A new report released by the Global Commission on the Economy and the Climate identifies 10 key economic opportunities that could close up to 96 percent of the gap between business-as-usual emissions and the level needed to limit dangerous climate change. The report calls for stronger cooperation between governments, businesses, investors, cities and communities to drive economic growth in the emerging low-carbon economy.
“This report shows that success is possible: we can achieve economic growth and close the dangerous emissions gap,” said former President of Mexico Felipe Calderón, Chair of the Commission. “Today’s report shows us that a goal we once thought of as distant is within our reach. We can achieve global prosperity and secure a safe climate together. The low carbon economy is already emerging. But governments, cities, businesses and investors need to work much more closely together and take advantage of recent developments if the opportunities are to be seized. We cannot let these opportunities slip through our fingers.”
The new report, Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate, shows how recent trends in the global economy – such as the dramatically falling cost of clean energy, the continuing volatility of oil prices, and the worldwide growth of carbon pricing – are building momentum for low-carbon development.
“More and more countries are committing to integrating climate action into national economic plans, from the recent G7 statement on the need to decarbonise the economy by the end of the century, to the development of low-carbon and climate resilient growth strategies in a number of developing and emerging economies”, said Lord Nicholas Stern, leading economist and Co-chair of the Commission. “Strong economic growth that is also low-carbon is going to be the new normal.”
The Commission’s 10 recommendations include:
- Scaling up partnerships between cities, like the Compact of Mayors, to drive low-carbon urban development. Investment in public transport, building efficiency, and better waste management, could save around US$17 trillion globally by 2050.
- Enhancing partnerships such as REDD+, the 20×20 Initiative in Latin America, and the Africa Climate-Smart Agriculture Alliance to bring together forest countries, developed economies and the private sector to halt deforestation by 2030 and restore degraded farmland. This would enhance agricultural productivity and resilience, strengthen food security, and improve livelihoods for agrarian and forest communities.
- Governments, development banks and the private sector should collaborate to reduce the cost of capital for clean energy, with the goal of investing US$1 trillion in developed and developing countries by 2030.
- The G20 should raise energy efficiency standards in the world’s leading economies for goods such as appliances, lighting, and vehicles. Investment in energy efficiency could boost cumulative economic output globally by US$18 trillion by 2035.
- Action to reduce emissions from aviation and shipping under international treaties and from hydrofluorocarbons (HFCs) under the Montreal Protocol could reduce emissions by as much as 2.6 Gt in 2030. In shipping alone, higher efficiency standards are expected to save an average of US$200 billion in annual fuel costs by 2030.
The Commission calculates that its recommendations could achieve up to 96 percent of the emissions reductions in 2030 that are needed to hold the rise in global temperature to under 2°C, the level which governments have pledged not to cross.
The report finds that businesses are already driving a growing US$5.5 trillion global market for low-carbon goods and services. It calls for new business partnerships to open new markets, share costs, and reduce concerns about the international competitiveness impacts of climate policy.
“Businesses are already preparing for a low-carbon future, and in many ways are ahead of the curve. For instance, companies representing 90 percent of the global trade in palm oil, including ours, have committed to deforestation-free supply chains by 2020”, says Paul Polman, CEO of Unilever.
The Commission argues that the actions identified in Seizing the Global Opportunity would enhance the national pledges (“Intended Nationally Determined Contributions,” or INDCs) already being submitted by countries to the UNFCCC for the Paris climate conference. It urges INDCs to be seen as “floors, not ceilings” to national emissions reduction targets.
“We know that the current INDC pledges are not likely to get us to the 2°C world we need. But this report shows there is significant room for stronger action that is in countries’ economic self-interest,” said Michael Jacobs, Report Director, New Climate Economy. “It is therefore vital that the Paris climate agreement sets in motion a regular process for strengthening national commitments, on the way to the long-term goal of reducing emissions to near-zero in the second half of this century.”
“This report highlights the huge opportunity countries now have to scale up climate action while also driving growth and development,” said Helen Mountford,GlobalProgramme Director of the New Climate Economy. “Global economic growth and carbon emissions are beginning to be decoupled: last year, for the first time in decades, emissions held steady while the global economy grew. But the pace of change needs to be accelerated if we are to meet our development goals and also reduce climate risks.”
Some global leaders offered comments:
Caio Koch-Weser, Vice Chairman, Deutsche Bank Group; Chair, European Climate Foundation: “Low-carbon sectors are a massive growth area for businesses and governments alike. Major infrastructure investments, supported by the cooperation of public and private financial sectors, are critical in unlocking this global economic opportunity, particularly in emerging markets.”
Chad Holliday, Chairman, Shell: “Momentum is building for a New Climate Economy. Business follows the money, and the money can increasingly be found in low-carbon economic growth. It’s time for governments to give us a clear policy foundation and let us get on with the job of making the transition.”
Naina Lal Kidwai, Chairman, HSBC India and Director, HSBC Asia Pacific: “We cannot tackle poverty successfully without also tackling climate change. International cooperation can drive both more inclusive economic growth and more ambitious climate mitigation, reducing the risks to the world’s poor. Businesses can play a major role in this, for instance, off-grid energy is a huge market in India and at the same time provides major social and environmental benefits. Together, a prosperous, low-carbon future is within our reach.”
Ngozi Okonjo-Iweala, Former Minister of Finance, Nigeria: “African countries have a real opportunity to set themselves on a low-carbon growth path. With the support of the international community, critical investments that can be made in the next 15 years can ensure development goals, such as accelerated energy access and poverty eradication, are met and in way that doesn’t leave a polluted world at risk from climate change for future generations.”
Michael R. Bloomberg, UN Special Envoy for Cities and Climate Change, founder of Bloomberg LP, and former Mayor of New York City: “The New Climate Economy report highlights how strong action on climate change makes sound economic sense. Cities know from experience that cutting pollution can attract jobs and spur economic growth – the Compact of Mayors is helping them do that – and investors know that clean energy presents a major economic opportunity. The more that all levels of government can remove barriers to the clean energy market the more progress we’ll be able to make in the battle against climate change.”
Chen Yuan, Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference; Former Chairman of the China Development Bank (CDP): “China’s growth can be driven by innovation, efficiency, cleaner energy and air, and more compact and productive cities. China can be a leader among developing countries on the road to the Paris climate conference, showing that low-carbon growth is the new normal.”
Eduardo Paes, Mayor, Rio De Janeiro; Chair, C40: “Low-carbon cities represent a US$17 trillion economic opportunity. Compact, connected, and coordinated cities can generate stronger growth and increase the health and wellbeing of urban citizens. Cities around the world are already leading the way in implementing sustainable and innovative urban solutions, from better mobility systems that reduce traffic and pollution to enhanced measures to treat waste. By sharing and scaling-up these best practices, cities can accelerate global climate action and help close the emissions gap.”
Ricardo Lagos, Former President of Chile, and Professor at Large, Watson Institute for International Studies, Brown University: “We have clear evidence from countries around the world that actions to tackle climate change can also generate better, more sustainable economic growth. Seizing the Global Opportunity finds that halting deforestation and restoring degraded land will be critical in making sure that livelihoods and food security improve.”
Trevor Manuel, Former Minister and Chairperson of the South African Planning Commission; Former Finance Minister of South Africa: “The findings of this report, combined with those of the recent Africa Progress Report, prove that there are immense opportunities in the emerging low-carbon economy. Africa can ‘leapfrog’ the fossil-fuel based growth strategies of developed countries and become a leader in low-carbon development, exploiting its abundant – and currently under-utilised – renewable energy resources.”
Kristin Skogen Lund, Director-General, Confederation of Norwegian Enterprise: “2015 is a moment of opportunity to accelerate growth-enhancing climate action. Landmark conferences on development financing, the SDGs, and climate change have the potential to usher in a new era of international cooperation.”
Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC): “Governments must take responsibility for a plan for industrial transformation and they need to work closely with trade unions to ensure this occurs through a just transition, supporting jobs, skills and community renewal.”
Helen Clark, Administrator, UNDP; Former Prime Minister of New Zealand: “Tackling climate change presents many opportunities for developing countries to spur economic growth, enhance resilience, and encourage more sustainable development pathways. Climate change action should no longer be seen as a cost, but rather as an important building block in achieving sustainable development. As this report shows, by halting the loss of our natural forests, we can significantly improve the lives of the 1.6 billion people who rely on forests for food, water, fuel, and medicine, as well as reduce global greenhouse gas emissions.”
Maria van der Hoeven, Executive Director, International Energy Agency (IEA): “Improving energy efficiency is crucial to sustained economic growth and meaningful climate action. It needs be seen as the “first fuel”. A more energy efficient world will have greater economic productivity and a smaller carbon footprint.”
Sri Mulyani Indrawati, Managing Director and Chief Operating Officer, The World Bank; Former Finance Minister of Indonesia: “This report shows once again that climate action doesn’t require economic sacrifice. Smart policy choices can deliver economic, health and climate benefits for developed and developing countries alike. Multilateral Development Banks can play a crucial role in helping countries follow a transition to low carbon growth by using scarce government resources smartly and leveraging much larger, long-term private investments.”
Takehiko Nakao, President, Asian Development Bank: “Multilateral development banks are already investing heavily in infrastructure to ensure low-carbon and climate-resilient development. Increased investments in climate-smart infrastructure are vital in coming decades given the strong growth trends in Asia and the Pacific, coupled with rapid urbanisation and rising climate vulnerabilities.”
Seizing the Global Opportunity is a follow-up to Better Growth, Better Climate: The New Climate Economy Report, which was released in September 2014. The Global Commission is made up of 28 leaders in the fields of government, business and finance from 20 countries.