NEWS: Climate Change—The Stern Review

Posted on 14 December 2007

Given our country’s despicable performance at the Climate Change conference going on in Bali, I feel it necessary to underscore some of the real facts and issues. Buried in my overly-long write up of the Urban Age Conference in Mumbai last month (http://www.columbia.edu/~rr322/UA-Mumbai.htm ) was a description of Nick Stern’s presentation of climate change. I most strongly recommend that you read the Executive Summary to the report he did for the British government on the economics of climate change. (There are links to the long [27 page] and short [4 page] versions of the Stern Review in the first paragraph, below. I recommend the longer version—but you should at least check out the short one if time does not permit you to read the longer one.) I have excerpted below the paragraphs I wrote in my Mumbai report about the climate change discussions at the UA Conference:

The Conference took up the question of climate change and cities—and its relationship to India, in particular. The main presentation was done by Sir Nicholas Stern, who is currently IG Patel Professor of Economics and Government, and Director of the India Observatory, London School of Economics—but who is a former chief economist of the World Bank, Head of the Government Economic Service, and Adviser to the Her Majesty’s Government on the economics of climate change and development. But most notably, Nick was the author of The Economics of Climate Change: Stern Review, the 700 page study he did for the Cabinet Office of Her Majesty’s Treasury, which made an enormously powerful impact on the debate on climate change when it was released at the end of October 2006. I most strongly recommend that you at least read one of his Executive Summaries of the Stern Review (which, by the way, is available free in its entirety online at www.sternreview.org.uk; and it is available in book form at Amazon.com): preferably the longer version (which, at 27 pages, has all of the powerful and informative slides Nick showed in his Conference presentation, as well as a much fuller presentation of the facts and thinking), but at least the shorter version (which, at 4 pages, will at least lay out for you the bare bones of this most important document). It received world wide attention, since it powerfully demonstrated that the costs of the world reducing greenhouse gas emissions to slow the pace of climate change, while enormous, were far outweighed by the costs of not doing so (citations are from the Executive Summaries of The Stern Review):

Using the results from formal economic models, The Review estimates that if we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more. In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each year.

Essentially, it presented an economically sound argument for why the world simply cannot afford not to make the necessary changes. The Stern Review also lays out in vivid detail what the long and short term effects are of climate change at varying levels of temperature increases (along with the economic costs of these effects), what different assumptions about levels of reduction in greenhouse gases will mean in terms of resulting temperature changes, and what can and must be done to avoid the worst of these outcomes (along with a painstaking analysis of the cost of these measures):

All countries will be affected. The most vulnerable – the poorest countries and populations – will suffer earliest and most, even though they have contributed least to the causes of climate change.

…estimates of the annual costs of achieving stabilization between 500 and 550ppm CO2e are around 1% of global GDP, if we start to take strong action now.

The risks of the worst impacts of climate change can be substantially reduced if greenhouse gas levels in the atmosphere can be stabilized between 450 and 550ppm CO2 equivalent (CO2e). The current level is 430ppm CO2e today, and it is rising at more than 2ppm each year. Stabilization in this range would require emissions to be at least 25% below current levels by 2050, and perhaps much more. Ultimately, stabilization – at whatever level – requires that annual emissions be brought down to more than 80% below current levels.

The costs of taking action are not evenly distributed across sectors or around the world. Even if the rich world takes on responsibility for absolute cuts in emissions of 60-80% by 2050, developing countries must take significant action too. But developing countries should not be required to bear the full costs of this action alone, and they will not have to. Carbon markets in rich countries are already beginning to deliver flows of finance to support low-carbon development, including through the Clean Development Mechanism. A transformation of these flows is now required to support action on the scale required.

Though brilliant, riveting, and convincingly comprehensible, Nick’s Conference presentation was simply too dense and rich even to attempt to summarize here. But here are some of the most striking points he made:

· The biggest effects of climate change manifest through water: storms, floods, droughts, crop failures, rise in sea level, etc.; the shorter term consequences are already upon us in the form of more severe storms, more extreme flooding, droughts; the more ultimately devastating consequences like the rise of sea level are more long-term eventualities

· We will go to a 2-3°C increase; at a 5°C increase, there would be massive population shifts, and the regions close to the equator would become uninhabitable

· For there to be any reasonable future, emissions need to peak within 15 years, then begin to decrease

· A great deal of energy consumption directly relates to cities; and cities provide the possibility of increasing return to scale, due to public transportation, local grids, skill agglomeration

· The world needs to act faster than it is accustomed to doing

· If it becomes a horse race between development and dealing with climate change, climate change will lose; it has to be done in a way that permits and encourages both

As for India, Nick pointed out that it is very vulnerable, but bears little responsibility (the U.S. produces over 20 tons/per person/per year of carbon emissions; Europe somewhat over 10 tons; China 4 tons; India 1 ton). Nevertheless, with its 1.2 billions people and rapid economic growth, India, like China, has the potential to become a major contributor to the problem. There need to be strong carbon containment objectives for India and other developing countries, but they need to be compensated by wealthier countries in order to make them possible:

In future, a transformation in the scale of, and institutions for, international carbon finance flows will be required to support cost-effective emissions reductions. The incremental costs of low-carbon investments in developing countries are likely to be at least $20-30 billion per year. Providing assistance with these costs will require a major increase in the level of ambition of trading schemes such as the EU ETS. This will also require mechanisms that link private-sector carbon finance to policies and programs rather than to individual projects. And it should work within a context of national, regional or sectoral objectives for emissions reductions. These flows will be crucial in accelerating private investment and national government action in developing countries.

Key elements of future international frameworks should include:

· Emissions trading

· Technology cooperation

· Action to reduce deforestation

· Adaptation

There is still time to avoid the worst impacts of climate change, if we take strong action now.

Some of India’s cities have already made strides in the direction of controlling carbon emissions. Sheila Dikshit, Chief Minister of Delhi, reported that Delhi has made great strides in this direction, including managing to convert its public transportation system entirely to CNG (compressed natural gas); and while that does not convincingly support her claim that the system is now emissions free (an untenable assumption to anyone who understands the physics of energy), it has been part of what has moved Delhi from its position as the most polluted city to a much greener place—with reduced pollution, increasingly good public transportation (including 72 km of metro system, with plans to expand to over 200 km by 2010), and the planting of 1 million trees. In 2005, Delhi was the first city in India ever to win the prestigious United Nations Public Service Award, given for “innovative projects that prioritize accountability, service delivery, transparency.”

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