February 1, 2006

Governments Must Give Green Incentives, Says Economist

By Jeremy Lovell

OXFORD -- The leader of a major study into whether economic growth is compatible with green policies has called on governments to provide clear incentives to help the environment.

Nick Stern, head of the British government's economic services, told a meeting of students and academics that such initiatives would form part of a wider set of policies.

"We need clear, long and credible incentives from government," he said. "We have to devise a framework for the private and public sectors to work together."

With predictions of potentially catastrophic floods, droughts and storms from climate change due to burning fossil fuels, clear commitments and proof that economies could grow and be clean was fundamental to harnessing international action.

"You need to act across a broad area," Stern said citing actions to stop deforestation, promote carbon-free electricity, cleaner transport, more efficient buildings and energy use.

"One of our key tasks is to find whether you can be green and grow," Stern said. "There are a lot of arguments to suggest that this is likely to be possible."

Making his first public speech on the study since it was set up last July, Stern told the Oxford Institute of Economic policy that scientific proof of climate change was overwhelming and a study of the economics was now crucial.

The United States, the world's biggest polluter, has rejected the Kyoto Protocol on cutting so-called greenhouse gas emissions on the grounds that it would badly damage its economy.

But Britain says it has cut its carbon dioxide emissions while its economy has been growing well, and environmentalists say low-carbon economic growth could be a reality using renewables like wind and waves and energy efficiency.

"This is an international collective action problem. There can be no free-riding," said Stern, who is to hand his report to finance minister Gordon Brown and British Prime Minister Tony Blair by November.

Scientists predict that global average temperatures will rise by between one and six degrees Celsius this century unless urgent action is taken now to cap and reduce carbon emissions.

Stern said recognizing the problem was only the start. Persuading everyone -- from governments to individuals -- to act appropriately was another question completely, and there was no single answer.

But most of all, he urged, climate change should become a part of everyday international diplomatic life like the battle against narcotics, nuclear proliferation and poverty.