Delaying climate action will raise costs by 50%: World Bank report
- 12 May 2015
LONDON: Delaying climate actions by 2030 would increase costs of decarbonization by 50%, a new study from the World Bank states.
The report Decarbonizing Development: Three Steps to a Zero Carbon Future, explores the best practices, policies and costs of keeping temperatures from rising less than 2 Celsius degrees from pre-industrial levels – the threshold to avoid the worst effects of climate change. To achieve this necessary target, the Intergovernmental Panel on Climate Change states global carbon emissions must reach zero by the end of the century. The World Bank report indicates that the more we wait, the more it will cost to reach this goal.
“This report confirms what many others – from both the private sector and academic institutions – have said for more than a decade now: the longer we leave to take action, the more expensive it becomes,” says Mark Kenber, CEO, The Climate Group.
“There are some who believe we can wait for technology development to find a magic bullet able to curb emissions at little or no cost. History suggests this is very rarely the case. What drives down the cost of solutions is early stage investment and commitments. That’s what we have seen with wind and most obviously solar power, where technology costs fell dramatically because a market was created. Investment in research and development to cut costs has meant that solar is competitive with fossil fuel-based electricity in many countries and regions around the world.
“The argument for waiting to act on climate holds no water. By acting now, the cost of curbing emissions will be much lower.”
Image: Infographic courtesy of the World Bank
A three-step pathway
Last July, a White House report estimated delaying policy action on climate for a decade would increase total mitigation costs by approximately 40%, with no action at all risking “substantial economic damage”. The new World Bank report reinforces such data, but at the same time offers a clear strategy to avoid such costs, while grasping the social and economic co-benefits of tackling climate change.
The first step is to “plan ahead with an eye on the end goal”. The report states, to reach the final target of reducing emissions by 2100 it is necessary to set many other steps or sub-targets. The short-term targets (for example, 2030) are “driven by a mix of cheap, quick fixes and costlier long-term measures,” which are necessary “to promote technology development, investment in long-lived infrastructure, and changes in how cities are built.”
In the long-term, countries must follow four important pillars. The first is decreasing carbon intensity of global electricity production to near zero around 2050, while pushing renewables and ‘negative emissions’ technology.
Shifting toward low carbon electricity will also drastically reduce greenhouse gas (GHG) emissions in energy-intensive sectors – such as transportation, building, and industry. The third pillar is to boost energy efficiency, making electrification easier and saving on energy bills. Lastly, managing landscapes better will increase removal of carbon from the atmosphere.
The report also suggests that setting a long-term goal can help policymakers choose the ‘right’ decision. In fact, a measure that appears cheaper in the short term can result in much bigger costs in the long run.
“The good news is that many options with high potential offer immediate local co-benefits, especially in low-income countries,” states the report, “so that early action need not represent a trade-off with short-term development goals.” In the short term, authors say countries must avoid investment in carbon-related technologies, develop a better public transportation and research clean technology.
Broad climate policies
One of the best tools to achieve global decarbonization is putting a price on carbon, which is “simply good fiscal and economic policy,” the authors write. Compelling polluters to pay for the direct and indirect costs of their emissions raises revenues that can be used for environmental projects, or to further enhance the country’s development.
However, this is just one tool in the complex system necessary to tackle climate change. Also, if the prices of the permits composing the market are too low, carbon pricing mechanisms are not able to make a real difference – a risk that the European Emissions Trading System is currently facing.
This is why the World Bank report urges policymakers to “go beyond prices with a policy package that triggers changes in investment patterns, technologies and behaviors.” Some of these policies can be incentives toward development and deployment of renewables.
Policymakers can also reduce taxation on solar panels and energy-efficient lightbulbs – a measure recently implemented by the Asia Pacific Economic Cooperation countries – spurring the required changes in investments and behaviors.
Image: Carbon markets in the world, from the report Decarbonizing Development: Three Steps to a Zero Carbon Future by the World Bank
Radical but smooth change
The pathway through deep decarbonization can be challenging, but can also offer new opportunities for a better, global development that protects those most affected by the direct and indirect effects of climate change. Because of this, the authors indicate the need to develop a climate package aimed at sustainable development, not just reducing emissions.
To avoid climate impacts governments should set clear and transparent criteria that determine when public support should be terminated, include a flexible framework, and insist on transparency and public accountability. Smoothing the transition to a low carbon world also includes helping businesses reinvent themselves for a cleaner world.
“Choices made today can lock in emissions trajectories for years to come and leave communities vulnerable to climate impacts,” said Rachel Kyte, World Bank Group Vice President and Special Envoy for Climate Change. “To reach zero net emissions before the end of this century, the global economy needs to be overhauled. We at the World Bank Group are increasing our focus on the policy options.”
- Mark Kenber: A global climate deal is not only the right choice; it is the smart one
- 2015 could be tipping point for the clean revolution
- Global economy could save US$115 trillion with clean energy investment, renewables sector already supports 6.5 million jobs
by Ilario D'Amato