In the long run, it even provides economic benefits.

The fear that cutting CO2 emissions will come with high economic costs is preventing some countries from taking climate action. But is that fear really justified? Not really, it proves a new study†

Economic motives

The message from many scientists is clear: we should now reduce our CO2 emissions to stop global warming. However, it is slow to get started. This is partly due to the fear of high economic costs in some countries. And when considering emission reduction and climate adaptation, economic motives simply play a major role. “Many economic questions arise in addressing climate change challenges,” researcher Laurent Drouet told Scientias.nl from. “Think of questions such as how much, where and when low-carbon technologies should be deployed. And how much, for example, should be invested in informing people to reduce their energy demand? Such major policy changes come with economic costs.”

Economic costs

Reducing our CO2 emissions is therefore quite difficult, which can also have consequences for the economy. For example, economies need to be redesigned, which can lead to industrial disruption. Some also wonder what the consequences of the implementation of new technologies will be. Although much thought is given to this, the economic costs of doing nothing are sometimes overlooked. For example, the IPCC concluded in its latest report that climate change “threatens humanity and the planet” and that rising global temperatures have already caused “significant and increasingly irreversible losses.” The economy is feeling these effects, among other things, through the loss of agricultural productivity, heat-related diseases and deaths, damage to infrastructure due to extreme weather and loss of biodiversity.

Economic benefits

In short, the economic benefits of lowering the global temperature are not always looked closely at. “We expect costs and benefits,” says Drouet. “Looking both ways should strengthen public debate and inform the decisions of governments and business.”

Study

In a new study, researchers have attempted to predict the economic effects of carbon reduction as accurately as possible. They did this by combining the costs of carbon reduction with data on the economic damage of climate change. It leads to an interesting discovery. “Our findings show that efforts to reduce emissions over the next decade will inevitably lead to future economic benefits,” said Drouet. “And those benefits will be much higher than the transition costs in the coming decades.”

Economic benefits

While the researchers note that the direct economic costs of carbon reduction are limited, most scenarios have net economic benefits after 2050 and the vast majority (more than 75 percent) by 2080. “These economic benefits come from avoided damage from high temperatures – when no climate action is taken,” explains Drouet. “For example, shorter heat waves, lower sea level rise, longer harvest times and less intensity in extreme events such as cyclones and floods in the second half of the century will lead to economic benefits.” These benefits will be greatest for developing countries.

Warming up to 1.5 or 2 degrees Celsius?

In addition, the results show that limiting global warming to 1.5 degrees Celsius or 2.0 degrees Celsius produces comparable economic results. It means that the current costs and benefits of these two climate goals are of similar magnitude and are not statistically different from each other. The extra economic costs of tightening the policy by half a degree are offset by the extra benefits of lowered temperatures, the researchers say.

According to Drouet, also in view of the economy, it is very important that we take action. “If we don’t act now, the global temperature will rise to the point that it will hurt our economies,” he says. “Not acting now makes no economic sense in the medium and long term. It should therefore be the government’s role to do everything possible to achieve emissions targets and support companies to also achieve their carbon reduction targets.”