Individuals in 166 different countries will demonstrate today in People’s Climate Marches to raise awareness about the dangers of complacency in the face of climate change.
Critics have long argued that any measures enacted to address the phenomenon will come at the cost of economic growth.
But a study released this week by a coalition of scientists, academics and policymakers argues that the cost of putting the brakes on man-made climate change is minimal — and in the long-run may actually be free.
The group, chaired by former Mexican president Felipe Calderón, estimates that the world is going to spend $90 trillion on infrastructure projects through 2030 anyway. Steering those investments toward low-carbon technologies would only add about $4 trillion on net, or less than 5 percent of the original amount.
“Well-designed [policies] can make growth and climate objectives mutually reinforcing in both the short and medium term,” they write. “In the long term, if climate change is not tackled, growth itself will be at risk.”
Here’s the main chart, showing the net costs and benefits from shifting investment away from the “business as usual” path of subsidized fossil fuels and urban sprawl toward more energy efficient technologies and structures, and higher-density cities:
The world could even see net savings from switching to low-carbon power sources like renewables, which the authors argue have fewer operating expenses and longer lifespans than fossil fuel assets. And in the right investment environment — one that recognizes the lower risk profile of low-carbon energy sources like solar and wind — they could also have lower capital costs.
“These two factors together can offset the increased capital investment required to switch from coal to renewables,” they write. “Taking into account the full financial picture, including operating savings, the full investment impact of a low-carbon transition in the electricity sector would be an estimated net financial benefit of up to US$1.8 trillion over the period 2015–2035.”
To achieve all these savings, the authors say, we will have to look both forward and backward. Perhaps the most stark image from the study is one showing how they foresee climate-friendly urban planning proceeding. The authors compare Atlanta with Barcelona, two cities with about 5.3 million people, but which have emerged with vastly different carbon footprints:
The authors’ modelling puts the cost of sprawl at $400 billion a year thanks to more expensive public services, higher capital costs for infrastructure, lower overall resource productivity, and accident and pollution damages.
To move forward, they say, we’ll have to revive policies from the age when cities were planned around foot travel, while accounting for modern demands for public transportation.
“The alternative to unplanned, unstructured urban expansion is a more efficient urban development model based on managed growth which encourages higher densities, mixed-use neighbourhoods, walkable local environments,” they write, “and – in Global Megacities and Mature Cities – the revitalisation and redevelopment of urban centres and brownfield sites, complemented by green spaces.”
The good news is that many metros are already embracing this model. Houston, they note, “is now making ambitious efforts to overcome the legacy of sprawl through urban renewal and sustained investment in public transport systems.”
Another, more unexpected task required to limit climate change will be to revive demand for nuclear power. Nuclear is mentioned alongside renewable electricity and carbon sequestration as a triumvirate of technologies that could help slow manmade climate change as long enough investment goes toward them.
“Deploying low-carbon technologies including renewables, nuclear and carbon capture and storage (CCS)” would cost the world $4.7 trillion, or only about 5% to the total cost of future infrastructure investments, the authors say.
But since the early ‘90s stricter safety standards and a smaller supplier base have increased construction costs of nuclear reactors between three and seven-fold, the authors say. As a result, cumulative plant growth since 1995 has been just 15%. In the short-term this growth will slow even further:
“Several OECD countries have … announced plans to reduce or phase out nuclear power completely, a process that has firmed after the Fukushima accident in 2011,” they write.
The world’s largest emitter appears to have been less deterred by Fukushima than the West. China has 29 nuclear plants under construction, and the government hopes to build 10 a year every year after 2020. (Right now the country has 15.)
This is important. The climate change story is really about getting the U.S. or China to act. If you think anything the U.S. does won’t matter because this all comes down to China anyway, you’re wrong. (You’re also wrong if you think India also. They should, but the U.S. needs to act, if we’re going by share):
The U.S. also has some nuclear coming online, but it is less than two years removed from a year in which it five nuclear plants were marked for decommission due to rising costs, especially opportunity costs from missing out on the natural gas boom.
“Nuclear offers many benefits in terms of energy security and avoided emissions, but [its] challenges – from waste handling, to high capital costs, to public concerns, are likely to persist,” the authors write.
The authors are nevertheless encouraged by the potential for deploying small modular reactors and thorium fuel. Interest in these must ramp up significantly to meet CO2 goals.
The two other key components to tackling climate change that the authors mention are the most politically difficult: eliminating fossil fuel and agricultural subsidies, and making CO2 emissions more expensive. OECD countries on average currently receive government incentives worth about $70 billion on average to keep using carbon-intensive fuel sources. Meanwhile, a quarter of all CO2 emissions are tied to land cultivation of one form or another.
If countries are serious about climate change, they will have to put those policies in reverse, by taxing fossil fuel use and inefficient farming.
“Carbon prices – typically imposed as taxes or through a cap-and-trade system – tackle the greenhouse gas market failure head on,” the authors write. “They tax an ‘economic bad’ and raise revenue for governments. With smart recycling of revenues they also have the benefit of being relatively non-distortionary in the short run and providing an effective signal to reallocate resources over the medium to long term.”
The authors are under no illusion about the political barriers to this, and do the best they can to detail feasible measures that can be taken.
The report’s ultimate trump card, the one that could help break that gridlock, is the huge economic risk associated with business as usual. The negative health impacts from rising CO2 emissions in developing countries is on average 4% of their GDP, climbing to 10% in China.
And the UN has estimated that an increase in global temperatures of 2°C would knock up to 2% off global GDP by the middle of the century.
“Climate risks increase disproportionately as temperatures rise, becoming particularly high above 3°C of warming,” they write, “as irreversible ‘tipping points’ may be reached such as the collapse of ice sheets and resulting sea-level rise.”
Thus, the world should come to grips with the known costs of climate mitigation now, than try to grapple with the unknown but certainly spiraling costs later.