LONDON: Achieving a clean, prosperous future is within reach – but we must invest at least US$1 trillion a year in clean energy, raise energy efficiency standards and implement effective carbon pricing.
These are just some of the suggestions raised by experts in the 2015 New Climate Economy report, an update of the ‘Better Growth, Better Climate’ report released last year by the Global Commission on the Economy and Climate.
BUSINESS ROLE
Businesses must play their role, adopting climate plans such as going 100% renewable. The Climate Group is helping companies that want to achieve this with our RE100 program, which shows how it is possible to provide energy security, help manage fluctuating energy costs, improve reputation and deliver carbon emission reduction goals. RE100 was launched at Climate Week NYC on September 22, 2014. RE100 is an action of the We Mean Business coalition.
By massively increasing private sector demand for renewable power, RE100 will accelerate the transformation of the global energy market, thus enabling the transition to a prosperous low carbon future.
23 of the world’s most influential companies have now joined RE100 and made a public commitment to going 100% renewable: Alstria, Autodesk, BT Group, Commerzbank, Elion Resources Group, Formula E, H&M, Infosys, IKEA, Kingspan, KPN, Mars, M&S, Nestlé, Philips, Proximus, Reed Elsevier Group, J. Safra Sarasin Bank, SAP, SGS, Swiss Re, Unilever, YOOX Group.
The report estimates businesses like our corporate partners are part of a US$5.5 trillion global market in low carbon and environmental technologies and products. Policymakers must take bold steps to drive this market by creating new jobs and skills.
The report shows that there is growing evidence that emissions reduction does not undermine profitability, and may even enhance it. The CDP Climate Leadership Index (made up of companies taking the strongest climate action) has outperformed the Bloomberg World Index of top companies by 9.1% over the past four years.
The authors also warn ambition must be raised in reducing international aviation and maritime emissions – which account for about 5% of global CO2 emissions to date and will reach 10-32% by 2050.
This year can – and must – be the tipping point for climate action, thanks to the momentum building around the Conference of the Parties in Paris later this year. “Achieving a new international climate agreement in Paris would provide a vital foundation for building a lower-carbon and more resilient global economy,” conclude the authors of the report, “sending a strong signal to businesses and investors.”
Image: Annual additions to global power generation capacity (GW), courtesy of Bloomberg
MOMENTUM FOR CHANGE
This year, for the first time in 40 years, greenhouse gas emissions decoupled from economic growth. Such a milestone shows that a better, sustainable future is possible.
However, this is not enough if we want to stay below the globally recognized limit of 2 Celsius degrees, states the new report. To date, carbon emitted per dollar of GDP in the global economy is declining less than 1.5% a year – but between now and 2050, the rate must be nearly 5%.
To address this issue, the New Climate Economy report more precisely indicates 10 key areas that could achieve 59-96% of the emissions reductions needed by 2030 to achieve the 2 degree threshold target.
Cities is the first area examined by the report because of their environmental impact. According to the UN, 60% of the world’s population will live in cities by 2030. Authors call for “compact, connected and efficient cities” able to protect air quality and spur economic growth – and ultimately, protect jobs.
To achieve this, an ‘integrated package’ of at least US$1 billion to support the biggest cities is recommended. These investments can generate savings in the period to 2050 of US$16.6 trillion, reducing greenhouse gas emissions by 3.7 gigatons (Gt) by 2030.
Along with restoring and protecting agricultural and forest landscape, another key area is investing in clean technology. The report indicates that at least US$1 trillion of investment per year is necessary to spur the clean revolution, in particular focusing on power supply and energy efficiency.
Energy efficiency is an area where the potential benefits are immense, but it must be supported by adequate policies. According to the report, enhancing this area could boost cumulative economic output by US$18 trillion to 2035, while reducing GHG emissions in 2030 by 4.5-6.9 Gt Co2 equivalent.
Image: Long-term energy efficiency economic potential by sector. Source: International Energy Agency
Putting a price on carbon – to account for its indirect damages, while using that revenue to incentivize clean technology – is becoming more and more popular around the world. Also called ‘cap and trade’, the system aims to ‘cap’ the CO2 emissions in the area covered, allowing businesses to ‘trade’ the allowances of how much carbon they can put in the atmosphere.
The report also calls to capitalize theUS$90 trillion in infrastructure needed globally by 2030. Integrating climate objectives in these projects will have “no or very modest additional cost” in the short period, while saving much more in the long run.