A Stern Warning on Climate (and a Word about Wedges)

It's been a week since the Stern Review on the Economics of Climate Change was unleashed upon the world, and the report has become a lightning rod on both sides of the climate change issue. For advocates of climate action -- that is, most people -- it was a call to arms, a sobering reality check about what will happen if we don't take bold action, fast.

For the small number of non-believers, it was just another alarmist, sky-is-falling plea, no more credible than those that came before it. Bjorn Lomborg, author of the controversial anti-environmental-movement screed, "The Skeptical Environmentalist," reviewing the report in The Wall Street Journal, complained that "Its fear-mongering arguments have been sensationalized, which is ultimately only likely to make the world worse off." And so it goes.

For the uninitiated, the Stern Review was commissioned by the British government last July. It was carried out by Sir Nicholas Stern, head of the U.K.'s Government Economic Service and former World Bank Chief Economist. In essence, Stern's team took climate models and number-crunched them into economic models.

The Review (download the full report here) focuses on the impacts and risks arising from uncontrolled climate change, and on the costs and opportunities associated with action to tackle it. It found that all countries will be affected by climate change, "but it is the poorest countries that will suffer earliest and most."

Unabated climate change risks raising average temperatures by over 5°C from pre-industrial levels. Such changes would transform the physical geography of our planet, as well as the human geography -- how and where we live our lives.

The Review calculated that the dangers of unabated climate change would be equivalent to at least 5% of global gross domestic product each year, and as high as 20% of GDP. That's far more severe than any previous calculation and reflects numbers that are nothing short of a global economic depression. In contrast, stabilizing greenhouse gases at manageable levels would cost about 1% of GDP.

The full 700-page tome is not likely to be read by many mere mortals, but I recommend at least its executive summary (there's both a short and long version) -- as well as any of several well-done analyses (such as Alan AtKisson's on Worldchanging, or the review by The Economist). It will likely be a topic of conversation for some time, and professionals dealing with climate change issues would be wise to be conversant about its key points.

Whither Wedges?
Another topic of growing discussion is that of "stabilization wedges," the notion promulgated by Princeton scientists Robert Socolow and Stephen Pacala that climate emissions can be stabilized by a series of bold actions over the next fifty years. Their original paper (download - PDF) is more than two years old, but it has been gaining currency over the past several months, culminating, perhaps, in a well-written piece in September's Scientific American (downloadable for a fee). I've heard it discussed several times at this fall's conference circuit, as well as in more casual conversations with colleagues and clients, and have been integrating it into my own speeches and presentations about business and the environment.

Socolow and Pacala argue that stabilizing greenhouse gas concentrations will require reducing emissions by 7 billion tons a year by 2054. To make this more understandable, they identified 15 potential "wedges," each of which could handle one billion tons of the total. Thus, it will take seven such "wedges" to accomplish their goal.

The wedges are sobering in their scale and scope. Here are just five examples of things we must do worldwide, each of which, when phased in over the next fifty years, will prevent the release of 25 billion tons of carbon:

Double the fuel economy of 2 billion cars worldwide from 30 mpg to 60 mpg

Cut electricity use in all homes, offices, and stores by 25 percent

Replace 1,400 large coal-fired power plants with gas-fired plants

Increase solar power 700-fold to displace coal

Increase wind power 80-fold to produce hydrogen for cars

Keep in mind that this isn't an either/or proposition. We'd have to do ALL these things -- plus two more -- to keep greenhouse gas levels stable in check below 550 parts per million, double pre-industrial levels.

Like the Stern Review, it's another sobering reality check on the challenges ahead. Increasingly, companies are not merely going to be asked what they're doing on climate change, or to simply disclose the full complement of their climate footprint. They'll be asked, "Are you doing enough to truly stem the worst effects of climate change?"

And increasingly, companies will find that they better have an answer, and that it better be good.

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Comments

[Marc Gunther]

Thanks for explaining and linking the Stern Report and the "wedge" idea, Joel. This is all quite sobering. It makes me wonder whether the dramatic growth of green tech investing and the commitment to reduce GHG emission that we are seeing from some companies (GE, DuPont, Wal-Mart) will not take us where we need to go fast enough. Add to that the fact that there are big companies (ExxonMobil, TXU) that remain part of the problem rather than part of the solution, and it's easy to get scared. I'm ordinarily an optimist but it's clear to me that all of us need to sound the alarms even louder when it comes to climate change.

[Mark Sofman]

So how and why is it that Bjorn Lonborg's work is a "screed?"

[C. Scott Miller]

Great article. I'd love to see your presentations.

There are costs and then there are social costs. For instance, TXU plans to build 11 coal-fired plants for Texas because they cost less than cleaner coal gasification plants. However, the social costs of coal combustion, even today's advanced technology versions, are incalculable if they stoke ghg emissions higher, stoke our dependence on fossil fuels, and further stoke centralization of energy production.

The value of the Stern report is that it focuses attention on social consequences that will arise if we ignore social costs. California, with its groundbreaking Global Warming law, is starting to place caps and monetary value on carbon emissions through a carbon credit system. That will generate investment capital for new, more expensive but more socially responsible technologies to be deployed.

[Lance Funston]

Joel

The wedges have also been popularized as a graphic concept for making action on climate change more understandable and possible through Gore's presentation in An Inconvenient Truth. I assume he got his data from that same source.

Even while pursuing the industrial transformation required to achieve these wedge goals, it seems that scientific consensus has also decided thatclimate change is underway and has an strong momentum of its own.

Recently members of the emerging "geo-engineering" field have suggested the spraying of sulfur particles into the high atmosphere to reflect sunlight as a last ditch effort to cool the climate.

Environmentalists rightly fear this potential solution might be seen as a "silver bullet" and a rationale for countries and corporations to keep lazily spewing GHG into the atmosphere.

But the question remains: is it better to be right or dead?

[mark c r (chemist) UK]

I'm a keen listener to the views expressed by Stern and also of the need for action - through the promotion of biofuels for instance.

One point recently raised by Jonathon Porritt at a public lecture he gave here in the UK and was in agreement with a point made by the RAND CORPORATION'S recent report into "Impacts on U.S. Energy Expenditures of Increasing Renewable Energy Use"...

That no firm SYSTEMATIC LCA analyses have been done into the use of renewable fuels from biomass.

I advocate a number of central databases of such information being setup to facilitate this soon. I say this so that comparative technologies can be easily compared rather than haphazardly with lobbying organisations interfering!

It's important to be able to "see the wood for the trees" (excuse the pun!) - getting reliable data on such things is more difficult than it has to be.

Does anyone think these problems would arrise with the nuclear energy industries??

Nice blog Joel.

Mark C R