Low carbon is THE growth market if we seize it now: New Climate Economy report spells it out

Clare Saxon Ghauri
16 September 2014

LONDON: Today a powerful new report will be released outlining how the world can safely reduce emissions and still reap economic benefits, if our business, government and finance leaders act immediately. 

Better Growth, Better Climate: The New Climate Economy is the flagship work of the Global Commission on the Economy and Climate, a major international project aiming to analyze and share the economic benefits and impacts of climate change.

The report reveals 50-90% of the actions required to cut emissions in most countries will also drive economic growth.

In the study, authors share independent evidence on the strong links between actions to tackle climate change and continued economic growth, with the aim of urging readjusted policies to better support the low carbon economy ahead of the UN Climate Summit, which takes place during Climate Week NYC next week. 

The findings of the report will be unveiled at the UN headquarters in New York today, by the group of influential economic leaders who contributed to the report. “The New Climate Economy report refutes the idea that we must choose between fighting climate change or growing the world’s economy. That is a false dilemma,” says former President of Mexico Felipe Calderón, Chair of the Global Commission on the Economy and Climate. “Today’s report shows how technological and structural change are driving new opportunities to improve growth, create jobs, boost company profits and spur economic development.”

15 year window

Lord Nicholas Stern is co-chair of the Commission, and the report findings echo his 2006 Stern review, which was one of the first papers to outline urgent climate action as more cost-effective than delayed action. He says: “The decisions we make now will determine the future of our economy and our climate. If we choose low-carbon investment we can generate strong, high-quality growth – not just in the future, but now. But if we continue down the high-carbon route, climate change will bring severe risks to long-term prosperity.”

Setting out the case for low carbon growth as a clear opportunity, the New Climate Economy argument is that business, finance and government leadership is needed urgently ahead of a potential global warming of 4C by the end of the century, stating the next 15 years as the key window for action. During this period, they say the global economy will grow by more than half, but that low carbon and climate-resilient growth is possible: "The capital for the necessary investments is available, and the potential for innovation is vast. What is needed is strong political leadership and credible, consistent policies.”

Authors explain the 15-year challenge can be met with increased investment in energy efficiency, smart infrastructure and clean technologies, honing in on cities as critical as they are home to half the world’s population, as well as the greenhouse gases associated with their 70% of global energy use. Low carbon improvements would not only lower pollution in cities, but save more than US$3 trillion in investment costs over the timeframe.

There is also opportunity for low carbon growth in regions without access to electricity, largely in Africa and Asia, where clean energy can be implemented early on in the development of infrastructure.

Low carbon scale-up

Despite impressive clean tech facts in the report - such as that small-scale solar has reached grid parity in many countries and that renewables will make up over half of new electricity over the next 15 years - authors warn low carbon energy still has a long way to go to being effectively scaled-up around the world, largely due to policy barriers and higher up-front costs.

However, the costs involved in adoption are far outweighed by the estimated costs of climate inaction, and are rapidly falling, as shown in the below graph from the report.

solar growth parity

Graph: Global Commission on the Economy and Climate, "Better Growth, Better Climate: The New Climate Economy", 2014

The report concludes with a 10-point Global Action Plan of practical recommendations to achieve greater prosperity and safer global temperatures, that together could potentially secure up to 90% of the emissions reductions needed by 2030 to avoid the impacts of runaway climate change.

Under general 'recommendations' for energy, authors suggest:

  • Implementing energy prices that enable cost recovery for investment.
  • Phasing out the US$600 billion that is currently spent on fossil fuel subsidies.
  • Putting an effective price on carbon emissions.
  • Raising ambition for zero-carbon electricity.
  • Boosting low carbon innovation by tripling research and development to 0.1% of GDP, and launching a platform for public-private collaboration for innovation.

But while revising current economic policies such as putting a price on carbon and agreeing a global climate deal is key to smashing barriers to low carbon scale-up, businesses also have a crucial role to play, as the private sector is fundamental to the low carbon economy transition.

Mark Kenber, CEO of The Climate Group, says long-lasting economic growth is dependent on corporates seeing the many benefits of early low carbon investment and incorporating it into their business plans: “The New Climate Economy report highlights a vital fact, that if you put climate change at the heart of your strategy, along with growth and social development, you can build a thriving economy while reducing emissions.

“Last year alone, renewable energy accounted for 56% of new global power capacity. Companies have woken up to this fact and are now actively investing into clean energy, not just for philanthropic motives or to be seen as being green, but simply because they recognize it makes business sense. As today’s report suggests, if we do nothing the disruption on our society and global economy will be far greater. If businesses and policymakers plan ahead and take action now, then the opportunities of a transition to a prosperous, low carbon economy await us.”

The study comes at a key moment in time when world leaders are set to attend the UN Climate Summit during next week's Climate Week NYC, which is the collaborative space for all related events in support of the Summit.

The Climate Group and other leading organizations - representing thousands of top companies - will launch a pioneering coalition called We Mean Business at Climate Week NYC, that will act as a united business voice in support of bold climate policy. You can find out more about We Mean Business by joining our live Twitter Q&A at 4-5pm London time/11am-12pm New York time on Wednesday September 17, using hashtag #WeMeanIt.

For a full list of Climate Week NYC events, please visit ClimateWeekNYC.org and follow the conversation on Twitter using #CWNYC.

You can also see our Climate Week NYC media resources for press releases, contacts and more info.

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By Clare Saxon

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