Stern publishes new report outlining a global plan to combat the growing threat of climate change
Professor Lord Stern
Wed 7 May 2008 – British economist Nicholas Stern, now Lord Stern, has published a report that updates his landmark 2006 review of the economic impact of climate change. He says the developed countries will need to commit to GHG reduction targets of at least 80% by 2050 and in an uncomfortable message to developing countries, Stern says that they too will have to commit to setting binding targets of their own by 2020.
The report, Key Elements of a Global Deal on Climate Change, has been co-authored by a group of experts from academia and the private sector, and outlines a series of key proposals for achieving a global deal on cutting greenhouse gas (GHG) emissions in the lead up to the UNFCCC 15th Conference in Copenhagen at the end of next year when a post-Kyoto agreement must be reached.
Putting the scale of the climate change problem into context, the report bases its strategies and cost calculations on a target of 500ppm CO2e (the measure of atmospheric GHG concentrations, which cause the rise in global temperatures and climate change) compared with a figure of 550ppm in the earlier Stern Review. “Subsequent evidence has indicated the position is more risky than [previously] assumed. Emissions, for example, are growing faster than the IPCC trajectory that was used in the Review,” it says.
By 2050, eight billion out of a world population of nine billion will live in what is currently termed the developing world. It is not in these countries’ national interests, says the report, to allow developed countries to take the lead on combating the effects of climate change and then wait to act. Countries with strong emissions growth such as China and India will need to plan to limit and reduce emissions within the next ten to twenty years. “For this they will require global cooperation, and they are unlikely to be able or willing to achieve these ambitious reductions without substantial technological and financial support and opportunities to innovate, and ultimately export, low GHG technologies.”
The report says effective action requires:
•Global emissions to fall by at least 50% relative to 1990 levels by 2050, in order to limit the grave risks associated with severe climate change. Emissions will need to decline by less than 20GT per annum in 2050 to less than 10GT over the following decades to fully stabilize GHG concentrations near or below the critical 500ppm threshold (in 2005, GHG emissions are estimated at 45GT);
•Global average per capita emissions that will – as a matter of basic arithmetic – need to be around 2 tonnes(T) by 2050 (20GT divided by 9 billion people): this figure is so low that there is little scope for any large group to depart significantly above or below it;
•Agreement by developed countries to take on immediate and binding national targets of 20% to 40% by 2020, and to commit to reductions of at least 80% by 2050;
•By 2020, demonstration by developed countries that they can deliver credible reductions, without threatening growth, and that they can design mechanisms and institutions to transfer funds and technologies to developing countries;
•Subject to this, a formal expectation that developing countries would also be expected to take on binding national targets of their own by 2020, but benefit from one-sided selling of emissions credits in the interim;
•Fast growing middle income developing countries with higher incomes will need to take immediate action in order to stabilize and reverse emissions growth, including sectoral targets and, possibly, earlier national targets; and
•A commitment by all countries, regardless of targets, will need to develop the institutions, data and monitoring capabilities, and policies to avoid high-GHG infrastructural lock-in.
To put the 2 tonnes global annual average per capita figure into perspective, the International Energy Agency estimates that in 2005 the per capita emissions were 19.5 tonnes in the US, 7.5 tonnes in Europe, 3.9 tonnes in China and 1 tonne in India.
For emissions to have been reduced to around 2T per capita in 2050, says the report, most of the world’s electricity production will need to have been decarbonized, while emissions from sectors like transport will need to have been cut sharply. “The importance of technological innovation in delivering this transformation can hardly be overstated.
“Different policy frameworks will be required for different technologies at different stages of development. This will require a major scale-up in public R&D on a global basis, support for demonstration projects, global efficiency or emissions standards, and new public-private partnerships to share risk efficiently.”
The report also says putting a price on greenhouse emissions “should be a central pillar” of mitigation policy and the world should aim for an international cap-and-trade system for three reasons:
•Effectively manages the risks of dangerous climate change by imposing an absolute limit on emissions;
•Efficiently reduces the costs of action; and
•Equitably generates private sector financial flows to developing countries (around $20-75 billion per year in 2020 and $50-100 billion per year by 2030), which can be used for low-carbon development.
Sector benchmarks, it continues, may also be “a good way” of incorporating international airline and shipping emissions into the global deal.
“Climate change is a present reality and a major risk for future generations and yet emissions continue to rise,” concludes the 56-page report. “The reach and complexity of climate change is unparalleled: it has the potential to affect billions of people and is subject to major risks and irreversibilities. The fundamental message of this paper is that urgent action is both necessary and possible. The risks associated with GHG concentrations are clear, even if the job of persuading public opinion still has further to go. It is equally clear that pragmatic steps are available across a range of policies which can make a material difference. The technologies and the policy mechanisms required are known and within reach at a manageable cost. By contrast, delay is both risky and expensive, helping lock the world into higher concentrations of GHGs and high-emissions technological infrastructure.
“All countries need to plan credible emissions reduction policies now, in order to avoid substantial risks to future generations. Global emissions must peak soon and then approximately halve by mid-century. The challenge now is how such reductions should be delivered.”
Former UK prime minister Tony Blair said: “This is an excellent report. It is absolutely right to stress the urgency of the situation and that the concerted action necessary requires a new global deal. Copenhagen is only 18 months away. Every opportunity between now and then must be taken to put in place the core elements of the post-Kyoto framework. I believe we can and we must break the deadlock, starting with the discussions at this year’s G8, which is why I intend to continue to work for a new global deal, and set out in June how that might be done.
“Meanwhile, as ever, Nick Stern and his team have produced a compelling analysis and strong policy recommendations which should be compulsory reading.”
Lord Stern is currently IG Patel Professor of Economics and Government, at the London School of Economics (LSE) and Chair of the Grantham Research Institute on Climate Change and the Environment