From my brief glance, it seems like he uses two climate sensitivity distributions, one based on the 1.5-4.5C of Wigley and Raper (drawing on the IPCC TAR) and another higher range based on Murphy et al 2004. While he doesn't go as far as to use some of the rather silly pdfs that have been presented, he's clearly been strongly influenced by them, mentioning a 20% chance of climate sensitivity exceeding 5C a few times. Of course most of the exciting numbers being quoted from his report are those arising from the highest end of the higher range that he uses. I've said before and I'll say it again, it seems quite a hostage to fortune to base policy decisions entirely on stuff that we are all pretty confident will not happen (but merely disagree on the definition of "pretty confident").
Our work has been published for a full 6 months, and a fair number of people working in the field first saw it over a year ago, so there has been plenty of time for some sort of response (I don't necessarily mean a direct comment on it, but rather new publications which take account of the arguments we have presented here and again here). So far, we've only managed to screw out some rather limited comments from Allen and Frame, and that only through the tactic of singling them out for direct criticism. Nevertheless, they have admitted (or perhaps I should say boasted, since they seem to consider it a feature not a bug) that they do not believe the results that they themselves have generated - and note further that this admission is not merely made with reference to the particular GRL paper in question, but is a general comment on the methods they and others have widely used. One IPCC AR4 author has also admitted privately via email that he is "pretty confident that the sensitivity range is 2 to 4 K or smaller" but he's never published anything like that. Come on guys (and girls), it's time to come clean before this mess gets any worse. Just because it's in the forthcoming AR4 doesn't mean you have to defend the "consensus" to the death. At the workshop I attended this summer, someone made the (at the time) amusing comment to the effect that it would be scary what was going on in probabilistic climate prediction, were it not for the fact that it was being ignored by the politicians anyway.
Well, it's no longer being ignored.
On top of the high climate sensitivity range, Stern uses the rather extreme A2 scenario (and essentially describes it as "business as usual") for his projections, even though it is already clear even 5 years on that we are falling behind this emissions pathway. I really think it's time the economists got their act together on this. And then he adds some feedbacks on top, based on results like those of the Hadley Centre model which has an extreme Amazon dieback due to having way too little rainfall in this region even before any global warming is considered. If the Japanese model had this behaviour everyone would just say it's a crap model but because it is HADCM3 it is supposed to be alarming :-) I see RP also has some criticism of the hurricane stuff. FWIW, I don't support him 100% on his general approach (too much "its not proven" and not enough "what is a realistic estimate") but I think he's more right than wrong. Anyway, my main beef is with the probabilistic estimation, because that's what I understand best. It seems crystal clear that the methods are intrinsically faulty - indeed the errors seem rather elementary once they are stated clearly - and it is long past the time that people should have been prepared to accept this and talk about it openly. Nature's comment that our criticisms "apply more generally to a widespread methodological approach" is hardly a valid defence of the science! Stern's results appear to be heavily dependent on the small probability of extremely bad consequences, so these problems may substantially weaken the value of his report. OTOH, it might be the case that even with a climate sensitivity of 2.5C and assuming a more moderate "business as usual" emissions growth, mitigation is still amply justified (personally I think action is justifiable on a number of grounds irrespective of the supposed "climate catastrophe").
I might add some more after reading it more carefully. Or I might just let those conscientious blokes at RealClimate do it better :-)