The Guardian (UK) [Printer-friendly version] August 31, 2006 CLIMATE CHANGE BRINGS US AN UNCOMPLICATED CHOICE Cameron's Conservatives have recognised that we can benefit the economy and the environment at the same time [Rachel's introduction: In England, the Conservative Party has adopted the precautionary principle for global warming: "The argument in favour of taking strong action to counter climate change is overwhelming, which is why the Conservative party's Quality of Life Policy Group has taken as its starting point an assumption that climate change is real enough to justify the precautionary principle."] By Zac Goldsmith The Archbishop of Canterbury recently described the economy as "a wholly-owned subsidiary of the environment". Calling for an immediate response to climate change, he said "the Earth itself is what ultimately controls economic activity because it is the source of the materials upon which economic activity works". His view, echoed by the likes of Nobel economics laureates Amartya Sen and Joseph Stiglitz among a great many others, is that we need a new type of market economics -- an approach that actually takes the planet into account. It may seem like an obvious call, but it's an approach that until recently couldn't have been further from that of our current, or previous governments. We have had strong words -- but little action. But that is changing. Climate change -- for so long an abstract concern for an academic few -- is no longer so abstract. Even the Bush administration's Climate Change Science Programme reports "clear evidence of human influences on the climate system". The strength of that consensus is such that we are presented with a window of opportunity between the denial of yesterday and the despair of tomorrow. We are at a fork in the road -- on one side is complacency and the pursuit of short-term economic growth, on the other the pursuit of innovation, the development of new technologies, and the realisation of our ability to reconcile economic growth with long-term sustainability. George Osborne, the shadow chancellor, speaking in Japan today, will describe environmental pollution as a market failure. "It is a classic case of what economists call an externality. Because the pollution is external to the market, polluting can make life easier, while the true cost is paid not by the polluter, but by everyone else." Given what we can expect if even the most conservative climate change predictions are accurate, failure to correct this market failure is not an option. Christian Aid, for instance, recently warned that 184 million people in Africa alone could die as a result of water and food shortages caused by climate change before the end of the century. The International Red Cross has said that it does not expect international aid to be able to keep up with the impact of climate change. And according to the world's biggest insurer, Munich Re, economic losses linked to climate change have increased by a factor of eight since the 1960s. The UN environment programme's insurers believe worldwide annual losses will exceed $300bn in 50 years time. Clearly it is impossible to make a definitive prediction on the future impacts of climate change, but we have only to take into account the horrific effects of Hurricane Katrina, both in human and financial terms, to glimpse the potential climate change has for wreaking havoc on our infrastructures. The argument in favour of taking strong action to counter climate change is overwhelming, which is why the Conservative party's Quality of Life Policy Group has taken as its starting point an assumption that climate change is real enough to justify the precautionary principle. And, contrary to the government's negative approach, the Conservative party recognises that, while climate change presents an unprecedented risk, it also presents real long-term economic opportunities. We cannot, for instance, radically reduce greenhouse gas emissions without major investment in new, clean technology -- there are opportunities to be found in the need for change. For those at the forefront of delivering a low-carbon economy, these opportunities will come from developing high-value jobs, greater energy efficiency, and secure, affordable energy supplies. The UK has the opportunity to become a leader in new renewable energy technologies, with London becoming a major financial centre at the heart of trading carbon and raising capital for the "new investment frontier". In doing so we will enhance our competitive advantage, not reduce it. Indeed, where companies have already begun to invest in low carbon technologies and energy efficiency, they are being rewarded financially. Dupont, for instance, has reduced its emissions by 72% since 1990, saving more than $3bn in the process. GE has promised to double its investment in environmental technologies to $1.5bn by 2010. Goldman Sachs, Wall Street's best-known investment bank, is currently ploughing more than $1bn into clean technologies. These initiatives are happening both as a result of consumer pressure and because they make financial sense. But it is the role now of government to provide a more stable, long-term policy framework in order to help unleash the wave of innovation that is needed. Recently, the Corporate Leaders Group on Climate Change wrote to the government calling for more support for this transition to a low- carbon economy. It is these long-term policies that the quality of life policy group is helping the Conservative party to develop. We must establish how to build consensus in society on high-impact actions to reduce greenhouse gas emissions, and seek ways to revitalise the international political process around global solutions to climate change. Britain can be used as proof that you can reduce carbon emissions without losing economic advantage or sacrificing quality of life. We need to look again at the range of current incentives and what messages they send to business and consumers. Without a doubt, a more honest application of the principle that the polluter pays is needed, along with long-term innovative and sustainable market mechanisms such as emissions trading schemes, eco-labelling programmes, renewable energy targets, cleaner public transport, improved building regulations and so on. And, as George Osborne will point out in Japan, we will need to make more use of eco taxes. "We should move some of the burden of taxation away from income and capital, and towards taxes on environmentally damaging behaviour. Instead of a tax system that penalises hard work and enterprise, we need to move towards more effective and fair taxes on pollution." Climate change presents us with an uncomplicated choice. If we are wrong about the dangers, these initiatives come with no downside. But if we are right and we fail to act, the consequences don't bear thinking about. Zac Goldsmith is the deputy chair of the Conservative party's quality of life policy group.