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Nicholas Stern – A Policy Framework for Climate Change

Lord Stern, author of the review on the economics of climate change (“The Stern Report”, 2006) wrote in The Times (London) on the 22 February 2008 pointing out the need for a clear policy framework to deal with the threat posed by climate change.

He wrote, “Climate change is the greatest market failure the world has seen. It requires large-scale and international action. By providing a strong policy framework to overcome this failure, governments can harness the tremendous power of markets to find effective, efficient, equitable and international responses to the challenge. For markets and entrepreneurship to work, that framework must be credible and predictable, but allow flexibility too.”

He said that The Climate Change Bill, currently in debate in the UK’s House of Lords, “provides a huge opportunity to demonstrate the UK’s commitment” and noted that, “Reversing the trend to higher global temperatures, more extreme and variable local weather patterns, increasing costs of natural disasters and potentially enormous population movements requires an urgent worldwide shift towards a low-carbon economy.”  Lord Stern also set out the three principles that a global policy must satisfy in order to generate international support:

  1. it must lead to cuts in CO2 emissions on the scale required;
  2. it must be implemented in the most cost-effective way; and
  3. it must be equitable, to take account of the double inequity – it is poor countries that are hit earliest and hardest and rich countries that have greater responsibility for past emissions.

Lord Stern welcomed the UK’s commitment to carbon reduction, and said that it would be the first country to create a legal framework to enforce this commitment, he added that “The UK, and other rich countries, should commit themselves to a target [of carbon reduction] of at least 80 per cent,” because, “Given the historical responsibility of big countries for a large majority of the current stock of gases, that is surely the minimum cut that equity demands.”

He also supported carbon trading and said there are three advantages:

  1. quotas control the level of emissions directly;
  2. trading for countries who want to exceed those quotes encourages better sharing of costs across the world; and
  3. they provide incentives for developing countries to participate.

Lord Stern of Brentford is IG Patel Professor of Economics & Government at the London School of Economics and author of the Stern Report (2006).

Important though the Climate Change Bill and Lord Stern’s work is the record of the UK Government on reducing carbon emissions is not good, ” Mr Juniper the retiring director of Friends of the Earth (FoE) said in January 2008, “Gordon Brown has talked a talk good on the climate-change issue in particular, but his policies are not matching the speeches.  In November, one day he was talking about the need to cut emissions by 80 per cent, and a few days later he was out there at the front of the pack making the case for a third runway at Heathrow, which would generate emissions equivalent to the whole of Kenya. “He hasn’t joined up the dots – he’s going in two directions simultaneously. Until he sees that the fundamentals of policy have got to reflect his overarching global concern, he isn’t going to get very far.” (reported in The Guardian 28 January 2008).

The UK department responsible for climate change is also the Department for Environment, Food and Rural Affairs, the department which was heavily criticized for its handling of BSE and foot and mouth outbreaks.  Its critics claim that it is focused on supported large agricultural producers.  If the UK Government is to seriously implement climate change measures this will require a separate department and a Minister in the Cabinet; I have little faith that the UK Climate Change Programme is getting anything like real political support.

One has to be realistic in assessing the performance of all politicians, their focus is primarily on looking good in the eyes of the electorate, and that often means supporting a number of policies which actually conflict with each other.  The current UK Government is also an administration that is particularly disjointed and confused, and it would be foolish to have any hopes that it will improve.


The Times, link to article: http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3412545.ece

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