In this DeSmog UK epic history post, we recall the climate denial backlash to the influential Stern Review, which called climate change the greatest market failure ever seen.

Tony Blair heeded an appeal made by Lord Lawson and the climate sceptic economist David Henderson that the Treasury in Britain and finance ministries around the world should take an active interest in the economic implications of the UN Intergovernmental Panel on Climate Change (IPCC) findings.

And so Gordon Brown, as chancellor, commissioned Nicholas Stern, then a permanent secretary at the Treasury and head of the Government Economic Service, to conduct an exhaustive study into the economics of climate change.

Stern was considered sound: he was educated at Cambridge and Oxford before being made professor at the London School of Economics. He had gone on to serve as senior vice president of the World Bank. Lord Giddens, the eminent academic, described him as “a scholar of impeccable reputation and certainly no scare-monger.”

Raging Sceptics

The ‘Stern Review on the Economics of Climate Change’ was produced at the Treasury and published in October 2006 – but the sceptics would be incandescent at its findings.

Prime Minister Tony Blair was first to speak to the assembled media. “What is not in doubt is that the scientific evidence of global warming caused by greenhouse gas emissions is now overwhelming,” he warned. “If the science is right, the consequences for our planet are literally disastrous.”

Brown spoke for a further 16 minutes to get his sound bite across: “Environmental policy is economic policy,” the chancellor bellowed.

The Daily Mail responded with the headline: “Blair: World Needs to Act on Climate Change Now”. But the newspaper also chose to mock the Labour leader: “But never fear – Superman is here in the shape of our posturing prime minister… anyone listening to him yesterday would think he could save the world single-handedly.”

Free Market Challenge

The Stern report itself was stark in its findings and presented a serious challenge to the free market orthodoxy: “Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.”

The report warned that investment in mitigating climate change today would be unlikely to have any material difference in the next half a century, but that the decisions during the course of the coming decade “can have a profound effect on the climate in the second half of this century and the next… policy must promote sound market signals, overcome market failures and have equity and risk mitigation at its core”.

Stern added: “The evidence shows that ignoring climate change will eventually damage economic growth. Our actions over the coming few decades could create risks of major disruption to economic and social activity, later this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century.”

The simplified message was that £1 invested in mitigation today would save £5 of necessary spending in years to come. Stern’s economic solutions sat comfortably within the eminent neoliberal economist Friedrich von Hayek’s vision of a free market.

Curiously, the strategy proposed by Stern – involving taking steps now that would only come to fruition one or two generations down the line – is precisely that imagined by Hayek decades earlier in his proposed war of ideas for the free market and against government intention that would prove so successful.

Adapt to the Storm

But those claiming to carry Hayek’s flame were simply incensed by the report. Kendra Okonski, environment programme director of the oil-funded free market think tank, the International Policy Network’s (IPN), attacked Stern and asserted that “it is clear that attempting to control climate change through global regulation of emissions or by government fiat more generally would be harmful and counterproductive.”

Rather than demanding that oil companies, including her sponsor ExxonMobil, limit the production of fossil fuels, the world should simply adapt to the coming storm, she argued.

“Adaptation should be understood as containing all possibilities in the realm of private, voluntary action – and eliminating government-imposed hindrances and obstacles to such action.”

The IPN had helped to establish the Civil Society Coalition on Climate Change alongside the Hayekian oil-funded Fraser Institute in Canada; Okonski also heavily promoted the think tank’s latest climate study.   

Denier Meetings

The publication of the Stern Review also spurred Henderson to redouble his efforts. He recalls: “When the review itself appeared, we returned to the fray. I was able to reconvene our economic group, again including Ian [Castles, the climate sceptic Australian finance secretary], and I also put together… a separate team of scientists and engineers: it comprised Robert Carter, Chris de Freitas, Indur Goklany, David Holland and Richard Lindzen. As a result, two linked review articles, one scientific and the other economic, were published.”

Henderson does not mention their names here, but he also recruited Lawson and British-Russian economist Robert Skidelsky from the House of Lords’ economic affairs committee and, significantly, Ross McKitrick from the Fraser Institute.

Julian Morris, director of the IPN, confirmed to me that he also attended early meetings with Henderson at Westminster. These shock groups would form a small vanguard of trusted climate sceptics, many of whom would, just three years later, join the ranks of Lord Lawson’s Global Warming Policy Foundation, author its reports, and champion its attacks from close range.

Sceptical Speech

Lawson led from the front and approached his old friends from the Centre for Policy Studies (CPS), proposing that he speak that November at an event organised to undermine Stern’s findings.

“It was a major sceptical speech,” Tom Knox from the CPS said, “which started off our sort of interest in climate scepticism.”

Lawson told his audience that “the relatively new and highly complex science of climatology is an uncertain one, and neither scientists nor politicians serve either the truth or the people by pretending to know more than they do”.

He then attacked the Royal Society for daring to challenge ExxonMobil: “It is simply not true to say that the science is settled, and the recent attempt by the Royal Society, of all bodies, to prevent the funding of climate scientists who do not share its alarmist view on the matter is truly shocking.”

The speech was gleefully taken up by Fred Singer, head of the notoriously sceptic Science and Environmental Policy Project, who promoted it among his supporters in the United States.

Up next in the DeSmog UK epic history series, we reveal the identity of the man behind Lord Monckton’s eccentric climate denial.

Photo: CIAT via Flickr