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Facts and Fictions About New Climate Change Report

The New Climate Economy Report has been endorsed by a wide range of politicians, businesspeople and commentators since it was published on 16 September, but a few 'usual suspects' have popped up in the media to make predictably weak and flawed attacks on its findings...

The New Climate Economy Report has been endorsed by a wide range of politicians, businesspeople and commentators since it was published on 16 September, but a few 'usual suspects' have popped up in the media to make predictably weak and flawed attacks on its findings.

The main conclusion of the report, which was commissioned by the governments of seven countries including the United Kingdom, is that well-designed policies can make economic growth and action against climate change "mutually reinforcing in both the short and medium term".

It outlines measures that would both achieve between 50 and 90 per cent of the cuts in annual global emissions of greenhouse gases required by 2030 for the world to be on a path towards a two-in-three chance of avoiding global warming of more than 2 centigrade degrees, and create additional economic benefits, such as reducing local air pollution.

The first criticisms levelled at the report on 19 September came from a controversial economist, Professor Richard Tol, but it was apparent that he had not understood the report before making a number of erroneous assertions about it.

He was followed by Dr Bjorn Lomborg, who was called upon by BBC Radio 4's Today programme on 23 September to provide 'false balance' during an interview with Lord Stern, Vice-Chairman of the Commission on the Economy and Climate which oversaw the preparation of the report.

Dr Lomborg said:

"Saying that there is no trade-off is just simply not representative of the economic literature. It's very clear that countries with high GDP growth also have high emissions of CO2. Now you can cut that back, you can cut your carbon emissions, but the evidence overwhelmingly show [sic] that you would have lower GDP growth. Not zero, but lower GDP growth."

This statement misrepresented the content of the report and showed that he, like Professor Tol, had not read it properly. The report explicitly acknowledges that there will be some trade-offs. Page 10 of the synthesis of the report states:

"The shift towards a low-carbon, climate-resilient path of growth and development will not be easy, and governments will need to commit to a just transition. Not all climate policies are win-win, and some trade-offs are inevitable, particularly in the short term. Although many jobs will be created, and there will be larger markets and profits for many businesses, some jobs will also be lost, particularly in high-carbon sectors."

But the report also notes that focusing narrowly on GDP growth, as Dr Lomborg did, ignores many other important aspects of economic performance. On page 19, the report states:

"The transformational changes proposed in this report offer an opportunity not just to drive economic growth defined in terms of incomes and GDP, but to achieve multiple benefits, improving human well-being more widely. This underpins the Commission's concept of "better growth": growth that is inclusive (in the sense of distributing its rewards widely, particularly to the poorest); builds resilience; strengthens local communities and increases their economic freedom; improves the quality of life in a variety of ways, from local air quality to commuting times; and sustains the natural environment. All these benefits matter to people, but they are largely invisible in GDP, the most widely used measure of economic output."

It also draws attention on page 18 to the evidence that economic growth does not necessarily require an increase in greenhouse gas emissions:

"National and local governments as well as businesses that have adopted lower-carbon strategies and policies have found them associated with economic performance as good as or better than their high-carbon peers'. Much of this has been driven by recent technological advances. The decoupling of growth from carbon emissions in some of the best-performing economies, both in Northern Europe and in North America, demonstrates the gains that can be made in incomes, jobs, rates of innovation and profits from a low-carbon, resource-efficient model of growth."

This is not the first time that Dr Lomborg has had trouble interpreting a major report on the economics of climate change. Earlier this year, he provided a mixed-up account of the latest assessment by the Intergovernmental Panel on Climate Change.

Fortunately, there have been plenty more thoughtful analyses of the new report by commentators who have read it carefully. Writing in the Financial Times on 24 September, Martin Wolf, the distinguished economics journalist, drew attention to its main findings and concluded: "It is unnecessary to persist in making today's massive unhedged bets in the climate casino. It is possible instead to combine growth with a less environmentally risky future."

Bob Ward is policy and communications director at the Centre for Climate Change Economics and Policy and the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science.