Climate change: Is Stern Report 'alarmist and incompetent'?


In Short:
The Stern Report on the costs of climate change has stirred the EU's political elites. But are the calculations behind it serious? EurActiv examines the climate sceptics' arguments.
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Background:
Following in the footsteps of Al Gore's campaign film "An Inconvenient Truth", the UK government's publication of the long-waited report by former World Bank economist Nick Stern has woken up Europe's political leaders (see EurActiv 31 Oct 2006).
Prime Minister Tony Blair called the Stern review "the most important report on the future" and his Finance Minister Gordon Brown followed suit. The French government also lends its support to the Stern study, saying that a similar "Factor Four" report in France had come to the same conclusions.
Issues:
Not everyone, though, applauded the document. The report immediately came under attack from climate sceptics who questioned the science and the cost calculations as well as from climate "believers" who stated that Sir Nicholas Stern's analysis is underestimating the costs of fighting climate change.
The UK government report's key message is that tackling climate change will cost 20 times less than doing nothing and therefore underpins political initiatives such as emission trading or energy-efficiency actions.
But studies on the costs of climate change have to include a lot of economic-value assumptions and are therefore difficult.
Moreover, the media frenzy surrounding the report could also face criticism of being politically motivated, as the current Labour government is coming under increasing "greenness pressure" from the new Tory leader, David Cameron.
Positions:
The US government which withdrew from the Kyoto Protocol on climate change in 2001, downplayed the importance of the Stern Report saying that it was one of many others on the costs of climate-change mitigation. Spokespeople of the Bush administration refered to their government's huge investments in new technologies to tackle climate change.
OPEC, the organisation of petroleum exporting countries, called the Stern report "misguided". OPEC's Secretary-General Mohammed Barkindo said: "The mitigation and adaptation to climate change can only be accomplished on the principles of common responsibility and respected capabilities and not by scenarios that have no foundations in either science or economics as we had yesterday from London".
The Wall Street Journal called the Stern report a "politicised edifice" and compared it negatively to the Copenhagen Consensus of Danish economist Björn Lomborg, saying "there are far more urgent, and far less speculative, problems that we know how to solve with the right policies. That message may not get scary headlines, but it would improve the lives of more human beings around the world." The Copenhagen consensus is a project that aims to establish policy priorities for advancing global welfare.
In the Guardian's blog "Comment is free", solar industry entrepreneur Jeremy Leggett criticised the Stern Report for not being "stern enough" and "playing down the scale of the problem".
One of the most renowned experts on the economics of climate change, Richard Tol, produced a detailed, four-page critique of the Stern report, saying that it uses only the most pessimistic impact studies, starts from a too-low discount rate and has no real cost-benefit analysis. Tol therefore called the report "alarmist and incompetent". "This is not to say that climate change is not a problem, nor that greenhouse-gas emissions should not be reduced. There are sound arguments for emission reduction. However, unsound analyses like the Stern Report only provide fodder for those sceptical of climate change and climate policy," Tol concludes.
Latest & next steps:
An international conference on climate change will start in Nairobi, Kenya on 6 November and will last until 17 November. More than 6,000 delegates including heads of state and ministers will discuss the future of an international climate- change regime.
Links

EU official documents
Commission DG Environment: Climate change portal

Governments
UK - HM Treasury: Stern Review on the Economics of Climate Change
France - Ministry for Economy, Finance and Industry: Rapport du Groupe de travail "Division par quatre des émissions de gaz à effet de serre de France à l'horizon 2050" , (Aug 2006) [EN]

Press articles
Times Online: Comment "A new slogan for the environmental pressure groups: Some Gain, No Pain"
International Herald Tribune: U.S. touts aggressive action on global warming in response to British report
Nature: How much will it cost to save the world?
The Australian: Alan Wood: Don't heed stern warning
Guardian: Lawson to take potshot at eco-obsession
WorldChanging: Stern review: how climate change is revolutionizing economics
Le Monde Citoyen: Rapport Stern: l'indispensable imposture
Wiener Zeitung: Warum ökonomische Studien zum Klimawandel nur wenig aussagen
Related Documents
Stern Review: Climate action now will avoid future economic chaos (31 October 2006)
Air-travel taxes to solve climate-change crisis? (31 October 2006)
Commission set to reject 'overblown' CO2 plans (26 October 2006)
EU trade unions demand strong climate-change policy (24 October 2006)
Piebalgs proposes 75 actions to slash energy consumption (20 October 2006)
Climate change: Is Stern Report 'alarmist and incompetent'?
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Climate change: Is Stern Report 'alarmist and incompetent'? (Euractiv.com)
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