In preparation for the September 23 international climate summit, the Global Commission on the Economy and Climate has released its report on the economic need for nations to invest in serious anti-climate change measures.
The report, The New Climate Economy, claims that, to avoid the worst effects of climate change, countries have 15 years to wean their economies off fossil fuel dependence. Today, the global population is 7.2 billion, with half of those people living in cities. According to the report, in 15 years, “the global economy will grow by more than half, [and] a billion more people will come to live in cities.” How these cities develop, then, “will be critical to the future path of the global economy and climate.”
The commission was created in 2013 by the UN, the World Bank, the International Monetary Fund, the OECD, the International Energy Agency, research institutes and former world premiers. Together, they have concluded that “[i]nvesting in a low-carbon economy is a cost-effective form of insurance against climate risk.”
The change must begin in cities, the report urges, because cities generate 80 percent of global economic growth. Currently, they also account for 70 percent of energy-related greenhouse gas emissions.
While advances have been made in renewable energy, low-carbon fuels and urban design, the advances fall very short of meeting the standards necessary to restrict global warming to just 2°C by the end of the century. This conclusion echoes a report from PricewaterhouseCoopers, released earlier this week, on the planet’s carbon reduction progress. For over a decade, carbon intensity has been falling by an average 0.9 percent per year, but PwC calculates that the rate needs to be 6.2 percent to prevent the globe from hitting the 2°C limit by mid-century.
This transition won’t come cheaply. The Commission calculates that $90 trillion in investments will be needed over the next 15 years to just maintain high-carbon infrastructure for cities. Shifts to greener infrastructure models will cost an additional $270 billion per year. While this represent a 4.5 percent increase in the transitional cost, the cost could ultimately be offset by savings in fuel and other energy-saving techniques.
But the transition could be profitable for all, as long as it is carried out in a thoughtful way. That’s according to the chief economist at the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, who was also an advisor on the Commission’s report.
“Economic growth and emissions reductions can be achieved together, the report clearly confirms,” he explains. “Pricing CO2 is key. The heaven above us today is a waste dump for gases that harm our climate system. Wealthy states are disposing of them, free of charge, at the expense of all of us. If emitting CO2 came at a reasonable price, this would stabilize investors’ expectations so they can push forward the innovation of climate friendly technologies.”