New report highlights the steep costs of climate inaction

Unchecked climate change would be a major impediment to economic growth during the next 50 years, costing an estimated $178 trillion in net present value terms during the 2021-2070 period, a new study concludes.

The big picture: The study from the Deloitte Center for Sustainable Progress models the impacts of a 3°C increase in global average temperatures compared to preindustrial levels, which is consistent with the world’s current pathway.

•It shows the associated effects on future productivity, economic output and growth across industries and regions.
Zoom in: In contrast to unchecked warming, the report states that if countries act quickly to reach net-zero emissions by 2050 and hold global warming to below 2°C, the global economy would see an expansion of $43 trillion in net present value during the 2021-2070 period.

Yes, but: There will be a period of time, potentially lasting a few decades, when the upfront costs of the clean energy transition would outweigh the benefits, the report notes. (A similar tone was struck in a McKinsey report last year.)

Context: The stakes may be highest in the Asia-Pacific region, the report finds, because a 3°C scenario would hit GDP the hardest there. This is partly due to the region’s vulnerability to extreme weather events.

•A climate change-related spike in the severity and frequency of extreme heat events, large wildfires and heavy precipitation events are already occurring around the world. These disasters are having far-reaching effects, such as the heat wave in India and Pakistan that began in March and led India’s government to halt wheat exports due to a drop in its output.
•These trends are taking place when the planet has only warmed by about 1.1°C (1.98°F) since the start of the industrial revolution.
•With the globe currently on course for at least 3°C of warming by 2100, barring rapid and steep greenhouse gas emissions cuts, far more significant impacts are virtually guaranteed.
What they’re saying: “Insufficient action to mitigate climate change is a policy choice that can be made,” said the report authors Pradeep Philip and Claire Ibrahim, via email. “But it is a choice that comes with a high cost.”

•”Ultimately, every business knows that investment takes time to generate returns but without investment, you can’t grow,” Philip and Ibrahim told Axios. “Business leaders make these decisions all the time — they find new funds, they reallocate existing funds, and they invest in both repair and maintenance but also in the new capital to drive their businesses,” they said.
•”This is the same for how we should think about the path to net-zero for our economy.”

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