Taking climate action will boost economic growth says new report

Integrating measures to combat climate change into regular economic policy will have a positive impact on economic growth over both the medium and long term, according to new report. 

The report, Investing in Climate, Investing in Growth, was released by the Organisation for Economic Co-operation and Development (OECD) on Tuesday 23 May.

The report details that bringing together the growth and climate agendas – rather than treating them as independent issues – could add 1 per cent to average economic output in G20 countries by 2021 and lift 2050 output by up to 2.8 per cent. 

Furthermore, if the economic benefits of avoiding climate change impacts – such as coastal flooding or storm damage – are accounted for, the net increase to 2050 GDP would be nearly 5 per cent.

The report prescribes the adoption of a combination of pro-growth and pro-environment policies in the development of the G20 countries’ overall growth and development strategies.

The G20 member states account for approximately 85 per cent of global GDP and 80 per cent of CO2 emissions.

The combination of climate policies such as carbon pricing with supportive economic policies will have a positive impact on growth centred investment in low-emission, climate-resilient infrastructure – the OECD said.

Angel Gurría, Secretary-General of the OECD, said: “Far from being a dampener on growth, integrating climate action into growth policies can have a positive economic impact.” 

He went on to say: “There is no economic excuse for not acting on climate change, and the urgency to act is high.”

The report shows that taking action only after 2025 would lead to an average output loss for G20 economies of 2 per cent after ten years relative to taking action now. 

Limiting the global temperature rise to below 2 degrees, in line with the Paris Agreement, will require $6.9 trillion per year in infrastructure investment between now and 2030, only 10 per cent more than the carbon-intensive alternative.

In addition, climate-friendly infrastructure is more energy-efficient and would lead to fossil fuel savings totalling $1.7 trillion annually, more than offsetting the incremental cost, the report said. 

Specifically, the report recommends G20 countries strengthening climate mitigation policies – including carbon pricing, fossil fuel subsidy reform and the use of public procurement – and scaling up efforts to mobilise private investment in low-emission and climate resilient infrastructure.

The report also states the need to engage local governments, employers and the workforce.

The report clearly sets out the structural, financial and political changes needed to enable the transition.

The report was prepared in the context of the German Presidency of the G20; Hamburg will host the twelfth G20 Summit on the 7th and 8th of July, 2017.

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