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 two to three 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 per cent 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 capitalisation 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 mobilisation 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.
The laggards are not only missing out on these opportunities; they’re putting us all at greater risk.
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.
Dr. Andrew Steer is the President and CEO of the World Resources Institute, Helen Mountford is the Director of Economics at WRI and the Program Director for the New Climate Economy (NCE) initiative, and Molly McGregor is the Research Manager for the New Climate Economy (NCE) Project. This post is republished from the WRI blog.