Lord Nicholas Stern – Blueprint for a Safer Planet

[ UPDATED : Someone kindly pointed out a typographical error. The correct expression is “Business as Usual”. My excuse : late night dyslexia. Thanks, o diligent reader. Keep up the good work. ]

The Old Lecture Theatre in the Old Building at the London School of Economics and Political Science (LSE) tonight was filled with noise, as people, packed to the rafters, exchanged hot air like it was the End of the World.

And so it was, or will be. The End of the World, I mean, unless we sort out Climate Change. Nick Stern made that quite clear.

I arrived in the nick of time from the heaving, juddery and squeaky Bus 26. Woman next to me on her mobile “Can you wash your stab vest ?” My inner question : “Why would you need to ?”

I look around the Gallery to where I was directed. Lots of bright eyes and a wide range of clothing. Some hijab. Some bedheads and even one proper Mohican. The person on my right reading The Economist. The person on my left doing their e-mails. Someone reading The Onion on their Vaio. Macs. Mobiles. Quite a young audience.

Lord Nicholas Stern of Brentford was introduced to us by Bob Ward, the Chair of the LSE. “Nick” was wearing a brown seemingly corduroy jacket but he did have a nice long red tie with gold squiggles on it. Very Versailles. The room went completely hush.

Nick Stern reminisced about the LSE, how he’d been lecturing on market imperfections in the past, how people had forgotten about it and gone to work in the City. He said that when he’s not travelling round the World trying to make people change it, he enjoys being at the LSE.

“Looking back, I underdid the damages”, he said, in reference to his 2006 Report on the Economics of Climate Change. “Emissions are growing faster. The Planet is absorbing less. Climate Change effects are coming through faster than we thought.”

“More cheerfully [audience laughs], understanding has deepened and broadened…our ability to respond has strengthened…”

Stern said that we have “precious months” in order to put together a global treaty at Copenhagen, but that it will be a “huge challenge” to get a “substantive agreement”.

He said that the global deal that is intended to be signed at the UNFCCC negotiations in December would have to have measures of the right scale and effectiveness, and be equitable.

He said that we first have to understand the Economics and the Science. “Science is big. Economics is big…[a] global deal is substantive too.”

He introduced the book he has written “Blueprint for a Safer Planet”. “I hope you will buy the book”, he quipped, and for the “nerdy economists” you can read his paper in the American publication “Economic Review” of May 2008 which spells out his arguments in more detail.

He said the Development (of poorer countries) and Climate Change are the “two defining challenges”. “If we do not manage Climate Change – we undo Development”, he said, it would “make progress impossible”.

And then there’s the Economic Crisis. He said we can and should tackle all three problems at the same time.

He outlined the process of Climate Change, the chain of actions that leads to the problem :-

1. People to Emissions
Through normal human actions, people create Carbon Dioxide and other Greenhouse Gas emissions. “Think of it as an annual flow”.

2. Emissions to Concentration of Greenhouse Gases in the Atmosphere
This is a “stock”.

3. Greenhouse Effect
The science of global heating.

4. Global Warming to Climate Change
Stern said that it wasn’t so much the heat that was the problem. “Mostly, this is about water in one shape or form”. Global Warming causes these changes in storms, floods, rainfall and so on, this Climate Change.

5. Changes in a very hostile damaging way affecting people.
“If we don’t do anything about it it will stop Growth and Development”.

He said it was a “story” of externality, affecting the Production and Consumption of other people. He said that tackling Climate Change was more difficult than the laws that cleaned up smog, and that it will be more long-term, not like clearing up congestion on a road.

Stern said that this “makes the politics of this more difficult”. This means changing the World as a whole.

And Climate Change itself is full of uncertainty, so any policy has to be constructed in the face of this uncertainty. There are all kinds of uncertainty and oscillation.

A very simpleminded policy like a Carbon price – even if it’s priced properly – “that won’t be enough”.

A few major countries are responsible for most of the emissions – 6 or 7. Under “Business as Usual”, Developing countries will increasingly have a crucial role, as they start to use the kinds of technology used in the Developed World.

Stern said that there’s “great inequality here”. It’s the poor countries that get hit earliest and hardest. “Unless they are central to the deal we will not be able to cut emissions like we must”. The inequities of history have to be part of that deal.

Throwing up a graph from his presentation, Nick Stern urged us to consider the problem of Climate Change from the perspective of Risk Management. For 500 ppm CO2e there would be nearly a 50% chance of reaching 3 degrees C temperature rise globally. For 750 ppm CO2e there would be nearly a 50% chance of reaching 5 degrees C temperature rise.

Five degrees – well if you’re in Moscow in February [audience laughs]…but the Earth has not seen that in 30 million years. “We don’t know how humans can handle this”. There will definitely be huge migration. We know from the Last Ice Age about ten thousand years or so ago that people stayed “south of Watford” [audience laughs]. Surely Climate Change will rewrite the physical geography, and it will happen fast in historical time. An incredibly rapid change. The response of people will be to move – probably billions of people – which will lead to conflict.

“This isn’t only a small problem of something unpleasant in few hundred years. This is something catastrophic happening” before 2100.

“We should see this as a risk management problem.” Fixing the atmospheric concentrations to 450 ppm CO2e within 6 years.

As a World we have to get down to below 20 Gigatonnes of emissions per year. Divided by 9 billion people that means 2 tonnes per person. He said that Giga means the same as billion. “Ten to the six” he said, but he meant “Ten to the nine”.

And that’s where the 80% cuts by 2050 figure comes from, since the Average European causes about 10 to 12 tonnes of emissions per year.

Plus, because of Development, in 2050 there won’t be many on the Planet emitting less than 2 tonnes per year, so that means there will not be many permitted to emit more.

How are we going to do this ? Less emissions, more efficiency. Stop deforestation. We will need to have close to Zero Carbon electricity by 2050. Low Carbon technology (Renewables, Nuclear…) If we have got Zero Carbon electricity, we can Zero Carbon surface transport. For aviation we might need to have biofuels…[An aside from Jo : you cannot be serious about biofuels for aviation. Do you know how much forest you’ll have to take down for that ?]

Zero Carbon : It’s not a mystery as to whether we can get there. And it can be cheap and attractive.

Stern puts up the slide of costs per tonne emissions reductions from the McKinsey report. Lots of options are cost-negative. “We must investigate them all”.

http://www.mckinsey.com/clientservice/ccsi/pdf/Greenhouse_Gas_Emissions_Executive_Summary.pdf
Exhibit B

“Economists like me like the price mechanism…markets seek out cost efficiency” [An aside from Jo : the proof is that markets don’t seek out Carbon efficiency, though, as it’s costly to de-Carbonise.] But it has to be done fast.

Can’t do CHP (combined heat and power) unless in a community. Can’t recycle unless in a community.

How much will it cost ? Need to take out about 65 Gigatonnes of emissions. Suppose an average cost of $30 per tonne. That makes $1.95 trillion. If the GDP doubles by 2050 that will equate to roughly 2% of GDP. [An aside from Jo : but won’t the costs of measures double too ? How could it still be only 2% of GDP ?]

The International Energy Agency (IEA) etc think it could cost a good deal less. “I’ve allowed for not very good policies, for things to go wrong. There will be technological progress. And the spending will only be for two to three decades.”

“In my Times article today, there is candidness” :-

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6135687.ece

“April 21, 2009 : Enough green talk. Now make it happen : The third runway go-ahead throws doubt on the Government’s eco-credentials. This Budget could put it back on track : Nicholas Stern”

Spending on Climate Change is like an insurance premium paid for a few decades to reduce the risks. You also get a technological driver of growth. “Investing in this growth story”. We need a “growth story” for overcoming World poverty.

“I don’t think we should contemplate growing forever” Stern said. He intimated we will need to find a different way from “endogenous” growth stories (“if you like that kind of language” [audience laughs]).

A Low Carbon growth story is attractive – more Energy security, cleaner, quieter. Something that can pull us out of recession. “We’d have to be mad not to pay 2% of GDP for a few decades.”

Stern said that we need strong coordinate action now – we know the key elements of the global deal – given that we start from 80% cuts.

This kind of global emissions cut does not mean that the Developed country quotas should be 2 tonnes per person. “My own view is that there should be zero quotas for rich countries for decades”.

The Developed countries should use the Clinton formula – use their example for power, not their power as an example. The Developed countries should share technologies and finance them in the Developing World.

Unless the Developing World is involved we’re not going to get a treaty. It’s going to be tough on China. And this treaty should not be a set of proposals put forward by the Developed World. The Developing World should lay down the description and the conditions.

It will need Emissions Trading – get the price system to do the work to sort out the lowest cost. Carbon taxes have their role to play. The price of Carbon is “absolutely fundamental” in quota trading. Have to allow for buying outside the country – a flow of funds.

“Having quotas gives you confidence that price will work.” As for the Carbon Tax – wouldn’t want to set one horse against the other, but with taxation you don’t have “quantity certainty”.

The Carbon Trading at the moment is set to be in the Clean Development Mechanism (CDM) – but this is one-sided – you get rewards for cutting emissions, but you don’t get penalised for creating more.

Stopping deforestation is “absolutely fundamental” to the “Development story” and should be designed by the countries where the trees stand and involve matters of property rights.

Technology : Carbon Capture and Storage will be “absolutely fundamental”. “If we can’t do it we need to find out very quickly.” If coal is going to be used, it’s the dirtiest of fuels. We need to learn how to do CCS on a big scale. If we can’t we need Plan B. There is a Plan B but it’s more expensive.

“There shouldn’t be any coal-fired power stations at Kingsnorth or anywhere else without CCS. If they don’t work we have to concentrate on other things” – solar, wind, tidal.

Development in a more hostile Climate is more expensive. We must not separate Adaptation [to Climate Change] and Development. “I was directly responsible for this mistake [audience laughs] – we didn’t take account of Climate Change in the cost of Development.” (Monterray, 2002).

We have to face up to the problem – of providing aid beyond the targets we’ve already set outselves. Extra finance will be needed.

“What about this Economic Crisis, I hear you asking ? Will it divert out attention ? Only if you have tiny minds. Do we want to come out of this crisis by sowing the sees of the next bubble ?” (Climate Change has been the largest ever market failure).

Can think broadly through the opportunities – what’s going to generate growth – Energy Efficiency and Renewable Energy. Lessons have been learned. Very strong examples in Korea. In China.

Copenhagen : it is important that the discussion leading up to Copenhagen is intense. China is working on a five year plan to start in 2011, and have an Energy strategy to underpin that.

The big emitters have to be involved. We know the scale of the action required – roughly 50% globally by 2050. We know how. We have to act right across the Economy. “We’ll learn like mad. We know roughly speaking how. The science is good enough to act. The technology is good enough to act. The challenge now is the political will. I see it moving. Whether it will move fast enough – we’ll find out. It’s all in our hands.” The academics here, the journalists (if you’re here). The challenge is very much a political challenge. The LSE’s position is to take on that political challenge [applause].

Questions from James Randerson from The Guardian, Ed Gillespie of Futerra and others. The gist of Nicks’ answer to Ed in part was “What’s the alternative to optimism ? Unless we act as if we can sort this out we [might as well put on a sunhat] and write a letter of apology to our grandchildren [and go back to sunning ourselves].”

Louise from CABE asked why the quick and easy things like bicycle paths were not being funded. Nick Stern reminded her and us to get involved in the political processes, told us to write articles for newspapers and to engage with civil servants “sensible, civilised, responsible lot”. “The power of rational argument is very important. I don’t really know any other way.”

I stood in line and bought the book. I took it to the platform for Nick Stern to sign. As I approached him he looked positively scared. I proffered my hand to shake. He stood up and shook and we smiled. “I’m Jo Abbess,” I said, “I’m dangerous”. It was OK after that. I asked him to sign “Zero Carbon or bust” in the book. He thanked me for coming. I said I had made copious notes. The jacket, on closer inspection, was definitely corduroy.

Later, in Belgo on the Kingsway, I was having a refreshing Pecheresse beer (it’s a sin). I was texting JournoMadman. He told me that someone had been asking about the Climate Camp “Did they have reasonable demands ?”

I replied “Climate Camp have given up asking for anything really. It’s all about telling now. Carbon Trading isn’t working and won’t work. See Andrew Simms in the New Scientist and The Guardian.”

My contact replied “Yes. I think that’s “unreasonable” “.

So there you have it : proof positive that rational arguments about Carbon Trading are considered too “unreasonable” to consider. Nick Stern : your confidence in rational debate is clearly a tad naive.

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