A few questions for Nicholas Stern (and a book review)

Nicholas Herbert Stern, Baron Stern of Brentford, is a British economist. After a spell as the World Bank’s chief economist, he worked for the British government and in 2006 produced the Stern Review on the Economics of Climate Change.

The report was very influential, particularly in promoting carbon trading for avoided deforestation as a cheap and quick way of addressing climate change. The last six years, however, has seen a global economic crisis, a collapse in the price of carbon, a stalemate in the UNFCCC negotiations, slow REDD readiness programmes and little finance for REDD.

A couple of months ago, a commenter on REDD-Monitor suggested that it would be interesting to ask Lord Stern some questions to see whether he has amended his optimistic views about REDD as a carbon trading mechanism. I wrote to Stern on 4 October 2012 and am still waiting for his response. REDD-Monitor’s email to Lord Stern is below.

In 2009, Nicholas Stern wrote a book titled, “The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity”. Stern’s “Global Deal” consists of three main proposals: carbon trading; avoided deforestation; and carbon capture and storage (among other technical fixes). Given Stern’s register of interests, none of these proposals is surprising. He is a member of the International Advisory Board of IDEAglobal.com (which promotes carbon trading, including REDD) and of Global Carbon Capture and Storage Institute (Australia) (which promotes carbon capture and storage).

Last year, Larry Lohmann at The Corner House (a UK-based NGO) included Stern’s book in a blistering review of five books about climate change, published in the journal Development and Change. (A fascinating debate resulted when the authors of one of the books responded to Lohmann’s critique. The review, response and Lohmann’s rejoinder are available here.) His review of Stern’s book is posted below.

REDD-Monitor looks forward to posting Lord Stern’s response to the questions and the book review.

From: Chris Lang
Date: 4 October 2012 21:28
Subject: A few questions from redd-monitor.org
To: Nicholas Stern

Dear Nicholas Stern,

Greetings from Jakarta! My name is Chris Lang and I run a website called REDD-Monitor (www.redd-monitor.org).

I have a few questions for you regarding your 2006 report (“The Stern Report”), which was hugely influential in promoting REDD, particularly regarding what has happened in the six years since your report was published.

I would be grateful if you could answer the following questions:

1. The Stern Report includes this sentence on p. 603: “Curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions and has the potential to offer significant reductions fairly quickly.”

You have also been quoted (again in 2006) as saying that, “Forests offer the single largest opportunity for cost-effective and immediate reduction of carbon emissions.”

Could you please comment on these statements, in the light of the past six years of experience in developing a REDD mechanism – in particular the slow progress in the UNFCCC negotiations on REDD and the fact that the UN-led carbon markets have almost completely collapsed (as the Financial Times commented this week).

2. In a 2010 report, the Swedish Society for Nature Conservation argued that, “It is naïve and dangerous to think that REDD will be quick or easy”. There are two points to this argument: First stopping deforestation is extremely complex and second assuming that it can be done quickly and cheaply reduces the pressure to cut emissions from burning fossil fuels.

Have you now reconsidered your view of avoided deforestation being quick and cheap? If so, where do you think you went wrong in your thinking and what have been the consequences of this?

3. For the past six years, the World Bank has been working on setting up a forest carbon market. In a speech last year, Andrew Steer, then-the special envoy for climate change at the World Bank, said that the World Bank has 200 people working full time on carbon markets.

When the World Bank’s Forest Carbon Partnership Facility was launched, the Bank announced that the “ultimate goal is to jump-start a forest carbon market”. But by November 2011, Benoit Bosquet, the co-ordinator of the FCPF at the World Bank, was arguing that “it’s probably good to take the time to get things right”.

Nevertheless, in country after country the FCPF has run into problems.

Could you please comment on the progress (or lack of it) that your former employer has made in attempting to secure the “cost-effective and immediate” reductions in emissions from deforestation.

Thank you for your time and I look forward to hearing from you. Please consider your response to be on the record.

Best regards,

Chris Lang

Review Essay
Capital and Climate Change (Extract)

Larry Lohmann
 
Development and Change 42(2): 649–668, 2011.
Nicholas Stern, The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity. New York: Public Affairs, 2009.
 
[ . . . ]
 
Stern, an academic, ex-World Bank chief economist and carbon businessman, steps forward in fighting style ostensibly to try to convince sceptical business and government planners that the ‘new technologies and investment opportunities of low-carbon growth will be the main drivers of sustainable growth in the coming few decades . . . These investments will play the role of the railways, electricity, the motor car and information technology in earlier periods of economic history’ (p. 207).
 
Delaying such long-term investments for even a few years, Stern warns, will mean ‘sharply greater costs aswe try to act in a rushed and ill-considered way later’ (p. 207). Stern calculates that 2 per cent of GDP is ‘worth paying now to reduce the chances of temperature increases above 5 degrees Celsius from around 50 per cent to around 3 per cent’ (p. 54). The longer structural low-carbon investment is put off, ‘the more high carbon sources of electricity will be locked in and the greater the cost of trying later to do too much too quickly’ (p. 45).
 
As Mike Hulme points out, numbers like Stern’s settle few arguments, either among business or the general public. Even those among Stern’s fellow neoclassical economists who might agree (on some days) about how to compare the costs and benefits of building a bridge will never come to a consensus about the most profitable timing for a remedy for a climate change ‘externality’ that, in Stern’s own words, ‘is long term . . . is global . . . involves major uncertainties, and . . . is potentially of a huge scale’ (p. 11). As Stern is aware, his use of cost–benefit analysis to press his case for climate action is essentially a literary gamble, not to be ‘taken too seriously’, as all the numbers are ‘very sensitive to assumptions’, ‘leave out conflict’, and are ‘weak on risk and biodiversity’ (p. 101).
 
What most strikes the eye about Stern’s book, however, are not his rhetorical cost–benefit numbers, but rather what they are used to justify. In a seeming paradox, this is not low-carbon investment, as Stern misleadingly claims, but rather high-carbon investment. Although Stern does call for cutting subsidies for conventional energy development (p. 113) and for using German-style government price controls to support the development of wind energy (pp. 115–16), his ‘global deal’ is designed in a way that entrenches fossil fuel consumption, especially in the North, at least through the medium term. Three elements are central: worldwide carbon trading; anti-deforestation programmes; and carbon capture and sequestration and other technical fixes.
 
As Stern is unquestionably aware, carbon markets necessarily discourage the immediate front-loaded investment in low-carbon technology he is ostensibly calling for. Both emissions trading (Driesen, 2008; Lohmann, 2006) and carbon offsets (p. 156) select for delay in the Northern-based industries where investment is most urgent, for example electricity generation, steel and cement. Offsets do not even provide capital for a transition away from fossil fuels in the global South (Gilbertson and Reyes, 2009; Sovacool and Brown, 2009). For example, although Stern assures readers that ‘technologies and financial flows from carbon trading’ will largely take care of the 95 per cent reduction in carbon intensity he sees as necessary for China’s industry (p. 188), in fact the 2000 Kyoto Protocol offset projects already operating or in the pipeline in that country are doing little or nothing to decarbonize Chinese industry (Brett, 2010; Environmental Investigation Agency, 2010; Schneider, Lazarus and Kollmuss, 2010). The simplification and expansion of carbon offset trading that Stern proposes (pp. 110–11, 160–63) would only further undermine the possibility of early structural low-carbon investment.
 
Stern’s proposal to pour US$ 15 billion of public money yearly into antideforestation programmes — on the ground that to do so would be a ‘very good deal’ in terms of cost savings (p. 166) — also flies in the face of his advocacy of immediate investment in a low-carbon future. Stern’s forestry idea would, again, delay industrial and social change in the North, this time through shifting the waste burden of the high-carbon fossil economy to the biota of the South (Cabello and Gilbertson, 2010). When all the necessary qualifications have been made, this is a land grab (or more specifically a grab of largely indigenous territories by industrial interests), and a particularly pointless one from a scientific perspective, for two reasons. First, the equation ‘saving trees = reducing smoke’ that Stern relies on conceals the fact that keeping biotic carbon out of the atmosphere for short periods can never compensate climatically for the permanent injection into the biosphere and atmosphere of the much larger reservoirs of fossil carbon formed underground over millions of years (Dukes, 2003; Haberl, 2006). Second, throwing money at deforestation without confronting its underlying causes is likely to be counterproductive (World Rainforest Movement, 2002). As Giddens points out in criticizing Stern, ‘[d]eforestation sounds like a unitary activity, which therefore admits of a unitary solution, but such is not the case’ (p. 225).
 
Stern’s other principal proposal of carbon capture and sequestration (CCS), too, would entrench high fossil fuel use by extending its ‘waste frontier’ into new territories. This time the idea is to take fossil-origin carbon directly from the smokestacks of coal-fired plants, liquefy it and pump it underground. Requiring several decades just to test, this scheme would wind up using even more pipes and other infrastructure than is now used to get oil out of the ground (Revkin, 2010; see also LaPlaca, 2010). Stern’s other suggestions for technology development — scattershot subsidies for nuclear fusion development, ‘enhanced photosynthesis’ (p. 114) and second generation biofuels (p. 171) — are for the most part equally ill-considered. Stripped of camouflage, then, Stern’s is a conventional strategy of continued fossil fuel exploitation, with new above- and below-ground enclosures and a new derivatives market tacked on. ‘Analysis matters’, Stern urges, but analysis of how low-carbon growth could be achieved is precisely what his book lacks.
 
[ . . . ]
 
REFERENCES

Brett, P. (2010) ‘A Carbon Trading System Draws Environmental Sceptics’, New York Times 12 October.

Cabello, J. and T. Gilbertson (eds) (2010) No Redd! A Reader. Hermosillo: Carbon Trade Watch and Indigenous Environmental Network.

Driesen, D.M. (2008) ‘Sustainable Development and Market Liberalism’s Shotgun Wedding: Emissions Trading under the Kyoto Protocol’, Indiana Law Journal 83(1): 21–69.

Dukes, J.S. (2003) ‘Burning Buried Sunshine: Human Consumption of Ancient Solar Energy’, Climatic Change 61(1–2): 33–41.

Environmental Investigation Agency (2010) ‘HFC-23 Offsets in the Context of the EU Emissions Trading Scheme’. London: EIA.

Giddens, A. (2009) The Politics of Climate Change. Cambridge: Polity Press.

Gilbertson, T. and O. Reyes (2009) ‘Carbon Trading: How it Works, Why it Fails’. Uppsala: Dag Hammarskjold Foundation.

Haberl, H. (2006) ‘The Global Socioeconomic Energetic Metabolism as a Sustainability Problem’, Energy 1(1): 87–99.

Hulme, M. (2009) Why We Disagree about Climate Change: Understanding Controversy, Inaction and Opportunity. Cambridge: Cambridge University Press.

LaPlaca, N. (2010) ‘Fact Sheet: “Clean Coal” Power Plants’, in K. Abramsky (ed.) Sparking a Worldwide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World, pp. 326–32. Oakland and Edinburgh: AK Press.

Lohmann, L. (ed.) (2006) Carbon Trading: A Critical Conversation on Climate Change Privatisation and Power. Uppsala: Dag Hammarskjold Foundation.

Revkin, A.C. (2010) ‘Coal sans CO2: Appealing Pipe Dream’, New York Times 30 April.

Schneider, L., M. Lazarus and A. Kollmus (2010) ‘Industrial N2O Projects Under the CDM: Adipic Acid— A Case of Carbon Leakage?’. Stockholm: Stockholm Environmental Institute

Sovacool, B.K. and M.A. Brown (2009) ‘Scaling the Response to Climate Change’, Policy & Society 27(4): 317–28.

World Rainforest Movement (2002) The Direct and Underlying Causes of Forest Loss. Montevideo: WRM.

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