'Almost too late' to stop a global catastrophe

The possibility of avoiding a global catastrophe is "already almost out of reach", Sir Nicholas Stern's long-awaited report on climate change will warn today. One terrifying prospect is that changes in weather patterns could drive down the output of the world's economies by an amount equivalent to up to £6 trillion a year by 2050, almost the entire output of the EU.

With world temperatures on course to rise by two to three degrees in 50 years, rainfall could be catastrophically reduced in some of the world's poorest countries, while others grapple with floods from melting glaciers. The result could be the largest migration of refugees in history.

These problems will be "difficult or impossible to reverse" unless the world acts quickly, Sir Nicholas will warn, in a 700-page report that is expected to transform world attitudes to climate change. It adds: "Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in 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."

But the Chancellor, Gordon Brown, and Environment Secretary, David Miliband, will emphasise the positive message accompanying Sir Nicholas's stark warnings, because the report will also say that the world already has the means to avert catastrophe on this scale, although it will involve the huge expense of 1 per cent of global GDP (£0.3trn).

"The second half of his message is that the technology does exist, the financing, public and private, does exist, and the international mechanisms also exist to get to grips with this problem - so I don't think it's a catastrophe that he puts forward. It's a challenging message," Mr Miliband said.

Combating climate change could become one of the world's biggest growth industries, generating around £250bnof business globally by 2050. Sir Nicholas's report calls for a rapid increase in research and development of low carbon technologies, and in "carbon capture", which involves putting carbon emissions into underground storage rather than pumping them into the atmosphere.

Mr Brown will write to EU finance ministers today urging a major expansion of the carbon trading scheme which penalises businesses that contribute excessively to the amount of carbon in the atmosphere. One issue he will raise is whether the scheme should be extended to cover aviation, one of the fastest expanding sources of carbon.

But the prospect of consumers having to pay higher fuel duty and other "green" taxes threatened to engulf Mr Miliband in political controversy yesterday, after a letter he wrote to Mr Brown earlier this month was leaked to The Mail on Sunday.

Mr Miliband urged that when oil prices drop, the tax on petrol should rise so that the cost to the motorist remains the same. He also suggested a higher road tax on vehicles such as 4x4s with high fuel consumption, a switch to road pricing so that motorists pay tax per mile, and that the tax system be used to encourage people to switch to energy-saving household goods such as more efficient light bulbs and washing machines.

Mr Miliband insisted his ideas were not intended to give the Government new ways to raise extra tax. "We're using mechanisms available to government to help change behaviour. They're not fundamentally there to raise revenue," he told BBC Radio 4's The World This Weekend.

Mr Miliband's proposals provoked a storm of protest from businesses, but they also presented a dilemma for the Conservative leader, David Cameron, who has frequently called for "green" taxes without giving details of what they ought to be.

Yesterday he said his policies "may mean taxing air travel", but refused to be drawn further. Interviewed on BBC 1's The Politics Show, he said: "I think green taxes as a whole need to go up and I think we need to be very careful that the green taxes we put up aren't too regressive. I don't want to get more specific than that."

The Liberal Democrat leader, Sir Menzies Campbell, poured scorn on any suggestion that there is a painless solution to global warming. "Nothing but hard choices will do," he said.