Study: Achieving Climate Goals Will Cost $45 Trillion by 2050

by John Sexton

Jul 11, 2014 2:56 PM PT

An estimate of the cost of achieving climate change mitigation goals places the global total at approximately $45 trillion.

Science Daily published a story last week based on a study which was apparently made public last month. The study found that in order to maintain a temperature increase of no more than 2 degrees Celsius by 2100, the world would need to invest between $30 and $75 trillion in new energy technology between now and 2050.

Some of that money is already being spent, the study notes, so the total additional investment works out to about $800 billion per year. That comes to around $30 trillion by mid-century. Here is the abstract for the study on which the Science Daily story was based:

The levels of investment needed to mobilize an energy system transformation and mitigate climate change are not known with certainty. This paper aims to inform the ongoing dialogue and in so doing to guide public policy and strategic corporate decision making. Within the framework of the LIMITS integrated assessment model comparison exercise, we analyze a multi-IAM ensemble of long-term energy and greenhouse gas emissions scenarios. Our study provides insight into several critical but uncertain areas related to the future investment environment, for example in terms of where capital expenditures may need to flow regionally, into which sectors they might be concentrated, and what policies could be helpful in spurring these financial resources. We find that stringent climate policies consistent with a 2°C climate change target would require a considerable upscaling of investments into low-carbon energy and energy efficiency, reaching approximately $45 trillion (range: $30–$75 trillion) cumulative between 2010 and 2050, or about $1.1 trillion annually. This represents an increase of some $30 trillion ($10–$55 trillion), or $0.8 trillion per year, beyond what investments might otherwise be in a reference scenario that assumes the continuation of present and planned emissions-reducing policies throughout the world. In other words, a substantial "clean-energy investment gap" of some $800 billion/yr exists — notably on the same order of magnitude as present-day subsidies for fossil energy and electricity worldwide ($523 billion). Unless the gap is filled rather quickly, the 2°C target could potentially become out of reach.

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