Sir Nicholas Stern: “A toast to the end of the Bush Era…”

“A toast to the end of the Bush Era…” That was the first sentence of an amazing presentation held by Sir Nicholas Stern in São Paulo at the Federation of the Industries of the State of São Paulo (FIESP) on Tuesday this week. In less than an hour, Dr. Stern discoursed on his mighty report “The Stern Review”.

Released in 2006 on behalf of the United Kingdom, “The Stern Review” is a 700-page document that stands by the conversion of our economy into a new low-carbon one. In short, the report proposes that the climate changes under a “business-as-usual” scenario will consume about 20% of the worldwide Gross Domestic Product (GDP), with adaptation and mitigation initiatives costing about 1.5% in the same period.

In a very casual yet direct manner, Dr. Stern reaffirmed his opinion for the need of an economical transformation into a low-carbon system. According to him, a high-carbon economy, one based on petrol and non-sustainable processes, must be re-evaluated immediately. He talked about the “Bush Legacy” – high-carbon products without long-term responsibility – and how to replace this outdated model. One of the most controversial of Dr. Stern’s proposals is the pricing of carbon within the products and services. In other words, it would be similar to establishing a “carbon tax” on the system.

According to “The Stern Review”, society needs to cut down its per capita emissions by more than 50%. While a regular European citizen emits 10 tons of CO2 equivalent per year, a responsible citizen should only emit 2-3 tons. This means developed countries must cut their emissions by 80% by 2050, and developing countries must produce 50% less carbon emissions than they do now. In his report Stern argues that a failure to do so will lead to dramatic modifications of the human condition (i.e., geographically, environmentally, and economically). Regarding these threats, Dr. Stern is very emphatic when he says the climate change is disturbing fishing activities, agriculture incomes, energetic planning, and so on. As a consequence, the GDP will most certainly definitely drop.

It is clear to Dr. Stern and his team – as it is to me and others – that our current economic model is not sustainable. However, why don’t decision-makers realize it? Why are some countries, like Brazil, investing millions of dollars in efforts to be “petrol independent” when they should be investing in efforts to be “petrol free” instead?

Is Dr. Stern correct in suggesting a carbon tax? If not a tax what is the best way to avoid the looming economic and environmental disasters that climate change presents?