Cutting emissions will increase global GDP, says Tony Blair

Far from proving a drain on the global economy, measures designed to cut carbon emissions could lead to increases in GDP and employment for all major economies, according to a major new report presented today to UN Secretary-General Ban Ki-moon by former British prime minister Tony Blair.

The report from international NGO the Climate Group reiterates the conclusion of the influential Stern Review that failing to address climate change would cost more than preventing it. But whereas the Stern Review predicted cutting global emissions would cost around one per cent of GDP - a figure Lord Stern has since upgraded to two per cent - the new report argues that a global climate change deal that promotes co-operation between countries would cut the cost of emission reductions to a level where they start to deliver new economic benefits.

The report comes just a day ahead of a crucial UN General Assembly meeting of 100 world leaders intended to lay the final foundations for the Copenhagen climate summit in December where the UN hopes to agree a new global climate change treaty to succeed the Kyoto Protocol.

Blair said that the cost savings that can be achieved if countries act together to curb emissions proved that there were economic benefits to be had from delivering a robust international deal.

"Forging and implementing a global deal will not be easy, but world leaders can be confident that reaching a deal is both achievable and consistent with their measures to promote economic recovery," he said. "In fact, though of course an economic as well as political challenge, if crafted right, an ambitious global deal can create millions of new jobs and be a key part of this recovery."

The report claims that a global deal could create 10 million new jobs by 2020, generate growth worth as much as all recent green stimulus packages combined, and reduce the carbon price necessary to achieve reduction targets.

For example, the report says it would take a carbon price of $65 per tonne of CO2 for the EU to cut its energy-related CO2 emissions 30 per cent by 2020, if operating alone. However, it calculates that this figure falls to $28 per tonne when the US joins in an agreement, and potentially as low as $4 per tonne with a global deal.

The report used computer simulations of economic activity, energy generation and greenhouse gas emissions developed by the Cambridge Centre for Climate Change Mitigation and analysts Cambridge Econometric to make cost estimates of a range of scenarios. It calculated that an international deal would lower the overall cost of cutting emissions by eradicating the problem of so-called " carbon leakage", where companies relocate to countries with less demanding carbon regulations, and providing businesses with legislative certainty.

The study is likely to be controversial given that Stern's estimates that cutting emissions would only cost one per cent of GDP have already been subject to fierce criticism from some economists. However, it is not completely without precedent - some economists have long argued that the development of a low-carbon economy represents a technology transition and that all previous transitions have resulted in net increases in GDP.

In related news, reports over the weekend claimed the UN was preparing to resort to "shock tactics" as it seeks to increase pressure on world leaders to break the deadlocked Copenhagen talks.

According to Guardian reports, leaders will be stripped of their entourages at the UN General Assembly talks and forced to take part in negotiations with just one aide available. Meanwhile, set-piece speeches will be replaced by smaller discussion groups that will force leaders of rich nations to engage directly with the leaders of some of the countries that will be worse affected by climate change.

The leaders will also lunch with environmental activists and chief executives of corporations who have been pressing their governments to deliver a deal in Copenhagen.