Now Is the Best Chance for a Climate Deal

Tony Blair and economist Sir Nicholas Stern say the next few weeks are a window of opportunity for creating the proper public-private cooperation needed to forge a global deal on climate change.

The economic case for action on climate change is becoming ever more powerful. Essentially, recent research shows that if nations act together to reduce carbon emissions, costs of action fall and new opportunities for jobs and growth rise. There will be upfront investment but this should not be all about government money. There is also a vast potential for private sector investment if we set the right framework of incentives.

The real benefits—with as many as 10 million new jobs created and additional output equal to the green stimulus packages created this year—come when all countries act together.

This week marks the countdown in earnest to the UN Climate Summit in December. Already in the last few days the Major Economies Forum has met in Washington and Environment and Climate Change Ministers have come together in New York. Heads of government have picked up the baton at the U.N. and later this week at the G-20 summit in Pittsburgh. Although climate change is ostensibly an environmental issue, what makes it seemingly so intractable is that the questions that divide countries—and which should bring them together—are economic and go to the heart of government policy. Nobody doubts the need to take action. Indeed heads of government have recognized this for several years. However, the questions of short-term versus long term costs and benefits, what additional investments are necessary, who should make them and the volume and respective roles of public and private financing still divide nations. It is crucial that these issues are resolved urgently by world leaders if we are to reach agreement on a global deal on climate change in the coming months.

• Big Fat Story: The Climate WarsThe Stern Review made it abundantly clear that there is no choice between action and inaction: the costs of doing nothing—economic as well as social and political—would make the current economic slowdown pale into insignificance. And, if anything, the scientific evidence that has emerged since the Review was published in 2006 suggest that the argument for early action to cut emissions is even stronger. Moreover, strong action on climate change will lay the foundations for a more sustainable, and energy secure future. The transition to this form of growth will probably be the most dynamic and innovative in our economic history.

However, the fact that it makes long-term economic sense to act now does not deal with the issues that most concern governments: short-term economic impacts and how they affect jobs and growth and how the emissions reductions are to be financed, especially in the context of shrinking public budgets. New research published by the Breaking the Climate Deadlock Initiative deals with the first set of issues.

Looking at a range of scenarios for participation in efforts to cut emissions by 2020 shows that in all cases there is a small but positive boost to both GDP growth and job creation, even when a few countries go it alone. However, the real benefits—with as many as 10 million new jobs created and additional output equal to the green stimulus packages created this year—come when all countries act together. And these benefits don't just accrue to one or two countries; in fact every country sees new jobs and increased output. Even ignoring the very real impacts of climate change itself, collaborative investment in cutting emissions is good for the economy.

Looking beyond 2020, global co-operation on climate change could yield still stronger economic gains, driving new waves of technological innovation and discovery and new sources of growth and employment. This leads us to the second issue. While the returns on climate change mitigation are positive, the initial investment still needs to be made. Estimates of this additional investment—in energy efficiency, clean energy, reduced deforestation and adaptation measures now and developing the technologies we will need in the future—vary widely.