World Economy

Greener Growth Could Add $26 Trillion to World Economy

The Global Commission on the Economy and Climate, which includes former heads of government, business leaders and economists, says there is “unprecedented momentum” towards greener growth that would boost jobs and countries’ economies
Subsidies to fossil fuel production and consumption present real roadblocks, says the program director.Subsidies to fossil fuel production and consumption present real roadblocks, says the program director.

Strong action to combat climate change could cumulatively add at least $26 trillion to the world economy by 2030, according to a study on Wednesday which seeks to dispel fears that a shift from fossil fuels will undermine growth.

President Donald Trump, for instance, said last year that he will pull the United States out of a global climate pact called the Paris Agreement because it would impose what he called "draconian financial and economic burdens" on his country, Reuters reported.

By contrast, the Global Commission on the Economy and Climate, which includes former heads of government, business leaders and economists, said there was "unprecedented momentum" towards greener growth that would boost jobs and countries' economies.

The Global Commission on the Economy and Climate, and its flagship project The New Climate Economy, were set up to help governments, businesses and society make better-informed decisions on how to achieve economic prosperity and development while also addressing climate change.

The New Climate Economy was commissioned in 2013 by the governments of seven countries: Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and Britain. The commission has operated as an independent body and has been given full freedom to reach its own conclusions.

Bold climate action could deliver at least $26 trillion in net cumulative benefits from now until 2030 compared with business as usual, it said.

"There's still a perception that moving towards a low-carbon path would be costly," lead author Helen Mountford told Reuters. "What we are trying to do with this report is once and for all put the nails in the coffin on that idea."

Smarter Investments Needed

The commission's study adds detailed projections since it first issued a report in 2014 to highlight economic opportunities from a shift away from fossil fuels.

Smarter investments in cleaner energy, cities, food and land use, water and industry could generate 65 million new jobs in 2030, equivalent to the workforces of Egypt and Britain combined, the study said.

A shift from fossil fuels to cleaner energies such as wind and solar power would avoid 700,000 premature deaths from air pollution in 2030, it added.

The report recommended high prices on carbon dioxide emissions of $40-$80 per ton by 2020 in major economies.

Subsidy reforms in the energy sector, coupled with higher carbon prices, could raise $2.8 trillion a year in government revenues in 2030, it said.

Former Mexican president, Felipe Calderon, honorary chair of the commission, said it was "a manifesto for how we can turn better growth and a better climate into reality". Co-chairs include Paul Pohlman, chief executive of consumer goods group Unilever, and Professor Nicholas Stern of the London School of Economics.

Trump, who doubts that man-made emissions of greenhouse gases are the prime cause of climate change and wants to promote the coal industry, has said the 2015 Paris Agreement could cost 2.7 million US jobs by 2025.

But the report predicted that US jobs lost in fossil fuels can be more than offset by a rise in employment in renewables and construction. It said 476,000 people were now employed in wind and solar power in the United States.

Despite signs of climate action the report said "we are not making progress fast enough" to limit a rise in temperatures linked to more floods, heat waves, wildfires and rising sea levels.

Key Recommendations

There is nothing to fear and everything to gain from combating climate change, if only governments stop standing in the way.

“We are at a unique ‘use it or lose it’ moment”, said Ngozi Okonjo-Iweala, former finance minister of Nigeria and co-chair of the commission behind the report. “Policymakers should take their feet off the brakes, send a clear signal that the new growth story is here and that it comes with exciting economic and market opportunities.”

Key recommendations include higher carbon taxes, sustainable transport systems and climate targets in the private sector. Governments should also ensure the benefits are fairly distributed across society, said the authors.

“There are some real roadblocks,” said Helen Mountford, program director of New Climate Economy, the institute that organized the report. “Governments continue to give subsidies to fossil fuel production and consumption to the tune of $373 billion per year from 2013,” she said.

On the Paris Agreement, the commission stressed that national climate change pledges fall short of what is needed to keep the temperature well below 2 degrees C. In June, EU climate chief Miguel Arias Canete indicated Europe might raise its pledge from “at least 40%” to 45% emissions cut by 2030. UN talks taking place this week in Bangkok will discuss how all countries can commit more.

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