A profound contradiction at the heart of climate change policy

By Nicholas Stern

As the negotiations at the UN climate change summit in Durban reach the critical stage, we must not overlook a fundamental contradiction between the way global fossil fuel reserves are evaluated and long-term policy goals. By ignoring this contradiction, companies and markets, as well as governments, are undermining management of the huge risks that rising levels of greenhouse gases pose to their survival.

At Cancùn last December, countries attending the last climate change summit agreed on curbing annual greenhouse gas emissions in order to avoid global warming of more than 2 centigrade degrees from the mid-19th century, which would carry unacceptably large risks.

Scientists warn that achieving about a 50 per cent chance of meeting the 2 degree goal requires cutting global annual emissions from the current level of about 48bn tonnes a year of carbon dioxide equivalent, to about 44bn tonnes in 2020, less than 35bn tonnes in 2030 and less than 20bn tonnes in 2050.

It is cumulative emissions that are important and such paths are consistent with a total emissions budget of 1,200bn to 1,400bn tonnes between 2010 and 2050. A more stringent target, say consistent with an 80 per cent chance of meeting the 2 degree goal, would have an even smaller budget of 500-600bn tonnes.

More than two-thirds of current annual emissions of greenhouse gases are carbon dioxide produced by the burning of coal, oil and gas. But according to the Carbon Tracker Initiative , proven reserves of fossil fuels, the big majority owned by nation states, would, if burned, produce 2.8tn tonnes of carbon dioxide, about double the carbon budget for the 50-50 chance of meeting the 2 degrees target.

Copyright The Financial Times Limited 2011.

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