Cost of tackling global climate change has doubled, warns Stern

Lord Stern believes £28bn may be need to tackle climate change.

The author of an influential British government report arguing the worldneeded to spend just 1% of its wealth tackling climate change has warnedthat the cost of averting disaster has now doubled.

Lord Stern of Brentford made headlines in 2006 with a report that saidcountries needed to spend 1% of their GDP to stop greenhouse gases rising todangerous levels. Failure to do this would lead to damage costing much more,the report warned - at least 5% and perhaps more than 20% of global GDP.

But speaking yesterday in London, Stern said evidence that climate changewas happening faster than had been previously thought meant that emissionsneeded to be reduced even more sharply.

This meant the concentration of greenhouse gases in the atmosphere wouldhave to be kept below 500 parts per million, said Stern. In 2006, he set afigure of 450-550ppm. "I now think the appropriate thing would be in themiddle of that range," he said. "To get below 500ppm ... would cost around2% of GDP."

In a recent report for the London School of Economics, Stern acknowledgedthat even 1% of GDP was "not a trivial amount". For the UK it is equivalentto £14bn a year. But he argue that it was a fraction of annual economicgrowth, and much less than the 8-14% that was spent, for example, on healthby industrialised countries.

His reassessment of the cost of battling climate change comes at a sensitivetime, the day before Gordon Brown makes a major speech setting out a £100bnstrategy for ensuring that 15% of all energy used in the UK will come fromrenewable sources by 2020. The government has come under pressure from theTories, whose statements on the environment include effectively banning newcoal power stations and opposing a third runway at Heathrow.

Ministers are already under political pressure to row back on environmentaltaxes, such as increases in fuel duty and vehicle excise duty. DowningStreet aides admit government policy is ahead of public opinion and that itsproposals are on the margins of what the electorate will tolerate at a timeof escalating oil prices and falling house prices. Brown will highlight thatas many as 160,000 green jobs will be created by his climate changemeasures.

Speaking yesterday at the launch of the Carbon Rating Agency, the world'sfirst ratings agency for carbon offsetting projects, Stern warned that the2% estimate required governments to act quickly. "All this depends on goodpolicy and well functioning [carbon] markets. There are many ways to messthis up, many ways of acting to make it more costly," he said.

The Stern review in October 2006 called for global emissions to be cut by aquarter by 2050 and to be stopped from rising above the equivalent of 550ppmof CO2, a measure that combines the effect of all the greenhouse gases. Thecurrent level is 430ppm, and is rising by 2ppm a year.

Yesterday, Stern, a former World Bank chief economist and head of the UKgovernment economic service, said he now believed the limit should be500ppm. This would reduce the risk from a 50% chance to a 3% chance that theglobal average temperature would rise by 5C above pre-industrial levels, hesaid, pointing out that the last time this happened, 35-55m years ago,alligators lived near the north pole. "These kind of temperature changestransform the word," he said.

His new comments follow a speech in April in which he said that the latestresearch showed climate change was more of a threat, and called for globalemissions to halve by 2050, including cuts of 80% in the UK and 90% in theUS.

The Department for Environment said the case for cutting global emissionswas still strong: "We cannot afford inaction on climate change. Even at theupper range of the estimates, the cost of avoiding dangerous climate changeis much lower than even the most conservative estimates of inaction."