30 September 2006Philip Thornton, Economics Correspondent
The cost of curbing the soaring emissions of harmful gases that are blamed for causing global warming has been estimated at $1 trillion by a major study of the cost of climate change.
The volume of emissions of the gases that cause global warming will double by 2050 unless rich countries agree to take significant policy steps to cut energy use, it shows.
The report, byPricewaterhouseCoopers, lays bare the potential damage to the environment of the industrial revolution in China and India. It puts a price of $1 trillion (£526bn) on the cost of sorting out the problem spread over the next generation. The bill is equivalent to a year's output of the economy of Canada, and less than half of the total stock of debt that has been built up by Britain's households. But it is less than the cost in terms of environmental catastrophe and loss of life that scientists fear will happen as temperatures and sea levels rise. "It is implicit from our findings that a trillion dollars certainly is a cost worth incurring," said John Hawksworth, the chief economist at PwC and author of the report.
Turbo-charged growth in emerging economies is helping to drag billions of people out of poverty across Asia, Latin America and eastern Europe.
But according to PwC, the price will be paid by sharp rises in global energy consumption and carbon emissions. They say it means the rich nations that have done most to cause the problem must take more drastic action to reduce their environmental impact.
The report comes as the environmental community awaits a key Treasury-commissioned report on the economic cost of climate change. Sir Nicholas Stern, a former chief economist at the World Bank, is expected to conclude that it will be cheaper to act now to curb energy use than to pay for the cost of symptoms later.
His findings, which will be presented to G8 environment ministers during a closed-door session at a summit in Mexico next week, will also outline the financial impact of global warning. Sir Nicholas will reject the alternative argument that the world should maximise economic growth to build reserves to meet the costs of the final reckoning.
PwC said it had attempted to put a price on slowing the growth in carbon emissions because it was impossible to calculate the cost of climate change. "If sea levels rise and a lot of people in Bangladesh drown do you calculate the loss of their lifetime earnings, even though they will be lower than for the UK? It is a difficult moral question," Mr Hawksworth said.
PwC's analysis shows its projections for economic growth of the seven largest emerging economies (E7) - Brazil, China, India, Indonesia, Mexico, Russia and Turkey - imply global carbon emissions will double by 2050. PwC estimates that assuming countries continue with current policies to reduce energy use by 1 per cent a year, emissions will rise by 7 gigatons of carbon (GtC) presently to about 15 GtC by 2050.
Mr Hawksworth said if the world abandoned its recent achievement on cutting energy intensity by 1 per cent a year - then emissions would treble to 24 GtC. Even a radical strategy - which he calls "green growth" - of boosting the share of non-fossil fuels used in energy from 12.5 per cent to 30 per cent, combined with a slightly tougher cut in energy intensity use - would keep emissions only at current levels. "This business as usual approach is clearly unacceptable," Mr Hawksworth said. "Ideally even more needs to be done but this would be challenging enough to achieve."
PwC's report gives a wish list of measures that could deliver lower emissions than exist now by 2050 . These include: energy efficiency improvements beyond the historic trend; road pricing where proceeds are not given back to motorists; investment in hydrogen-based technologies; a major switch from coal to has, nuclear and renewables, particularly in China and India; and expanding carbon capture and storage - taking carbon at source and storing underground or undersea.
The West is sensitive to being seen as lecturing developing countries, or insisting they make the cuts the G7 never made until now.
China and India have ratified the Kyoto protocol but do not have to meet the targets to reduce their emissions of carbon dioxide and five other greenhouse gases.
http://news.independent.co.uk/environment/article1772355.ece
