Friday, July 22, 2011

Nicholas Stern and the impact of the economic crisis on climate change

The Copenhagen climate talks in 2009 were billed as the summit that would save the world from disastrous climate change. But it failed to deliver a binding deal on carbon emissions. Since then, progress on an international deal has been slow as countries have become more preoccupied with saving their economies, rather than saving the world.

Dimitri Zengelis, associate fellow of the energy, environment and development programme at Chatham House in London, says: “The obvious impact is that nobody wants to think about the long-term and the environment that people consider higher order luxuries when they are struggling to pay their mortgage and wondering where their next pay check is coming from and whether they are going to keep their job.”

Europe’s drop in GDP by around 5% between 2007 and 2008 and the debt crisis which began with Greece in 2010 have distracted EU governments who had championed climate policy, says Nick Robins, HSBC’s head of the Climate Change Center.

He says: “Europe has led the pack for the last 20 years and we believe that the EU is the largest market for low carbon goods and services and will be so in 2020. But the EU has hit a pause in terms of more policy incentives. It’s still working out the fiscal austerity issues that are top of mind at the moment.”

Meanwhile, in the US, progress on domestic and international climate policy has been overshadowed by a $14.26tn budget deficit and an unemployment rate of 8.8% as of March, well above the average of 5.7% for the past 50 years.

Dr Margo Thorning, chief economist at the American Council for Capital Formation, says that the economy partly prompted Congress to reject a cap and trade scheme last year, and this year Republicans have repeatedly sought to protect fossil fuel companies by limiting the powers of the Environmental Protection Agency to curb emissions.

She says: “The slowdown in the economy that really hit us hard in 2008/2009 made economic growth and restoring jobs the priority in the US. Paying more for energy is inevitable if you try to quickly phase out fossil fuels and would make it tougher to keep your business going or perhaps precipitate moving more jobs out of the US.”

Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, acknowledges in the Harvard International Review published in April:

“These last two years have also seen a fallback among some developed countries in the national and international priority given to climate change, for two primary reasons: first, the assault on climate science, and second, the international financial and economic crisis.”

US public and political opinion may also have been more impacted by the “climategate” scandal and the mistake over predictions of melting Himalayan glaciers in the Intergovernmental Panel on Climate Change’s 2007 report.

Professor Richard Muller, who runs the controversial Berkeley Earth Surface Temperature project at UC Berkeley, California, says “climategate” and “glaciergate” undermined public trust.

He says: “The people involved in it convinced themselves that climate change is a looming disaster. Because they believed the data to be strong and didn’t trust the public to be persuaded by the scientific case they took decisions so that the public reached the ‘right conclusions’.

“The IPCC says the Himalaya glacier mistake is a small of the report, but it’s not a small part of public opinion.”

As countries prepare for the next major UNFCCC meeting in Durban, South Africa, in November, hopes are increasing that further progress will be made on issues such as forestry, technology and climate finance.

The Copenhagen accord set a target of climate finance flows from developed to developing countries of $100bn a year by 2020. So far, the World Bank has received $12bn of the climate finance money, but one of the ongoing impacts of the global recession may be that the $100bn target will be harder to achieve.

Sir David King, director of the Smith School of Enterprise and the Environment at the University of Oxford, says: “We’ll have to wait and see, I’m one of the skeptics as to whether it will grow.”

Although the non-binding Copenhagen accord was greeted with disappointment, 140 countries have signed up to curb emissions by 2020, covering 85% of the world’s emissions.

But Sir David says the accord is a better deal going forward than a binding global deal.

He says: “If we had a binding deal at Copenhagen it would have been another drop in the ocean. But we’re in a much stronger situation now, which is muscular bilateralism and multilateralism – this is what we’re doing what are you going to do? It’s very different from saying let’s negotiate. It’s much more productive.”

And although the US position in international climate talks is hamstrung by Republican resistance to domestic policy, change might come sooner from the corporate world, rather than Congress, says Zenghelis.

He says: “What’s going to move it? It’s not going to be the science or the morals, it’s just going to be hard core American business getting up and saying look we are totally slaughtering our manufacturing capacity relative to our competitors in particular China. That’s what going to swing it eventually in America – it’s forward sighted businesses, innovators and technology companies.”

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