The Economic Case for Action against Climate Change

Prof Sam Fankhauser , from the Grantham Research Institute at the LSE , discussed  the  economic considerations and the policy case for action on emissions. Conventional cost benefit analysis (CBA) had been successful in exposing the sensitivity of policy questions to a range of specifics, such as the discount rate, but thinking was moving towards insurance principle, or“rational risk management”. Climate policy was not per se a major issue for public finance, nor need it inhibit “Green growth”. Recession was no reason to delay the low-carbon transition, but it had undermined the price signals intended by the EU ETS.  UK/EU leadership on climate issues was “at risk”, and we should look outside at countries like China where the dynamics of policy was changing rapidly.