Twenty years on from the Stern Review, which set out the economic case for climate action, the stakes have never been higher.
The science is even more worrying than it was in 2006. Tipping points—such as the collapse of the Amazon forest system, the thawing of permafrost and the release of trapped greenhouse gases, and the melting of land-based ice sheets—all look much closer now.
Evidence now suggests these scenarios could be triggered by global warming of just 2oC to 2.5oC above pre-industrial levels, not the 3.5oC or 4oC we thought then.
Such tipping points could react to each other and lead to unmanageable downward spirals, including the potential movement of billions of people and the reversal of economic growth. We are now contemplating events so catastrophic that attaching a number such as the percentage loss of GDP seems spurious. The challenge is how to act quickly to avoid such consequences.
The conclusions we reached in our 700-page report, prepared on the request of then prime minister Tony Blair and chancellor Gordon Brown, are even more relevant today. First, the benefit of strong and early action on climate change far outweighs the economic costs of inaction. Second, the world does not need to choose between averting climate change and promoting growth. And third, climate change is the greatest market failure the world has ever seen.
The Stern Review has stood the test of time. The question is, how do we move forward?
The advances in technology over the last two decades offer hope. Renewable electricity is now cheaper than fossil-fuel electricity in much of the world. Electric vehicles are superior to those powered by internal combustion engines: far less polluting and cheaper to run and maintain. Air pollution contributes to seven million premature deaths each year, according to the World Health Organization. By investing in greener technology we can create better health outcomes for our populations across the world.
Artificial intelligence has also arrived at a crucially important time. When combined with green technologies, it can help us create cities where we can breathe cleaner air and move more easily, and pursue agriculture that does not degrade our land or poison our water. We can use it to discover, for example, new components for batteries or methods for nuclear fusion. AI can also help us track biodiversity loss, an issue which interacts with climate and is ever more important. Crucially, AI can help us identify key climate vulnerabilities and adapt accordingly.
In 2006, we spoke of achieving 80 per cent global reductions in emissions between 1990 and 2050. We now speak of net zero by 2050. The science is clear: stabilising the Earth’s temperature requires stabilising concentrations of greenhouse gases, and stabilising those concentrations requires inflows and outflows to balance: in other words, net zero. Thus it is absurd to call net zero “ideological” as many appear to do: it is basic physics.
The 2050 date is consistent with the ambition of the 2015 Paris Agreement to hold global warming well below 2oC while pursuing efforts to limit it to 1.5oC. We are now certain to pass 1.5oC, but limiting warming to well below 2oC remains within reach. That would leave open the possibility of returning to 1.5oC over the following decades.
On the policy side, we now see that though it is crucial to price and regulate carbon, there are other key market failures to tackle. We must foster research and development. Capital markets must be strengthened in their ability to manage risks. Development banks, national and international, have a crucial role to play here. The big systems—cities, energy, transport, land, water—require steering and management. For example, low-carbon cities will require green bus and metro systems, and better facilities for cyclists and pedestrians. And power grids must have the capacity to shift demands and supplies over space and time.
Looking forward, we need much stronger investment in the new opportunities created by the new green technologies and AI if we are to avoid climate tipping points. The next two decades will bring a period of rapid growth in developing countries. Will the new infrastructure they create be clean and efficient from the outset? How can richer countries help provide them with finance and technology to foster clean and sustainable growth, while also accelerating emissions cuts at home? The answers will lie in investment and innovation.
Transformational change causes dislocation. There will be winners and losers. But we have in our hands a new model of sustainable, resilient and inclusive growth that is so much more attractive than those of the past—from cheaper and cleaner energy to agriculture. Change is difficult but inaction is worse, indeed unforgivable, given the consequences for this and future generations.
