Nicholas Stern Commentary

September 27, 2011

The arguments for strong action to reduce emissions to manage climate change are immensely powerful. Yet, as Rob Socolow argues, they have not yet commanded the breadth and depth of understanding required for action on the necessary scale. I agree with this assessment, and with his position that part of the reason must lie in how the case has been presented, and with his description of how the arguments might be recast and marshaled in a more persuasive manner. My version of how the case can be made in a simple and direct form is as follows. It has much in common with, but is not identical to Rob’s.

The risks from inaction on emissions, or delayed or weak action, are immense. Inaction could take, in a century, concentrations to levels that could imply a risk of 30-50 percent or so of temperature increases of 5 degrees Celsius  above 19th century levels, temperatures the planet has probably not seen for 30 million years. Humans have been here as homo sapiens only for around 200,000 years. Such temperatures would likely transform where we could live, and hundreds of millions, possibly billions, of people would have to move, with the likely consequence of severe and extended conflict.

This is about risk management since, whilst we can be confident the risks may be very large, we can’t be certain of consequences; we can at present deal only with probability distributions, at best. Of course, to recognize or speak in terms of risk and uncertainty must not be construed as “an admission that the science is unsound or unsettled.” We must be absolutely clear on the very strong and longstanding scientific foundations. In my view, as a humble economist, scientists can and must do a much better job at countering the unscientific, ill-informed, and aggressive attacks on the science. And they should provide the best account they can of the scale and meaning of the potential consequences. It is extremely hard to describe a 4, 5, or 6 degree Celsius world, in part because humans have no direct experience of one. But such a temperature change surely carries huge risks, and scientists are better capable or illustrating and explaining what these might be than are non-scientists. At stake here are not minor probabilities of discomfort, but substantial risks of catastrophic change of the relationship between humans and the planet.

Waiting for further clarification from the science of the probability distributions looks like a very dangerous policy. This is a flow-stock process (emissions to concentrations) and thus embodies a ratchet effect, since it appears very hard to directly reduce concentrations on any major scale. Further, delay locks in a high-carbon infrastructure. The necessary scale of action requires a new energy-industrial revolution. To have around a 50-50 chance of holding to a 2 degree centigrade increase, we would need to cut global emissions (in carbon dioxide equivalent) by a factor of around 2.5 by 2050 from their current levels. If world output grows by a factor of 3, we have to cut emissions per unit of output by a factor of 7 to 8. That means close to zero carbon per unit of output for most of the economy. Even if emissions or temperatures targets are relaxed somewhat, the scale of change must still be very large: it would be a new energy-industrial revolution, in any language.

That industrial revolution requires strong policies (it will not happen without pricing of carbon, taxes, regulation, and the like) and large investment. Like all industrial revolutions it will involve dislocation. We should not pretend that it will be easy. But past industrial revolutions (the great economic historian of technology, Chris Freeman, identifies five waves of technological change, from textiles in the later part of the 18th century to information and communication technology now and the last part of the 20th century) have brought a few decades of creativity, innovation, and growth. We can already see that creativity and innovation beginning. And there are the further likely benefits of energy security, a clean environment, safety, and biodiversity. It is absolutely not win-win-win — it will be difficult. But overall, it is a path that could be very attractive. It is the only plausible growth story. The high-carbon route will destroy itself.

The two defining challenges of our century are managing climate change and overcoming world poverty. If we fail on one, we fail on the other. If we cannot manage climate change, we will halt and reverse development. If we cannot tackle climate change in a way that creates opportunities for rising living standards in the developing world in the next few decades, we will never create the necessary international coalition for action.

The first part of the path is clear, in its rationale and sense of direction, its technologies, and its economic policies. We will learn along the way. What is missing is political will. That will not arise unless we are much more persuasive in our arguments. That must include strong and clear recognition of the uncertainties, difficulties, and dislocation associated with the new path, of the immensity of the risks of inaction, and of the great opportunities from a new way of producing and consuming.

Rob is absolutely right in insisting that we re-examine the way the case has been made. And his suggestions for re-casting are persuasive. This is where we have to think, work, and deliver.