HITTING the Paris Agreement goal of net zero carbon emissions will require investments in a green transition worth 2-3 percent of world output each year until 2050, far less than the economic cost of inaction, according to a poll of climate economists. Respondents also said such a transition depended on the rich world fulfilling promises to help developing economies, and on measures to set a global carbon price of at least US$100, well above the level reached in most current schemes. Economists polled in Europe, Asia and the Americas ahead of the Oct. 31-Nov. 12 UN talks in Glasgow, widely seen as the world’s last chance to limit global temperature rises to “well below” 2 degrees Celsius and ideally to 1.5C. The survey, the first of its kind, highlighted the daunting fiscal challenge ahead for governments which since January 2020 have spent a total of US$10.8 trillion, or 10.2 percent of global output, in response to the COVID-19 pandemic. Asked whether they thought the COP26 talks in Glasgow would help reach Paris Agreement goals, the pessimists outweighed optimists by nearly three to one, with 32 of 44 respondents saying they were pessimistic on that score. While the Sept. 16-Oct. 20 poll also revealed differences among top forecasters over how to measure the economic stakes of climate change and decarbonization, it showed a strong consensus of views around the benefit of early and coordinated action. “If we delay acting on climate change, the higher that cost to reach net zero emission by 2050 goes,” said Charles Kolstad, professor of economics at Stanford University. “Clearly developing countries cannot be expected to pay for mitigation while they are investing in development and helping their poorest citizens. Insisting on their paying will not accomplish anything.” The relatively narrow 2-3 percent of global GDP range per year favored by the bulk of respondents to reach net zero emissions is somewhat higher than estimates cited by other bodies. The International Monetary Fund this month cited estimates that net zero by 2050 would mean extra investments of 0.6-1 percent of annual global GDP over the next two decades amounting to a cumulative US$12 trillion-US$20 trillion. In the poll, there was substantial divergence in the scale of dollar estimates for the cumulative investment needed, reflecting the differing methodologies used by economists. The median view provided was US$44 trillion. James Nixon, head of climate change macroeconomics at Oxford Economics, put the cumulative amount of investments needed in the energy and other sectors at almost US$140 trillion by 2050, the highest estimate obtained in the survey. “While mitigation may be expensive and potentially politically painful, I think it’s incumbent on economists to show that not doing anything is even more expensive,” he said. A “business-as-usual” trajectory leading to temperature rises of 1.6C, 2.4C and 4.4C by 2030, 2050 and 2100 respectively would result in 2.4 percent lost output by 2030, 10 percent by 2050 and 18 percent by 2100, according to the median replies to the survey. In contrast, if countries can jointly limit the temperature rise to 1.4C by the end of the century, the loss to global output would be reduced to 2.0 percent by 2030, 2.3 percent by 2050 and 2.5 percent by 2100, they forecast. By comparison, the shutdowns of economic activity caused by COVID-19 shrunk the world economy by 4.3 percent last year, according to the World Bank. “The economic impact of COVID has been significant but temporary. The GDP impacts of climate, however, are permanent, long-term and grow larger with each year of inaction,” said Claire Ibrahim, a director at Deloitte Access Economics. (SD-Agencies) | 