Low carbon is the "growth story of the future", says economist Lord Stern
- 05 December 2015
PARIS: The low carbon transition is “the growth story of the future: full of innovation, creativity, ideas, investment opportunities,” says Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment, in The Climate Group’s exclusive Climate TV interview.
The Professor of Economics and Government is known in the climate action world for his Stern Review, first published in 2006, which defined climate change as “the greatest market failure the world has seen”. Recently, he published an upgrade of his review finding that today the cost of inaction on climate change greatly exceeds the cost of action.
“If you want to be part of the growth story of the future, that’s where you should focus your attention,” remarks Lord Stern. “You will not only find the big demand growth would be there: you’ll also find as you get more energy efficient you cut back on your emissions; you are going to make more money in the process.”
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Speaking in Paris at the end of the first week of negotiations for COP21, the professor looks forward to the post-2015 climate agenda and how finance can spur the decisive shift toward a low carbon economy. “In large measure it means financing for US$5-6 trillion per annum of infrastructure,” explains Lord Stern, “and doing that in a way which is clean, low carbon, sustainable and climate resilient.
“That is something that is entirely possible, but it would need a scaling up both on the investment side – which needs good policy – and on the finance side of that investment – which means bringing down the cost of capital by putting together the right kind of combination of financiers, including the multilateral and national development banks.”
The Paris agreement, to be finalized next week, will contain climate actions that will formally start after 2020. The next five years then, will be crucial to implement the agreed goals and increase the determination needed to tackle climate change. “In the post-Paris world, we are going to have to ramp up our ambition,” says Lord Stern, “because within the Paris agreement you get important steps in a good direction, but they're not strong enough.
“In ramping up that ambition, it’s critical to be clear of the direction of travel, to have clarity on decarbonizing our global economy by the end of this century, clarity on innovation and how we are going to encourage that to happen, and clarity on finance.”