Global | Decarbonizing the Global Economy: Challenges and Opportunities

Summary

In the face of unequivocal evidence of climate change, the challenge is to decouple economic development from greenhouse gas emissions with more ambitious policies aimed at achieving a socially just transition by internalizing the costs of emissions and promoting green innovation and private investment.

Key points

• Key points:
• The evidence of anthropogenic global warming over the past 150 years is unequivocal, with increasing risks from both catastrophic physical events and insufficient transition policies. Climate scenarios conditioned on plausible future CO2 concentrations make the 1.5ºC target unlikely.
• Degrowth is not an option: economic development and improved social welfare are possible by reducing emission intensity per unit of GDP. Climate policies must aim to promote lower CO2 emissions and greater energy efficiency.
• Progress in climate policies remains insufficient to achieve "net zero" by 2050. Carbon prices are low compared to estimates of their recommended levels, even though the cost of insuring against catastrophic climate change scenarios is manageable: 2% of annual welfare in advanced economies (less than 1% in Latin America).
• The magnitude of investment required for the transition demands strengthening the institutional and regulatory framework to attract private investment, which in turn fosters innovation and boosts productivity.

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