Economics and climate change

Can we afford to take action on climate change?

The New Climate Economy - "a major new report has described claims of a clash between fighting global climate change and growing the world's economy a "false dilemma”, and said that instead, the two were intrinsically linked, with inaction on climate change likely to cost economies more in the long term."

Launched after a year-long study advised by a panel of world-leading economists the Better Growth, Better Climate: The New Climate Economy Report concludes that "Countries at all income levels have the opportunity to build lasting economic growth and at the same time reduce the immense risk of climate change. But action is needed now."

The Executive summary of their report proposes a 10-point Global Action Plan of key recommendations. This asks decision-makers to:
1. Accelerate low-carbon transformation by integrating climate into core economic decision making processes. This is needed at all levels of government and business, through systematic changes to policy and project assessment tools, performance indicators, risk models and reporting requirements.
2. Enter into a strong, lasting and equitable international climate agreement, to increase the confidence needed for domestic policy reform, provide the support needed by developing countries, and send a strong market signal to investors.

3. Phase out subsidies for fossil fuels and agricultural inputs, and incentives for urban sprawl, to drive more efficient use of resources and release public funds for other uses, including programmes to benefit those on low incomes.
4. Introduce strong, predictable carbon prices as part of good fiscal reform and good business practice, sending strong signals across the economy.
5. Substantially reduce capital costs for low-carbon infrastructure investments, expanding access to institutional capital and lowering its costs for low-carbon assets.
6. Scale up innovation in key low-carbon and climate-resilient technologies, tripling public investment in clean energy R&D and removing barriers to entrepreneurship and creativity.
7. Make connected and compact cities the preferred form of urban development, by encouraging better-managed urban growth and prioritising investments in efficient and safe mass transit systems.
8. Stop deforestation of natural forests by 2030, by strengthening the incentives for long-term investment and forest protection, and increasing international funding to around US$5 billion per year, progressively linked to performance.
9. Restore at least 500 million hectares of lost or degraded forests and agricultural lands by 2030, strengthening rural incomes and food security.
10. Accelerate the shift away from polluting coal-fired power generation, phasing out new unabated coal plants in developed economies immediately and in middle-income countries by 2025.

"The Deep Decarbonization Pathways Project (DDPP) is a knowledge network comprising 15 Country Research Teams and several Partner Organizations who develop and share methods, assumptions, and findings related to deep decarbonization. Each DDPP Country Research Team has developed an illustrative roadmap for the transition to a low-carbon economy, with the intent of taking into account national socio-economic conditions, development aspirations, infrastructure stocks, resource endowments, and other relevant factors. The interim 2014 report focuses on technically feasible pathways to deep decarbonization.

The preliminary DDPs already provide key insights and identify unique elements of deep decarbonization in each country. These include the key components of nationally appropriate strategies and the most promising country-specific technology options for deep decarbonization. The initial DDPs also identify the principal challenges that still need to be addressed by the DDPP. Finally, the DDPs provide initial indications of the enabling conditions for the successful implementation of deep decarbonization. Understanding and meeting these conditions will require further refinement through careful analysis, public consultation, and learning by doing.
The Executive summary states:

The 15 DDPs developed by the Country Research Teams share three common pillars of deep decarbonization of national energy systems:
1) Energy efficiency and conservation: Greatly improved energy efficiency in all energy end-use sectors including passenger and goods transportation, through improved vehicle technologies, smart urban design, and optimized value chains; residential and commercial buildings, through improved end-use equipment, architectural design, building practices, and construction materials; and industry, through improved equipment, production processes, material efficiency, and re-use of waste heat.

2) Low-carbon electricity: Decarbonization of electricity generation through the replacement of existing fossil-fuel-based generation with renewable energy (e.g. hydro, wind, solar, and geothermal), nuclear power, and/or fossil fuels (coal, gas) with carbon capture and storage (CCS).

3) Fuel Switching: Switching end-use energy supplies from highly carbon-intensive fossil fuels in transportation, buildings, and industry to lower carbon fuels, including low-carbon electricity, other low-carbon energy carriers synthesized from electricity generation or sustainable biomass, or lower-carbon fossil fuels."