24 September 2008 | Luca Del Buono

 

Governments need to show the same boldness to intervene in the markets to kickstart a move to a low-carbon economy as they did when they helped the banks stave off financial crisis last week, a leading academic has demanded.

"Both require strong regulation for efficient economic outcomes," said Terry Barker, a climate change expert at Cambridge University, who fears the Lehman Brothers and HBOS problems foreshadow a global economic downturn.

Barker's concerns were backed up by one of the government's scientific advisers, who fears that a downturn could lead to a lack of investment in vital new sectors such as developing carbon capture and storage plants."When you have a downturn of this kind, it does lead to a disinvestment in this kind of technology," said Robert Watson, a former World Bank adviser who is now at the Department for Environment, Food and Rural Affairs.

There were marked similarities between the lack of transparency and action on complex lending risks that had wreaked havoc in the banking community and the kinds of dangers being stored up by corporate and political inaction over global warming, said Barker, the director of the centre for climate change mitigation research at Cambridge.

"Both threaten the economy with catastrophic collapse," added the economist, who has worked with the UN's Inter-Governmental Panel on Climate Change, and was speaking with Watson at the Entrepreneurship for a Zero Carbon Society conference at Cambridge University.

Barker believes the problems on Wall Street will take potential investment money out of the system. But he says a determined response by ministers could encourage the channelling of that cash into vital work on climate change.

He fears that governments and business leaders have massively underestimated the risks posed by rising sea levels and changing weather patterns - any costs associated with moving to a low-carbon economy were, he said, "negligible" compared with the costs of doing nothing.

The banking crisis meant the rules of engagement by governments had changed completely, said Barker.

The same system of "force majeure" was needed to tackle climate change through new eco-taxes, and help to supplement carbon trading.In the past, cost-benefit analyses had been applied to justify inaction on global warming, but this was inappropriate given the enormous scale of the social, environmental and other threats being faced.

"The Amazon rainforest and coral reefs cannot be substituted by money. It's obvious, but it needs repeating," said Barker.

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Source: The Guardian

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