Nicholas Stern’s new paper on Climate Change: 8/10 on economics; 3/10 for politics (and the science is pretty questionable, as well)

December 9, 2008

     By Duncan Green     

We’re looking for a climate change researcher (interested? – applications by 15 July), so I’ve been mugging up a bit by reading Nicholas Stern’s new paper, Key Elements of a Global Deal on Climate Change. His university, the London School of Economics, has just set up the ‘Grantham Research Institute on Climate Change and the Environment‘ (which will inevitably be known as the ‘Stern Centre’) and is bound to be a major voice in the next few years. Tony Blair’s also making climate change a priority – have a look at his new paper.

So what does Stern say about the way the climate change debate is going? Two of the most notable findings are:

· Avoiding the risks of dangerous climate change requires that global greenhouse gas emissions peak within the next fifteen years are halved relative to 1990 by 2050 (to about 2 tonnes per capita), and then decline to less than 10 Gigatonnes (GT) of emissions (1 tonne per capita).

· Developed countries will need to take on immediate and binding national emissions targets, demonstrate that they can achieve low carbon growth, and transfer resources and technologies to developing countries, before developing countries take on binding national targets of their own by 2020.

Oh, and in response to mounting evidence, he’s lowered the figure for what level of greenhouse gases is likely to trigger catastrophic climate change from 550 parts per million (ppm) to 500.

Let’s look at those in order:

On carbon allowances, one tonne per capita is a demanding target, to put it mildly. The US currently churns out about 20 times that amount; Britain, Germany and Japan use 10; the global average is already up to 4.5 tonnes. One tonne amounts to roughly a single transatlantic return flight. The report argues that this will require moving to a ‘decarbonised’ global energy system, for starters (see the brilliant recent Economist survey on energy for the latest thinking on this). In addition, emissions from transport, land-use, buildings and industry will need to be cut sharply. But even were we to achieve it, Stern himself acknowledges that it is far from fair – a one tonne carbon allowance ignores the historic responsibility of rich countries for squandering the ‘carbon commons’ in the first place.

On developing country commitments, Stern makes a valiant effort to balance fairness, development and climate when he says that rich countries must show good faith (and the feasibility of a low carbon growth model) before requiring developing countries to accept emissions limits. As he says, ‘By 2050 [developing countries] will account for close to 90% of the world population. It is their world and it should be developing countries that lead the design of the programme for action on climate change.’

On 500 ppm, plenty of very clever people think he is not going far enough. James Hansen, the NASA scientist who first alerted the US Congress to the issue back in the 1980s, argues that we need to get back to 350ppm (the world’s carbon load already exceeds that level). Interestingly, Stern’s objection to going further than 500ppm is largely political – it would be so expensive that politicians would never agree to it. But if Hansen is right, political expediency is hardly relevant – we either cut carbon to 350ppm (or whatever the right level is) or expect truly horrible consequences.

Which brings me to my main point – what are the politics of all this? The Stern Report, commissioned by Gordon Brown and published in 2006, had a massive impact on decision makers – it showed that taking a small hit on GDP now in order to get carbon emissions down would save a much larger sacrifice later on. Suddenly tackling climate change became not just urgent, but politically feasible and economically rational. Stern is very aware of all this – in his new paper he says: ‘Over-stating the problems relative to the opportunities risks prompting parties to wait for others to move before taking action. By contrast, the expectation of a credible global agreement would sharpen the incentives for companies and governments to move quickly and efficiently.’

But has he been too successful, putting short-term tactical victories before long-term strategic challenges? Finding the balance between presenting a task as politically impossible or a mere stroll in the park is extraordinarily difficult. In fact, Stern may be doing climate change a disservice by making the adjustment look easier than it really is, thereby reducing the sense of urgency and threat needed to galvanize action.

As for the long term, one tonne per capita is hard enough in technological terms, but achieving equity is going to be extraordinarily difficult to achieve. What sort of political negotiation would lead to the EU or US agreeing to accept an equal per capita carbon allowance with Bangladesh or Zambia?

Even were equity issues to be resolved, getting the technology in place to deliver one tonne per capita represents another huge political challenge. Technological transformation of this scale has few precedents in history, apart from the industrial conversion of economies to arms production during wartime. That required enormous, existential threats to entire countries. The trouble is that by the time climate change generates such threats, especially to rich countries, changes to weather patterns and sea levels will have already destroyed millions of lives in poor countries, perhaps for ever.

These kinds of consideration are largely absent from Stern or Blair’s recent papers, (except for Stern’s sensible suggestion of making developing country commitments more clearly conditional on progress in the rich economies). Finding a new form of politics that delivers equity, technology and ambition at the speed and level required to head off climate change will require something unprecedented. To some extent the global community has managed that on issues such as nuclear weapons or chemical and biological warfare, but those never struck at the heart of the economic model like climate change does. Nicholas Stern’s first report was called ‘the Economics of Climate Change’. What we need now is an equally prestigious enquiry into ‘the Politics of Climate Change’, and that’s probably not best written by economists


December 9, 2008
Duncan Green