We are on the cusp of a new growth era, one where growth is driven by the interaction between rapid technological innovation, sustainable infrastructure investment and increased resource productivity. Ambitious climate action across key economic systems—energy, cities, food and land use, water and industry—can lead to higher productivity, more resilient economies and greater social inclusion. It is the growth story of the 21st century.
Yet we are not making progress fast enough in embracing this growth model. The next 10-15 years are a unique use-it-or-lose-it moment for both the economy and climate. The world will invest $90 trillion in infrastructure by 2030, more than the current stock in place globally today. How that infrastructure is built will be a major determinant of future prosperity for both people and the planet. It is also a key moment to turn the tide on climate change. Already, 18 of the last 19 years have been the warmest on record. Disasters triggered by weather- and climate-related hazards were responsible for thousands of deaths and $320 billion in losses last year. This summer, record-breaking heatwaves, wildfires and extreme flooding turned deadly and caused billions in damages. Unless we make a decisive shift now to a low-carbon economy, we risk the enormous costs of runaway climate change.
Today, the New Climate Economy launches its 2018 report, Unlocking the Inclusive Growth Story of the 21st Century: Accelerating Climate Action in Urgent Times. It demonstrates the benefits of a new low-carbon growth model and outlines how we can urgently accelerate efforts to achieve it. Bold action could yield a direct economic gain of $26 trillion (cumulative) by 2030 compared with business-as-usual. And this is a conservative estimate. Ambitious climate action could also generate more than 65 million new low-carbon jobs in 2030—equivalent to the entire workforces of the UK and Egypt combined—and could avoid more than 700,000 premature deaths from air pollution by 2030.
The next 2-3 years are a critical window when many of the policy and investment decisions that shape the next 10-15 years will be taken. The Global Commission on the Economy and Climate calls on leaders in government, business and finance to prioritize urgent action on four fronts:
1) Ramp up efforts on carbon pricing and move toward mandatory disclosure of climate-related financial risks.
Major economies should put a price on carbon of at least $40-80 per ton of CO2 by 2020, along with a predictable rising pathway by 2030. Already, 70 countries, states and provinces have carbon prices in place or planned, covering 20 percent of global greenhouse gas emissions. Major economies should also lead the way in phasing out fossil fuel subsidies and harmful agricultural subsidies and tax breaks by 2025.
Fossil fuel subsidy reform and carbon pricing alone could generate an estimated $2.8 trillion in government revenues per year in 2030, equivalent to the GDP of India today. These funds could be used to invest in urgent public priorities.
Accelerating efforts to disclose climate-related financial risks is essential to deliver radical transparency and shift much-needed finance toward low-carbon solutions. More than 390 companies—including investors with assets of a combined market capitalization of more than $7 trillion—have already publicly committed to support the Task Force on Climate-related Financial Disclosure’s recommendations, and a number of them are starting to apply them in their financial disclosures.
2) Accelerate investment in sustainable infrastructure.
Ensuring that infrastructure investments are sustainable is critical. The G20 should continue its work to develop infrastructure as an investment asset class to improve the mobilization of private and long-term finance. Multilateral development banks should double their collective investment in infrastructure, making sure it is sustainable, aiming to invest at least $100 billion per year by 2020.
3) Harness the power of the private sector and unleash innovation.
By 2020, all Fortune 500 companies should establish emissions-reduction targets in line with what scientists say is necessary to prevent the worst climate impacts. Already, more than 460 companies across all sectors have committed to Science-Based Targets.
A big push on innovation is needed, such as on deforestation-free supply chains or net-energy positive commercial buildings. We need at least $50 billion of new capital committed to breakthrough climate challenges by 2020.
4) Build a people-centered approach that shares gains equitably and ensures that the transition is just.
All governments should establish clear Energy Transition Plans to reach net-zero energy systems. They should work with energy companies, trade unions and civil society groups to ensure a transition to a low-carbon economy doesn’t place unfair burdens on workers and communities.
Women will play a critical role in this agenda. Ensuring their full participation in the economy could boost global GDP by as much as $28 trillion per year by 2025.
A greater focus on adaptation and resilience across efforts and policies is critical as climate impacts continue to negatively affect lives and livelihoods. We can no longer choose between actions for today and those for tomorrow.
The Future We Want
Leaders are already seizing the exciting economic and market opportunities of this new growth approach. The laggards are not only missing out on these opportunities; they’re putting us all at greater risk.
We can deliver on the promise of this new growth era. We can eliminate extreme poverty, prevent dangerous climate change, and improve the lives and livelihoods of millions—but only if we set out to do so decisively now. As this new report makes plain, we have everything to lose and so much to gain.
The Global Commission on the Economy and Climate is a major international initiative that was set up in 2013 to help governments, businesses and society make better-informed decisions on how to achieve economic prosperity and development while also addressing climate change. The Commission, currently chaired by Ngozi Okonjo-Iweala, Paul Polman and Lord Nicholas Stern, comprises leaders from over 20 countries, including former heads of government and finance ministers, leading businesspeople, heads of international organizations, city mayors and academics. They all serve on the Commission in a personal capacity.
OSLO/LONDON (Reuters) – 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.
The Global Commission on the Economy and Climate, which includes former heads of government, business leaders and economists, said there was “unprecedented momentum” toward greener growth that would boost jobs and countries’ economies. 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 toward 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.” 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 would generate tens of millions of new jobs annually — around 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 tonne 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.
476,000 people are 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.
We could shift to sustainability and save $26 trillion. Why are aren’t we doing it? The costs of the status quo keep rising; the costs of sustainable alternatives keep declining.