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Lord Stern urges key role for EBRD and region in tackling climate change

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Sir Nicholas Stern, IG Patel Professor of Economics and Government, London School of Economics and Political Science and EBRD President Thomas Mirow

Sir Nicholas Stern, author of the 2006 Stern Review on the Economics of Climate Change, delivered the 2009 Jacques de Larosière lecture

Moving towards a low-carbon economy can help lift the EBRD region out of economic crisis while also reducing the long-term risks of catastrophic environmental change, Lord Nicholas Stern told the EBRD 2009 Business Forum in the Jacques de Larosière lecture on Friday.

Lord Stern – an LSE professor and former EBRD chief economist – acknowledged that many of the Bank’s countries of operations are particularly concerned about the cost of switching to low-carbon technologies because they have carbon-intensive economies.

“There are lots of economic instruments we can use to recognise the more difficult position of the region relative to others,” Professor Stern said. “But we should not argue that the region should move more slowly. That would be extremely damaging.”

Lord Stern led the 2006 Stern Review on the Economics of Climate Change for the UK government and has also worked as chief economist for the World Bank. He has just published a new book on climate change called A Blueprint for a Safer Planet.

Based on what he called “conservative” estimates, Lord Stern told his audience at the EBRD that there is a 50/50 risk of global temperatures rising by an average 5 degrees centigrade if greenhouse gas emissions continue at current levels. If such a temperature rise occurs, he warned, the environmental consequences could be catastrophic and could include desertification, devastating floods, hurricanes and changing river courses.

“If we fail to manage climate change,” Lord Stern said, “we will create an environment so difficult that living standards will move backwards.”

The estimated cost of reducing emissions to a level that significantly mitigates the risks of major climate change is 1 to 2 per cent of GDP, but the investment would deliver economic as well as ecological rewards, Lord Stern predicted.

“This transition, if managed well, is going to be a period of very powerful growth,” he said, adding that the process could also provide answers to the current economic downturn. “It’s cheaper to invest when more resources are idle. This is a sensible way of coming out of the recession.”

According to Lord Stern, the EBRD has a key role to play in this shift to a low-carbon economy because of its experience in dealing with transition and integrating environmental concerns into the process – for example through its Sustainable Energy Initiative.

“The EBRD’s clarity of purpose, precision in methods of working and above all international collaboration are going to be fundamental to a serious attack on climate change,” he said. This new form of transition “has to be supported by a new way of doing things. That’s what the EBRD is about.”

By Mike McDonough, Internal Communications Manager
16 May 2009