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By some perspectives, the planet owes Lord Nicholas Stern a big thank you – for transforming the debate on climate change into frightening economic terms.

The author of the groundbreaking Stern Review has warned that if action is not taken on climate change, we face an economic crisis ten times worse than the one we are experiencing now.

This week George Negus asks the former World Bank chief economist about Australia’s role in tackling climate change, and what he thinks of the Rudd government’s handling of the issue of late.

As Australia’s politicians ponder delaying any decision until the Copenhagen Summit in December, Lord Stern calls for “a sense of urgency” in the Australian debate.

“There’s no way that Australia could be interpreted as going it alone by moving forward now and that is absolutely fundamental,” he says.

While the primacy of the climate issue seems to have cooled in the midst of the global financial crisis, the world is “still warming” says Stern. Powers like Australia cannot afford to wait if they hope to lead in a new global order.

“I think the world will ask if Australia with all its advantages can’t cut back strongly then how can anybody expect us to cut back strongly? If that were the general attitude, then the planet would be in an extremely difficult state and we would be living very dangerously indeed.”

For months now, governments all over the world have been racing the clock to get their acts together before the wildly-debated UN climate change confest in Copenhagen early next month. Amazingly, here in the land down-under we’re still haggling over our carbon reduction targets, but it’s not just us lagging behind. Right across the globe, the summit’s goals are being downgraded as the December 7 deadline gets closer. Earlier this year, we talked with Lord Nicholas Stern, the architect of the 2006 UK review that became pretty much the benchmark for discussion on the whole issue of climate change and carbon reduction. With two very nervous weeks to go before Copenhagen – and what it may or probably won’t achieve – that interview is as pertinent as ever.

GEORGE NEGUS: Lord Stern, the Opposition here think we should wait until after the Copenhagen summit in December. Have you got any advice – gratuitous or otherwise – to give us? Because, it would seem it’s become a real political football in this country.

LORD NICHOLAS STERN, CLIMATE CHANGE ECONOMIST: I think it’s very important for the people of Australia and those involved in this discussion to take account of the very big international implications of what Australia decides to do. It can’t simply wait for everybody else, because we’re all part of this together and, actually, Australia is rather a prominent part of the story. Australia, Canada, the United States are right up there amongst the big emitters – over 20 tonnes of CO2-equivalent per capita, compared with Europe with around 10, 11 or 12, China around 5, India below 2 and much of sub-Saharan Africa below 1 tonne per capita. So I think the world will ask, “If Australia – with all its advantages – “can’t cut back strongly, “then how can anybody expect us to cut back strongly?” It’s an extremely serious issue for the rest of the world what Australia does. And I think that there should be a sense of urgency – as you debate your own problems very robustly and in your own way, it’s very important that that sense of urgency comes through Australian politics, because what you do is a significant part of what the world will do.

GEORGE NEGUS: But can it wait until Copenhagen? Can we wait for the US and China, for instance?

LORD NICHOLAS STERN: There’s a real potential for momentum here with the changing policies of the US Administration. They have committed themselves to 80% reductions over 1990-2050. And that’s from a level of emissions not dissimilar from that of Australia. They’re building their emissions trading scheme. In China they’re looking very intently at their energy strategy, building into their 12th 5-year plan, which starts at the beginning of 2011. We’re seeing big changes in those countries. China is talking about peaking by 2020 in its emissions and we haven’t heard that before. And Australia is in a very special position in relation to those two key powers. I think its political position – and its actually rather favourable political position in relation to the US and China – is also very important.

GEORGE NEGUS: Lord Stern, what would you say to one particular MP, who said recently that to go it alone on this issue would be economic suicide?

LORD NICHOLAS STERN: There’s no way that Australia could be interpreted as going it alone by moving forward now. That is absolutely fundamental. Second, I think we must recognise the great advantages to acting early. The low-carbon technologies are going to be the technological and innovation drivers of the next two or three decades. High-carbon growth has no future. On the other hand, there’s going to be a great demand for the technologies which Australia is in a very good position to produce. I mean, carbon capture and storage for coal, I think there’s a good bet that if Australia really goes for it now it will become a world leader in what will be a huge market.

GEORGE NEGUS: When the Rudd Government announced that they would be looking at up to a maximum of 25% cut from 2000 levels by 2020 they were derided that these levels are too far too low. The Greens here condemned it as very unadventurous, a non-bold move. How do you feel about a 25% cut?

LORD NICHOLAS STERN: When people talk about cuts by 2020, they think of 2020, understandably, as the midpoint between 1990 and 2050. As a midpoint for 1990-2050, then strong cuts – at least of the order of 25% or arguably more – are necessary for rich countries, which should be going for at least 80% cuts 1990-2050.

GEORGE NEGUS: So our goal is not too low?

LORD NICHOLAS STERN: No, what I’m arguing is that if it’s relative to 1990, a 25% cut could be plausible as a route from 1990-2050. There could be some understanding around the world that we are where we are, we wasted a couple of decades and we start in 2010 in a place that’s not very attractive and where, really, we shouldn’t have been.

GEORGE NEGUS: Of late it seems that the era of climate change action that followed your report has lost some of its urgency – that a little thing called “the global financial crisis” has pushed it off its perch as global enemy number one. Does it bother you that people are using the global financial crisis as a way of avoiding the issue of climate change?

LORD NICHOLAS STERN: Well, the argument that action on the climate crisis should somehow be delayed because we’ve got a current economic crisis is simply confused and wrong. The reason we got into this economic crisis is that we delayed action – we didn’t take into account the kind of risks that we were generating. We ignored them and we delayed action. We shouldn’t make the same mistake on climate change. When we came out of the dotcom bubble around the turn of the century and tried to revive our economies after that, what we did was to lay the foundations of the next bubble. It makes no sense to come out of one crisis in a way that isn’t sustainable.

GEORGE NEGUS: You originally said that unless we invest in something like 1% of global GDP per annum fighting climate change it could ultimately cost us up to 20% of global GDP. Now in your new work you are calling for an investment of 2%. Does that mean the situation is worsening?

LORD NICHOLAS STERN: I raised the number because I think, looking back, the targets that were proposed in the Stern Review were not ambitious enough, given the kinds of risk which we’re now seeing. The risks are actually still worse than we saw in the Stern Review because greenhouse gases are growing faster than we assumed, the absorptive capacity of the planet – particular the oceans – to absorb greenhouse gases is less than we thought, and some of the effects – for example, Greenland ice melting – are coming through faster than we thought. So what I’m suggesting now is that we raise our targets somewhat – that will cost a little more – but I’m, on the other hand, extremely encouraged by the way in which technology is moving. And I suspect that 5 or 10 years from now some of these costs might look, actually, as on the high side – that it could be actually rather cheaper because of the great technological progress that’s coming through.

GEORGE NEGUS: Lord Stern, how important is the upcoming Copenhagen summit? Is that a crunch point for the globe?

LORD NICHOLAS STERN: Absolutely. It’s the most important international gathering since the Second World War.

GEORGE NEGUS: You put it that high?

LORD NICHOLAS STERN: Yes. The risks that we run are still bigger than the very unpleasant experiences the world went through in the 30 years from 1914 to 1944 which led up to the Bretton Woods Conference and the recognition that unless we collaborate as a world the consequences will be disastrous. This time around, on the climate, they’re still more dangerous than what we went through in those 30 years, 1914-1944. The difference is that we have to anticipate it. We have to see what’s coming because if we wait to see how it comes to us, how it manifests itself, it will be too late. It’s not like a trade talk, where you fail and you pick it up five years later in roughly the same position. Five years later we’ll be in a much worse position because of the build-up of stocks of greenhouse gases and because of the locked-in investments in high-carbon technologies we would be making.

GEORGE NEGUS: The sceptics are still out there – the people who believe that science could be wrong about this. Are they still getting in your ear?

LORD NICHOLAS STERN: No. They’re totally marginal now. I mean, do they object to the laws of thermodynamics or gravitation? I mean, it’s just absurd. The greenhouse gases are there, they’re going up and greenhouse gases trap heat – that’s been known since the 19th century. So it’s really only in bar rooms, I think, that this kind of discussion takes place. I don’t think anybody would regard that as serious anymore.

GEORGE NEGUS: You must feel occasionally as though you’re swinging between optimism on one hand and Armageddon on the other. Do you occasionally feel a bit schizoid about climate change?

LORD NICHOLAS STERN: Well, I feel that the risks if we don’t act are immense. And it’s sometimes frustrating that people don’t realise – that some people don’t realise – just how big those risks are. If we change the planet along the route that we are taking hundreds of millions of people would have to move. You’d see that in the second half of this century, the early part of next – indeed some of it is already happening now. And if hundreds of millions of people move we’ll have protracted world conflict. Those are the kinds of stakes we are headed for. This is very big stuff. On the other hand, the route forward with low-carbon technologies, new discoveries, I think is a very exciting route. Low-carbon growth will be cleaner, more energy secure, more biodiverse, probably quieter and safer. It’s actually pretty attractive.

GEORGE NEGUS: Lord Stern, thanks very much for your time – appreciated.

LORD NICHOLAS STERN: Great to talk to you, George.

GEORGE NEGUS: Climate change guru British economist Lord Nicholas Stern. Not too sure, though, about the sceptics still being marginal. But you can only wonder what Lord Stern thinks of the almost universal view right now that a legally-binding treaty on global carbon emissions is highly unlikely – despite his dire warnings that it was a must. By the way, we’ll actually be in Denmark ourselves, including Copenhagen, to preview the summit for next week’s program. Even before the summit they’re hosting, the Danes are already setting a cracking pace for the rest of the world on how to reduce carbon emission.