Combining climate action with nations’ economic growth agendas, rather than treating them separately, will increase G20 countries’ economic output 1% by 2021 and 2.8% by 2050, the Organisation for Economic Cooperation and Development concludes in a report released yesterday.
“Far from being a damper on growth, integrating climate action into growth policies can have a positive economic impact,” OECD Secretary-General Angel Gurría said during the Petersberg Climate Dialogue in Berlin. “There is no economic excuse for not acting on climate change, and the urgency to act is high.”
The report notes that the next 10 to 15 years of infrastructure investments will determine whether the objectives in the Paris agreement can be met—and the longer that investment waits, the more it will cost to hit the targets.
“The report shows that taking action only after 2025 would lead to an average output loss for G20 economies of 2% after 10 years relative to taking action now,” the OECD notes. “The delay would mean that, eventually, even more stringent climate policies would have to be introduced more urgently, risking greater environmental and economic disruption and leaving more fossil fuel assets as economically unviable.”
The international agency points to chronic underinvestment in infrastructure in most G20 countries but notes that, at US$6.9 trillion per year through 2030, a low-carbon pathway would only require 10% more investment than a carbon-intensive route. That premium would be more than paid back, since climate-friendly infrastructure “is more energy-efficient, and would lead to fossil fuel savings totalling US$1.7 trillion annually, more than offsetting the incremental cost.”
The report calls on G20 countries to integrate climate objectives with “pro-growth reforms”, strengthen carbon pricing and other climate mitigation measures, scale up their efforts to mobilize private investment in climate solutions, and “engage local governments, employers, and work force in the transition of exposed activities and communities, to deliver a just transition for workers.”