From the FT:
The UN Intergovernmental Panel on Climate Change’s third report of a trio on global warming, released on Sunday, focuses on “mitigation” – how to fight rising temperatures by limiting the build-up of carbon dioxide and other greenhouse gases in the atmosphere.
…The key objective is to keep the average worldwide temperature rise below 2C, the internationally agreed target that would avoid catastrophic global change.
…Large changes in investment patterns, particularly in the energy industries, will be required to achieve the 2C goal. The report estimates that investment in power generation from conventional fossil fuels should fall $30bn a year, while investment in low-carbon plants (nuclear, renewables and carbon capture) rises $147bn a year. Total global annual investment in the energy system is about $1,200bn today.
In addition, the IPCC says investment to improve energy efficiency in transport, buildings and industry needs to rise $336bn a year.
The economics of mitigation are a particularly controversial issue in climate policy. The report acknowledges that estimates of the net costs vary widely according to assumptions, model design and technologies available.
But it concludes that an ambitious fight against climate change will reduce annualised economic growth by somewhere between 0.04 and 0.14 percentage points, with 0.06 per percentage points the most likely figure. This would leave global consumption in 2050 just 3.4 per cent lower than under the “business as usual” scenario.
That’s very cheap climate insurance.
