UK climate change costings 'too high'

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UK climate change costings 'too high'

By David Ibison in Stockholm

Published: January 18 2007 02:00 | Last updated: January 18 2007 02:00

The cost of combating climate change could be 40 per cent lower than the figure given in last year's watershed Stern report on the economic impact of global warming, according to research to be announced today.

The research will be presented by Lars Josefsson, chief executive of Vattenfall, the Swedish power company, and is likely to attract particular attention as he is a special adviser on the environment to Angela Merkel, Germany's chancellor.

Germany took on the presidency of the European Union on January 1 and Ms Merkel has made combating climate change a centrepiece of its rule. Sigmar Gabriel, Germany's environment minister, will attend the talk by Mr Josefsson.

"The cost of limiting the concentration of greenhouse gases is equivalent to 0.6 per cent of the total gross world product - if all the identified potential is exploited," Mr Josefsson told the FT.

Sir Nicholas Stern, a UK economist, propelled climate change up the political agenda in a report that claimed global warming could shrink the world economy by 20 per cent if nothing was done, but that action today would cost 1 per cent of GDP.

Mr Josefsson's report says lower costs can be achieved using measures that "pay for themselves", such as insulation improvements and fuel efficient cars. But it also envisages more use of nuclear power and carbon capture technology.

The research, which was paid for by Vattenfall, forms part of a drive by Mr Josefsson to enhance the role played by the world's leading companies to combat climate change. He oversaw last week's announcement of the creation of the 3C initiative, in which 15 of the world's largest companies joined forces to devise "commercial solutions and market-based investments" to climate issues.

US companies such as General Electric, NRG Energy and Duke Energy signed up to the 3C initiative, a development Mr Josefsson said meant the interests of US business and climate protection were becoming increasingly aligned.

He hopes the revelation that tackling global warming could be much cheaper than first thought, and led by large businesses, will galvanise political leaders into addressing climate-related issues.

Mr Josefsson plans to present the research to business leaders in Davos this month and will travel to Asia to convince business leaders there to join the 3C programme.