Towards a Global Deal on Climate Change
Nicholas Stern
Delhi, 31st March 2008
1
Part One
Risks and Targets
2
Projected impacts of climate change
0°C
Food
Water
Global temperature change (relative to pre-industrial)
1°C
2°C
3°C
4°C
5°C
Falling crop yields in many areas, particularly
developing regions
Falling yields in many
Possible rising yields in
developed regions
some high latitude regions
Small mountain glaciers
disappear – water
supplies threatened in
several areas
Significant decreases in water
availability in many areas, including
Mediterranean and Southern Africa
Sea level rise
threatens major cities
Ecosystems
Extensive Damage
to Coral Reefs
Rising number of species face extinction
Extreme
Rising intensity of storms, forest fires, droughts, flooding and heat waves
Weather
Events
Risk of Abrupt and
Increasing risk of dangerous feedbacks and
Major Irreversible
abrupt, large-scale shifts in the climate system
Changes
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Probabilities (in %) of exceeding a
temperature increase at equilibrium
Stabilisation level
(in ppm CO2e)
2°C
3°C
4°C
5°C
6°C
7°C
450
78
18
3
1
0
0
500
96
44
11
3
1
0
550
99
69
24
7
2
1
650
100
94
58
24
9
4
750
100
99
82
47
22
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Source: Hadley Centre: From Murphy et al. 2004
Currently at 430ppm, rising at 2.5ppm p.a. and this rate of
increase is increasing
4
Structure of argument on global
mitigation objectives
• Risk of going above 5°C increase are very severe: e.g. would induce
massive movements of population including in the sub-continent;
thawing of Himalayan glaciers/ snows with floods/torrents in rainy
season; dry rivers in dry season and loss of water from run-off;
droughts and floods more severe; cyclones more severe; sea-level
rise…..
• Global deal essential for India
• Stabilisation to 550 or 500ppm CO2e ‛buys’ sharp reduction in
probabilities of dangerous temperature increases relative to BAU
• Global cuts of 30-50% by 2050 required for target of stabilisation
range 550- 500ppm CO2e: implied carbon price around $30 per
tonne
• Cost of action to get in range looks acceptable relative to reduction
of risks and damages avoided
5
Part Two
Flows and Costs
6
Delaying mitigation is dangerous and
costly
100
450ppm CO2e
90
500ppm CO2e (falling to
450ppm CO2e in 2150)
Global Emissions (GtCO2e)
80
70
550ppm CO2e
60
50
Business as Usual
40
50GtCO2e
30
65GtCO2e
20
70GtCO2e
10
0
2000
2010
2020
2030
2040
2050
2060
2070
2080
2090
2100
Source: Stern Review
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Reducing emissions requires action
across many sectors
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Cost of action or inaction
• Stern Review examined results from bottom-up (Ch 9) & topdown (Ch 10) studies: concluded that world could stabilise
below 550ppm CO2e for around 1% of global GDP.
Subsequent analyses IEA/IPCC/McKinsey have indicated
similar or lower figures
• Starting planning now with clear targets and good policies
allows measured action and keeps costs down. Delayed
decisions/actions (or “slow ramp”), lack of clarity, bad policy
will increase costs
• Associated co-benefits (energy security, reduced pollution)
and opportunities (innovations, new markets)
• Review probably under-estimated emission growth (growth of
emissions from China particularly)
• Probably under-estimated risks of high-temperatures (omitted
features in climate science modelling) and damages from high
temperatures (implausible ‘overly linear’ extrapolations)
• Thus magnitude of avoided damages under-estimated
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Part Three
A Global Deal
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Basic Criteria for a Global Deal
• Effectiveness: the scale must be
commensurate with the challenge
• Efficiency: we must keep down the
costs of emissions reduction
• Equity: the rich countries must take the
lead
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Commitments: percentages
• G8 Heiligendamm – global 50% by 2050 (consistent with
stabilisation around 500ppm C02e)
• California (and US under e.g. Obama/Clinton) - 80% from 1990
levels by 2050. McCain 65% target and has sponsored cap-andtrade bill
• France – 75% by 2050 (Factor 4), relative to 1990
• EU Spring Council: 60-80% by 2050 and 20-30% by 2020,
relative to 1990
• Germany – 40% by 2020, relative to 1990
• India to stay below rich country average per capita
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Equity and the GHG ‘reservoir’
• Long-term stabilisation at 550ppm CO2e implies that only a further
120ppm CO2e can be ‘allocated’ for emission, given that we start at
430ppm CO2e (or further 70ppm if targeting 500ppm)
• Can view the issue as the use of a “collective reservoir” of 270ppm
(i.e. 550 minus the 280ppm of 1850) over 200 years. Over half of
reservoir already used mainly by rich countries. (i.e. 150ppm CO2e
increase from 280 to 430)
• Equity requires a discussion of the appropriate use of this reservoir
given past history
• Thus convergence of flows does not fully capture the equity story,
from emissions perspective
• Equity issues arise also in adaptation, given responsibilities for past
increases
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Target: stocks, history, flows
• Current 40-45 GtCO2e p.a. Current stocks around 430ppm CO2e;
pre-industrial stocks 280ppm
• The United States and the EU countries combined accounted for
over half of cumulative global emissions from 1900 to 2005
• 50% reduction by 2050 requires per capita global GHG emissions of
2-3T/capita (20-25 Gt divided by 9 billion population)
• Currently US ~ 20+, Europe ~10+, China ~5+, India ~1.5 T/capita
• Thus 80% reductions would bring Europe, but not US, down to world
average. Many developing countries would have to cut strongly too if
world average of 2-3 T/capita is to be achieved. If one billion people
are around 4 – 5 T/capita then (e.g.) another one billion would have
to be around 0 – 1 T/capita
• Requires close to zero carbon electricity and surface transport
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Key elements of a global
deal / framework (I)
Targets and Trade
• Confirm Heiligendamm 50% cuts in world emissions by
2050 with rich country cuts at least 80%
• Rich country reductions and trading schemes designed to
be open to trade with other countries, including
developing countries
• Supply side from developing countries simplified to allow
much bigger markets for emissions reductions: ‘carbon
flows’ from rich to developing countries to rise to $50$100bn p.a. by 2030. Reform CDM to operate on wholesale
level. No aggregate targets until rich countries prove
credibility
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Key elements of a global deal / framework (II)
Funding Issues (flows from rich to developing)
• Strong initiatives, with public funding, on deforestation to prepare for
inclusion in trading. For $10-15 bn p.a. could have a programme
which might halve deforestation. Importance of global action and
involvement of IFIs
• Demonstration and sharing of technologies: e.g. $5 bn p.a.
commitment to feed-in tariffs for CCS coal would lead to 30+ new
commercial size plants in the next 7-8 years
• Rich countries have caused most of the problem. Poor countries
suffer earliest and hardest. Rich countries to deliver on Monterrey
and Gleneagles commitments on ODA in context of extra costs of
development arising from climate change: potential extra cost of
development with climate change upwards of $80bn p.a. by 2015
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Implications for India of an effective, efficient
and equitable global deal
• Sharp reduction of risks (economic, security, climate) for
India
• Cleaner, safer, more biodiverse and more sustainable
development
• Substantial inflows of funding for move to low carbon
economy (possibly tens of billions of dollars)
• Major transfers of technology
• Substantial resources for adaptation to more hostile
climate, in context of past rich country responsibility for
rise in stocks of GHGs
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Part Four
Possible Role for India
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India: steering toward a global deal I
• Insist rich country cuts are at least 80% by 2050 and
they have credible interim targets for 2020
• Explain that proposing equality in flows by 2050 is a
very weak demand given the history
• Explain that those countries (including USA) around or
above 20 tonnes per capita should be cutting by 90%
• At the same time the rich countries must recognise that
they must demonstrate
(i) low carbon growth
(ii) credible mechanisms, including carbon trading, for
helping finance developing country investments
(iii) credible mechanisms for transferring technology
(iv) funding for extra challenge for developing countries
in more hostile climate (adaptation)
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India: steering toward a global deal II
• Explain significance of Merkel/Heiligendamm offer by PM
Manmohan Singh: lays down clear challenges to rich
countries
• Show actions India is taking and planning including Feb.
2008 budget statement (para. 109) and Climate Change
Action Plan (June 2008)
• Propose that developing countries create their own
credible action plans: including energy efficiency;
deforestation; facilitating carbon trading; alternative fuels
and technologies
• Design the successor to Clean Development Mechanism
(do not wait for rich countries to propose) capable of
operating on scale
• Design incentive mechanisms for promoting the transfer of
technology
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Foundations of Strategy for India
• Steer international community towards an
equitable global deal
• Act in self-interest to reduce energy costs and
dependence on hydrocarbons in a world of
high energy prices and energy insecurity.
• Explore India’s natural advantages of sun,
wind, gas, tropical forests
• Harness India’s entrepreneurship, technical
skills and diversity
• Leveraging the country’s decentralisation
strategy
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Possible Policy Measures in India - 1
These possible measures not only show action in India which
will promote the global deal India and the world urgently need
for sustainability, they are also in the short and medium term
in India’s self-interest. Challenge is to align individual
incentives with India’s self-interest.
Revenue raising
• Taxes on pollutants including in power and transport, or quota trading with
auctioned permits
• Reform power sector, particularly reduce T & D losses
• Reduce energy subsidies
New incentives & technologies
• Zero tariffs for imports of cleaner technologies and reduced taxes on
cleaner technology
• Emissions regulations
• Public transport; sustainable cities; electric vehicles
• Promote and demonstrate: CCS for coal; solar; nuclear; gas; hydro; CHP;
2nd generation bio-fuels; etc.
• Technology challenge fund
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Possible Policy Measures in India - 2
Institutional
• Carbon monitor and regulator
• Climate change committee to assess progress and
promote policies
• World class emissions trading platform:
demonstrate for trade within and outside India
• Reform grid to promote decentralisation and selling
as well as buying
• Institutions to encourage afforestation and arrest
deforestation
Adaptation: CRUCIAL CHALLENGE
• Information base – meteorology/ science
• Infrastructure: irrigation, transport, flood defence…
• Agriculture: new crops; techniques; insurance/early
warning …
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Illustrative growth for India
Income/
capita
1600
tonnes/
capita
6
3
2
100
1
2010
2020
2030
2040
2050
2008
•
•
•
•
•
Rich world followed emission path close to income path
One example only: many simulations and possible paths should be
examined, together with associated policies
Europe likely to be down to 7 or 8 tonnes/capita by 2030
India will require fundamental change to energy strategy
Negotiate payment for difference between curves
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