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00:00Hello everyone. My name is John Fryer I'm a senior executive editor at Bloomberg News overseeing our coverage of climate change. With me today is Lord Nicholas Stern. Lord Stern is currently the ISE How a professor of economics and government at the London School of Economics. And he also leads the school's Ransom Research Institute on climate change and environment. I think one of the most interesting pieces in the first edition of Green was our piece How to Grow Green a really interesting and expensive look at all of the different ways that governments around the world can use this crisis to reunify their economies . It's sort of become a bit of a cliché. Now political economists say never that a good crisis go to waste but it still holds true in the aftermath of it. Now Northeastern you know you co-authored a report in May sign I think by about 200 policymakers and academics arguing that support for climate friendly policies would result in the swiftest and economic recoveries around the world as we recover from this terrible over the economic crash . Two months on from this . What evidence do you see around the world that policymakers are taking that on board. Yes. Thanks very much John. That was a piece in the Oxford Review of Economic Policy with co-authors Cameron Hepburn Joe Stiglitz and Haslinda Amin and gave us and we asked policymakers around the world about their views on what constituted a strong recovery what constituted a sustainable green climate friendly recovery. And we found that the number of areas. Not surprisingly I think the answer to that question well you could get both in for example retrofitting all buildings making cities more friendly to cyclists and pedestrians rolling out your electric vehicle charging stations . And particularly in the natural capital . Planting trees restoring degraded land including peat lands looking after water systems and so on. And they had in common not only that they were generating employment and being good to the environment but that they were fast as well as labor intensive and had strong economic multipliers. So the sustainable story is actually the strong recovery story. And it was remarkable how strongly that was recognized by policymakers around the world . And so looking looking at the concrete screen stimulus plans that we're now starting to see from Germany France the U.K. Joe but at the end of last week came out with some of his climate proposals. Which ones do you see as the most promising as well as the boldest plans to date. Obviously we're just at the beginning of this stimulus process which is to look particularly interesting and particularly exciting. But let me turn to that . But it is interesting that they felt that this was the moment to do it that they felt they got the political space to do it. And if you look at the opinion polls that is what people want. They want to build back better. They recognize that the old system was very dangerous. And further they recognized that actually you can make change quickly because that's one of the things that we've learned from this crisis. So before you sort of go into details the fact is I think it's very important to recognize that the political leaders felt that the space to do it was in some sense they had the political pressure to do it. Now you've got the green recovery in Europe which looks really very strong and buttressed by actions in governments. And I think this is the first time that Angela Merkel has really been able to tell the German carmakers that this is the route we're going that this is not a moment to rekindle diesel. This is a moment to push very hard for electric vehicles. The bailout in France from the French government was contingent on them pushing very hard to find NextEra aviation. Of course we can find that net zero regulation. You have to do that. I think if you look at the package that she see brought in in the U.K. a couple weeks ago there was three billion for retrofitting buildings. And that's a very important part making the buildings more efficient. And they also flagged that there'll be more coming for natural capital working on land and forests and so on. So I think you've seen in Europe quite a strong response. And of course the United States is its own structure. But you do see goals different policy United States moving in different directions and big parts . United States of course are committed to a green growth future and to the green recovery. But I think the best you can say the presenter is somewhat confused . It is British understatement of course . Well we get that we'll get back to that in a moment. And of course there's Asia as well. I mean China you know over the last 10 years has tried to position itself as something of a climate warrior. Of course they've been very big very strong on solar over the last 10 or 15 years. But I haven't heard that much from them. At least two dates on green stimulus coming out of this crisis is that it is not a surprise to you that the disappointments . It's a worry. I think that I've been interacting a lot with my Chinese colleagues up and working on a new China for 30 years or so. And I mean close contact with my friends. Jim Walsh University Energy Foundation China and so on. And there are a lot of people in China pushing very hard for green pointing out the things we were just discussing that a lot of the story that I'm saying the sustainability list of programs and projects these past labor intensive with strong multipliers and they see the huge cost reductions in renewables for power and they see tremendous opportunities in electric vehicles electrified China mobility all the way around. So there's that group of people pushing very strongly. But there is an opposition in the opposition of vested interests in coal some regions that are very heavily vested in coal who are pushing back. You've got great structures which are biased in China against renewables still somewhat bizarrely. They give priority for coal fired electricity. It makes very little sense but it's actually a protection mechanism. So we think of vested interests and lobby groups when we discuss the political economy of rich countries that's there in China too. And that politics is playing its way through. I think we'll learn more as we see the outlines of the 14 five year plan 20 21 25. They're going to emerge the latter part of this year. So I think in China there's a very intense discussion going on. I think there are many people who are also quite senior people who see the real opportunities in the new model of growth that is exciting is innovative. It's much more attractive cities where you can move and free ecosystems which are robust and fruitful. They see it and they push it. But we don't yet know which way it's going to fall because the vested interests lie strongly otherwise . China of course is always very very difficult country to read very difficult to read. Its politics for people watching here you're clearly you know in close contact with colleagues in China. Obviously a deep expert on this matter. Are other particular policy areas policy initiatives we should be looking out for to give us a sign of where the pendulum will sort of settle when it comes to the to the to the China climate debates . I think it's a future call. China's call came more or less to a plateau around 2014 . And in optimistic mode we thought we might have a plateau and then tip on the outwards. But it's been a plateau. It's bounced around sometimes up sometimes down last year or two . It's been a slight upward tick. And I think it's the plants the coal that are going to be the critical test of whether China is really going to push very strongly. If we see coal stocks turn down during this plan we could see China's emissions peak during this plan. That means between 2021 2025 China declared in Paris and the Paris agreement in 2015 21 that it would peak emissions by 2030. If China says we'll peak emissions during this period that would mean that peaking them by 2025. And that would be the most important signal. And it would mean coal turning down pretty quickly. As I say it's plateau. But what we need to see is that to turn down that would be great the inside of self-interest to do exactly that . We'll keep an eye on that . Turning back to the US. And you mentioned earlier that it's interesting in Europe political leaders felt like they had to cover. They have the raw social support to come out with these ambitious green stimulus plans. Obviously the US is in a very different sort of part of the of the debate's trajectory so to speak . Do you used where do you feel the U.S. is is on that . Can you imagine a future in which the U.S. gets the point where Europe in Europe is now or should our ambitions or hopes for green stimulus in the U.S. be much more much more restrained than that. Well for those of us who are not probably 19 states but who love the United States one of the things we love is how varied it is. So there are lots of bits of the United States and many of its firms and pushing very strongly in a green direction. Even some of its power companies pushing very strongly things like you know pushing in a green direction . California is strong. Much of New England is strong. Many of the firms as I as I said a lot of the data oriented firms pushing very strongly. The second optimistic part of the U.S. story is an extraordinary creativity. I mean the electric vehicle was given new life and very powerful new life in large measure by Tesla . And that has changed helped change the world on electric vehicles . Every major car company in the world at the end of the year the internal combustion engine working towards it. Different diets different ways that Tesla was very important and not a tremendous amount of the story of the green of green growth and sustainable growth with all the opportunities. Is around digital management digital management systems of how systems system so that you get a much better more flexible matching of supply and demand that you can manage your variable renewables more subtly and efficiently. That's going to be digital management all kinds of systems that manage that. Cities are complicated systems and we need to get them much more cycle oriented pedestrian oriented more attractive to autonomous vehicles and so on. That will be digital management storing much of land use as well. That applies too. So what you got then is a country with enormous technical prowess in many of the key technologies that matter. And I think that that will be a very powerful driving force as well. And of course you've got a country was coming now already with the United States a great deal of unemployment. How are you going to try to get people back to work in the jobs of the 19th and 20th century in secure jobs jobs that if there are assets stranded. So to jobs. Are you going to look for jobs in the 21st century. And I think when push comes to shove the United States will go looking forward not looking backwards. That does goes depend quite a bit not totally but quite a bit on what happens in the elections just a few months away . Can you imagine a future in which we see the Europeans are doing this now. Can you imagine a future in which the arguments have been stimulus is so compelling that the next Republican candidates whoever that might be whether that's in four years time or whatever destiny in four years time that even the Republican Party leadership of the Republican Party will embrace it. Is it any the force. Yes I think that is perfectly feasible. And one thing that we do know is that the Republican candidate for the presidency four years from now will not be Donald Trump. You have a constitution. So what would that Republican think. I think the evidence in four years time will be even more compelling than the evidence is now which is pretty compelling now that the alternative method of growing sustainable method is much more attractive. The costs of renewable power are going on that the cost of storage is going on down. In India the most recent auction had round the clock solar that sold plus storage outcompeting all the fossil fuels without subsidy without a carbon tax. That's just going to go on going. And actually a lot of this story in the creativity will come from the United States. So I think full year now the campaign will be set in a context where it's just much more efficient much more attractive to do it clean. And so my guess is that it will be an issue which may not divide the parties. If you look back over the years it's very rare that climate has divided the parties in the United States presidential election. And I think that four years from now the evidence will be so powerful that this is a statement of hope. But I think that some justified optimism that the evidence would change so dramatically that with a bit of luck that Republican candidate would see it . But I'd like to close a note of hope. I know I know you need to run a demo but I have one more question for you . You know as I said earlier this the audience watching this . There's the vests. There's people interested more interested in interest in the broader climate story. But of course Bloomberg's audience is an audience of entrepreneurs and investors as well. Green green technologies are advancing all the time. Can't constantly meeting about new developments. If you were if I were to give you ten million dollars to invest in a green technology of the future what would it be. What what do you hold the most promise . Well that's very kind of you John. You can give it to me anyway . But the we have to look beyond the renewables now because we can see where they're going. And they're done tremendously well . They'll go on doing tremendously well. That's more an investment story now . So I would look beyond that to the more difficult parts of the story more difficult parts of the story particularly around sea and air transport. Those those have to change. And of course a lot of the industrial processes have to have to change. And there I think hydrogen and ammonia that will be important in certainly in sea travel and industrial processes heating homes also hydrogen likely to be important. So getting that green hydrogen hydrogen through electrolysis getting that cost right down is enormously important. Every school girl and boy knows that water is H2O love. Go in there and split off the H two from the OK. And that's that's where you'll get your hydrogen . And that is going to be enormously important. And if you do it through clean electricity and the energy you need in that process that I think would be enormously exciting. We've got to bring the costs down. We need good technologies to do that. I also think that synthetic fuels or air fuels from waste at the moment fuel some waste of various kinds of food food waste or waste from processed waste or waste from crops. You know as fair as that process those kinds of opportunities are really moving strongly . But we've got to get the cost right now because I don't believe that we'll stop air travel for what it should be more expensive this ability that basically won't go away. And many of us would not want it to go away the over the medium term . And that means you've got to go to zero carbon fuels. We can see those. We need a lot of effort to bring those down. And I think air capture also is going to be an important part of the process. And by the way use and capture to make synthetic synthetic jet fuels. So that would be useful for that as well . Never forget natural capital . We always go to the sort of the high tech that uses storage will be very important in a lab that you know trees are pretty good . Restoring degraded land is pretty good. And they give you all sorts of benefits be awful simply to capture . So organizing that much better I think is enormously important as well. And I always refused to give a one shot answer because this is not a problem with a one shot . Well maybe we should be offering you 10 million one hundred million dollars to invest rather than just 10. Because there's so many so many ideas there. I would love some. Thank you so much for for joining us today. Thank you very much. Pleasure . Nice to talk to you. John .

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Lord Nicholas Stern on the Green Stimulus

London School of Economics Professor Lord Nicholas Stern talks with Bloomberg Executive Editor John Fraher about how countries can make their COVID stimulus plans green. (Source: Bloomberg)

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