Stern urges business leaders to wake up to green regulation risk
Economist argues development of carbon markets and environmental legislation make low-carbon strategies the low-risk option
Companies are taking unacceptable business risks by pursuing carbon-intensive growth strategies based on the mistaken assumption that lax regulation of emissions and relatively low-carbon prices will continue into the future, Nicholas Stern has told a conference of European investors.
Speaking at a Swiss event hosted by German asset manager DWS Investments, the author of the seminal 2006 Stern Review on the economics of climate change, said: “As a company, you cannot be sure what will happen to the carbon price, but assuming zero [price moves] is a pretty stupid assumption over 20 to 30 years.
“Presuming zero regulation of emissions is also a pretty stupid assumption. A ‘low-carbon’ strategy is getting less risky.”
Stern urged European businesses to adopt low-carbon strategies and push for an integrated energy grid system across the continent.
He also called on investors to support domestic clean energy technologies – not least so Europe does not lose the lead in this sector to a rapidly advancing China.
“There is a realisation in Beijing’s 12th Five-Year Plan that domestic consumption is a driver of growth, and [there are] benefits of clean quality growth,” he said. “They see the traffic jams in Beijing, and sand blowing in from the Gobi desert in April, and Beijing is asking how vulnerable is China to climate change? It is a huge risk, and China understands it is a country run by entrepreneurs [who can tackle this].”
In moving from carbon-intensive manufacturing to consumption, Stern said the priorities on China’s agenda include energy efficiency, renewables, new materials, high-end manufacturing and communication technology.
He said many of these priorities related directly to low-carbon industry. “All these are big stories, and also the things we think we are good at in Europe and the US,” he said.
Stern said building an integrated energy grid would also benefit Europe’s competitiveness at a time when the continent urgently needs to bolster its economic standing.
“It gives you more competition across borders and greater energy security, and you need sources of employment, so the project makes enormous sense,” he said. “It would give Europe the kind of cutting edge it probably has now in the low-carbon sphere, but which it could lose to China.”
He said a sixth revolution of low-carbon growth – following revolutions in textiles, industries, railroads, mass production and IT – would “bring two or three decades of strong investment, innovation and growth”.
“If you get it right this is very attractive from a point of view of growth, and it will be greener, safer, cleaner and more bio-diverse,” he added.
Stern cautioned only “modest steps forward” should be expected from the 17th United Nations conference on climate change in Durban in December, and added his voice to those who believe “it will probably not include a second set of agreements”.
“We’ve had [conferences in] Copenhagen and Cancun, [which were] a relative success, but only consolidated the UNCC process and embedded it,” he said.
By David Walker
Companies are taking unacceptable business risks by pursuing carbon-intensive growth strategies based on the mistaken assumption that lax regulation of emissions and relatively low-carbon prices will continue into the future, Nicholas Stern has told a conference of European investors.
Speaking at a Swiss event hosted by German asset manager DWS Investments, the author of the seminal 2006 Stern Review on the economics of climate change, said: “As a company, you cannot be sure what will happen to the carbon price, but assuming zero [price moves] is a pretty stupid assumption over 20 to 30 years.
“Presuming zero regulation of emissions is also a pretty stupid assumption. A ‘low-carbon’ strategy is getting less risky.”
Stern urged European businesses to adopt low-carbon strategies and push for an integrated energy grid system across the continent.
He also called on investors to support domestic clean energy technologies – not least so Europe does not lose the lead in this sector to a rapidly advancing China.
“There is a realisation in Beijing’s 12th Five-Year Plan that domestic consumption is a driver of growth, and [there are] benefits of clean quality growth,” he said. “They see the traffic jams in Beijing, and sand blowing in from the Gobi desert in April, and Beijing is asking how vulnerable is China to climate change? It is a huge risk, and China understands it is a country run by entrepreneurs [who can tackle this].”
In moving from carbon-intensive manufacturing to consumption, Stern said the priorities on China’s agenda include energy efficiency, renewables, new materials, high-end manufacturing and communication technology.
He said many of these priorities related directly to low-carbon industry. “All these are big stories, and also the things we think we are good at in Europe and the US,” he said.
Stern said building an integrated energy grid would also benefit Europe’s competitiveness at a time when the continent urgently needs to bolster its economic standing.
“It gives you more competition across borders and greater energy security, and you need sources of employment, so the project makes enormous sense,” he said. “It would give Europe the kind of cutting edge it probably has now in the low-carbon sphere, but which it could lose to China.”
He said a sixth revolution of low-carbon growth – following revolutions in textiles, industries, railroads, mass production and IT – would “bring two or three decades of strong investment, innovation and growth”.
“If you get it right this is very attractive from a point of view of growth, and it will be greener, safer, cleaner and more bio-diverse,” he added.
Stern cautioned only “modest steps forward” should be expected from the 17th United Nations conference on climate change in Durban in December, and added his voice to those who believe “it will probably not include a second set of agreements”.
“We’ve had [conferences in] Copenhagen and Cancun, [which were] a relative success, but only consolidated the UNCC process and embedded it,” he said.
By David Walker
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