It was heartening to hear last night that even the most influential economist in the world on impacts of climate change sometimes feels weighed down by the massive global challenge we face.

Nicholas Stern, the former chief economist of the World Bank, former head of the UK Government Economic Service and author of the hugely influential Stern Review on climate change in 2006 was speaking at the London School of Economics – where he now heads the Grantham Research Institute on Climate Change and the Environment.

In the Q&A at the end of Stern’s talk, the Guardian blogger Ed Gilespie asked him how he could be optimistic in the face of contradictory policies by the UK government. Stern confessed that sometimes he could not help focussing on the negatives: “The Russians will cheat, the Americans are not going to give up their SUVs, the Chinese don’t care anyway and the Brits are too lazy to do anything. I can sit in a bar and tell these stories – and I have done – but that doesn’t mean that they are a good basis for action,” he said.

But if we give in to pessimism then we have already failed to solve the climate crisis, he said. “What’s the alternative to optimism? Unless we act as if we can sort this out you might as well just get a hat and some sun tan lotion and write a letter of apology to your grandchildren. The only way we can think of going forward is to try to make the best of a bad starting point.”

“The one way of guaranteeing to fail is to assume that we will,” he added.

Stern’s description of the scale of the problem was characteristically uncompromising – “this is the biggest market failure the world has ever seen”, “the world is more risky than I articulated [in the Stern Review]”, we risk a “transformation of the planet”. But the talk itself, which was to promote his new book, A Blueprint for a Safer Planet, had an upbeat tone. His message was that we have a pretty good idea what the solutions are and what we need to avoid. New technologies like better renewable energy are vital, energy efficiency is a must, deforestation has to be halted and massive fiscal stimulus packages designed to deal with the economic crisis can and should transform the world economy with a greener hue.

In particular, Stern said the world has to get a move on with carbon capture and storage. Currently around half the world’s electricity comes from burning coal so we have to find a way of doing that without releasing stacks of CO₂. “If coal is going to be used, the only response – because it is the dirtiest of all fuels – is that we have to learn how to do carbon capture and storage and we have to learn how to do it quickly on a commercial scale,” he said.

If CCS won’t work on a large scale we have to find out quickly. “If we can’t then it’s plan B and plan B will be more expensive probably,” he added.

He repeated his call that the proposed Kingsnorth coal-fired power station should not go ahead unless it is fitted with CCS. “We can’t ask India and China to use new clean coal technologies if we are not prepared ourselves to demonstrate that they work and share those technologies,” he said.

The UK government’s announcement on Kingsnorth is imminent. It remains to be seen whether it is listening.

• We will be podcasting a recording of the event. I’ll post a link in the comments when it is up.