By Liz Kalaugher

“I realise most of you here are scientists and not economists and that is your fault,” were the first words of Nicholas Stern of the London School of Economics at his plenary talk at the Copenhagen Climate Congress.

Later he laid out the pros and cons of both carbon trading and carbon tax schemes. “Don’t let anyone kid you that a tax scheme is clearly the best,” he said.

Stern put together the Stern Review of the economics of climate change in 2006 for the UK government. In the light of evidence since then, he believes his report underestimated the damages climate change could cause and the speed of that change. Today he says two big challenges face us  – poverty and climate change. And if we don’t fix climate change we will create a physical climate so hostile that the hard-won gains in development are lost.

“We should be supporting development that is shaped and driven by developing countries themselves,” said Stern. “This is about working together to expand the options that people have, the technologies that are available…then there would be a real partnership.”

The necessary resources could come from carbon finance, overseas development assistance, private investment, and the various kinds of guarantee and insurance instruments available to the international finance institutions.

Stern stressed that if developed countries can show examples where they have achieved low-carbon growth, it would be far more powerful than just talking about it. To date developing countries have only seen development in the west result from a high-carbon growth path but this need no longer be the case.

Stern reckons that a high-carbon growth future would kill itself, firstly from high hydrocarbon costs and then because of climate change. “We should see action as, rather, attraction and inaction as inexcusable,” he said.

That action is particularly attractive in an economic slowdown, when resources are cheaper. “Now’s the time to get the unemployed of Europe getting our houses more energy efficient,” said Stern. “We must not sow the seeds of the next bubble. We can come out of
this one and lay the foundations for low carbon growth.”