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Immediate climate action is the only sensible economic choice, says Lord Stern

Date
22 July 2015
Immediate climate action is the only sensible economic choice, says Lord Stern

LONDON: The cost of inaction on climate change greatly exceeds the cost of action – and the case is stronger today than it was 10 years ago, when the Stern Review was published.

These findings come in the latest paper published today by Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment.

The paper ‘Economic development, climate and values: making policy’ builds on the Stern Review, first published in 2006, which defined climate change as “the greatest market failure the world has seen”.

Now, Professor Stern calls for strong policies to address what he describes as a growing opportunity: “The rate at which some clean energy technologies have been developing is much quicker than the Stern Review expected,” he underlines. “An excellent example of the dynamism of this kind of structural change is the progress made in solar photovoltaic energy installations.”

The evidence for this is compelling. Last year was a boom year for solar, with IRENA stating solar photovoltaic prices have fallen by 80% since 2008 and are expected to keep dropping. This year, a report by the institute Fraunhofer ISE stated that solar will be the cheapest form of electricity in many regions of the world in the next 10 years.

However, greenhouse gas emissions have continued to grow significantly since the first release of the Stern Review.

CO-BENEFITS

While the international community has agreed to keep the global warming increase under 2 degrees Celsius based on pre-industrial levels to avoid the worst effects of climate change, Lord Stern says to achieve this bold policies must be implemented now: “There is increasing recognition that many of the measures and policies to mitigate climate change by reducing greenhouse gas emissions have multiple economic co-benefits, beyond avoided climate change impacts, that have not been formally accounted for in the estimates of costs by the Stern Review and the IPCC. Perhaps the most important of these is the benefits of reducing local air pollution from emissions of fossil fuels, such as coal and diesel.”

The World Health Organization estimates that air pollution was responsible for approximately 7 million deaths worldwide in 2012.

As Professor Paolo Vineis, Chair of Environmental Epidemiology at the Imperial College London, stressed in our briefing paper on the links between climate change and health, “climate change interacts with air pollution. Typically, soot (black carbon) aggravates the increase in temperature due to greenhouse gases.

“In addition, there is an interaction between temperature and pollution on human health, for example on the respiratory tract – such as chronic obstructive pulmonary disease, because of the interaction of different exposures. Sometimes, the overall effect is unpredictable”.

AMBITIOUS RESEARCH

Even if the price of clean technology is dramatically falling, research in this field is still a key component. As our technologist Dr Peter Curley wrote in a recent blog, there are still many challenges such as intermittency of supply and storage limitations.

Lord Stern highlights the rising opportunities for low carbon technology, while stressing the need for immediate climate action: “The Stern Review estimated that stabilization of atmospheric concentrations of greenhouse gases at between 500 and 550 ppm of carbon-dioxide-equivalent would cost the equivalent of about 1% of global GDP per year.

“However, allowing concentrations to reach 550 ppm now seems to be too dangerous, and it is desirable to set a limit of no more than 500 ppm to have a reasonable chance of avoiding a rise in global average temperature of more than 2°C.

“I believe that meeting this more demanding target could be achieved for an equivalent annual investment of no more than 2% of global GDP, and possibly for much less.”

The cost of climate action is therefore relatively cheap – and even more so compared with the huge costs of inaction.

Earlier this year, The Climate Group CEO Mark Kenber remarked: “Innovative business leaders can also turn climate change into a valuable opportunity, by supporting a successful outcome at COP21. If we combine the scientific impetus with the economic benefits of acting on climate change, there’s even less reason to delay action. Because action saves money – and inaction costs money. A lot of money.”

Lord Stern concludes his paper calling for a “transition to a low carbon economy, […] a path of development and growth that is very attractive in its own right: cleaner, quieter, more efficient, less congested, less polluted, more bio-diverse and so on.

“And in addition, and fundamentally, it carries much less climate risk. It does require investment and change. It will involve some dislocation. But it seems a very sound and attractive strategy.”

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by Ilario D'Amato

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