Lord Stern, author of a 2006 report on climate change that led to him being dubbed “the most dangerous man you’ve never heard of,” has written a second report recommending basing the world’s economies around climate policy. Colloquially known as ‘Stern 2.0’, the ‘Better Growth, Better Climate’ report from the Global Commission on the Economy and Climate also contains dire warnings on the threat of global warming, despite no warming having been recorded now for 18 years.
Just as Stern’s first report, written on the request of then Prime Minister Tony Blair, was panned by fellow economists, the summary of this report too is attracting criticism from his colleagues (the full report has yet to be released). Richard Tol, Professor of Economics at the notoriously left leaning University of Sussex, has written a critique of the report, published on his blog and at The Conversation (h/t Bishop Hill).
“The summary was released before the main report and we are invited to believe its findings without inspecting the evidence. It seems, though, that Stern has produced another far-fetched piece of work,” Tol writes.
The report contains three broad claims – “none of which stack up,” Tol says: that economic growth is stimulated by climate change policies; that climate change threatens economic growth; and that an international treaty on climate policy is required urgently. Addressing each in turn, Tol explains how each is flawed.
Climate alarmist reports are notorious for upping the ante in an attempt to cajole governments into spending even more money on green policies, and Stern 2.0 is no different. In the first Stern report, the recommendation was to spend 1 percent of world GDP to stabilise the atmospheric concentrations of greenhouse gases around 525ppm CO2e (the Intergovernmental Panel on Climate Change (IPCC) estimated it would cost twice as much). The new report sets a more stringent target of 450ppm CO2e.
“This is implausible. Renewable energy is more expensive than fossil fuels, and their rapid expansion is because they are heavily subsidised rather than because they are commercially attractive,” writes Tol. “The subsidies and market distortions that typify climate policy do, of course, create opportunities for the well-connected to enrich themselves at the expense of the rest of society. Perhaps Stern 2.0 mistook rent seeking for wealth creation.”
On the charge that climate change endangers economic growth, Tol is dismissive: “Over the past two decades, economists have re-investigated the relationship between economic development and geography. … most research finds that climate plays at most a minor role in economic growth, and that the impact of climate is moderated by technology and institutions. Just consider Iceland and Singapore. Stern 2.0 goes against the grain of a large body of literature.”
Again, the IPCC disagrees with Stern’s findings here too, and again Stern has turned up his rhetoric. The first Stern report predicted costs of climate change to lie between 5 and 20 percent of global income, whereas the IPCC placed it at a much more modest 0.2 to 2 percent. As James Delingpole pointed out on Breitbart London when the IPCC report was released, “If the lower estimate is correct, then all it would take is an annual growth rate of 2.4 percent (currently it’s around 3 percent) for the economic costs of climate change to be wiped out within a month.”
Yet this hasn’t stopped Stern warning that his last prediction may have been an order of magnitude too conservative – precisely the opposite of the IPCC’s testimony.
And lastly, the claim that an international policy on climate change is required. “Since 1995, the parties to the UN Framework Convention on Climate Change have met year-after-year to try and agree on legally binding targets – and they have failed every time,” Tol writes. “The reasons are simple. It is better if others reduce their emissions but you do not.
“Stern also argues that ‘[d]eveloped countries will need to show leadership.’ The EU has led international climate policy for two decades, but without winning any followers. The broken record that is Stern 2.0 is unlikely to inspire enthusiasm for more expensive energy,” Tol concludes witheringly.
Reading through the summary, the inherent contradictions are obvious. For example the summary on one chapter reads “There is a perception that there is a trade-off in the short- to medium term between economic growth and climate action, but this is due largely to a misconception (built into many model-based assessments) that economies are static, unchanging and perfectly efficient.” Yet the summary to the next chapter begins “Transitioning from a high-carbon to a low-carbon economy will require significant investment. Businesses, land owners, farmers and households will need to invest to improve efficiency; energy producers will need to switch to low-carbon generation.”
Tol was a contributor to the most recent IPCC report but asked to have his name removed from the Summary for Policymakers as he felt that the summary struck a much more alarmist tone than the report itself. His comment was “This is a missed opportunity.”
Commenting on Stern 2.0, he repeats the charge: “Climate policy need not be expensive. Study after study has shown that it is possible to decarbonise at a modest cost and Stern has missed an opportunity to point this out.”
The comment is reminiscent of Matthew Sinclair’s 2011 book Let Them Eat Carbon, in which he argues that, even if we accept that carbon dioxide drives climate change, and that climate change is detrimental to humankind, the policies currently being pursued by governments still don’t make sense: “Like a man facing a midlife crisis who blows all his savings on Porches or Harleys without becoming any more attractive to younger women, we risk wreaking our economies without achieving significant environmental improvements.”