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Reducing Carbon Emissions Would Fuel Global Economy

Climate
Reducing Carbon Emissions Would Fuel Global Economy

Evidence is amassing to discredit those middle-ground politicians who say they think climate change is real but don't think we should address it because of the steep economic costs.

With the right policies, moving from fossil fuels into renewable energy could mean trillions of savings to be invested in economic growth.
Photo credit: Shutterstock

Two reports issued today by the Climate Policy Initiative add to the growing pile of studies showing that moving to clean-energy, low-carbon policies that help mitigate the effects of climate change could actually provide fuel for the economy. They found that moving to such policies could save the global economy trillions of dollars in the next two decades to invest in economic growth. The reports were commissioned by the New Climate Economy project as part of the research conducted for the Global Commission on the Economy and Climate.

“For policymakers around the world wondering whether the transition to a low-carbon economy will help or hurt their countries’ ability to invest for growth, our analysis clearly demonstrates that, for many, the low-carbon transition is a no-brainer," said Climate Policy Initiative's executive director Tom Heller. "It not only reduces climate risks, its benefits are clear and significant."

“Moving to a Low Carbon Economy: The Financial Impact of the Low-Carbon Transition” juxtaposes the costs of low-carbon electricity and low-carbon transportation system with the costs of the current system. “Moving to a Low Carbon Economy: The Impact of Different Policy Pathways on Fossil Fuel Asset Values” looks at the risk and extent of existing fossil fuel assets' loss of value (aka asset-stranding), which would limit governments and businesses’ ability to borrow against them to finance growth and investment, including investment in a clean energy technologies. 

The reports came to a number of conclusions about the positive economic impacts of shifting to policies that favor clean, renewable energy. They found that since governments worldwide and not private companies control 50-70 percent of oil, gas and coal resources, they also have the power to shape policies that can lead to savings or to asset-stranding. They also concluded that the savings in operational costs from renewable energy as opposed to fossil-fuel energy far outweighs the value of the stranded assets. And they assert that transitioning away from coal would provide the greatest benefits in emissions reductions with the least loss in value.

They also urge reducing the cost of financing renewable energy plants to lower the cost of transition worldwide, implementing a planning approach that includes taxes and innovation, and using gas as a bridge fuel in some regions—particularly China and India—until 2030 but saying gas use would have to decrease after that.

“Our analysis reveals that with the right policy choices, over the next twenty years governments can achieve the emissions reductions necessary for a safer, more stable climate and free up trillions for investment in other parts of the economy," said Climate Policy Initiative's senior director David Nelson. "This is even before taking into account the environmental and health benefits of reducing emissions.”

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