Nicholas Stern – 22nd May 2009
Rather than a speech, this session was in the format of a question and answer session between Stern and the host, followed by questions from the audience. At one point the host asked Stern about his own personal environmental record, I’ve not recorded this as it was a pointless question.
In the first part of his talk Stern referred to himself as an academic who happened to have spent 13 years working in public policy – he was the chief economist at the World Bank and then he worked at the EBRD before working on his review of the economics of climate change for the British government.
Q. Why is climate change an urgent problem?
A. Stern mentioned his connections with the developing world. He has worked in China and India. There is one particular village in Uttar Pradesh that he has known for 35 years, he goes back to visit at least once per year, more recently twice a year. He can see the effects of climate change which are already affecting them, the changes in rainfall that threaten their agriculture.
He spelled out some possible changes that may work towards a solution, for example paying 50% more for electricity, taking less flights, driving less. He cited reasons for optimism, for example the Obama administration. Obama is taking a long term view.
Q. Why should we start to mitigate climate change now, can’t we wait until later?
A. There is a ratchet effect, we are constantly adding to the stock of GHGs in the atmosphere. Currently CO2e is at 435ppm. In a few years it will be 460ppm. We have to make sure that emissions peak within the next 7-9 years, and keep the stock of GHGs below 500ppm CO2e, then bring it down from there.
If we fail to make a deal in Copenhagen, we create uncertainty in investors. Uncertainty in what they think the price of carbon will be, and uncertainty in the regulation over the next years. Hence investment in clean energy etc will be scared off. So there are two areas which provide a reason to hurry: The science and the politics.
The credit crunch is providing reasons for delay on acting on climate change. However, it should not, it should be seen as an opportunity to change. “A crisis is a terrible thing to waste”.
If we cut emissions by 50% in 2050 compared to 1990 levels, there is a 50% chance of more than 2C temperature rise, maybe more than a 50% chance. This is a very risky position to be in, due to our bad starting point. We should have woken up to the danger 30 years ago.
In terms of Copenhagen, it is wiser to go for something where you have a good chance of agreement. This is a political and economic judgement to make. If humanity starts out on the path of reducing emissions by 50% by 2050, this will be a very steep learning curve. With luck, 10 years of aiming in that direction will be the right time to raise our sights. We have an opportunity to throw away.
Q. What are the reasons for optimism?
A. The Climate Change Act and the Climate Change Committee in the UK is a great step forward. We can look forward to a greater sense of community when acting on climate change, making the necessary changes to our lifestyle.
Q. What temperature rise do you expect by the end of this century, if there is a deal on climate change and if there isn’t?
A. If there is a deal, then realistically 2 to 2.5 Celsius, under 2C is unlikely. Stern refused to answer what he thought the temperature rise would be if there was no deal.
Q. What happened with the carbon trading scheme, wasn’t it a failure?
A. The carbon trading scheme is young, only 3 to 4 years old. There were some crass errors made – too many permits issued. Nevertheless, Europe has built up expertise in trading.
More trading schemes should be set up. There is no other way to get finance to developing countries other than selling permits for carbon. There should be a price floor and tough conditions.
Q. Isn’t economic growth driving us to disaster? Shouldn’t the rich world head as rapidly as possible towards a steady state economy?
A. For a few decades growth in the developing world will be fundamental to lifting them out of poverty. In the rich world, to try to stop growth would undermine agreement on climate change, it would be politically unacceptable.
Growth will not continue forever. As Woody Allen said, eternity is a very long time, especially towards the end. But for much of this century the issue will be whether we can deliver low carbon growth, particularly in the developing world. Can we grow for the next few decades and beat this problem? Yes we can.
Q. Should we as consumers use our power to boycott companies that are not doing enough?
A. Yes, consumers should boycott where it is justified. But this is a powerful weapon and it should be used selectively to punish the worst behaviour. For example, a company that lies about its environmental credentials or a company that funds propaganda to justify its bad environmental record.