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Stern Warning: Cost of Tackling Climate Change Rises

Lisa Auret|Special to CNBC.com
Friday, 18 Apr 2008 | 1:50 PM ET

Don't fly to meet your colleagues across the world, better hold a videoconference instead.

And use a thermostat to cut down on greenhouse emissions, before it's too late, the author of a report on the economic impact of global warming warned.

In October 2006, Lord Nicholas Stern, former UK Government Advisor on Climate Change, published the Stern Review on the Economics of Climate Change, the largest report of its kind.

In his report, Lord Stern wrote that in order to stabilize climate change's impact on the global economy, it would cost around 1% of the global econmy's GDP by 2050.

But at a recent symposium on environment issues in London, Lord Stern raised that figure to 1.5% of GDP, saying he misjudged the quickening effects of global warming.

"That's like a permanent, but one-off increase in costs and prices. So prices go up 1.0 - 1.5% this year and stay at that much higher [level] than they were before," says Lord Stern.

The latest scientific evidence shows that not only are emissions rising faster than previously thought, the ability of the earth to absorb carbon dioxide in so-called carbon sinks is also deteriorating faster than expected, explains Lord Stern.

More Money Needed

He pointed to a series of triggers that he says are pushing climate change even faster than the scientists at the Intergovernmental Panel on Climate Change have documented.

Mostly, it has to do with “feedbacks” – compounded effects of rising temperatures.

AP

Lord Stern singled out more acidic oceans, which absorb less carbon dioxide, and melting permafrost which releases methane, a potent greenhouse gas.

To avoid the shocks effects of climate change requires money for the reinforcement of buildings and infrastructure, to make them sturdier in the face of extreme weather conditions, he said in his report.

Also there is a need for increasing the use of things like public transport, and support for financial markets so that it is possible to purchase insurance against climate-related disasters.

Big countries like China and rich ones like the US, which emit the most greenhouse emissions, are morally obligated to help the poorer ones protect themselves against the very worst that may transpire.

Economic Slowdown Could Help

The current economic slowdown, instead of hurting attempts by countries and companies to contribute to reducing emissions, could actually help, he says, as during "tougher times", like this "short-run recession", people are concentrating even more on saving money and should think more carefully about being energy efficient.

Saving the planet is a continuous process and long-term process, he adds.

"During that long haul, there are going to be bursts of growth, there are going to be recessions, this is one of them. So there is no reason for stopping a long-run project because you have got a short-run recession," Lord Stern said.

A reduction in deforestation is an effective way to the cut down emissions, as well as carbon capture for coal-fire power plants, where you catch the carbon and pump it into the ground, he said.

"You've got to identify the ways of saving on greenhouse gasses, which are the cheapest and tackle those first," Lord Stern says. "Energy efficiency is clearly a way that saves money,"

"There are some things that we should get on very quickly that don't cost that much," he adds. "But there are other areas where we will have to make investments, and the important thing to do is give people the incentive to make those investments."

A scheme of penalizing companies that emit greenhouse gasses should also be considered, Lord Stern says.

One way is taxing emissions, or quota trading, where a company gets permission to emit a certain level of emissions and if it goes over that level, it has to pay for it. If the company emits fewer emissions, it can sell its permits to another company still exceeding its original quota.

Lord Stern says the green challenge is also an opportunity for "new markets, for new jobs, new technologies, new exports."