The last budget before Copenhagen

Nicholas Stern - panning Kingsnorth, Heathrow and now the budget?
CC Thiago Karrapatoso

I never thought I'd feel particularly warmly towards an economist. But then, Lord Stern of Brentford (as he's known to his friends), has a special place in the hearts of many climate change policy wonks.

He's responsible for the Stern report - an attempt, back in 2006, to figure out exactly what tackling climate change would cost. The full report ran to 700 pages, but the top line was this: 1% of global GDP a year would hold greenhouse gas concentrations in the atmosphere to 550 ppmv, 3% of global GDP would hold it to 450 ppmv - gettting closer to limiting temperature rise to 2 degrees. But if we don't start spend that now, climate change will end up costing us 20% of global GDP. In other words, make significant but realistic investment now (the global military budget is about 2.5% of GDP, after all), or destabilise the climate and break the economy permanently. He basically took the environmental debate around addressing climate change and put it into the language of economics.

I suppose many of us might feel reducing everything to costs is probably a little abstract, or even distasteful, because it seems to obscure the human, social and environmental aspects of the situation - you can't reduce nature to numbers, man! But maybe this time suspend your suspicion. Because remarkably, for someone who was clearly appointed because of his central position in the establishment, Stern does a good impression of a man strategically speaking the language of economics to deliver body blows to the status quo. You might even suspect that the plan all along was to become the respectable face of climate change concern, get a peerage, and then ramp it up a little.

While he's probably not going to be calling for the overthrow of capitalism any time soon, Stern has used the few interviews he's given since 2006 to harangue (very politely) the government for their equivocation over Kingsnorth and their assent to a third runway at Heathrow, stating that Kingsnorth should not be built - unless the carobn it emits can be captured, which it can't, and that he would be ‘surprised' if the construction of a third runway at Heathrow fitted with a coherent carbon and transport policy from the government. For someone who has shaped the debate on climate change to weigh in on the two most politically sensitive policy decisions the government have to make is political dynamite.

In his latest interview he talks about tomorrow's budget - ‘the last budget before Copenhagen'. Because the UK has committed to cut emissions 80% by 2050, the budget needs to contain some substantial green spending to begin the task of reducing emissions, because making 80% cuts is going to take more than waving a magic diplomatic wand at Copenhagen in December.

It's going to mean committing to make the slightly boring infrastructure changes at home first. Lord Stern notes that the test of government climate policy will be whether they create strong programmes to transform our approach to energy efficiency, to public transport, to energy generation. He reckons that we need to probably spend £20 billion a year, for the next five years, during a period of "intensive investment", to kick start the process. Half of that would come from the public purse, amounting to about 0.7% of UK GDP. So speaks the economist at the heart of the establishment.

Of course, he is an economist first and foremost, and there's the rub. No matter how revolutionary his work from the point of view of economists, he is set in a particular point of view that says we can avoid the worst of climate change and still sustain economic growth by adjusting the way we do business. It seems unlikely to me that we can just grow our way out of the environmental limits that we've spent so long ignoring, no matter how much we spend on public transport.

That's a debate we're going to need to unpack some more. For now, it's useful to have those within the establishment calling for many of the same things as us. From the budget tomorrow, we want to see a progressive policy on energy use which rules out unabated coal, promotes energy efficiency and renewable energy, and is backed up with some Stern-esque spending.

Early indications - the stimulus package announced at the G20 - amounted to only about £120 million of new money to green the economy - are not encouraging. We'll wait and see. But how we spend our money determines how much carbon we emit - and when it comes to climate change it's the carbon budget which is the bottom line. The message from Lord Stern is that there's not much point spending a load of money to shore up the economy now if the impacts of climate change are going to rip it apart in a few decades time. Something for the chancellor to ponder, perhaps.