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Lord Stern Snubbed By UK Government: Free Trade Trumps Climate Change

Alex Stevenson, The Ecologist

Lord Stern’s bold initiative to tackle climate change “unhelpful” says UK Government: free trade and economic growth take precedence over climate change.

Lord Stern’s comments constitute a call for a whole new system of global climate regulation.

Lord Stern yesterday called on Parliament to introduce a revolutionary system of ‘carbon tariffs’ to help save the global climate. This would take the form of an import duty on goods from countries that do not charge companies for their carbon emissions – and so remove the disadvantage faced by businesses whose prices are undercut by firms in states which do not have carbon pricing.

“Over the medium term, some sort of border adjustment for differential approaches to policy on carbon in different countries would be appropriate,” Stern told MPs on the Commons’ energy and climate change committee. There was a “case for an adjustment” in ten or 20 years’ time, he argued, when countries still resisting a carbon price should be hit by “a tariff to take into account their inability to price carbon”.

Lord Stern added he was even more concerned about the dangers of climate change now than he had been when he authored his influential Stern Review on the Economics of Climate Change, published by the UK Government’s Treasury department in 2007.

He now felt that he had underestimated the impacts of the “very hostile environment” that would be produced by severe climate change, and “I would have been more worried about future generations being possibly worse off, in some areas substantially worse off, than the current one.”

Lord Stern’s comments constitute a call for a whole new system of global climate regulation. Under the existing Kyoto Protocol, signed in 1997, only a short list of already industrialised countries are required to cut their carbon emissions. Many of the world’s biggest emitters, notably China and India, are exempt. Even industrial countries that violate their obligations like the USA and Canada face no penalty for non-compliance.

Lord Stern’s proposed carbon tariffs or ‘border adjustment measures’ would penalise all countries that fail to price carbon or put other measures in place to constrain carbon emissions. And it would protect industries in countries that do price carbon emissions from cheaper imports from countries that do not. The measure has the backing of numerous economists including Dieter Helm and Joseph Stieglitz.

But the UK Government was quick to pour cold water on Lord Stern’s proposals. A spokesman for the UK’s Department of Energy and Climate Change told The Ecologist: “Fundamentally we continue to believe that border adjustment measures are an unhelpful way to address carbon leakage because they risk having protectionist undertones. They are also very complex to administer, with costs for government, business and consumers.”

“This could be further complicated, where exports originate from a country using less carbon intensive technology, as such countries may seek ‘tax credits’, creating even more complications to global trade”, he added.

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