31 January 2006

Sir Nicholas Stern gives Keynote Speech to the Oxford Institute of Economic Policy on ‘What is the Economics of Climate Change?’

Sir Nicholas Stern, Head of the Stern Review on the Economics of Climate Change and Head of the Government Economic Service will give a lecture to the Oxford Institute of Economic Policy (Oxonia) as part of their distinguished lecture series entitled ‘What is the Economics of Climate Change?’ on Tuesday 31 January. In his speech, Sir Nicholas will outline a number of key themes and questions on which the Review will focus:

Climate change is a serious and urgent issue. The most recent science indicates that many of the risks are more serious than previously thought. The problem is global in both its causes and its effects, and demands an international collaborative response;
Because of its global scale, long time horizons, uncertainties and irreversibilities, the economics of climate change is much more complex than that of other environmental problems such as smog or water pollution. The possibility of serious adverse consequences may justify more extensive action now than central projections alone would suggest;
Countries assessing their role in global action must understand the implications of the changing climate, and of mitigation policies, for both their own economic growth and human development and that of others. These implications will vary widely. Some of the most severe impacts will be felt in the poorest countries least able to adapt;
The current pathway of emissions is unsustainable in terms of its consequences for dangerous climate change. Policies and institutions are needed to shift future patterns of energy consumption and production, to promote the development and deployment of new technologies by public and private sectors, and to change individual and societal attitudes. A strong private sector response requires public policies that give clear, long-term and credible incentives;
Climate change requires an international response based on a shared understanding of the implications. Incentives need to be in place to support action in fast-growing developing countries. Developed countries, which bear most of the historical responsibility for the problem, should show leadership. The UK and EU have a vital role to play in generating the multilateral action that is crucial for an effective response.

Sir Nicholas Stern said today:

“Climate change has important implications for future economic growth and development in all parts of the world. Some of the most severe impacts of the changing climate will be felt by people already struggling with extreme poverty, reinforcing still further the need for international action to fight poverty and promote development.

But it is not too late to take action to avoid the worst impacts of climate change. If governments set clear, credible, and long-term incentives, then businesses and individuals will respond, and emissions can be shifted to a more sustainable pathway.

The issue demands a global response. Effective action requires the involvement of the fast-growing developing countries. The world’s richest nations, who bear much of the historical responsibility for the problem, should lead the international effort”

A paper will accompany the speech and is available on the Stern Review website, http://www.sternreview.org.uk/. The Review team welcomes responses to this paper by 17 March 2006. These can be sent by email to oxonia.responses@sternreview.org.uk, or by post to: Oxonia Responses, Stern Review, 2/35, 1 Horse Guards Road SW1A 2HQ.

Notes to Editors

1. Oxonia is an independent not-for-profit institution devoted to the analysis, discussion and dissemination of economic policy issues.

2. Sir Nicholas Stern is Head of the Government Economic Service and Adviser to Her Majesty’s Government on the Economics of Climate Change and Development.

3. The Chancellor announced on 19 July 2005 that he had asked Sir Nicholas Stern to lead a major review of the economics of climate change, to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and globally. The full terms of reference are at http://www.sternreview.org.uk/. The review is being taken forward jointly by a Cabinet Office and HM Treasury team, and will report to the Prime Minister and Chancellor of the Exchequer by Autumn 2006. The Review takes place within the context of existing national and international climate change policy.

4. Sir Nicholas Stern invited interested stakeholders in the UK and the rest of the world, including academic, private sector, scientific, NGO and other experts, to submit evidence to the Review by 9 December 2005. The Review team are now considering over 200 responses in detail. The responses received have been posted on the Review team website.

5. Media enquires should be directed to Vicki Bakhshi on 020 7270 6280.