We are stuck deeper in the carbon economy than most of us realise, which is why unravelling 100 years of development is so complicated and why world leaders may be reluctant to start the process.
But stopping climate change in its tracks need not bring the world’s economy juddering to a halt. In fact, many people believe there is greater economic opportunity in facing the issue head on than hoping it will disappear. The solution is to balance the needs of a choking planet with the needs of the global economy and the billions who depend on it.
In his influential report Stern Review on the Economics of Climate Change for the UK government in 2006, the World Bank’s former chief economist, Lord Stern, said “tackling climate change is the pro-growth strategy for the long term.”
His report concluded that the cost on inaction would be between five per cent and 20 per cent of global GDP every year “now and forever”. He said the cost to the global economy of tackling the issue – our insurance premium – would be just one per cent. Crucially, he made the point that the developing world would benefit as much from taking action as the West, rather than “missing out” on the benefits of industrialisation and consumption that the developed world has enjoyed for most of the last century.
The action required to reengineer the world’s economy is either “push” or “pull.” The “push” will come from governments through taxation and regulation in a classic ‘carrot and stick’ approach that is already working well in the car industry. The stick, regulation with heavy fines for breaches, is forcing manufacturers to produce cleaner cars. The carrot of lower taxation is driving consumers to take up these products to enjoy cheaper motoring. And it is working – even Ferrari is working on an electric-hybrid car.
The “pull”, which is perhaps slower to gain traction but will ultimately be more powerful, will come from consumers. The choices we make as individuals have a massive impact on how economies work. We are not all going to revert to Edwardian tweeds – if we did, the low-cost clothing manufacturing sector, essential to emerging markets, would evaporate – but consumers and responsible businesses can make a difference from the bottom up. Tesco, for example, is taking climate change very seriously and aims to be carbon neutral by 2050. Yes, it will make commercial scarifies along the way, but you could assume that in the long-term its green ambitions will not hinder its growth.
