Avoiding climate change disaster is affordable , says PwC

Ashley Seager
guardian.co.uk,
Thursday July 3, 2008

Cooling towers at Eggborough coal-fired power station, near Selby. Photograph: John Giles/PA
Severe adverse effects from climate change can be avoided at a reasonable cost but only if politicians stop talking and start acting, a major report from PricewaterhouseCoopers said today.
Updating a study it first did two years ago, the accountancy firm said that inaction on reducing carbon emissions in the interim means the necessity for action has become even more urgent than before. It called on leaders of the Group of Eight leading economies, particularly the United States - the world's largest per capita polluter - to commit themselves to firm timetables for emissions reductions at next week's summit in Tokyo.
It estimated the cost of a 50% reduction in global carbon emissions by 2050 at around 3% of global economic growth, at the top of the 2%-3% range it estimated in 2006. This is slightly higher than the upwardly revised figure of 2% estimated by Lord Stern recently but PwC stresses that its forecasts are broadly in line with Stern and both are affordable.
"This is broadly equivalent to sacrificing around a year of global GDP growth between now and 2050," said John Hawksworth, head of macroeconomics at PwC. "In other words, reaching the same level of GDP in 2051 as might otherwise have happened in 2050."
PwC has raised its projections for the amount of carbon that would be released between now and 2050 because it expects stronger economic growth in China and India over the next four decades, which in turn would lead to more use of energy and more carbon emissions.
G7 countries (G8 minus Russia) would need to cut their carbon emissions by 80% by 2050 to make their contribution to the 50% cut in global emissions, it said.
It said the group of countries it calls the "E7" - China, India, Brazil, Russia, Mexico, Indonesia and Turkey - can be allowed to continue increasing emissions, albeit at a slower rate, between now and 2020 and then cut them beyond that date.
But PwC said politicians need to take action very soon. "We've heard a lot of talking but we are at the point when politicians need to be specific about a number of concrete actions and hopefully something will emerge this year," said Hawksworth.
Richard Gledhill, head of climate change services at PwC, said: "Governments in all major economies must demonstrate their joint political will to establish a well-functioning global carbon market that puts a price on carbon emissions. That will send the right economic signals to private sector investors and consumers needed to deliver the new technologies and changes in behaviour required to combat global warming."
Hawksworth said that in addition to a carbon market, countries will need a combination of carbon taxes, regulation and government support to ensure that all parts of their economies are pushed towards a low carbon future.
He said the carbon price that would be needed to encourage the switch away from carbon towards cleaner energy sources was around $40 a tonne, close to where it is now.
"It does not need to go much higher than it is now in order to achieve the sort of carbon reductions we are talking about. But at the moment there is not the sort of long-term framework for this that we need."
PwC's report said that if nothing changes, global carbon emissions from energy use will double by 2050, raising the concentration of CO2 in the atmosphere from 380 parts per million to 600 ppm, with disastrous consequences for future generations.
Significant carbon reductions were technologically feasible, said the report, if the world made a big move into renewable energy, increased its energy efficiency and embarked on large-scale carbon capture and storage (CCS) to trap emissions released by burning coal. It said a combination of measures would be affordable and necessary.
Nuclear energy would potentially play a role but was not crucial. Similarly, PwC sees a role for biofuels but warned that this would have to be balanced against the need for affordable food.
Hawksworth said record high oil prices could accelerate a move away from oil and gas but he cautioned that the change it prompted had to be towards clean alternatives such as renewables rather than dirty options like coal without CCS and the exploitation of tar sands.
He said that the costs of decarbonising economies could be lower than expected if technological advances speeded up. He pointed to previous efforts to reduce ozone depleting chemicals and acid rain from the atmosphere, both of which end up costing less than predicted.