Fueling a climate breakthrough -

LONDON: Nicholas Stern's report to the British government on the economics of climate change has created quite a stir. It appears to accept broadly the warnings about carbon emissions (mostly from burning fossil fuels) and climate change, but also to bring hard economic analysis to bear in an area so far dominated by arguments among scientists and by chilling predictions of disaster, such as those rehearsed by Al Gore in his film and book "An Inconvenient Truth."
There are other and more immediate inconvenient truths to face, however.
The first is that the struggle to control the climate - by far the biggest and most ambitious mission ever undertaken in human history - has to be totally global to have any effect. The biggest source now of greenhouse gases is the United States, but the biggest sources in the future will be China and India, with a third of the world's population. Even now, if Britain closed all its power stations, the carbon emissions saved would be equivalent to no more than a year's increase in emissions in China.
The developing countries are still relying on burning coal, of which India, China and America have about half the world's enormous reserves - enough to last for centuries. Yet coal is the dirtiest of all energy resources.
The second awkward reality is that appeals to higher moral instincts have resonance principally among policy makers and the more comfortably off; for the vast majority of humankind, choices have to be based on hard economic considerations. The "global catastrophe" message is not nearly enough to persuade people, businesses and governments to change. A much more compelling story has to be devised and much more powerful incentives have to come into play.
A third stumbling block is conflicting time scales. The outcomes of actions to cut carbon have a hugely long lead time. In the words of the Stern report, "What we do now can only have a limited effect on the climate over the next 40 or 50 years."
In the second half of the 21st century, all the efforts now to cut carbon emissions will, so scientists increasingly agree, have some benefit. They may prevent the tipping point where the weather finally turns against humanity in a rage of destructive floods and freezes and boiling heatwaves. But energy needs are immediate, as are the threats to the world energy supply, whether from terrorism or political upheaval. Somehow the motives and fears that move people and nations have to be harnessed to the longer-term goals.
A fourth awkward truth is that the investment decisions required to transform the energy supply and demand patterns of the globe necessitate immensely long-term commitment and therefore a degree of both policy continuity and price predictability.
Yet not only do governments come and go, but the energy scene is fraught with extreme volatility. The oil price, which is the key to energy prices, soars and then slumps, confounding capital investment calculations. When oil prices drop, as they will in the future, people tend to give up on energy efficiency, energy saving and alternative energy investment and go gratefully back to cheap oil (and gas and coal), thus undermining the climate warming struggle.
It ought to be possible to combine the twin goals of energy security and long-term climate security to provide a truly motivating worldwide story. On their own, prophecies of disaster lack the power to persuade people to act.
Harnessing these two causes would create the kind of grand unity of purpose that the world so conspicuously lacks at present.
If schemes for pricing carbon, and thereby presenting consumers with the true cost of the energy they consume, can be established worldwide, then the process of real change could at last be triggered. Clever juggling of the taxes, although not an overall increase in the tax burden, may be part of the new policy mix. Whatever the methods consumers everywhere would start to pay the full and true cost of fuel and make their decisions accordingly.
Without real economic incentives to save energy and invest in cleaner alternatives, long-term hopes for climate change could easily be undermined.
Lord Howell is a former British secretary of state for energy. Carole Nakhle is Energy Research Fellow at the University of Surrey.