By 2050, investments in climate change mitigation measures must increase 9-fold, and in adaptation - 13-fold, to keep global temperature rise within 2°C, Report informs referring to the update "Too Hot to Think Straight, Too Cold to Panic."
The study was prepared by Boston Consulting Group (BCG), Cambridge Judge Business School, and the climaTraces Laboratory of the University of Cambridge. The scale of research on climate change impacts is growing rapidly, noted Kamiar Mohaddes, Associate Professor at Cambridge Judge Business School and Director of the climaTraces Laboratory.
He said that climate change will reduce incomes in all countries and sectors - from agriculture to industry and trade.
The most cost-effective way to reduce damage is through mitigation measures. The return on investment can exceed their volume by 5-14 times. Adaptation also plays an important role, especially in the coming decades, according to the update. The importance of early investments is emphasized: 60% of funding should be allocated before 2050, although 95% of the economic damage from inaction will manifest later.
There are strong economic arguments for combating climate change, but few realize their significance, said Annika Zawadzki, Managing Director and Partner at BCG. Investments in climate measures by 2100 can bring a tenfold return. According to the study's authors, with warming of 3°C by 2100, global production will decrease by 15-34%. However, investments of 1-2% of global GDP will help keep temperature rise within 2°C, reducing losses to 2-4%.
The cost of inaction will amount to 11-27% of GDP - three times more than global healthcare spending and eight times more than the funds needed to overcome poverty, the update notes. It is also predicted that by 2030, the energy transition will create 14 million new jobs in energy supply, as well as 16 million jobs in construction and new sectors, such as hydrogen production. However, 5 million jobs in obsolete industries, including fossil fuel extraction, will be cut.
A just energy transition is needed, providing workers with opportunities for retraining and employment, as well as measures to diversify the economy, the update states.