Royal Society of Edinburgh Facing up to Climate Change Lecture Global Action on Climate Change: the Road to Cancun Lord

Nicholas Stern Kt FBA IG Patel Professor of Economics and Government, London School of Economics
24 August 2010 Report by Steve Farrar Despite the gloomy outcome of the Copenhagen Summit, Nicholas Stern is optimistic that an international agreement to tackle climate change could emerge within the next two years. The man whose team produced the Stern Review on the Economics of Climate Change in 2006 argues that the existence and effectiveness of such an agreement will be determined by political will. Lord Stern argued that there are two defining challenges of the 21st Century managing climate change and overcoming poverty; failure to tackle one spells failure tackling the other. If climate change is not addressed, the environment will become too hostile for development. But if addressing climate change requires strong constraints on living standards in developing countries in the next two or three decades, it will be impossible to create the necessary international coalition. This interrelation underpinned Lord Sterns argument. Lord Stern outlined the basic climate change argument, as he recognised that not everyone has understood the magnitude of the problem. Global warming is being caused by the increasing concentration of greenhouse gases in the atmosphere, currently 435ppm (parts per million) of carbon dioxide equivalent. These gases are being emitted faster than the planet can absorb them and so more energy is being trapped, driving up temperatures. These higher temperatures lead, in a fairly complicated way, to climate change. Each year about 2.5ppm carbon dioxide equivalent is being added to the atmosphere, and that rate is increasing. Given that the current level of concentrations is around 435ppm, over a century, concentrations will rise to around 750ppm or more if no action is taken to curb greenhouse gas emissions. This will result in perhaps a 50 per cent chance of a temperature rise of 5C above preindustrial levels, a mean temperature not known on the planet for some 30 million years. The climate change that will follow might lead to southern Europe becoming like the Sahara Desert, to many lowlying parts of the world being inundated by the sea, and to the collapse of the Amazon rainforest. We cannot predict the temperature increase or its consequence with certainty; this is about risk management. But we should recognise that the risks are potentially immense. Lord Stern warned that perhaps billions of people will need to move. Were talking about prolonged, severe global conflict, he said. These are the kinds of stakes were playing for. The Stern Review of 2006 underestimated many of those risks, he argued. Greenhouse gas concentrations are building faster than the economists had expected, the ability of the planet to absorb them is deteriorating more rapidly than had previously been understood, and some of the impacts of climate change are manifesting themselves earlier than anticipated. Lord Stern said the magnitude of the response to this challenge has to correspond to the magnitude of the risk. Currently, around 47 billion tonnes of carbon dioxide equivalent are emitted per year. Lord Stern argued that to give humanity a 50:50 chance of limiting the temperature rise to 2C above that of the mid 19th Century, this total would have to be reduced to well below 35 billion tonnes per annum by 2030, and well below 20 billion tonnes by 2050. Per capita, this means cutting todays level of seven tonnes to four by 2030, and to around two by 2050, taking projected global population increases into consideration.

The good news is that ways to achieve these goals are being developed rapidly. Lord Stern said the reductions could be produced by energy efficiency, low carbon technology and by stopping deforestation. This amounts to what he described as a new energy-industrial revolution. Lord Stern said that previous industrial revolutions had involved an initial surge of investment lasting two or three decades. He predicted that the transition to a low-carbon economy that an energy industrial revolution will entail could be a very dynamic period. Whilst this is motivated by a necessity to cut climate risk, the result could be a dynamic growth surge for 30 years or more. That could be particularly attractive to developing countries, where the challenge of overcoming poverty is so important. If we dont get growth, we wont get a coalition, Lord Stern said. And when we achieve low-carbon growth, it will be more energy-secure, cleaner, quieter, safer and more bio-diverse; in other words much more attractive than current forms. And any attempt at high-carbon growth will kill itself from the very destructive environment it would create. The signs are encouraging. Lord Stern observed that the flow of low-carbon ideas in the last few years in fields such as transport, architecture, power generation and agriculture has been extraordinary. The focus of the economic policy side of climate change management is on market failure. Lord Stern said that markets failed when they did not reflect the costs of actions and that there is a big cost to the emissions of greenhouse gases. He argued that emissions are being systematically subsidised because they are not being priced. To get the markets to work well, Lord Stern said there has to be some kind of price for carbon. The matter is not just about carrots and sticks, but also about responsibility. Reducing risk by changing behaviour is a responsible response to the challenge of climate change. We, as John Stuart Mill argued, form our views of what it right and responsible by careful discussion of the issues. In summary, we know the magnitude of what we have to do, we know the areas in which we have to act, we can see the technologies to deliver this, we can see the economic policies that can support this and we know enough to get started. What is missing, Lord Stern said, is the political will. This subject tests our rationality as human beings to think through the consequences, Lord Stern said. If we wait, as in the narrow evolutionary model, to see the full consequences of our ways, it will be too late. On a national level, helping people understand the magnitude of the risks they face is of fundamental importance. Lord Stern said it is also vital that they understand that actions to reduce the risks can have attractive aspects. He said that the price of some things will go up and that electricity, for example, might cost 15 to 20 per cent more. But there will also be the many economic and social benefits described, as well as the redirection of climate risk. Lord Stern said that many countries are increasingly recognising the new industrial revolution carries big advantages for whoever gets there first. For instance, there has been a remarkable shift in the debate over tackling climate change in China. On an international level, climate change has become a major political issue over the last five years in a way that was not true five years ago. Lord Stern argued that there have been some positive aspects to the United Nations Climate Change Conference in Copenhagen last year, not least the fact that more than 100 presidents and prime ministers attended. But that should not obscure the fact that the meeting was cold, chaotic, quarrelsome and disappointing. Lord Stern said the Copenhagen Accord was much less than many had hoped for and much less than could have been achieved. He said there had been serious misunderstandings, bad listening and, what he described as crazy, an attempt by rich countries to tell the poor countries what to do. But he said that Brazil, South Africa, China and India are no longer just looking for the rich countries to act but are instead asking what they might or should do themselves, considering that they are among those who will probably be hit first and hardest by the impact of climate change.

Whilst Lord Stern said the Copenhagen Accord was fragile, it seems to be less fragile than many had feared at the time. If you look at the detail of the commitments, of the ideas and the groups that have been convened, we are moving forwards, he said. When we left Copenhagen in December we did not know that the emissions intentions for 2020 envisaged in the Accord and to be submitted by the end of January 2010 would in fact be submitted. In fact, all major countries have presented their intentions and 85 per cent of emissions are covered. The next United Nations Climate Change Conference, to be held in Cancun, Mexico, later this year, should aim for a political agreement, Lord Stern argued. The following conference, in Durban, South Africa, in 2011, might aim for a treaty. The animosity and acrimony that was evident at Copenhagen is still there, fuelled by a sense of injustice amongst developing countries. But Lord Stern said there has been, at least the beginnings of, a political shift in those countries to take the future of the planet into their own hands. Lord Stern said that individual responsibility has an important role to play, not least in building and influencing the political will to tackle the issue. This is a challenge for academics, journalists and politicians, amongst others. If we all decide its too difficult, that people cheat, that the US wont give up its cars or China give up its coal, then we will be absolutely right, Lord Stern said. The only way forward is to describe analytically and carefully what we can do and why its attractive. He recognised that we cannot know with confidence whether sufficient political will can be generated, but argued it is vital to try. QUESTIONS A member of the Scottish Green Party challenged Lord Sterns assumption that it is possible to get economic growth without producing climate change, an argument put forward by Professor Tim Jackson. Lord Stern responded by emphasising the importance of breaking the link between consumption and emissions and rejecting Professor Jacksons conclusions. Such a breach is vital, since even if growth stopped now, annual emissions are already at a dangerous level. A supporter of the world development movement asked whether it is really possible to pressurise elites to act in an ethical manner. Lord Stern said recent announcements by the Chief Executive of Walmart about only buying renewable energy, eliminating waste in stores and demanding the corporate giants Chinese suppliers act in a more green fashion showed the power of consumer influence. A Glasgow University academic asked Lord Sterns opinion of James Hansens proposal of a 100 per cent dividend carbon footprint tax as a way of putting a price on carbon. Lord Stern replied that he regards Dr Hansen as a great scientist, but is less enthusiastic about his grasp of economic policy. He is in full agreement with Dr Hansen about a price on carbon and that a tax was one way, but there are major issues on what to do with the revenue.

A vote of thanks was proposed by David Sugden, Professor of Geography at the University of Edinburgh and Chair of the RSEs Facing up to Climate Change Inquiry Committee. Professor Sugden said: You have shown us the magnitude of the problem and given us a vision of a world thats better and fairer. He added that there is a huge opportunity for Scotland to play its part in addressing the problem.

Opinions expressed here do not necessarily represent the views of the RSE, nor of its Fellows The Royal Society of Edinburgh, Scotlands National Academy, is Scottish Charity No. SC000470