CliSAP: Let’s stick with the economic aspects: where are these investments supposed to come from? And how much would they cost?
Held: The private sector plays an important part. From 2010 to 2011, 74 percent of the investments in the low-carbon sector came from private enterprises. To estimate the future costs, in the new report we considered roughly a thousand different scenarios – which, by the way, is another change from the last report in 2007. The results project between one and four percent lower economic growth by 2030 if suitable investments in climate protection are made. By 2050 the number climbs to between two and six, and by 2100 to between two and twelve.
“In comparison, the costs of climate protection are low.”
CliSAP: Sorry, you’ll have to explain that – does that mean incomes and wealth will shrink because of climate protection costs?
Held: No, that wouldn’t be accurate. You can’t subtract the value from the current gross national product; you have to keep in mind how the economy will develop – and that in the long term it always grows. It’s one of the few constants in economic history, despite two world wars, despite recessions, and despite more than one global financial crisis.
The costs of climate protection would most likely reduce annual growth by an average of 0.06 percent through the end of the century. However, that doesn’t reflect the climate-related damages we would avoid – if we factor them in, we might even see a net plus. At the same time we expect economic growth of 1.6 to three percent per year; in comparison, the costs of climate protection are low. Plus there are so-called co-benefits, which we would normally have to pay for but get free of charge thanks to climate protection. For instance, lower emissions also mean fewer cases of respiratory disease and lower costs in the healthcare sector. So we see that climate protection and continuing economic growth can actually go hand in hand.
CliSAP: How can we keep the costs down? The 0.06 percent you mentioned is a pretty optimistic scenario.
Held: It will be a question of management: how efficiently are the markets running? How well do national governments work together? Personally, I think we need to let go of the old national approach. We could harvest solar energy in Southern Europe if we all worked together to build enough solar parks there, and it would be good for Europe as a whole. But right now, each country invests on its own.
CliSAP: Thanks kindly for your time.
Markus Dressel conducted the interview.
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