Action on climate will help, not hurt economy – Stern Review

Acting now to curb greenhouse gas emissions will cost the world considerably less than paying the price of uncontrolled climate change later, the world's first major assessment of the economics of global warming has found.


A central message of the long-awaited Stern Report is that radical action to cut carbon emissions now will preserve rather than undermine economic growth in the future, preventing a major drop in living standards worldwide.

Under a business-as-usual scenario the global market will shrink by between 5 and 20%, with a figure at the higher end of the scale more likely, said the author of the review Sir Nicholas Stern, formerly chief economist of the World Bank.

Losses were calculated by adding up the costs of drought, floods, falling crop yields, the spread of tropical diseases, malnutrition, rising sea levels, and falling fish stocks as oceans are acidified by the CO2 they absorb.

Costs would be highest for developing countries because of their warmer climate, heavy reliance on climate-sensitive agriculture, and difficulties adapting to climate change because of a lack of resources, said Professor Stern, who has published extensively on developing world economics.

Putting the world on track towards a stable level of atmospheric greenhouse gases would substantially reduce the most extreme risks and cut probable costs, partly because “the damages from climate change will accelerate as the world gets warmer.”

Human activity has already raised atmospheric greenhouse gas concentrations from a level equivalent to 280 parts per million CO2 before the Industrial Revolution to 430ppm today. If emissions continue unabated greenhouse gases will rise to at least 550ppm by mid-century and then continue to grow.

The report recommends 550ppm as a realistic stabilisation level to aim for, with lower reductions carrying excessive risks and deeper cuts judged too expensive.

There is now no way of stopping the build-up of greenhouse gases over the next decade or so, but stabilising them at around 550ppm by 2050 will cost countries an average 1% of their GDP.

“This is significant, but is fully consistent with continued growth and development,” the report states.

Greenhouse gases could be brought down to this level by a combination of measures including:

– reducing demand for emission-intensive products and services by putting a “price on carbon” through green taxes, regulation and cap-and-trade schemes

– developing low-carbon technologies

– cutting energy waste

– addressing non-energy contributors to global warming e.g. from deforestation

Changes in land use, which mainly boil down to chopping down forests, account for around 18% of greenhouse gases, and were singled out in the report as a “relatively cheap” means of mitigation. Together with agriculture and emissions from waste non-energy emissions account for over a third of greenhouse gas emissions, an important but often neglected source as policy focuses on carbon emissions from industry.

Launching the report, foreign secretary Margaret Beckett said: “There are people all over the world who still believe somehow that there would be a trade-off between economic growth and climate security.

“I think this report knocks this on the head by showing that the real threat to economic growth comes in fact from an unstable climate and the insecurity that will create,” she told reporters.

The report, which was published just days before international talks aimed at establishing a post-Kyoto agreement begin in Kenya, emphasises the need for international cooperation and the fact that acting in a coordinated way will substantially reduce the costs of action for everyone.

The UK could use the Nairobi talks to press for an international to replace Kyoto, which runs out in 2012. Such an agreement could include US, China and India which are not parties to Kyoto but which are crucial to cutting global emissions.

The Stern report counters the US administration’s main concern regarding an international agreement on carbon cuts, which is that such action would harm the economy, Margaret Beckett said.

“The nature of their concern has been exactly the concern that this report is set up to deal with,” she said.

“The question that is concerning countries all over the world is ‘do we have to sacrifice our growth if we are to tackle this issue.’ And the answer is ‘no you don’t, but actually you will sacrifice your growth if you don’t tackle this issue.”

Sir Nicholas Stern said:”There is still time to avoid the worst impacts of climate change, if we act now and act internationally. Governments, businesses and individuals all need to work together to respond to the challenge.

“But the task is urgent. Delaying action, even by a decade or two, will take us into dangerous territory. We must not let this window of opportunity close.”

Goska Romanowicz

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