Transitioning to a low carbon energy system could not only prevent the most devastating impacts of climate change, but could free up trillions of dollars over the next 20 years, according to new research.
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Two reports released by the Climate Policy Initiative (CPI) have revealed that a greener global economy would save $1.8 trillion (£1.1tn) between 2015 and 2035 – money that could then be invested elsewhere.
This is because the operational costs involved in the extraction and transportation of fossil fuels exceed the costs of financing renewable energy, while existing fossil fuel reserves will be devalued when legislation is introduced to cut carbon emissions.
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Some of the very governments that would introduce this legislation would be hit hardest by this ‘stranded asset’ effect, as they own 50-70% of global oil, gas and coal resources and collect taxes on the rest. But, the CPI noted, governments also have the power to maximise the savings of the low carbon transition.
Cutting coal consumption has the greatest potential for boosting the environment while losing the least amount of value, the report calculated. Transitioning away from coal could achieve 80% of the required emissions reductions, while, providing investment in coal plants is scaled down, incurring little economic loss.
Meanwhile, regions that import more oil than they extract themselves – such as Europe, the US and China – stand to benefit the most, the CPI said. The EU could save as much as $1 trillion (£620bn).
Significantly, these CPI’s calculations do not take into account the environmental and health benefits of a greener, less polluted world. Previous studies have estimated such savings to be in the billions.
“For policymakers around the world wondering whether the transition to a low-carbon economy will help or hurt their countries’ ability to invest for growth, our analysis clearly demonstrates that, for many, the low-carbon transition is a no-brainer,” said Tom Heller, executive director of the CPI.
“It not only reduces climate risks, its benefits are clear and significant.”
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