UK's Stern report calls for 80% global GHG cuts

London (Platts)--31Oct2006

The UK government's long-awaited Stern report on the economics of climate
change, released on Monday, called for global greenhouse gas emissions to be
brought down more than 80% below current levels in order to stabilize climate
change.

To meet the goals, the power sector around the world would need to be "at
least 60% decarbonized by 2050," said Sir Nicholas Stern, head of the
government economics service, in a report that UK leaders hope will spur
global action.

"The costs of stabilizing the climate are significant but manageable; delay
would be dangerous and much more costly," said Stern, a former chief economist
at the World Bank.

The report said failure to act would cost the global economy at least 5% of
gross domestic product each year, and possibly as much as 20%. Resolving the
problem would cost about 1% of global GDP each year, Stern said.

Global GDP was about $60.7 trillion in 2005, according to a US government
estimate. That would peg the cost of combating climate change at roughly $607
billion.

Stern's report, which was commissioned by the UK government in 2005, cited a
range of policies to curb emissions, such as a global trading system that
includes caps and taxes on emissions. He also called for policies to support
innovation and deployment of low-carbon technologies, and public education.
Stern called for the stabilization of global emissions. At a minimum, carbon
emissions should peak in the next 10 to 20 years, and then fall at a rate of
at least 1% to 3% per year so that by 2050 global emissions would be 25% below
current levels.

"These cuts will have to be made in the context of a world economy in 2050
that may be three to four times larger than today?so emissions per unit of GDP
would need to be just one quarter of current levels by 2050," he said.
Stern said hydrocarbons might produce more than half of global energy supply
in 2050.

"Extensive carbon capture and storage would allow this continued use of fossil
fuels without damage to the atmosphere, and also guard against the danger of
strong climate-change policy being undermined at some stage by falls in
fossil-fuel prices," he said.

He acknowledged that the cost of reducing emissions could fall more heavily on
some sectors than others. "There will be a transition to be managed," he said.

The full versiuon of this story was published in Platts Emissions Daily.
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