A Stern Warning

The big news on the cleantech front in the last week was the release of the Stern Review Report on the Economics of Climate Change. This report was commissioned by the U.K. Treasury, and was overseen by Sir Nicholas Stern, former Chief Economist of the World Bank.

For those of you who missed the press coverage, here is some sample reportage, from MSNBC. U.K. Prime Minister Tony Blair introduced the Stern report, calling it “’the most important document on the future’ that he had read since becoming prime minister.”

At its essence, the report aimed to quantify the costs of dealing now with climate change (about 1% of global economic activity), relative to the costs of dealing only later with climate change (estimated between 5-20% of global economic activity).

In Stern’s words, climate change could cause “disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century.”

In the words of Madison Avenue, as in the old advertisements for (I think?) Fram oil filters, “you can pay me now, or pay me later.”

Blair added further strong statements surrounding the report’s unveiling, claiming that the report “demolished the last remaining argument for inaction in the face of climate change.” Of course, the Stern report and Blair’s supportive statements didn’t definitively end the debate, but just added more fuel to the fires. Myron Ebell of the Competitive Enterprise Institute — not just a skeptic but seemingly an outright enthusiast on climate change (they’ve been funded by ExxonMobil among other climate miscreants) — countered that “the report’s estimates for reducing greenhouse gas emissions are laughably rosy, while the assumptions about the impacts of global warming are ridiculously overblown.”

Actually, I suspect that Ebell may be right — at least in regards to underestimating the costs of immediate significant action to mitigate climate change. Based on my understanding of energy economics, and the costs of emission reduction options, reducing greenhouse gas emissions by any significant quantity will not come easily or cheaply.

This view is more or less corroborated by the noted Danish academic Bjorn Lomborg, who wrote an op-ed piece in the Wall Street Journal dissecting the Stern report. Lomborg is a formidable force when wielded effectively by climate change “do-nothings”, in that his arguments against dealing with climate change are not the rants of a madman, but rather a reasoned and seemingly rational analyst using sound logic underlain by good facts and grounded assertions.

Lomborg ends up concluding that, while climate change is a real concern, there are other more urgent and higher-return investments that deserve our incremental public policy dollar. That presupposes that we have a future inhabitable planet to live on.

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