WorldView/Paul Gillespie:According to Nicholas Stern, global warming is "the biggest market failure ever seen". His comprehensive report for the British Treasury last October set the scene for this year's much more realistic international debate on climate change by highlighting the hugely escalating costs of delaying action to slow, stop and reverse it.
Things have changed so much that "tackling climate change is the pro-growth strategy", as he puts it. His authority as the former chief economist to the World Bank is put firmly on the line and takes the strain very well.
In economic parlance, market failure refers to situations in which markets do not efficiently allocate goods and services or do not serve the public interest because they do not reflect external costs of their activities in their pricing structures. Thus the environmental consequences of corporate activity are disregarded. Stern includes the costs of species extinction and ecological degradation in his analysis and calls for global political action to address them. A new balance between public and private action will thereby be established.
His analysis is borne out in the report from the International Panel on Climate Change (IPCC) this month examining its impacts, how ecosystems are adapting and their vulnerability to further change. Its summary for policymakers is a starkly impressive document, spelling out systematically the effects on agriculture, forestry and ecosystems, water resources, human health, and industry/settlement/society.
Drawing on a great body of scientific research, its findings that anthropogenic (man-made) actions have directly affected the world's climate are delivered with varying degrees of confidence, ranging from very high to medium. The following frightening summary, for example, has an 80 per cent likelihood: "The resilience of many ecosystems is likely to be exceeded this century by an unprecedented combination of climate change, associated disturbances (eg flooding, drought, wildfire, insects, ocean acidification) and other global change drivers (eg land use change, pollution, over-exploitation of resources)."
Overwhelmingly, the greatest impact of these changes will be on the world's poorest people, who are least responsible for them. Were these costs to be properly reflected in corporate pricing, global capitalism would look very different as to efficiency and profitability.
So climate change is closely related to economics and realisation of that fact now drives policy on the subject. The notion of an individual carbon footprint must also be applied to more collective endeavours. It is a huge question whether the pursuit of growth at all costs is any longer environmentally sustainable, indeed whether economic growth is any longer a worthy goal of public policy. Many of these issues are played out in transatlantic relations between the United States and the European Union.
Speaking in Dublin this week at the Institute of European Affairs as part of its ambitious programme on climate change, Kurt Volker, second in command at the US state department's bureau for European and Eurasian affairs, set out his government's perspectives on climate change.
Central to them is a vision of economic growth harnessed to market-driven technological change, with governments acting as facilitators and regulators rather than controllers of the process. Economic growth generates greenhouse gases, so it is to be expected that they should be most produced in the world's most productive economy, that of the US.
There are three possible ways to cut greenhouse gases, Volker said: reducing economic activity; shipping them off through trading schemes; or developing new technologies which eliminate them. US policy is decisively geared towards the third option.
Despite the disagreement with the EU over the Kyoto scheme of setting targets to reduce the gases, the US cares about climate change, recognises human responsibility for it, is deeply committed to cutting emissions, works multilaterally to reduce them and fully participates in the IPCC's work, in which many American scientists play a leading role.
From 2000 to 2004 the US economy grew by $1.9 trillion (€1.4 trillion) yet its greenhouse gas emissions increased by only 1.3 per cent. President George Bush set a goal to reduce the greenhouse gas intensity of the US economy by 18 per cent by 2012 and there is a wide variety of programmes to achieve it. They include incentives to encourage private investment in alternative energies, many of which are becoming profitable. State by state there are many more such programmes, notably in California. Governments must learn how to harness rather than direct markets, which have the ability to produce ecologically innovative solutions.
Volker said the Kyoto argument is frustratingly bound up with means, not objectives. His government needs to be sure it can control agreements reached and mistrusts international target-based methods.
But he is well aware of how damaging in public relations terms is the perception in Europe and elsewhere that the US has selfishly refused to be involved in Kyoto. In fact, it works with China, India and other states on technology transfer programmes and other measures to go beyond the Kyoto targets for the post-2012 period. It wants to work with the EU at this month's summit meeting in Washington and beyond that at the G8 and United Nations meetings later in the year. The scientific picture will then be filled out by the forthcoming IPCC report on what can be done to reverse global warming.
In this international setting there is real competition about political methods as well as new technologies between different world regions. The US emphasis on finding new technologies is refreshing, but not exclusive to them. A new US administration will have its work cut out to retrieve its reputation around the world after the unilateralist thrust of the first Bush term. That still determines its image, despite the evidence of greater multilateral efforts on climate and other issues with Europe over the last two years.
We are left with the issue of whether it will be possible to agree what is necessary to turn the ecological tide back over the next decade or two. According to Stern and the IPCC reports, that is all the time there is left for action before qualitative and irreversible changes occur.
In Bill McKibben's words, we have reached the "Oh shit" stage of global warming, after the first stage which asked, "I wonder if it will happen?", and the second one of "Can this really be true?".
pgillespie@irish-times.ie