ENVIRONMENT: A Blueprint for a Safer Planet, By Nicholas Stern, Bodley Head, 256pp. £16.99
NICOLAS STERN MADE headline news with his review in 2006 of the economics of climate change. His lines – that this was the greatest market failure the world has ever seen, that the benefits of strong early action outweigh the costs – were commonplace for a few short days. For that news cycle the world took note of the economic argument that we could and should cut greenhouse gas emissions in order to stabilise our climate. It helped that the review presented the latest scientific evidence in a clear and clever way. It also helped that the costs involved could be totted up into relatively simple and reassuringly small figures, which gave a message of hope that we could make the necessary change.
Sterns's latest book, A Blueprint for a Safer Planet, is unlikely to have the same impact. With little new material and fewer fancy graphics, it reads more like a primer for those interested in the economics of climate change and it investigates the prospects for a new international deal to be reached in Copenhagen later this year on the follow up to the Kyoto protocol.
Three years on from the first review, the scientific evidence on climate change has become all the more alarming. Stern has adjusted downwards the targeted level of further pollution we can let into the atmosphere. To reduce the probability of catastrophic climate change, high polluting countries such as our own will have to cut our emissions of greenhouse gases by more than 80 per cent before the middle of this century. In investigating what will be the cost of that adjustment, Stern is still sticking to his prediction that the change can be made with only a 2 per cent loss in world GDP. That prediction relies in large part on the work done by the consultancy firm McKinsey Co and its “cost abatement curve”. This is a “bottom up” measurement of how much it should cost to reduce a tonne of carbon from a range of different energy, transport and agriculture changes.
Stern relies more on his own analysis when discussing the core economic question as to how we should “discount” the value of consuming a resource unit in the future in comparison to using it today. He calls for ethical considerations to be reintroduced into economic modelling and policy analysis and debunks the already tarnished concept that ethical values can be revealed by markets themselves.
Stern’s own ethics seem to have been formed by his work in poor communities in Ethiopia, Kenya and India in the late 1960s and early 1970s. His work as chief economist at the World Bank and author of the Report of the Commission for Africa mean he is well placed to see the link between development and solving climate change. This is the most positive message in this book: that by reaching a global deal on climate change we may lay the foundations for future international co-operation on broader issues.
The 15th meeting of the parties to the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen is expected to set out the bones of such a deal. It is described as the most important gathering since the end of the second World War. Stern constantly returns to the refrain that the deal must be effective, in that it cuts back emissions on the scale required; it must be efficient, in keeping costs down; and it must be equitable, in relation to abilities and responsibilities, taking into account both the origins and impact of climate change.
Stern sets out the sort of deal he would like to see. Emissions targets for both rich and developing countries make up the first two elements. The third requirement is an effective trading regime to promote efficiency and to generate financial flows and incentives for developing countries. Combating deforestation is the forth element, which can bring the most immediate and significant greenhouse gas reductions. The fifth element is a mechanism to allow the transfer of technologies, and, finally, he sees delivery of overseas assistance to support development goals in a more hostile climate as a basic requirement for equity within any deal. The signals are that most countries do want a deal. The reality is that the bones of that deal will probably contain a litany of political compromises and flaws. The targets that Japan and the US are now setting as their own goals for reductions by 2020 are only a fraction of what the scientists say needs to be done. The UN process needs to move on from a bunker where climate change experts discuss the location of a comma to one where economic development ministers agree the policy approach that will make real reductions happen.
Lord Stern (as he is described on the book’s dust jacket) will no doubt arrive at these negotiations as a force for good, a Jedi knight if you will, battling against the peril of climate change. His most powerful role may still be to tell those economic ministers a simple truth, that it makes economic sense to switch to a low-carbon future. The European Union has set the right sort of mandatory targets for emissions reductions but the fear is that when it comes down to real actions on the ground we will be overtaken by the swifter and more flexible American industrial machine and the command structure in China, which is now investing massively in clean technologies.
In Ireland we have started to un-tap our massive renewable energy resources and to promote greater energy efficiency. We also have relatively clean high-tech productive industries.
Our greatest challenge will be to reduce the emissions from agriculture and transport but even there the task is not impossible. We have everything to gain and nothing to lose from following this blueprint for a safer planet.
Eamon Ryan is a Green Party TD and Minister for Communications, Energy and Natural Resources