Friday, December 07, 2007

Heathrow Third Terminal social cost - three times higher than Government figure

The Environmental Audit Committee on December 4 heard Friends of the Earth and WWF say that

The figure for the economic cost of carbon emissions — the future cost of climate change - being used by the Government to justify developments like Hathrow's third terminal - is nearly three times lower than Sir Nicholas Stern recommended.

Stern cites a figure for the social cost of carbon in 2000 of $85 per tonne of CO2 equivalent.

Using DEFRA's exchange rate, Friends of the Earth calculated that that equates to £53 per tonne of CO2 equivalent.

But DEFRA has introduced a new concept — "the shadow cost of carbon" — and puts the 2000 value of that at only £19, which is nearly three times lower.

What does this mean?

It gives us a social cost of carbon emissions in the Heathrow consultation of just £4.8 billion.

If DEFRA and the Department for Transport had stuck to Sir Nicholas Stern’s figure, they would have put the cost at more than £13 billion.

That would have stopped in its tracks the proposal for a third runway at Heathrow.

Although carbon emissions are rising year on year — and have risen since the Government came to power — they have given the green light to one of the very projects that will stop them meeting their own targets.

The cost to the environment and, as Sir Nicholas Stern pointed out, to the economy will be huge.

1 comment:

John Mashey said...

A question I ask my British friends about Heathrow runway 3:

Everybody believes Peak Oil will hit in the next 10 years, or if you believe T. Boone Pickens, hit last year. or

Given that higher oil prices -> higher jet fuel prices, is there anything in the government documents that models the likely effects on demand for air travel if the prices go up?

If I understand right, it's ~2020 or so before this is done.

In general, one might want to think hard about *any* major infrastructure investment that will take 10+ years or so: assume higher fuel prices: does that investment make sense or not?