05 November 2006, The Observer

Stern measures and green hopes

After Sir Nicholas Stern's bleak warning on climate change, Climate Change Capital's James Cameron tells Oliver Morgan that the profit motive is the most realistic solution.

Last week economist Sir Nicholas Stern placed carbon markets and trading - the mechanisms underpinning Cameron's views and CCC's profit potential - at the centre of his analysis of climate change, which concluded that 'business as usual' would mean disaster. With speedy action he said, the cost of avoiding such catastrophe would be 1 per cent of global GDP; delay could multiply that by five, even 20, times.

Trading works through governments agreeing caps on the level of national emissions, then imposing industry limits and issuing permits for individual companies up to a cap. Companies that exceed their allocation must pay for more permits - available from companies that have undershot their targets. Trading schemes have started in several parts of the world - the EU, parts of the US, and Japan. This creates a means for driving down emissions and also a market for permits.

 

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