Climate change

In 2006, Sir Nicolas Stern completed a highly influential review of the economics of climate change for the UK government. His report confirmed that the balance of evidence shows that climate change is already having a global impact:

• Greenhouse gas emissions have already increased global temperatures by half a degree Celsius, as the level of greenhouse gases in the atmosphere has risen from the equivalent of 280 parts per million (ppm) of carbon dioxide before the industrial revolution to the equivalent of 430 ppm today.
• If no action is taken on reducing emissions, there is more than a 75 per cent chance of global temperatures rising between 2ºC and 3ºC over the next 50 years and there is a 50 per cent chance that average global temperatures could rise by 5ºC. Stern reviewed the likely environmental impacts of such a climate change:
• Ecosystems will be particularly vulnerable, with 15–40 per cent of species potentially facing extinction (after a warming of only 2ºC).
• Melting glaciers will first lead to increased flood risks, and then to strongly reduced water supplies, threatening one-sixth of the world’s population.
• Declining crop yields, especially in Africa, could leave hundreds of millions without the ability to produce or purchase sufficient food.
• Rising sea levels could leave 200 million people permanently displaced by 2050, while extreme weather patterns will threaten many millions more.
• In a business-as-usual scenario (where we continue with current rates of growth in emissions and no action is taken to reduce them), the likely economic impacts of climate change would result in a decrease in global consumption of 5–20 per cent, with a disproportionate share of the impacts falling on the world’s poorest regions.

We now face two major problems with the use of fossil fuels as sources of energy. The first is that the combustion of fossil fuels is polluting the atmosphere with carbon dioxide and other greenhouse gases, leading to global climate change. The second problem relates to energy security, where for a variety of reasons the security of the supply of fossil fuels is a concern in many countries. During 2008 oil reached record-breaking high prices, and the cost of fossil fuels is increasingly a concern.

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