Global Commission on Economy and Climate: Evidence from the 70 national and subnational economies that have put a price on carbon or are about to shows it does not slow economic growth.
The conventional wisdom that carbon pricing slows down economic growth has been triggered in the recent research from the Global Commission on the Economy and Climate, that finds that bold climate action could deliver at least $26 trillion in economic benefits through 2030. However, evidence from the 70 national and subnational economies that have put a price on carbon or are about to shows it does not slow economic growth, but provides a clear and steady signal for business, industry and consumers to shift course.
According to the authors of the Report, the shift to a different model of growth is happening in most of the economies. The progress is visible. Investment in sustainable infrastructure is now recognised as a central driver of growth and the delivery of the SDGs and the Paris Agreement. The G20 adopted “strong, sustainable, balanced, and inclusive growth” as its goal. Major development finance institutions (DFIs) are shifting their capital towards sustainable investments.
Progress on low-carbon and energy-efficient technologies, especially in the energy sector but also in mobility, buildings, and agriculture, has been much faster than predicted. Auctions for long-term power contracts are generating unsubsidised bids from renewable energy producers at prices under US$3 cents per kilowatt hour, out-competing fossil fuel alternatives in more and more locations.
At the same time the progress is not on track to respect the urgency of the climate change matter. But, overall, we are still not making progress fast enough toward a new climate economy. The policy hand-brake is still on. Policy-makers are not taking sufficiently bold action to escape the legacy economic systems, mainly in the terms of the most needed fossil fuel subsidies reforms
The authors of the Report call upon economic decision-makers in the public and private sectors to take the following actions: (1) governments should put a price on carbon and move toward mandatory climate risk disclosure for major investors and companie; (2) Accelerate investment in sustainable infrastructure, supported by clear national and sub-national strategies and programmes; (3) Harness the power of the private sector, including to unleash innovation and advance supply chain transparency; (4) Ensuring a people-centred approach, such that the gains are shared equitably and the transition is just.