SIEMENS

You call for drastic reductions in CO₂ emissions in order to avoid the most catastrophic effects of climate change. Does this mean that we will have to compromise our standard of living?

Stern: I don’t think this is the kind of language that brings us forward. It will not be about compromising living standards, but about making changes in lifestyle, about investing, and about using energy more efficiently. Changes of this kind do not mean compromising living standards. We will simply build an economy that is greener, safer, and more biodiverse, as well as more dynamic and innovative. From my point of view, that means an improvement in living standards. For instance, think about the ways people move around. We can make public transport much more attractive, thus providing an incentive to reduced use of personal transportation. We can make the use of hydrocarbons - or fossil fuels in general - much more expensive by taxing them more heavily and we could use the proceeds to fund better public transport and to promote greener private transport. Obviously, we have to provide incentives to people in order to support responsible behavior, and economic incentives are often the strongest ones. But it comes down to individual responsibility as well. Just as most people now know better than to drink and drive, in the future they may not want to pollute.

In which ways have you changed your life to reduce your carbon footprint?

Stern: I use public transport more often than in the past, being helped by the fact that I do not like driving, so it is not a big sacrifice. Sometimes it is inevitable to use my car, as I mostly live in rural Sussex and only partly in London. However, in London public transport is a lot more attractive than driving anyways. This is partly due to the congestion charge, which serves as an appropriate economic incentive. In addition, I have made changes to my house, which dates from the 15th century. For example, we have installed a ground source heat pump. And we buy our electricity from a wind energy company. So the heating and electricity side is in principle zero carbon. But I fly far too much and I will try to get that down over time. However, the subject I am now dealing with professionally is quintessentially international. So I am working with India, China, the African Union, and the U.S. and traveling is unavoidable.

How can technological innovation contribute to diminishing climate change?

Stern: Technology will be central in helping to make change happen. For instance, there are ways to enhance energy efficiency in everyday life. We can increase the use of renewable energies and develop new generations of nuclear reactors. On the other hand, we have to learn more about energy storage, carbon capture and storage, and reducing the cost of producing renewable energy. Innovation in these fields is crucial.

How can multinationals help?

Stern: Multinationals have one big advantage. In spite of the much-criticized concept of shareholder value and the pressure deriving from it, they can and often do take more of a long-term view when it comes to future markets and product development. At least they are more able to do so than smaller companies. What we can say confidently at this point is that the future of this planet and its economies lies in low-carbon industries. Those who do not follow this route will be stranded. So multinationals that are looking ahead already heavily invest in these areas. And they should do so, as a duty to their shareholders and other stakeholders.

Will investing in low carbon industries spur economic growth?

Stern: Let me put it this way: The high-carbon economy we have now really is the slow growth option for the world economy. The high-carbon economy will kill itself, first through rising hydrocarbon prices and secondly, and more fundamentally, because of the more and more hostile physical environment it will create. Let us not underestimate the damages we are likely to inflict on the planet by continuing to emit greenhouse gases at a high and increasing rate. Over the next 30-60 years we could see temperature increases that take us out of the range of human experience and, over 100 years or so, far out of that range. We have to reduce those risks. The low carbon growth route is the only possible growth route. We have to transition to it over the next two or three decades. It will be a period of enormous innovation, inventiveness, and creativity that will make it a dynamic growth period.

What do you say to critics who suggest that there may be superior benefits if our society invests in the prevention of AIDS and malaria, rather than in carbon emissions reductions?

Stern: Proponents of this approach are deeply confused from an economic point of view. They set out different kinds of programs and regard them as separate, consequently pitching malaria prevention against the fight to manage climate change. But in fact these issues are logically intertwined and must therefore be treated in conjunction. Let’s follow through with an example. Climate change will radically alter health prospects for millions of people in different parts of the world as well as future standards of living, which, again, affect health prospects. Rising temperatures will make malaria an even bigger problem than it is today. Migration, triggered by climate change, can contribute to rising rates of HIV infection. Therefore addressing climate change means addressing malaria and HIV indirectly at the same time, and we must address malaria and HIV directly as well. The challenges of climate change and development must be tackled together.