September 29, 2013 7:22 pm

World leaders must act faster on climate change

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Businesses will watch governments to check they understand the IPCC findings, says Nicholas Stern

Governments and businesses should be left in no doubt about the dangers of delaying further cuts in greenhouse gas emissions following the publication of the new assessment report by the Intergovernmental Panel on Climate Change.

A summary of the report, approved by 195 governments on Friday, points out that if we want a 50 per cent chance of avoiding global warming of more than 2C, which countries have agreed would be dangerous, we cannot emit in total more than between 820bn and 1,445bn tonnes of carbon dioxide and other greenhouse gases over the next century.

Given that we are currently emitting 50bn tonnes of emissions every year, even if we stay at today’s levels we will use up our entire budget in 15 to 25 years. And if we carry on increasing annual emissions at the present rate, we will exhaust it even quicker.

The report reveals clearly how slow, weak action increases the risks because greenhouse gases continue to accumulate in the atmosphere, and the installation of long-lasting high-carbon capital and infrastructure locks in future emissions. It is this brutal arithmetic that should persuade companies, communities, cities and nations to seize the opportunities for sustained and sustainable growth offered by hastening their transition to a low-carbon economy.

In the private sector, the process of discovery is under way, creating cleaner and more energy-efficient technologies. But businesses need greater clarity and consistency from policy makers.

For governments, the stark fact is that after less than 1C of warming we are seeing fundamental changes to the world’s climate, which could soon be transformed beyond anything modern humans have experienced, potentially causing mass migration and endless conflict. This should focus minds as they choose policies for emissions reductions and prepare for international climate negotiations in Warsaw this year. They are working towards the 2015 UN climate change summit in Paris, at which they hope to sign a treaty ensuring global action to reduce emissions by enough to give a good chance of avoiding the 2C threshold.

Countries such as the UK have anticipated the direction of international co-operation by embedding in domestic legislation a target consistent with this threshold. The Climate Change Act, passed in 2008, commits the UK to reduce its annual emissions by at least 80 per cent by 2050 compared with 1990.

Having read the IPCC report and recognised the need for accelerated action, others should follow. For the EU, the report presents a chance to reclaim leadership on climate change. It should set a target to reduce its emissions by 50 per cent by 2030. Anything less would amount to a failure to recognise the scale of ambition required. And, given the slow growth and recessions of recent years, it is eminently feasible.

But all governments must recognise that they themselves potentially pose the biggest threat. There is a danger that, through vacillation and confusion, they will create policy risk that undermines the confidence of the companies largely responsible for delivering the transition to low-carbon economic growth and development.

Businesses will now be watching world leaders and their ministers to check that they understand the findings of the IPCC, recognise the scale and urgency of the problem, and see the additional benefits of shifting off a high-carbon path.

Some politicians will still seek to deny the science and downplay the risks. Many of them have vested financial interests in protecting the status quo, or ideological beliefs that mean they cannot acknowledge the logic of correcting market failures that have created climate change in order to strengthen the role of markets in discovering opportunities and allocating resources. Although they are small in number, they still have the power to create confusion and slow action.

But everywhere evidence is emerging of opportunities afforded by new energy sources that are more efficient and less polluting. No investor should fail to be impressed by how rapidly the costs of solar photovoltaics and other technologies are falling. Trillions of dollars of investment will be needed, but this will unleash decades of growth at a time when there is slack in many economies and interest rates are low.

It is this linkage between strong growth and reduced climate risks that will be examined by a new project, chaired by the former Mexican president Felipe Calderón and of which I am vice-chair, due for completion in September next year.

The leaders of the biggest emitters, China and the US, are showing they understand both the increased risks and the great opportunities. Presidents Barack Obama and Xi Jinping pledged at their summit in June to work together to tackle climate change.

The new IPCC report should now convince all world leaders to accelerate their efforts to tackle climate change and create a safer and more prosperous world.

The writer is a professor at the London School of Economics and president of the British Academy

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