79th Annual Academy Awards (Gone Green)

In the eloquent words of Academy Award winner, Melissa Etheridge - "......Caring about our earth is not political. It is not about being Republican or Democrat. It is not red or blue. It is green and we should all care". Very apropos and very true! The Biggest Show of the Year - The Academy Awards - has officially gone green.

Reproduced below is part two of the article written by Kevin Eddy (assistant Editor of the Chartered Secretary ICSA magazine January 2007-- Apocalypse now-ish (Part Two)

Taking Action

That outcome is not inevitable, however; disaster can be averted. The Stern Review predicts that the cost of taking action to reduce greenhouse gas emissions will be far lower than the cost of dealing with its effects but only if action is taken now.

Stern estimates that greenhouse gas concentrations can be stablilised between 500 and 550 ppm by 2050 at a cost of one percent (1%) of the Gross Domestic Product (GDP). This cost could even be reduced further if there are major gains in efficiency or if the strong co-benefits such as reduced air pollution are measured. However, Stern emphasises that the measures must be taken in the next 10 to 20 years to achieve that result. Delay in taking action will result in accepting more climate change and higher mitigation costs and would put achieving even the risky stabilisation target of 550 ppm beyond reach.

In order to reach the stabilisation figure, global emissions would need to peak in the next 10 to 20 years, then reduce by between 1 and 3 percent per year, ultimately falling to about three quarters of current emissions. However, cuts in emission levels will need to be made in the context of a world economy projected to be 3 or 4 times larger than today's. So the actual figure per unit of GDP would need to be just 25 percent of current levels by 2050. We will need to emit only a quarter of what we currently do. The review identifies three key policies essential to achieving this target: carbon pricing, investment in low-carbon, high-efficiency technology; and the removal of barriers to behavioural change.

Carbon Pricing

Carbon pricing of some form is an 'essential foundation' for climate change policy. Putting an appropriate price on carbon - explicitly through tax or trading or implicitly through regulation means that people are faced with the full social cost of their actions. This will lead individuals and businesses to switch away from high-carbon goods and services and to invest in low-carbon alternatives.

While the Stern Review suggests that the particular balance of tax, trading and regulation will depend on individual national circumstances, it recommends that a common global carbon price would be advantageous. It adds that trading schemes such as the European Union's Emissions Trading Scheme (ETS) are an especially effective way to equalise carbon prices and cut emissions.

The idea of an international price for carbon has met with support from at least one quarter - the Confederation of British Industry (CBI). CBI's director general, Richard Lambert, spoke at that organisation's Conference in November 2006: "We would rather see a price for carbon set through an international trading system than a finance minister try to prescribe the price."

Technology

Investment in the full spectrum of technology policy is equally essential in achieving the deep cuts in emissions which are needed - from research and develpment to demonstration and early-stage deployment. Stern argues that, while the private sector plays the major role in this process and that carbon pricing will already provide an incentive to look for low-carbon alternatives, governments will also need to collaborate closer with industry to stimulate development further. This, the report suggests, should be done by doubling, worldwide, public spending on research and development and increasing incentives to promote innovation - which currently stands at $34 billion worldwide - by between two to five times.

Removal of Barriers

The final essential aspect is the removal of barriers to behavioural change. Even where measures to reduce emissions are cost effective, factors such as a lack of reliable information, transaction cost and organisational inertia may act to prevent action. Regulatory measures can play a powerful role in providing clarity and certainty as well as sharing best practices. Most crucial, though, is the need to foster a shared understanding of the nature of climate change and its consequences. Stern argues that governments need to catalyse action by creating public and international debate backed up with evidence. A programme of education aimed at school children will be crucial to sustaining future policy in the long term.

It's those long term effects that the above measures are intended to address. Their effects may not be felt for decades hence, so interim adaptation policies will also need to be put in place to deal with the impact of climate change in the intervening years. While some adaptation will take place autonomously due to markets reacting to the effects of climate change, Stern recommends that governments should put in place policies to assist adaptation in the medium term. These could include: providing better regional climate predictions; introducing infrastructure and building planning standards which take account of likely effects; the protection of coastlines and other natural resources; increased preparation for emergencies; and, the provision of a financial safety net for the pooerest in our society.

The final (part three) of the Stern Report on the Economics of Climate Change will be aired here next week. Have a splendiferous week and congratulations to all the 79th Academy Award winners. Y'all rock!!!