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Last Updated: Monday, 30 October 2006, 11:33 GMT
Climate costs: The next generation
By Richard Black
Environment correspondent, BBC News website

Sir Nicholas Stern. Image: AFP

In climate change, you always have to go back to the numbers.

The scientific consensus, as far as you can pin it down, urges something in the order of a 60% cut in global greenhouse gas emissions - it would like them today, but 2050 makes a more feasible target.

Bring in considerations of equity, and for richer nations like Britain that means cuts in the order of 90%.

Sir Nicholas Stern, in his new report, broadly endorses these figures, and the overall message is clear: richer countries must cut, and cut now.

Money must be spent not only on low-carbon technologies but on protection, especially for the most vulnerable communities, he says.

And his case to the business and economics communities, which as a former World Bank economist he is well placed to make, is that action now will cost a mere 1% of global GDP by 2050, whereas business as usual could cost up to 20%.

The overall message of the report is not fundamentally new. In its 2001 report the Intergovernmental Panel on Climate Change (IPCC) calculated costs in the same ballpark.

The acid test of Stern is whether his economist's language can bring about the fundamental shift in political and economic direction which other financial analyses - as well as arguments posited on human rights, poverty alleviation, environmental services, health and simple concern for the natural world - have failed to do.

For that, he needs to be heard and understood at all levels of the British government and, more importantly, in every other major government.

Taxing questions

Never let it be said that the current UK administration is inefficient. Its ability to generate several days' headlines from a single report is the stuff of spinmeister legend.

Thanks to the leaks, drips and deluges of Stern-related minutiae over the last few days, one can already gauge how he is perturbing the political landscape within the UK.

Trading on Singapore's stock exchange.  AP/Ed Wray
A reduction in growth now would be worthwhile, the report argues
Environment Secretary David Miliband, Conservative leader David Cameron and Liberal Democrat chief Sir Menzies Campbell have all spoken in recent days of green taxation, and of hard choices now to avoid the harder choices that lie ahead.

Currently, none of these figures make tax policy.

Green taxes have a lot of support within environmental circles, but from the policymaker's perspective there is a major flaw; if they are succesful, revenue goes down.

We have seen this in microcosm in London with the congestion charge, which affected drivers' decisions more than the analysts predicted, meaning that less money was raised to spend on public transport as the Mayor intended.

Expand that situation to a national treasury which has to allocate taxation money to schools, hospitals and pensions, and the problem becomes clear.

Taxing income and sales, on the other hand, should produce rising revenue so long as the economy is expanding.

This is perhaps the reason why no country in the world bases its taxation system on resource use and polluter payments; many tinker at the fringes, but green taxes are not the major player which environmental groups would like them to be.

Is Gordon Brown going to break the mould? He has shown no signs of it yet.

Business costs

For the moment, Tony Blair remains the final arbiter of British policy.

And while he warns of "catastrophic" consequences of climate change in one breath, in the next he can say, as he did at the Davos economic forum last year and again last week, that no climate action will be taken which damages business.

There are two big problems here. One is that Mr Blair is mistaking "business" for "the economy"; the other is that he is neglecting the trans-generational nature of climate impacts and solutions.

Burned rainforest. Image: BBC
An end to deforestation is advocated in the Stern report
Business is not the only driver of a healthy economy. It is affected by war, disease, storms, global events: even (if you live in north Africa) by plagues of locusts.

Stern's fundamental message is that business as usual is doing a certain amount of harm to the economy - not too much now, but much more later unless things change.

If a mild pinprick for business now will save it from wholesale cauterisation later, we surely need a level of politics rather more subtle than a simple ban on moves which are "bad for business".

Green paint

Journalists and wonks treated by the Whitehall PR machine to early drips of Stern have made much of the report's likely impact on the world stage.

That's not surprising, as those journalists and wonks are British, and we just love to see ourselves painting the world green as we once covered it in pink.

On the international stage, getting Stern accepted and acted upon faces four major problems:

  • continued resistance within the US to the scientific consensus
  • the reluctance of major developing nations to accept any constraints on their economic growth
  • the absence of global economic drivers which will make it more profitable, say, to invest in clean coal technology over conventional plant
  • in democracies, parties advocating any degree of economic pain typically fare poorly

If those arguments look familiar, that is because they should be; they were major obstacles to climate action even before the Kyoto Protocol was born almost a decade ago.

They are as real today as they ever were; and until we see politicians the world over prepared to campaign on a platform of pain today in exchange for a smaller reduction in jam tomorrow, the jury must be out on whether the Stern report will bring any change to the international climate field.


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