Changing the world’s old fossil fuel-based economy onto a new low-carbon footing could provide the stimulus needed to bring the world out of its current economic downturn and fuel long-term growth, while avoiding the risks posed by global warming. That is the view of Lord Nicholas Stern, author of the landmark report on the economics of climate change that has proved highly influential on governments across the world since its publication in 2006.
The former World Bank chief economist and adviser to the UK’s Treasury concluded in his review that the costs of acting on climate change immediately, at about 1 per cent of gross domestic product, were far lower than failing to act, which would cost 5 to 20 per cent of output. If anything, he says now, the report substantially under-estimated the risks of climate change. Lord Stern, now back in academia as professor of economics and government at the London School of Economics, is anxious that governments learn the lessons in the current financial crisis. "We need a good driver of growth to come out of this period, and it is not just a simple matter of pumping up demand," he explains.
Efficacité énergétique et relance de l’emploi
"We will have to pump up demand - by cutting taxes and increasing transfer payments and making investments that can take place quickly and are labour-intensive - all of those will matter. But we should be thinking about these things in a way that can start to drive forward a form of growth that is really well-founded and sustainable. Not like half-baked websites sold for zillions of dollars or inflated house prices which allowed people to spend too much and leverage in an insecure way."
Cutting energy wastage, which also cuts emissions, and seeking renewable sources of energy are both "still more important in hard economic times", he continues. Both improve energy security, which "gets a stronger focus" when countries are thinking about risks to their economies.
Energy efficiency, in particular, should be seen as a quick route to stemming unemployment, in Lord Stern’s view. "Insulation [of existing buildings] could be embarked on very quickly, and [it requires] a large amount of labour," which is particularly valuable in the context of a construction industry that is suffering a downturn. "Well-designed promotions of this kind [have] quick returns and can be mobilised quickly."
Une croissance "verte", solide et durable
Low-carbon growth encompasses much more than energy efficiency and renewables - it extends to new types of cars and other transport, new building materials and designs, energy transmission systems, new packaging for retailers, the redesign of manufacturing techniques, different farming methods, and a host of other developments in nearly all sectors of the economy. This sort of "green growth", on a wide scale, could "lay the foundations of growth" for the future, Lord Stern believes. "It is not just a Keynesian pump-up." Looked at correctly, today’s economic crisis provides an opportunity to achieve the reformation of the world economy from high to low carbon "at a lower cost of action, because the economy is a bit slacker", he says.
Investing in low-carbon growth in the predicted recession will be doubly vital, he warns. Governments across the world are preparing stimulus packages to boost industry - but if they do so without building in incentives and restrictions that ensure the boost these measures produce is "green", then the world will be doomed to a high-emissions future, which will result either in worse climate change or higher costs for cutting emissions in the future. "What you don’t want to do is to inflate the economy in a way that starts to lock you back into old methods," he argues. "There is a choice about how to inflate."
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Les deux chantiers du XXIe siècle
"There are two big challenges for this century and they are world poverty and climate change," he says. "We have to take these two together - we succeed or fail on them together." In the past, some countries and non-governmental organisations have seen development and climate change as separate problems. They argued that developing nations needed help to pull themselves out of poverty, and that climate change could be solved once that was achieved.
Wrong, says Lord Stern. If programmes are constructed to help improve countries’ economic fortunes without tackling climate change, then the resulting damage to the planet will push those countries back into poverty. "Any development which ignores the changing climate is going to get into real difficulties," he says. And if rich countries try to frame a deal on the climate that damages the prospects of economic development for the world’s poor, then that deal will not gain the support of developing nations and will fail. Accordingly, he argues, any global deal must address both issues and must be equitable to the developing world. Rich countries must show poor countries that renewable energy can be built up quickly, that carbon capture and storage can work, and that the other technologies they need for low-carbon economic growth will be made accessible to them.
Un double progrès : "industries vertes" et conscience des enjeux
But he is optimistic that this can be achieved. "The intensity and pace of technological development in the last three years has been quite remarkable," he says. Equally remarkable has been the way in which businesspeople, economists and politicians have grasped the challenge of climate change, he adds. "You have to remember that the scientists have been bashing away on this for the last 20 years, but in terms of politics and business and economics this is very young," he explains. "It’s amazing how far we have come in two or three years - business is seeing there is real growth potential here, that this is a real long-term growth industry. This is not a dotcom - just as people who looked behind the dotcoms saw that IT was a serious long-term growth industry and continues to be."
The high profile that climate change has gained in business and politics in the past few years, and the change of president in the US, will make it easier to reach agreement on a successor to the Kyoto Protocol in Copenhagen, he believes. "Copenhagen is not going to be easy, but there is a real chance [of agreement]," he says. "You absolutely can’t take it for granted, but you are starting to see awareness at the highest levels of government, in prime ministers and presidents, that simply was not there three years ago."
