The US is missing out on enormous economic opportunities by leaving the Paris Climate Agreement, as Europe and other countries step up to fill the gap. As the world grapples with rising temperatures and extreme weather events, a new study finds that accelerated climate action could boost global GDP by 0.2% by 2040 and 3% by mid-century.
The Economic Benefits of Climate Action: A Missed Opportunity for the US
Climate change has become one of the most pressing issues of our time, with far-reaching consequences for the environment, economies, and societies worldwide. As the world grapples with rising temperatures, extreme weather events, and geopolitical tensions, it is essential to acknowledge the economic benefits of climate action.
The Global Market for Climate-Friendly Technologies
The global market for climate-friendly key technologies continues to grow rapidly, presenting enormous opportunities for businesses and economies. According to the International Renewable Energy Agency, renewable energy accounted for more than 90% of total power expansion last year, with globally, there was almost twice as much investment in renewable energies as in fossil fuels.
The Economic Case for Climate Action
A new study by the Organization for Economic Cooperation and Development (OECD) and United Nations Development Program found that accelerated climate action could boost global GDP by 0.2% by 2040 and 3% by mid-century compared with the status quo. Targeted climate policies and investment in clean energy and efficiency could cut emissions while stimulating productivity and innovation.
Climate action refers to efforts aimed at reducing greenhouse gas emissions and mitigating the impacts of climate change.
Governments, organizations, and individuals worldwide are taking part in this global movement.
Key strategies include transitioning to renewable energy sources, increasing energy efficiency, and promoting sustainable land use practices.
According to the United Nations, 7.6 billion tons of CO2 equivalent were emitted globally in 2020.
The Paris Agreement sets a goal for limiting warming to well below 2°C above pre-industrial levels.
The US Misses a Chance
The US decision to leave the Paris Climate Agreement has plunged climate multilateralism into a ‘deep crisis.’ Germany‘s outgoing Chancellor Olaf Scholz stated that pulling back from climate protection meant the US would miss out on ‘enormous‘ economic opportunities. This is particularly concerning, as the world’s biggest economy is not being at the table of the climate negotiations.
Europe Seeks to Fill the Gap
Europe will work with companies and countries in Latin America, Africa, and other regions around the world to continue its diplomacy. Germany‘s outgoing foreign minister Annalena Baerbock emphasized that the international community will continue its efforts, even if others decide to stay out of it.
Ambitious Climate Plans are Good for Business
UN Secretary-General Antonio Guterres pointed to ‘enormous‘ investments in renewables and the economic damage caused by climate change-related extreme weather. Renewable energy is renewing economies, powering growth, creating jobs, lowering energy bills, and cleaning our air. The news that 2024 was a record year for renewables growth further underscores the benefits of climate action.
Renewable energy sources, such as solar and wind power, are becoming increasingly important for reducing our reliance on fossil fuels.
Solar energy alone is projected to account for 27% of global electricity generation by 2050.
Wind turbines can generate up to 6 megawatts of power, enough to supply a small town.
Investing in renewable energy can reduce greenhouse gas emissions and create jobs in the clean tech industry.
A Call to Action
As countries submit their plans outlining new climate objectives up to 2035 ahead of COP30, it is essential to acknowledge the importance of driving ‘finance to developing countries‘ and submitting ambitious new nationally determined contributions. The world waiting for CO2 reduction targets, particularly from China and the EU, will be crucial in determining whether this acceleration can really happen.
The relationship between China and the European Union is multifaceted and has evolved significantly over the years.
The EU is China's largest trading partner outside of Asia, while China is the EU's second-largest trading partner after the United States.
Bilateral trade reached a record high in 2020, totaling over $700 billion.
However, tensions have risen due to differences on issues like human rights, intellectual property protection, and climate change.
The two sides continue to engage in dialogue, with cooperation in areas such as clean energy, transportation, and education.
Conclusion
The economic benefits of climate action are clear. However, the US decision to leave the Paris Climate Agreement has presented a significant challenge to global efforts. Europe and other countries must work together to fill the gap left by the US and continue its diplomacy. The solutions and opportunities are emerging more clearly than ever, but it is essential that countries seize these developments to remain competitive while building resilience and ensuring energy security.
