Governments need to show the same boldness to intervene in the markets to kickstart a move to a low-carbon economy as they did when they helped the banks stave off financial crisis last week, a leading academic has demanded.
"Both require strong regulation for efficient economic outcomes," said Terry Barker, a climate change expert at Cambridge University, who fears the Lehman Brothers and HBOS problems foreshadow a global economic downturn.
Barker's concerns were backed up by one of the government's scientific advisers, who fears that a downturn could lead to a lack of investment in vital new sectors such as developing carbon capture and storage plants.
"When you have a downturn of this kind, it does lead to a disinvestment in this kind of technology," said Robert Watson, a former World Bank adviser who is now at the Department for Environment, Food and Rural Affairs.
There were marked similarities between the lack of transparency and action on complex lending risks that had wreaked havoc in the banking community and the kinds of dangers being stored up by corporate and political inaction over global warming, said Barker, the director of the centre for climate change mitigation research at Cambridge.
"Both threaten the economy with catastrophic collapse," added the economist, who has worked with the UN's Inter-Governmental Panel on Climate Change, and was speaking with Watson at the Entrepreneurship for a Zero Carbon Society conference at Cambridge University.
Barker believes the problems on Wall Street will take potential investment money out of the system. But he says a determined response by ministers could encourage the channelling of that cash into vital work on climate change.
He fears that governments and business leaders have massively underestimated the risks posed by rising sea levels and changing weather patterns - any costs associated with moving to a low-carbon economy were, he said, "negligible" compared with the costs of doing nothing.
The banking crisis meant the rules of engagement by governments had changed completely, said Barker. The same system of "force majeure" was needed to tackle climate change through new eco-taxes, and help to supplement carbon trading.
In the past, cost-benefit analyses had been applied to justify inaction on global warming, but this was inappropriate given the enormous scale of the social, environmental and other threats being faced. "The Amazon rainforest and coral reefs cannot be substituted by money. It's obvious, but it needs repeating," said Barker.
The Cambridge academic said EU carbon reduction targets were far too low and would have to be raised if the world was to stand a chance of tackling the problem. There needed to be a 40% reduction in carbon output by 2020, not the 20% target that was currently in place.
Watson said action was needed on all fronts if the world was to avert disaster - and Britain should be forging ahead with nuclear, carbon capture and storage (CCS), and renewables such as wind, to ensure energy supplies were retained while carbon emissions fell.
With regard to CCS, he said the world needed an equivalent of the Apollo space programme of the 1960s and 70s aimed at putting a man on the Moon. There should be 20 CCS prototypes developed at the same time - the possible $1bn (PS500m) cost for each facility was tiny compared with the $300bn worth of fossil fuel subsidies or the trillions of pounds' worth of economic activity that the Stern Review had indicated would be endangered every year by inaction on climate change.
