Climate change: Sustainable growth, markets, and institutions

Over the last decade, climate change has moved from a peripheral policy issue to centre stage, and from the narrow confines of scientific research to the stuff of everyday politics. Few now deny that climate change is taking place, and few deny that the causes are in large measure anthropological. The debate now has moved on from the question of whether climate change is occurring to how it can be tackled. It is perhaps not surprising that politicians’ desire to show leadership by signing up to ambitious targets has not been matched by much by way of supporting analysis of the mechanisms and policy instruments to achieve them, and in particular the implications for energy and transport systems. Part of that lack of detailed engagement with the design of policy is a consequence of a serious underestimation of the scale of the changes required and the costs of achieving them. In this respect, perhaps the most worrying aspect has been the readiness of political leaders to take at face value the conclusion of the Stern Report (Stern 2006) that the costs of mitigation policies may be as low as 1% GDP (or perhaps even less), and therefore the comforting implication that people may not have to adapt much of their lifestyles in order for the problem to be addressed.