Nicholas Stern, economist: ‘Degrowth is a diversion and a conspiracy against the developing world’

Lord Nicholas Stern, 79, should undoubtedly be included on the list of those who have contributed the most to raising the debate on climate change and its implications. In 2006, this renowned economist — who was born in Hammersmith, a district of West London — authored one of the key reports that brought the subject of global warming out of the laboratories and into the offices of government leaders and CEOs.

It’s far more expensive not to act to curb climate change than it is to act. This was the main conclusion of his study, which was commissioned by the then Labour government of the United Kingdom. In his latest book, The Growth Story of the 21st Century: The Economics and Opportunity of Climate Action (2025), he develops the idea of approaching this fight as an opportunity.

Stern spoke with EL PAÍS in a hotel near Madrid’s Retiro Park, in the midst of spring’s vibrant atmosphere, something that wasn’t good for his allergies. But neither the pollen nor the constant barrage of bad news can erase his optimistic and cheerful demeanor.

Question. Twenty years later, do you think your 2006 analysis is still valid?

Answer. That analysis is still valid. Indeed, it’s even stronger. The first point was that the cost of inaction is much greater than the cost of action. We now see that temperatures are increasing faster than we thought, and the consequences are worse than we anticipated. So the cost of inaction has gone up, and the cost of action has gone down, because the technology has moved faster than we anticipated. The second conclusion, which I didn’t explore in depth, was to argue that the investments we needed to make to combat climate change were very good investments for the economy. That’s a growth story. And my new book is about making the growth story happen. And the third major issue was market failure due to greenhouse gas emissions that harm others — what are known as “externalities” in the jargon of economics.

Q. What do you think about the fact that large corporations and Wall Street funds have put their climate policies on hold after Trump’s 2024 victory?

A. The basic consequences and causes of climate change aren’t changed by an election. Investors in Texas who install solar and wind power do so because it is cheaper and better. They may not have views on the science of climate change, but the point is that they’re making those investments. Electric vehicles are unambiguously superior to internal combustion vehicles, in terms of performance, production cost, maintenance requirements, and, of course, emissions. So, the basic facts of science and technology aren’t changed by an election. It’s true that some companies have become more hesitant, more cautious. I believe that, in hindsight, we’ll see this as a short-term disruption, a blip. It’s unfortunate, and it’s a problem. But it’s not a permanent change.

Q. Will Trump’s pro-fossil fuel measures slow down solar and wind energy in the U.S.?

A. It will slow it down because financial support is now less strong. But it won’t stop it. I think emissions in the U.S. will continue to fall. Trump is a short-term problem in relation to a long-term process, which is inexorable. And it will continue because, if we don’t act, we’ll be in serious trouble, and because clean energy is cheaper than dirty energy in much of economic activity. It matters because time is not on our side. It matters because the situation is very urgent.

But we’re seeing acceleration in other parts of the world. The acceleration in China has been stronger than we thought just five or 10 years ago. More than half of the cars sold in China are now electric. Chinese electric vehicles are amazing in terms of quality and price. If you look at Chinese batteries, they’ve been getting progressively cheaper. If you look at the way they’ve invested in their capacity to process critical minerals, the same is true. The same is true of their advances in AI, which will be useful in the fight against climate change. India is accelerating its pace now as well. So, while one part of the world has slowed down a bit, another is accelerating.

Q. Is it possible to simultaneously achieve economic growth and effective climate action?

A. Absolutely, it’s possible. But I’d make the statement stronger than that: I’d say that effective climate action drives economic growth.

Q. What do you think of the concept of degrowth?

A. It’s a distraction, a diversion from the bigger issue, which is: how do we change what we do, so that it’s much less damaging to the environment? If we make the necessary investments, we won’t only reduce emissions and biodiversity loss: we’ll also drive economic growth.

Now, this isn’t economic growth forever. This is economic growth over the next two or three decades, as a result of new, very attractive, productive investments that change the whole relationship between economic activity and the environment. In addition to being a distraction, degrowth could be seen as a conspiracy against the developing world, which is growing faster than the rich world. I hope it continues to grow, because we want to see a strong rise in their standards of living.

Now they have the opportunity to do so in a way that’s very different from the dirty model of rich countries. That’s why it could be seen as a conspiracy against the development of poor countries. Degrowth advocates may say that is not their intention, but that is how it is perceived in many developing countries, which have a right to development. Not to emit — none of us has the right to emit. But the fact is that even in rich countries, degrowth is not a politically attractive story.

Q. How will the war in the Middle East affect the global energy transition?

A. If we are wise, we will learn the lesson we should have learned long ago: dependence on fossil fuels means accepting insecurity. Japan attacked Pearl Harbor in 1941 for oil, to protect its access to it, which the Americans had begun to disrupt. If you look at how the United States and the United Kingdom conspired to undermine democratic development in Iran in the 1950s to install the Shah, you see that it was for control of oil. The oil disruptions in the 1970s and 1980s were a consequence of war. We saw it with Ukraine and gas supplies to Europe in 2022, and we’re seeing it now. How long will it take us to learn this lesson? Dependence on oil is a recipe for insecurity. And now we have better alternatives. Renewables are cheaper and better; electric vehicles are cheaper and better. So now we know what to do. This should surely accelerate the commitment to the transition.

Q. What should Europe do now?

A. This is a moment of great economic, environmental, and political importance for the world, where we have an opportunity to accelerate progress. Spain has been at the forefront of all this, reducing the price of electricity and demonstrating that the transition away from coal can be managed. It’s done better than most other countries. Europe should unite to also be at the forefront and work with countries around the world.

Q. But some European countries have called for the suspension of the EU Emissions Trading System (ETS)...

A. That would be a mistake. The emissions trading system gives strong incentives in the right direction and, increasingly, it can raise revenue. I don’t see the arguments for taking away the ETS. Short-term adjustments could be made to gasoline taxes, for example, but the emissions trading system is about long-term decision-making for European industries, which need stability in public policy.

Q. Do you think the 2015 Paris Agreement is still a useful treaty?

A. Yes. The Paris Agreement gave the world a clear sense of direction. It enabled the legal systems of the world to be anchored in a public commitment. And that’s been very important. That direction has been a factor in the dramatic drop in the cost of renewables, electric vehicles, batteries, and storage. Only one country has withdrawn from the Paris Agreement: the U.S. Has life become more difficult for the Paris Agreement? Yes. Is it still alive? Very much so. And it’s important that it is.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition