Economic Cost of Climate Change Expected to Quadruple by 2050
TLDR
- Economic impact of climate change could quadruple global GDP losses by 2050
- Net zero emissions require substantial economic transformation across all sectors
- Urgency in raising carbon price to $300 per ton by 2035 for necessary emissions reductions
The economic impact of climate change could be significantly worse than previously estimated, with potential losses in global GDP quadrupling by 2050 in some scenarios, according to a report by the Network for Greening the Financial System (NGFS).
The group, comprising over 140 central banks and supervisory authorities, warns that climate-induced risks to GDP may lead to roughly 30% losses if global temperatures rise by 3C above pre-industrial levels. The latest models suggest that substantial economic transformation is necessary across all sectors to reach net zero emissions by mid-century.
The NGFS report also underscores the urgency of raising the carbon price to around $300 per ton by 2035 to drive the necessary emissions reductions, an increase from its previous recommendation. Current carbon prices, particularly in Europe’s market, fall well below this threshold at around $72 per ton.
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Key Takeaways
NGFS’s findings highlight the escalating economic risks posed by climate inaction. With current policies setting the world on a path to 3.1C of warming, achieving the 1.5C target would require a much stronger, coordinated policy response. The report calls for a steeper carbon price increase and accelerated investments in green infrastructure to offset the growing GDP losses associated with unchecked climate change. While timely action could mitigate the worst economic impacts, global climate policies would require an investment boost of $900 billion to $2.1 trillion annually to limit warming to 1.5C.
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