In 2006 the Stern Review, commissioned by the UK Government, developed a new economic understanding of the impact of climate change by including risk into standard cost/benefit analysis. With the finance system in turmoil as a result of bad risk management, a new stimulus for the economy is needed to ensure that we can continue to grow and avoid the worst outcomes from a credit crunch. A ‘green’ growth push, led by governments and supported by business, has the potential to rebuild confidence in the economic system and should incorporate climate risk into its framework from the beginning.
In November 2007 a group of 170 companies from around the world published The Bali Communiqué . The Communiqué called on world leaders to agree a comprehensive, legally binding United Nations framework to tackle climate change. The initiative represented an unprecedented coming together of the international business community and included some of the biggest companies and brands, including organizations from the United States, Europe, Australia and China.
With governments and politicians now increasingly focused on this issue, and with a strong call from business to create the political space required to start detailed discussions on the implementation of policies, it is now important to move beyond a vision for emissions reductions (usually outlined as emissions reduction targets) and into real action to identify the particular pathways that we are to take to achieve these targets.
Governments must use regulations and standards across the board to help deliver the necessary technology and behaviour changes, and should work closely with business to ensure that the changes can be delivered rapidly. To support technology discovery, demonstration and deployment, governments must use cap-and-trade markets to establish a carbon price, forward procurement, rising standards, subsidy reform, funding support for discovery and demonstration and funding support for technology transfer (possibly through revenue generated by auctioning of carbon allowances on cap-and-trade markets). To reduce the risk of climate impacts, governments must develop strong adaptation strategies and work closely with the insurance sector to ensure that the risks are brought down to a manageable level. Adaptation strategies, in particular around water, food and health, should be shared between governments.
In summary the biggest obstacle for government to overcome to achieve a low carbon, or low climate risk, economy is political will. Business has given the green light for action and there is no one policy area that should be prioritized – instead we need government to prioritize developing, and clearly articulating, a vision and pathway to get us from today to 2020, 2050 and beyond.
Dr Aled Jones is the Deputy Director, University of Cambridge Programme for Sustainability Leadership