Fighting Climate Change Would Boost Global Economy up to US$2.6 Trillion a Year

2014•06•25 Joe Romm Center for American Progress

An important new World Bank report concludes that just a few key policies aimed at cutting carbon pollution would boost the global economy. The study “Climate-Smart Development: Adding Up the Benefits of Actions that Help Build Prosperity, End Poverty and Combat Climate Change”, looks at the European Union plus Brazil, China, India, Mexico, and the United States.

The Bank finds that if all six embrace three sets of policies for clean transportation plus energy efficiency in industry in buildings, “the annual benefits of just these policies in 2030 include an estimated GDP growth of between $1.8 trillion and $2.6 trillion.” Furthermore, the report found that “these policies alone would account for 30 percent of the total reduction needed in 2030 to limit global warming to 2°C [3.6°F].”

The overall benefits are staggering, as these policies avoid 94,000 premature pollution-related deaths and 8.5 billion metric tons of carbon dioxide equivalent (CO2e) emissions. They save nearly 16 billion kilowatt-hours of energy — roughly equivalent to taking 2 billion cars off the road.

This finding matches that of the recent International Energy Agency (IEA) report, “Energy Technology Perspectives”. The IEA found that an aggressive effort to deploy renewable energy and energy efficiency (and energy storage) to keep global warming below the dangerous threshold of 2°C would be astoundingly cost-effective, “resulting in net savings of $71 trillion” by 2050.

And both reports are in line with the latest finding by the world’s scientists and governments that stabilizing at 2°C would have a net effect on growth of 0.06 percent per year — essentially no effect at all compared to the staggering amount of climate damages avoided.

Previous World Bank reports had focused on the disastrous dangers of delay, such as their November 2012 blockbuster, “Turn Down the Heat: Why a 4°C Warmer World Must be Avoided,” which warned that “we’re on track for a 4°C warmer world marked by extreme heat-waves, declining global food stocks, loss of ecosystems and biodiversity, and life-threatening sea level rise.”

The new reports analyzes specific strategies for a number of major developing countries, such as putting in place several integrated solid waste management options, including biodigesters, in Brazil, “expanding bus rapid transit in India, the use of clean cookstoves in rural China, and the use of solar panels and biodigesters to produce electricity from agriculture waste in Mexico.”

The benefits of just these four policies are enormous, as this video from the World Bank explains.

Anyone who claims that avoiding catastrophic climate change would entail high net costs or significant economic losses is, well, simply denying what we know about economics and climate solutions.

This Climate Progress article appears by permission.

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Joe Romm

Senior FellowCenter for American Progress

Joe Romm is a Fellow at American Progress and is the Founding Editor of Climate Progress, which New York Times columnist Tom Friedman called “the indispensable blog” and Time magazine named one of the 25 “Best Blogs of 2010”. In 2009, Rolling Stone put Romm #88 on its list of 100 “people who are reinventing America”. Time named him a “Hero of the Environment” and “The Web’s most influential climate-change blogger”. Romm was acting assistant secretary of energy for energy efficiency and renewable energy in 1997, where he oversaw US$1 billion in R&D, demonstration, and deployment of low-carbon technology. He is a Senior Fellow at American Progress and holds a PhD in physics from MIT.