Nicholas Stern presents at Bloomberg on Climate Change

Reports Rebecca Tunstall - 23rd July 2009

Nicholas Stern, the LSE professor who published the widely acclaimed Stern Review for the UK government on the economics of climate change gave an optimistic presentation at Bloomberg, in December, about a new global warming treaty.

Policy makers around the world have been making positive steps towards long term change, notably in the US where policy makers have been unwilling to commit in the past. There has also been a deepening in public awareness which provides a positive building block for the future.

Commenting on the recent economic downturn, Stern believes that the downturn could be a catalyst to accelerate investment in industry, thereby laying the foundation for growth in a “low carbon” way. Both China and Korea’s recovery packages focus directly on a greener economy. He commented that fighting climate change, deforestation and poverty are “the challenges” of this century.

With China and the US accounting for a combined 40% of global emissions their co-operation “is absolutely fundamental to this whole story,” Stern commented. The reality is that if we continue with “business as usual” the global temperature could rise by around 5°C by the middle of the next century. Such a change in temperature would have dramatic effects, he emphasised. “You’re talking about the potential movements of hundreds of millions of people and extended conflict; the destruction of where we can live: rivers change, hurricanes come, sea levels rise.” However, this is not a fine art, and many variables remain. The best scientific estimates are that there is around a 50% chance of a 5°C rise on a “business as usual” model. However, this could be reduced to around 3% with the implementation of Sterns recommendations, at the cost of 1-2% of GDP. It is important for countries to agree to cut CO2 emissions to 20 billion tonnes by 2050, from 40 billion tonnes now. This will require an 80% cut from 1990 levels, per capita, by industrialised nations.

Stern commented that for the long term goals to be met, “every sector, technology and country must be involved.” It is not about picking “winning technologies”, but more about creating a framework within which innovation can thrive. However, we must not be blind to the fact that approximately 50% of our electricity is currently produced from coal, with India and China driving demand, meaning that Carbon Capture and Storage (CCS) technology will be very important.

So, what does this mean for the future? Everyone is looking forward, expecting the Copenhagen 15 to provide a deeper understanding of overall standards and individual countries involvement. Support for carbon markets, a halt to deforestation and CCS are likely to be central to these discussions. Outside of these discussions positive steps are being taken in the wider market, most notably in China and the US, where President Obama has been using his power to influence change.

Sterns final message was that all the current initiatives were a step in the right direction but were not enough to halt our current march to destruction. He does, however, remain positive about the overall outcome, but suggesting “we can do more!”

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