Surprisingly, this thought-provoking study does not come from the usual environmental or civil society sector actors. Instead, the study is a product of the Global Commission on the Economy and Climate, which brought together 24 leaders from government, business, finance and economics in 19 countries. For twelve months, leading institutes from Brazil, China, Ethiopia, India, South Korea, the United Kingdom and the United States contributed to analysis with advice provided by a world-class economist panel.
The new report arrives just a few days before New York welcomes governments, business and civil society for three separate climate events: the UN Climate Summit, Climate Week New York City 2014 and the New York City People’s Climate March.
The report’s central message is that over the next 15 years, about US $90 trillion will be invested world-wide in agriculture, cities and energy system infrastructure. This window of time represents an unprecedented opportunity to shift global investment toward low-carbon growth, increasing job creation, public health, business productivity and quality of life for millions. Continuing down a “business-as-usual”, high-carbon economic route will bring severe risks to long-term prosperity due to the increasing impacts of climate change.
The full report provides some key observations across a variety of sectors. Below are three highlighted findings that are critical from an urban perspective:
- Better Cities: Building better connected, more compact cities based on mass public transport can save over $3 trillion in investment over the next 15 years. These measures will reduce greenhouse gas emissions and improve economic performance and quality of life.
- Renewable Energy: As solar and wind energy prices fall dramatically, more than 50% of new electricity generation over the next 15 years is likely to be from renewable energy sources, reducing dependence on dirty fuels like coal.
- Phasing out subsidies: Fossil fuel subsidies currently amount to some $600 billion, compared to $100 billion for renewable energy. Removing climate-harmful subsidies will help to improve energy efficiency and make funds available for national priorities.
The report also highlights that the price of inconsistent policies will be uncertainty, lower investment and lower job creation.
In its conclusion, the report proposes a “Better Growth, Better Climate” framework, consisting of a 10-point action plan that if implemented could achieve up to 90% of the emissions reductions needed by 2030 to avoid dangerous climate change. From a focus on the economics of change, recommendations include:
- Developing comprehensive plans for phasing out existing fossil fuel subsidies: Enhanced transparency and communication and targeted support for poor people and affected workers. Developed countries could accelerate efforts to remove fossil fuel subsidies for exploration and production. Developing countries could explore innovative approaches with development banks on how to finance the up-front costs on low-income households.
- Implementing a predictable price escalator: For when political pressures for certain countries or sectors demand a lower price initially.
- Applying a clear and credible carbon price signal across the economy.
- Recycling revenues from carbon pricing for productive uses: Cutting distortionary regulations and poorly structured taxes. A share of carbon revenues should be prioritized to offset impacts on low-income households.
Some of these ideas are already gaining traction regionally. For example, Mexico approved a carbon tax, and Chile recently approved a set of ‘green’ taxes that will generate extra income that will fund education. These are innovative interventions that support a new climate economy – and improve the quality of growth.
The report’s organizing Commission will meet and discuss the study’s findings with economic decision-makers in several countries, and Nivela will track some of these developments across, e.g., Brazil, Chile, Colombia, Mexico and Peru.
Now is the right time to be having these debates. By adding visibility to the costs of inaction and the benefits of integrating economic and business models, together we can help strengthen global climate action.
The full report is available at: www.NewClimateEconomy.report