Climate

Green Economy Could Bring Benefits of Over $26 Trillion

A just-published report says there is over $26 trillion in economic benefits out there in the Green Economy if countries would just go out and grab it.

Widespread use of both wind and solar energy are just part of the $26 trillion economic benefit the world has ahead for it by embracing the Green Economy.

That’s the conclusion of The 2018 Report on Global Commission on The Economy and The Climate.

The Global Commission was chartered to create this and its 2014 predecessor report by seven countries: Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom, “as an independent initiative to the international community”.

Where the past industrial age was driven first by industrialization and then by the information economy, the new boom for this century lies with the Green Economy. As with past economies, those countries and industries which choose not to adapt will be left behind and see others surge past them. With the new Green Economy, there is the potential for an economic gain of US $26 trillion out there for those with the courage, vision, and execution skill to take advantage of it.

Unlike the past, the consequences of not jumping to the next economic wave are more than just economic.  As greenhouse gas emissions continued to rise during the last two decades, we collectively have caused 18 of the last 19 years to be the warmest ever. Drought and food scarcity are becoming more a part of life for some parts of the world, while others have seen flooding and sea level rise. Polar ice and glaciers are melting at record rates, and a global heat wave this summer caused havoc with drought, crops, and a world-wide wave of wildfires throughout the Northern Hemisphere. Severe storms like Hurricane Maria last year, which blasted through the Caribbean and Puerto Rico, and the terrifying super typhoon Jebi, which has flooded Japan and left Kansai International Airport submerged, are becoming more powerful and common every year. Together the accumulated climate-change related disasters killed thousands around the globe and created over $320 billion in direct economic losses in 2017.

The new report points out that “the next 10-15 years are a unique ‘use it or lose it’ moment in economic history”. As global leaders make decisions on how to spend an estimated $90 trillion in infrastructure just between now and 2030, it is critical that infrastructure be sustainable. That same time frame is also a ‘life or death’ one for dealing with climate change. As the report notes, “unless we make a decisive shift, by 2030 we will pass the point by which we can keep global average temperature rise to well below 2 degrees Centigrade”. Several new models suggest we may have even already passed the point where there is so much carbon dioxide in the atmosphere that, even if we halted all greenhouse gas emissions today, the globe could continue to grow hotter for years to come.

If the shift is made for drastic moves regarding climate change, and countries move quickly to invest and take a major role in the Green Economy, the report suggests more than just a future without further global warming. The analysis, prepared by the Global Commission on the Economy and Climate, a group consisting of former heads of government and business, plus financial experts, says if governments act in the next 2-3 years with quick action, new jobs and entirely new industries will blossom just as they have with previous waves. This time the benefit could be over $26 trillion. It would come in the form of an estimated 65 million new low-carbon jobs by 2030, a total which is larger than the entire workforces of the United Kingdom and Egypt combined. It is also estimated that taking the big steps could avoid some 700,000 premature deaths from air pollution in 2030.

As to what to do, the authors of the new report emphasize a short list of major priorities to take advantage of this unprecedented opportunity:

Begin to price carbon with higher costs and require mandatory disclosure of climate-related financial risks for all projects, whether public or private. The report notes that while “carbon pricing is now in place or planned in 70 countries or jurisdictions, but in most places the price levels are too low to drive transformational change.” Governments and industry must take a tougher stance on any enterprise which has the potential for dumping more carbon into the atmosphere.

Significantly increase investment in sustainable infrastructure – as part of “clear national and sub-national strategies and programs”. New construction investment will need to be properly balanced against the ability of infrastructures to provide access to renewable energy and water to support their use. New kinds of financing will also be needed, likely drawing from Multilateral Development Banks (MDBs) and other development finance institutions (DFIs) such as the World Bank, the Asian Infrastructure Investment Bank (AIIB) and the African Development Bank. All governments should also put in place zero-emission Energy Transition Plans. An example of a good start here is the current Net Zero Carbon Buildings Declaration, which as of mid-August 19 cities had pledged to support.

Get the private sector involved in a big way, to encourage innovation throughout and dramatically improve supply chain transparency. Where one company cannot do it all alone, find ways to link organizations together through public-private partnerships and strategic partnerships.

Make sure people are as important as the economic and environmental gains ahead, and ensure inclusion of all sectors of society. As with past major economic shifts, the transformation to a Green Economy has the possibility of leaving some behind. Governments in particular should make sure they bring together, as the report notes, “representatives of energy companies, trade unions and civil society to ensure a just transition for workers and communities”.

None of this is going to be easy. As Helen Mountford, program director of New Climate Economy, the institute behind the report, said, “There are some real roadblocks. Governments continue to give subsidies to fossil fuel production and consumption to the tune of $373 billion per year from 2013.” She also pointed out that those same governments are “also continuing to support agricultural subsidies at a rate of $5190 billion on average in recent years. These ae significant subsidies to go towards harmful activities, and yet we have other policies which are moving towards the low-carbon economy. That does create inconsistency.”

According to Ngozi Okonjo-Iweala, former finance minister of Nigeria and co-chair of the commission which produced the report, despite these challenges he believes grabbing the $26 trillion ‘brass ring’ while also saving the planet is more than possible. But it will require that “Policy makers should take their feet off the brakes, send a clear signal that the new growth story is here and that it comes with exciting economic and market opportunities.”