Nicholas Stern’s lecture at LSE earlier this week did not have anything groundbreaking, but, as usual, his ability to present climate change facts and their links to economics made it an interesting talk.

On the science side, the main point was the recognition that the Stern Review underplayed the risks. He cited figures from the Hadley Centre showing that, under business as usual, CO2e concentrations, currently 435ppm, might get to 750ppm or more by the end of our century, which means it is “likely” there will be a 5.5-degree temperature increase. This would mean floods, droughts, crop failures, mass migration, major political conflicts, etc. In short, we’re going to hell in a hand basket.

But he keeps a positive attitude, and here are the main points of his blueprint:
- We need to keep under 500ppm, or 20 gigatones/yr. For a world of 9 billion people in 2050, that means 2 tonnes/yr/person (the typical UK person emits 10+ tonnes/yr)
- Considering historic emission stocks, citizens of developed countries should actually have a quota of zero, and pay for their 2 tonnes through trading schemes
- Pricing CO2 externalities is fundamental and emissions trading has a role to play, but the main parts of the strategy are: energy efficiency, low and zero carbon technologies, carbon capture and a halt to deforestation
- The developed world should pay for avoided deforestation, but the developing world should be in charge of laying down the conditions. Technology transfer to the developing world is also key.
- Overall, measures would cost 1%-2% of global GDP to begin with, less in the future as technologies evolve and oil prices rise. And most of this cost is actually investment, which will generate more growth.

In terms of next steps, he highlighted the importance of sorting out a plan before Copenhagen, in December. The clock is ticking.