What are the absolute key numbers defining the new climate economy that business must know and prepare for in the coming years?
By Anna Fenger Schefte & Anders Nolting Magelund
The Sustainian found the numbers that will have a profound impact on the economy in the years to come. It would be no exaggeration to claim that these numbers are the most important ones for business, the markets and the planet, and they must be taken to heart by policy makers. These numbers clearly describe a new market reality where the modus operandi, market possibilities, priorities, and investments of all businesses are disrupted. A new market reality where the only industry that can be confident in expecting to grow will be the “catastrophe industry” – the companies that are making money cleaning up from catastrophes such as hurricanes, floods and droughts.
Business leaders all over the globe must ask themselves what the consequences of these numbers will be for their business – both in a short-term and long-term perspective
To stay abreast, business leaders all over the globe must ask themselves what the consequences of these numbers will be for their business – both in a short-term and long-term perspective – and what role they could and should play in the transition to the new climate economy. And this is urgent matter, because the effects of the climate economy are already tangible.
Here are the world’s most important numbers:
2020 is the deadline
Six milestones are absolute key, if we are to drastically lower CO2 emissions by 2020 – and thus to ensure that we do not face the apocalyptic climate change tipping point. The six milestones to be achieved by 2020, according to the global non profit organization Mission 2020 headed by Christiana Figueres, are:
- Energy: At least 30% of the world’s electric supply should come from renewable sources, coal-fired power should be shut down and no new plants approved.
- Infrastructure: Cities and states must implement policies and regulations to support a full decarbonization of buildings and infrastructures by 2050.
- Transportation: Zero-emissions transport must be the preferred form of all new mobility – especially in the world’s major cities and transport routes.
- Land: Large-scale deforestation is replaced with large-scale land restoration, and CO2-sequestering agricultural practices are used.
- Industry: Clear goals for the halving of emissions from heavy industry – including iron and steel, chemicals and oil and gas “well before 2050.”
- Finance: Governments, banks, and international bodies like the World Bank mobilize at least US$ 1 trillion a year for climate action.
Sustainable growth is possible
Economic growth and climate change action actually can go hand in hand. But in order to do so, we need to combine the right economic reforms and incentives with ambitious climate policies. This is the conclusion from The OECD report “Investing in climate. Investing in Growth”.
A climate change compatible policy package can boost long-term GDP by 2.8% on average across the G20
The report foresees that a climate change compatible policy package can boost long-term GDP by 2.8% on average across the G20. If the positive impacts of avoiding the negative consequences of climate change are also taken into account, the net effect on the GPD for 2050 is estimated to be almost 5% higher than it would be if governments take no further action.
More investments are needed
To mitigate catastrophic climate change, The International Renewable Energy Agency (IRENA) estimates that more than US$ 1.7 trillion will be needed between 2015 and 2030, or on average almost US$ 110 billion per year.
Looking at energy efficiency which is key in climate change mitigation, the global energy intensity reduction has experienced an annual industrial reduction of -2.2% since 2014. However, this rate is still short of the -2.6% annual target needed to meet the target for energy efficiency of Sustainable Development Goal number 7 (Energy). Every year we fall behind raises the effective target for the remaining years to 2030, and this now stands at -2.7%, a 0.1% increase from the original target.
In turn, although global investment in energy efficiency has increased by 9% to US$ 231 bn in 2016, global investment in energy efficiency needs to reach US$ 1 trillion per year by 2030.
We are not on track
The number of developed countries with sufficient climate change mitigation policies: 0
This is the clear-cut result from this years SDG Index and Dashboard report. It concludes that with the “current climate policies pursued by G20 countries are insufficient and, in some cases, critically insufficient” to achieve the well below 2°C degrees target agreed upon in Paris back in 2015.
Not one of the 28 EU countries is ambitious enough
The same conclusion applies for the EU, where all 28 EU countries are far from meeting the Paris Agreement. A 2018 report aptly titled ‘Off Target’ compiled by NGO coalition Climate Action Network ranks the EU countries’ ambition and progress in fighting climate change and not one of the 28 EU countries is ambitious enough, or making the progress needed to reach the Paris climate goals.