Economy faces climate 'calamity' says 700 page Stern Report

London, UK (by Joe Murphy “Evening Standard”) – A 700-page Government report on climate change has predicted the ‘biggest global economic crash since the 1930s’ - paving the way for a host of new green taxes.

Tony Blair today warned the planet was ‘on the edge of calamity’ and paved the way for new taxes on motoring and air travel.
Heavy taxes being pushed for by ministers include VAT on airline tickets, duty on aviation fuel and higher air passenger duty - together raising the price of a typical family flying abroad by 20% or more.

With bigger taxes on motoring, the annual cost to families if all the schemes being discussed by ministers go ahead could be more than £1,000 a year.

However, for the least-green households, the tax penalty could be even more severe. A London family of four that has a 4x4 on the drive, keeps the heating turned high, has a gas heater in the garden and takes cheap flights abroad each year can expect to be hit by £2,000 more in duties.

Launching the 700-page Stern Report into climate change, the Prime Minister said people had no choice but to make sacrifices or face disaster. ‘This report will be seen as a landmark in the struggle against climate change,î Mr Blair said.

‘It reinforces the overwhelming scientific view that our planet is on the edge of calamity. It also gives us the clearest evidence yet that bold and decisive action can still prevent it.î

He and Gordon Brown stood shoulder to shoulder to launch the findings of Sir Nicholas Stern’s widely-leaked report, the most comprehensive study yet into the potential effects of global warming.

The Chancellor has conspicuously refused to rule out using his Budget to impose hefty new taxes on petrol, flights and gas guzzling cars.

A range of possible taxes to punish domestic carbon polluters were proposed in a leaked submission to the Treasury from Environment Secretary David Miliband.

They included the return of the unpopular fuel escalator - annual petrol duty rises - which sparked the fuel protests in 2000 and taxes worth around 10p per litre.

Other measures were pay-per-mile road charges; taxes on inefficient domestic appliances, such as old-fashioned dishwashers; duties on aviation fuel, a higher air passenger levy and more charges for household rubbish.


  • £3.68 trillion - the total cost of tackling climate change per year unless drastic action is taken, according to the Stern report.
  • 1% - how much of global gross domestic product (GDP) must be spent if climate change is to be tackled now.
  • 200 million - the number of people who could become refugees after their homes are hit by drought or flood.
  • 40 - the percentage of species that could become extinct due to climate change.
  • 0.5% - the temperature increase across Africa in the past 100 years.
  • 20% - Britain’s current target for reducing carbon emissions.
  • 30% - the EU’s target for reducing carbon emissions by 2020 under proposals by Gordon Brown.
  • £10.6bn - the total amount the Stern report recommends should be spent on global research into carbon emissions. (less than what BP posts in 1 years profits and yet the products BP produces account for 5% of global warming)
  • 1 in 6 - the number of people in the world whose drinking-water supply could be affected by climate change.
Mr Blair said it was necessary to ‘be bolder at home’ which implied that the leaked tax plans would have to be considered.

There was speculation the leak was part of a ‘kite-flying’ exercise to see if voters responded angrily or could be softened up.

Both he and Mr Brown emphasised the need for international action, saying that without China, India and the United States joining in nothing would be achievable.

The Chancellor revealed that former US vice-president Al Gore - now a prominent environmental campaigner - has agreed to be his adviser on the issue.

Mr Brown strongly backed Sir Nicholas’s call for an international carbon-trading scheme, in which companies would get permits to produce a certain amount of pollution.

These permission’s could then be traded, so that clean technologies would be rewarded and dirty producers would face higher costs.

‘Above all Sir Nicholas Stern’s report sees climate change as a global challenge that demands a global solution’, Mr Brown will say. ‘The truth is: we must tackle climate change internationally or we will not tackle it at all. Britain will lead this global effort.î

The EU already has a fledgling carbon trading market, where a tonne of carbon emissions currently cost around 11.75 euros.

The Government hopes to hijack the bandwagon and make London the world’s main exchange centre for a market that Sir Nicholas estimates will be worth $70bn in four years’ time - more than aerospace and pharmaceuticals put together.

Sir Nicholas, the former chief economist at the World Bank, began work in July last year and his study was received as the most comprehensive work on the economics of climate change - both the impact it will have on wealth-creation and the way it can be tackled by harnessing the power of markets. Its main points are:

  • A warning that unchecked global warming has the potential to cause the biggest global economic crash since the Thirties, wiping out as much as a fifth of the world’s wealth-creation.
  • At worst, 200 million people will become refugees while many more would suffer from famine, floods and conflicts.
  • Between 15% and 40% of species could be destroyed as habitats die out.
  • The world’s poorest countries will suffer the most, especially Africa.
  • Giving up the equivalent of 1% growth now could stave off the disaster.
Sir Nicholas proposes:

  • Setting a new EU target for emissions reductions of 30% by 2020 and 60% by 2050. The scheme, which currently covers only half of emissions, would be expanded.
  • Linking Europe’s emissions regime with counterparts in Australia, California, Japan, Norway, and Switzerland as the first step towards establishing a global system.
  • Doubling energy Research and Development and scaling policies to support markets for low-carbon technologies
  • Integrating climate change into development policy - so that rich countries honour pledges to increase overseas aid.
Mr Miliband confirmed that a leaked letter setting out his call for higher green taxes was genuine. He added: ‘As our understandings of climate change increases, it is clear more needs to be done.’

Tory leader David Cameron said he would be prepared to tax air travel and bigger cars. Liberal Democrat leader Sir Menzies Campbell said: ‘We have absolutely no option but to deal with the problem of climate change and nothing but hard choices will do it.’

Sir Nicholas today said families must accept the need to pay through higher prices. ‘It is consumers and households that ultimately pay’, he said on BBC Radio 4. ‘They will pay just 1% more on average for their consumer activities.’

What Miliband proposes

Fuel Duty
Automatic increases even if oil prices fall. The annual fuel duty escalator, abolished after protests in 2000, would be restored. That could mean 10p on a litre of fuel, costing the driver doing 15,000 miles a year some £260 a year.

Road Pricing
Pricing should ‘reflect the full environmental impact of the journey made’. A 2p per mile charge would cost £300 a year for a 15,000-miles-a-year driver.

Cheap flights
£5 increase in air passenger duty, raising £400 million a year; VAT on ticket prices; taxing aviation fuel to be considered. Means cost of a family holiday to the Mediterranean could rise by up to £130.

Domestic Rubbish
‘Differential charging’ for household waste, leading to greater use of microchips in wheelie bins to spy on rubbish. Penalties for not recycling, fears that council tax will have to rise.

Household Appliances
Taxes on energy-wasting white goods and lighting products - could mean a £50 levy on wasteful appliances and a £1.50 charge added to non-green lightbulbs.

Gas-guzzling cars
‘Substantial increase’ in road tax for inefficient 4x4s. Top rate of vehicle excise duty could reach as much as £630.

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