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31 January 2006

Stern Review on the Economics of Climate Change

The Chancellor announced on 19 July 2005 that he had asked Sir Nick 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 review will be taken forward jointly by the Cabinet Office and HM Treasury, and will report to the Prime Minister and Chancellor by Autumn 2006. It takes place within the context of existing national and international climate change policy.

The announcement of this review is a further demonstration of the importance which this Government attaches to the issue of climate change, and follows its decision to make climate change a priority for the UK Presidencies of the G8 and EU.

Oxford Institute of Economic Policy Distinguished Lecture: 'What is the Economics of Climate Change?’

Sir Nicholas Stern, Head of the Stern Review on the Economics of Climate Change, gave a keynote lecture to the Oxford Institute of Economic Policy as part of their distinguished lecture series entitled ‘What is the Economics of Climate Change?’on the evening of Tuesday 31 January. This paper sets out the key approaches and questions for the Stern Review. We would welcome reactions to this paper by 17 March 2006  - either by email ( ) or by post to the address below."



Call for evidence

At the outset of the Review, Nick 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 on all areas relevant to the Terms of Reference. The formal deadline for submitting evidence has now passed. However, the Review team will endeavour where possible to consider material we receive in the future via the contact details listed below:

Review Team contact details

Stern Review
2nd Floor, Room 35/36
HM Treasury
1 Horse Guards Road
London SW1A 2HQ

Terms of Reference

The terms of reference of the review are to:

Examine the evidence on:

  • The implications for energy demand and emissions of the prospects for economic growth over the coming decades, including the composition and energy intensity of growth in developed and developing countries;
  • The economic, social and environmental consequences of climate change in both developed and developing countries, taking into account the risks of increased climate volatility and major irreversible impacts, and the climatic interaction with other air pollutants, as well as possible actions to adapt to the changing climate and the costs associated with them; 
  • The costs and benefits of actions to reduce the net global balance of greenhouse gas emissions from energy use and other sources, including the role of land-use changes and forestry, taking into account the potential impact of technological advances on future costs; and
  • The impact and effectiveness of national and international policies and arrangements in reducing net emissions in a cost-effective way and promoting a dynamic, equitable and sustainable global economy, including distributional effects and impacts on incentives for investment in cleaner technologies

Consult with key stakeholders, internationally and domestically, to understand views and inform analysis.

Based on this evidence, provide:

  • An assessment of the economics of moving to a low-carbon global economy, focusing on the medium to long-term perspective, and drawing implications for the timescales for action, and choice of policies and institutions.
  • An assessment of the potential of different approaches for adaptation to changes in the climate. 

Assess how this analysis applies to the specific case of the UK, in the context of its existing climate change goals.

Produce a report to the Prime Minister and Chancellor by Autumn 2006.

Related links:

Independent Reviews index
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