at Durban. We should learn from that and keep investing in this process.

Q25 Chair: If the political and economic leadership of the world is shifting from west to east, how do we ensure that the USA comes into this process? It would be very hard to see a genuine global agreement that does not have the active participation of the USA. What sign is there that, under the present process, we are going to get that participation?

John Ashton: I think there is no bigger problem in the whole of climate diplomacy than that one. My assessment of it is that, in a sense, it is not just a problem about where the debate in the US is on climate change. It is a problem to do with a deeper conflict in domestic politics in the US between two very different views about the US and its role in the world. The trouble is, when you have that kind of situation, you can’t resolve it just by talking about climate change. It is stuck at a deeper level.

Just two observations, though. I think the more the US sees other major economies leaving it behind, which is certainly what is happening-China now is way ahead of the US in shifting the fundamentals of its development model on to a low-carbon footing-the more that will create forces inside the US who will say, "We can’t afford to be left behind. We need to get moving here". As I say, China and the EU are both among the major economies who are now moving in a way that the US, certainly at national level is not-there are some very interesting things happening at state level and at municipal level in the US. But I think that sense of being left behind is always very powerful, whatever you are talking about.

There is another question will be one of the key questions in 2015. It is quite hard looking at this problem now to see how you could imagine securing 67 votes in the US Senate for a treaty that involved a legally binding economy-wide emissions commitment for the US. Just as it is impossible to see, in my view, how you might imagine the EU moving off the position that it has held for many years, that the global level of this problem requires legally-binding commitments. That is a genuine diplomatic conundrum which has to be resolved in some way. We have to find some way of creating the political space to deal with it and I do not have a magic solution to that problem, but I think that it is a problem that needs to be discussed. We need to find a way of building the political space.

What I would observe is that it is not unheard of for countries, not just the US, sometimes to behave, to all intents and purposes, as if they were bound by a particular treaty and to do that to such an extent that other countries are willing to treat them as if they were part of that treaty. You could say that to some extent the relationship between Norway and the European Union has that character to it. There are probably insights to be drawn from parallels of that kind as we try to build that political space.

Q26 Chair: Do you think that there may be other influences that could be brought to bear on this? We had Dave King giving evidence on UNFCCC five or six weeks ago, and he is advocating global emissions trading as an ultimate goal, as a way forward. Given the interest in America in trading of all kinds and a lot of expertise, it seems to me that they would be drawn into a system if it incorporated the big Asian economies. We have encouraging signs in Korea as well as in China. Australia may even finally get there. We have the EU. Do you think solutions to climate change that offer business opportunities to the participants from which America felt excluded by its reluctance to accept these agreements, might be a way of drawing the United States in?

John Ashton: I don’t think that will do the political heavy lifting that needs to be done and, of course, it is instructive that it was originally a US proposal that the idea of emissions trading was incorporated into the Kyoto Protocol and then into the way we constructed our response in the EU through the emissions trading scheme. The Obama Administration then, later on, tried to get an emissions cap and trade bill through Congress. You can debate how hard they tried, but the effort to get a cap and trade bill through the US Congress then did not succeed. It comes back to the question earlier about engineers.

One has to be very careful about superficially attractive engineering solutions. Whether you say, "All we need is global emissions trading", or to cite another idea that has been around for a long time, so-called contraction and convergence, I think those miss the point. We may end up with a global emissions trading framework. It would be a very good thing because it would minimise transaction costs. You would have, in a sense, a single carbon currency. Advocating a global emissions trading framework is not necessarily the best way to end up with one.

What you need to do is go back not to the diplomatic and negotiation geometry, but to the political engineering to build the political will for higher ambition. If you have a political will for higher ambition then you can encompass architectures that will embody that, but arguing for the architecture itself is not how you build that. You have to address underlying fears. Again, arising from some of the earlier debate, what are the risks to jobs and growth and competitiveness in a particular economy? That is where the real heavy lifting lies.

Q27 Sir Robert Smith: What is the relationship between the Treasury and the Foreign Office?

Chair: All the reporters have gone now.

John Ashton: Within these four walls, as it were. I think this issue poses unprecedented challenges to the way any Government conducts its business and, in particular, thinks about the economy. It does so against quite an interesting backdrop-the events of 2008 and all of their consequences. It perhaps comes back to what I was saying earlier about systemic risks. The lesson from those events is that we need to get much better at identifying systemic risks before they turn into full-blown crises. The fact that we experienced and are still experiencing the crisis that we are now in is a consequence of not having done so and clinging to methodologies, clinging to a way of thinking about the economy and the role of Government policy in the economy.

It calls for a degree of humility and a degree of pragmatism in the way our economic establishment-without mentioning particular Government Departments and I think it goes beyond Government Departments, it certainly goes into the columns of newspapers-thinks about where jobs and growth and competitiveness are going to come from in a world that is beset by increasing systemic risks. Without being more indiscreet than I would want to be, all the time there is debate in Government about economic choices. If we want to get the right choices at the end of the debate, it is very important that it is an open debate and one that it is not trapped in methodologies that have been rendered obsolete by events and one that recognises that there isn’t any single Government Department that has a monopoly of wisdom about macro-economic analysis and about the choices that flow from it to do with fiscal policy and expenditure policy.

There is a challenge for our government system generally to develop the capacity to behave in a more systemic way and to allow that open debate and to perhaps have a bit more humility built into it about the mistakes that arise from clinging to methodologies that are no longer fit for purpose. I don’t know whether that is sufficiently clear.

Q28 Dr Lee: The key part, I would suggest, of addressing climate change is changing individual choice and behaviour. One could put forward an argument that a significant part of the problem that the eurozone faces, and indeed Britain faces, is debt that was fuelled by unaffordable consumption. In the light of that, did you detect in China-because I think I certainly did-a change of position with regards to whether you measured emissions on the basis of territorial emissions or a consumption-based measure? I was suggesting going in and trying to persuade the Chinese to reduce their carbon emissions. If I were the Chinese, I would turn round and say, "Well, you keep buying the plasma screens". So who is responsible for the level of emissions in China is an interesting point. I got the impression now that between provinces there were some tensions over emissions- Guangzhou, the province in the south, was economically vibrant so, therefore, had higher emissions and so on. I wondered where you stood on whether it should be consumption-based or territorially based because in this country we had a rather entertaining evidence session where Defra and DECC were arguing and were taking a different position themselves on which measure they would support.

John Ashton: I think the emergence of that consumption-basis analysis has been helpful and illuminating in the debate. It gives you a better-informed debate if you understand. It helps you understand, of course, that this problem is part of a wider problem of interdependence. This is a globally connected economy that we are all part of. I am surprised that those countries who might feel under less pressure in terms of the international commitments they are being asked to make if the carbon accounting was done on a consumption-basis have not over the last few years made a stronger argument that we should shift to that frame of reference, if you like.

At the same time, we are where we are, and we now have a system that is based on an accounting of national emissions with a lot of institutional capital invested in that and in the methodologies of how you measure a tonne of carbon and how you make sure they are comparable, one economy to another. It would be an enormous distraction if we were now to say, "That’s not the most effective way of looking at this. We need to shift the whole system onto a consumption-based system".

Q29 Dr Lee: The problem is it is going to offshore your emissions.

Sir Robert Smith: Not if you are controlling the emissions globally.

John Ashton: If you have a closed system, then you balance the books in the end. You can balance the books by either method and you have a better debate if you can see what each method tells you. In terms of the diplomatic architecture, we chose a certain route. There is broad international consensus that that is the right route in terms of practical diplomacy and politics. I do not feel an overwhelming pressure. There are lots of pressures in the UN climate negotiations, and we have talked about some of them, but that is not one that I feel is a particularly dominant one at the moment. Of course, in terms of communication, there are benefits in either model. What matters is that the books balance in the end.

Q30 Dr Lee: Do you think the mechanism that we have now negotiated will lead to fewer obese people in America, because in essence that is what you are saying. You are saying essentially that the excess, the affluence, the over-consumption-be it of televisions or of burgers-is all part of the same system. Are you honestly saying that the system we have in place now will in time lead to a reduction in the excesses of western society?

John Ashton: First of all, I think it will still be possible to be obese in a carbon-neutral economy.

Dr Lee: But it will be more expensive.

John Ashton: It would be more expensive to be obese and one hopes that the politics of getting from a high-carbon economy to a low-carbon economy will be helpful, will be mutually reinforcing, with the public health politics of reducing obesity. One can imagine how they could reinforce each other. One sees some signs of it. In a way, that is a kind of superficial response to your question. The deeper response is, if you like, the debate about the growth model. It is interesting. Probably partly as a consequence of 2008 and everything that has followed, there is more fundamental debate now in more places, more agonising that I have seen in my entire professional lifetime, about what kind of growth model, or in some countries they would call it a development model-the Chinese talk about their development model-you want to have.

I think it is a moment of enormous opportunity because, out of that debate, you can leverage structural change of a kind that it would have been very difficult to leverage 10 years ago when everybody thought they were doing better than some of us were in reality. That structural change has to include a shift not only to low carbon but to a much higher degree of resource efficiency; an economy that is less wasteful and which does not measure waste as if it were a benefit. In areas of obesity, according to our current accounting systems-I cannot remember the figure I saw some time ago for the annual number of liposuction operations performed globally, which is quite a scary number as you can imagine-all of that counts as positive in GDP. It is economic activity, and yet it is self-evidently not a smart way to go.

There is a very legitimate debate about how we measure real welfare. I think there is another overlapping debate, albeit not the same debate, about whether we need to abandon the idea of growth at all, even adjusted growth that is more focussed on real welfare. I am not one of those people who says that this has to be done in a hair-shirt way, partly because you can now see the avenues that you can go down to avoid wearing a hair-shirt but also partly because I just do not think that is practical politics. Any political party that runs for election on a proposition that they are going to reduce the life chances and the capacity to have a good life for voters is not going to be successful. So we had jolly well better make sure that we can find a way of presenting this that avoids a feeling of sacrifice and hair-shirts. One other thing I would say about that-

Dr Lee: Sorry, are you advocating being economical with the actualité there?

John Ashton: No, I am saying that-

Q31 Dr Lee: I look at the current circumstances and think it is obvious that our lifestyles are going to have to diminish in the next 10 or 15 years, in relative terms, and I do not think that actually it does politics any good whatsoever to say otherwise and present it otherwise.

John Ashton: I am not sure I agree with that. Of course, it depends what you mean by "diminish", and that goes down to the basis of the choices that people make. A lot of people would not regard it as an improvement to their lifestyle to eat to the point that they become obese, and there is a shared public interest in encouraging that view in terms of diet.

Focusing on the difference between a high-carbon economy and a low-carbon economy, I think it is perfectly possible to imagine a low-carbon economy, a carbon-neutral energy and transport system, that does not feel like a diminishing in the sense that you are proposing it, which is all about value creation and enhancing the confidence that people have in the future and the future that is before them. A shift from liquid hydrocarbon fuels in transport to electricity in transport, a broader process, seems to me enormously exciting. A lot of this story is a story of electrification, how we use electricity to do more things in smarter ways.

I have a friend, now in his 90s, who runs a company in Taiwan called Delta Electronics, which he established a couple of decades ago. Originally it made TVs. He is a self-taught engineer and he started to read things in the newspapers about climate change. So he said, "Well, this looks interesting. I’m going to inform myself about this". So he spent a lot of time reading and listening to people about climate change. He told me, almost in these words, a light bulb went on in his head and he said, "I can see what the response to this is going to be. It’s going to be about electricity, using electricity to do more things in smarter ways, and I am going to re-engineer the business model of my company so that we can take full advantage of that".

Delta Electronics is now one of the world’s leading manufacturers of electronic goods across a very wide range of applications, and they tend to be the most energy-efficient goods in their categories. They are doing extraordinarily well. They have manufacturing facilities and research facilities in dozens of countries. Certainly there are fundamental changes, both in terms of Government policy and in terms of individual behaviours and choices, but I do not think you have to tell a story about those changes that is primarily one of diminishing rather than enhancing.

Q32 Chair: We could go on all day. I think we have covered quite a lot of good ground. We have probably dealt with the issues that are uppermost in our minds. Was there anything else that you think we have omitted to address?

John Ashton: Not that you have omitted, but maybe I could just say one other thing, because it has really struck me an awful lot just in the last year of the six years I had in the role. As an exploration, not with a clear intent, I started to make a habit of trying as much as possible to build in conversations with young people-the under-30s-both during my visits overseas and here. The people who want to have a conversation with a climate change envoy are, to some extent, self-selecting, obviously. Nevertheless, I found them illuminating, and I also found them inspiring conversations. I probably got more energy from those conversations than I did from any other kind of conversation. Perhaps I can just describe some of the conclusions that I draw from where those conversations have got to-and I intend to continue them.

I think there is a sense in a lot of countries, including this country, among, if you like, educated under-30s that business as usual is over, whatever that means-you can argue about what it means-and that they are the first generation for a very long time who, as they look as their futures, see a prospect that is not necessarily as attractive as the prospect that their parents had when they were their age. It seems to me that that change of prospect, inter-generation, is an enormously important political fact and it is not unique to traditional industrialised economies like Britain. I think it is true in countries like Korea as well, for example. How we react to that fact is germane not only to climate change, but for a revitalisation of politics generally.

They go on to say that they want to have a grown-up conversation about how to fix business as usual, how to build a more attractive prospect. They do not, on the whole, want to go to the beach or have sex and drugs and rock and roll, nor do they want to engage in single-issue fanaticism using modern social media. They want to have a wider, more grown-up conversation, but what they feel as they look at my generation is that, by and large, we are not interested in that conversation. We are too busy clinging to business as usual, either because we have a vested interest in it or because we are imprisoned by the shackles of outdated theories about prosperity and where it comes from, which is germane to the question that you asked earlier, or because we just lack the curiosity and the confidence to go outside our established comfort zones. I think that how we respond to that appetite is more important than anything else in relation to climate change.

I do not have a Twitter account. I have resisted so far. I do not tweet, but I have been on the Chinese equivalent of Twitter, which is called Weibo. This is not being boastful, because in China it is a very small number, but I think I have something like 30,000 followers on Weibo who are mostly young, urban, educated Chinese. I get that same sense from them, and it links back to that China 2030 report. We have to build something better, and that something better involves a low-carbon economy, and more resource efficiency and more resilience. That generation understands that a credible conversation about the future is not credible, and will not be credible, unless it is credible about climate change. That is a source of political energy that needs to be tapped much more effectively than it has been so far, it seems to me. I do not know how to do it, but perhaps the place to start is in legislatures around the world and so that is why I wanted to use the platform that you have very kindly given me to make that point.

Chair: Thank you very much. That was a very stimulating discussion, and I wish you well in your next career move. I hope that we can keep in touch. I am sure your observations on the climate change scheme will continue to be of great interest to this Committee.

John Ashton: Thank you very much indeed to all of you. It has been a pleasure, and I would love to stay in touch.




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