Summary: Stern report on climate change costs

LONDON - Ignoring climate change could lead to economic upheaval on the scale of the 1930s Depression, underlining the need for urgent action to combat global warming, according to a British report released overnight.

These are highlights of the report.

Predictions

* Even if the annual flow of emissions did not rise beyond today's rate, the stock of greenhouse gases in the atmosphere would reach double pre-industrial levels by 2050 - that is 550 parts per million - and would continue growing thereafter.

* On current trends, average global temperatures will rise by 2-3 degrees centigrade within the next 50 years or so (compared with the period before 1850).

Costs

* If no action is taken, climate change will reduce global consumption per head by between five and 20 per cent, and is likely to be at the upper end of that range.

* The costs of extreme weather alone could be 0.5 to 1 per cent of global Gross Domestic Product by 2050.

* By comparison, the annual costs of stabilising greenhouse gases in the atmosphere at 500-550 parts per million (ppm) is estimated to be about one per cent of annual world GDP by 2050, a level the report describes as "significant but manageable".

Assumptions/risks

* The report's cost estimate is based on stabilising greenhouse gases in the atmosphere at 500-550 ppm; it said costs would likely rise rapidly to achieve anything below this.

* A level of 550 ppm has up to a 99 per cent chance of resulting in a more than 2 degrees centigrade global average temperature rise compared to the pre-industrial era. It says 550 ppm is associated with significant global warming risks.

* This suggests EU policy may be over-optimistic. EU leaders said in March 2005: "... with a view to achieving the ultimate objective of the UN Framework Convention on Climate Change, the global annual mean surface temperature increase should not exceed 2 degrees above pre-industrial levels."

* Stabilising gases at 450 ppm, seen likely avoiding the most dangerous effects, was "already almost out of reach".

Opportunities

* Markets for low-carbon energy products are likely to be worth at least $500 billion (263 billion pounds) per year by 2050, and perhaps more.

* Climate change policy may kickstart reform of inefficient energy systems and removal of distorting energy subsidies, on which governments spend around $250 billion a year.

* In a calculation of the "social cost" of carbon, it estimates the net benefits in the long term of immediately implementing policies at around $2.5 trillion.

Reducing Emissions

* Large-scale uptake of a range of clean power, heat and transport technologies is required for radical emission cuts in the medium to long term.

* The global power sector will have to be at least 60 per cent, and perhaps as much as 75 per cent, decarbonised by 2050 to stabilise greenhouse gases in the atmosphere.

* Even with very strong expansion of the use of renewable energy and other low-carbon energy sources, hydrocarbons may still make up over half of global energy supply in 2050.

* Extensive carbon capture and storage, burying greenhouse gases from power plants and factories underground, would allow continued use of fossil fuels without damage to the atmosphere.

* Policy to reduce emissions should be based on three essential elements: carbon pricing, technology policy and removal of barriers to changing people's behaviour.

* Public spending on research and development into low-carbon technologies has fallen in the last two decades. Likely high returns to a doubling of investments in this area to around $20 billion a year globally.

* The report argues that worldwide incentives to encourage the use of new low-carbon technologies should be raised by two to five times from the current level of some $34 billion a year.

Adapting to climate change

* The additional costs of making new infrastructure and buildings resilient to climate change in OECD countries could be between $15 billion and $150 billion a year.

Response

* A global view on the problem's urgency and on long-term goals, plus an international approach based on multilateral frameworks and coordinated action, are essential.

* Securing broad-based and sustained cooperation requires equitable effort across developed and developing countries.

* Calculations based on income, historic responsibility and per capita emissions point to rich nations taking responsibility for emissions cuts of 60-80 per cent from 1990 levels by 2050.

* A broadly similar price of carbon is necessary to keep down the overall costs of making these reductions and can be created through tax, trading or regulation.

* Enabling the European Union's Emissions Trading Scheme to link with other emerging trading schemes could improve liquidity while also establishing the nucleus of a global carbon market.

Deforestation

* Emissions from deforestation are estimated to represent more than 18 per cent of global emissions.

* Need urgent action to preserve the remaining areas of natural forest.

Poor nations

* The poorest developing countries will be hit earliest and hardest by climate change. The international community has an obligation to support them in adapting to climate change.