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FACTBOX-UK Stern report on climate change costs

29 Oct 2006 13:09:45 GMT
Source: Reuters

LONDON, Oct 29 (Reuters) - Ignoring climate change could lead to economic upheaval on the scale of the 1930s Depression, underlining the need for urgent action to combat global warming, a British report on the costs of climate change said.

These are highlights of the report, a summary of which was obtained by Reuters.

PREDICTIONS

-- Even if the annual flow of emissions did not rise beyond today's rate, the stock of greenhouse gases in the atmosphere would reach double pre-industrial levels by 2050 -- that is 550 parts per million -- and would continue growing thereafter.

-- On current trends, average global temperatures will rise by 2-3 degrees centigrade within the next 50 years or so (compared with the period before 1850).

COSTS

-- If no action is taken, climate change will reduce global consumption per head by between five and 20 percent, and is likely to be at the upper end of that range.

-- The costs of extreme weather alone could be 0.5 to 1 percent of global Gross Domestic Product by 2050.

-- By comparison, the annual costs of stabilising greenhouse gases in the atmosphere at 500-550 parts per million (ppm) is estimated to be about one percent of annual world GDP by 2050, a level the report describes as "significant but manageable".

ASSUMPTIONS/RISKS

-- The report's cost estimate is based on stabilising greenhouse gases in the atmosphere at 500-550 ppm; it said costs would likely rise rapidly to achieve anything below this.

-- A level of 550 ppm has up to a 99 percent chance of resulting in a more than 2 degrees centigrade global average temperature rise compared to the pre-industrial era. It says 550 ppm is associated with significant global warming risks.

-- This suggests EU policy may be over-optimistic. EU leaders said in March 2005: "... with a view to achieving the ultimate objective of the UN Framework Convention on Climate Change, the global annual mean surface temperature increase should not exceed 2 degrees above pre-industrial levels."

-- Stabilising gases at 450 ppm, seen likely avoiding the most dangerous effects, was "already almost out of reach".

OPPORTUNITIES

-- Markets for low-carbon energy products are likely to be worth at least $500 billion per year by 2050, and perhaps more.

-- Climate change policy may kickstart reform of inefficient energy systems and removal of distorting energy subsidies, on which governments spend around $250 billion a year.

-- In a calculation of the "social cost" of carbon, it estimates the net benefits in the long term of immediately implementing policies at around $2.5 trillion.

REDUCING EMISSIONS

-- Large-scale uptake of a range of clean power, heat and transport technologies is required for radical emission cuts in the medium to long term.

-- The global power sector will have to be at least 60 percent, and perhaps as much as 75 percent, decarbonised by 2050 to stabilise greenhouse gases in the atmosphere.

-- Even with very strong expansion of the use of renewable energy and other low-carbon energy sources, hydrocarbons may still make up over half of global energy supply in 2050.

-- Extensive carbon capture and storage, burying greenhouse gases from power plants and factories underground, would allow continued use of fossil fuels without damage to the atmosphere.

-- Policy to reduce emissions should be based on three essential elements: carbon pricing, technology policy and removal of barriers to changing people's behaviour.

-- Public spending on research and development into low-carbon technologies has fallen in the last two decades. Likely high returns to a doubling of investments in this area to around $20 billion a year globally.

-- The report argues that worldwide incentives to encourage the use of new low-carbon technologies should be raised by two to five times from the current level of some $34 billion a year.

ADAPTING TO CLIMATE CHANGE

-- The additional costs of making new infrastructure and buildings resilient to climate change in OECD countries could be between $15 billion and $150 billion a year.

RESPONSE

-- A global view on the problem's urgency and on long-term goals, plus an international approach based on multilateral frameworks and coordinated action, are essential.

-- Securing broad-based and sustained cooperation requires equitable effort across developed and developing countries.

-- Calculations based on income, historic responsibility and per capita emissions point to rich nations taking responsibility for emissions cuts of 60-80 percent from 1990 levels by 2050.

-- A broadly similar price of carbon is necessary to keep down the overall costs of making these reductions and can be created through tax, trading or regulation.

-- Enabling the European Union's Emissions Trading Scheme to link with other emerging trading schemes could improve liquidity while also establishing the nucleus of a global carbon market.

DEFORESTATION

-- Emissions from deforestation are estimated to represent more than 18 percent of global emissions.

-- Need urgent action to preserve the remaining areas of natural forest.

POOR NATIONS

-- The poorest developing countries will be hit earliest and hardest by climate change. The international community has an obligation to support them in adapting to climate change.

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Last updated:Sun Oct 29 13:12:07 2006