The credit crisis has highlighted the readiness of goverments to spend huge sums of money and take concerted international action. But what about the other crisis threatening the long-term health of the global economy. David Middleton, CEO of the Business Council for Sustainable Development - United Kingdom, and the Midlands Environmental Business Company, looks at a “Tale of Two Crises.”
Considered by many to be one of the best business/economic speeches on sustainable development in recent times in the UK, Dr Stewart Davies, Business Commissioner of the Sustainable Development Commission, was speaking at the annual dinner in Birmingham of the not-for-profit Midlands Environmental Business Company.
He said: “Just 25 months ago, Professor Nick Stern published his report on the Economics of Climate Change. “He asserted that the costs of urgently taking the steps to mitigate climate change would be a small fraction of the cost to future generations of the impact of rising atmospheric greenhouse gas levels left on its current course.
“When the Report was launched I described it as the “business case for the next industrial revolution”.
But the sheer scale of the figures Nick Stern called for to be invested in this “low carbon industrial revolution” were staggering. So large as to paralyse action.
The report states: “Ultimately, stabilisation – at whatever level – requires that annual emissions be brought down to more than 80 per cent below current levels.
“This is a major challenge, but sustained long-term action can achieve it at costs that are low in comparison to the risks of inaction.
“Central estimates of the annual costs of achieving stabilisation between 500 and 550ppm CO2 are around one per cent of global GDP, if we start to take strong action now.”
One per cent of the global GDP is about £30 trillion, That’s £300 billion per annum to bring us onto the track of carbon emissions needed to avoid disastrous climate change.
He challenged us to early action – the next 10 years are critical. According to this maths, a mind-boggling £30 trillion has to be spent over the next decade to address this crisis.
The immediate aftermath of the Stern Report’s publication was, frankly, disappointing. At least part of the explanation for the lacklustre response was this paralysis factor – £30 trillion.
And that’s where I have a “Tale of Two Crises”.
According to the Bank of England just five weeks ago, the world’s financial firms had lost £1.8 trillion as a result of the continuing credit crisis.
And £30 trillion just happens to be what the US government is reported as having just spent to address the consequences of the current credit crisis!
Previously unthinkable sums of money have been identified as necessary, funded from past and future taxes and committed, it seems, at just a stroke of a pen.
Governments across the world have taken immediate measures to address the credit crisis that have been planned and executed with a speed that would simply have been thought impossible in peacetime. In just days, the deals have gone from brainstorm to cash.
A truly remarkable rescue exercise and one we all have a massive stake in, so we must hope it is effective.
Thirty trillion pounds spent to address the credit crisis! So, now, what is the parallel for the money that Professor Stern identified as needed to address the Climate Change Crisis in the next 10 years? Stern can no longer be accused of calling for “unrealisable” amounts of rescue funds, or “unprecedented” levels of international co-operation.
So could this be a positive impact of the credit crisis: opening up thinking of world leaders that global crises can be acted on with appropriate urgency and massive resources.
Just imagine if that opening of minds, coinciding with the incoming US administration under President Obama created an historic opportunity to lead international action on climate change.