Monday, 01 December 2014 07:58

The New Climate Economy Report Challenges Conventional Thinking on Growth and Climate Action

Written by 



A new report released yesterday finds that, thanks to new investments in infrastructure and rapid technological innovation, it is possible to tackle climate change while at the same time improving economic performance. Challenging conventional wisdom, the report refutes the notion that countries must choose between fighting climate change and growing their economies.

Surprisingly, this thought-provoking study does not come from the usual environmental or civil society sector actors. Instead, the study is a product of the Global Commission on the Economy and Climate, which brought together 24 leaders from government, business, finance and economics in 19 countries. For twelve months, leading institutes from Brazil, China, Ethiopia, India, South Korea, the United Kingdom and the United States contributed to analysis with advice provided by a world-class economist panel.

The new report arrives just a few days before New York welcomes governments, business and civil society for three separate climate events: the UN Climate SummitClimate Week New York City 2014 and the New York City People’s Climate March.

The report’s central message is that over the next 15 years, about US $90 trillion will be invested world-wide in agriculture, cities and energy system infrastructure. This window of time represents an unprecedented opportunity to shift global investment toward low-carbon growth, increasing job creation, public health, business productivity and quality of life for millions. Continuing down a “business-as-usual”, high-carbon economic route will bring severe risks to long-term prosperity due to the increasing impacts of climate change.

The full report provides some key observations across a variety of sectors. Below are three highlighted findings that are critical from an urban perspective:

  • Better Cities: Building better connected, more compact cities based on mass public transport can save over $3 trillion in investment over the next 15 years. These measures will reduce greenhouse gas emissions and improve economic performance and quality of life.
  • Renewable Energy: As solar and wind energy prices fall dramatically, more than 50% of new electricity generation over the next 15 years is likely to be from renewable energy sources, reducing dependence on dirty fuels like coal.
  • Phasing out subsidies: Fossil fuel subsidies currently amount to some $600 billion, compared to $100 billion for renewable energy. Removing climate-harmful subsidies will help to improve energy efficiency and make funds available for national priorities.

The report also highlights that the price of inconsistent policies will be uncertainty, lower investment and lower job creation.

In its conclusion, the report proposes a “Better Growth, Better Climate” framework, consisting of a 10-point action plan that if implemented could achieve up to 90% of the emissions reductions needed by 2030 to avoid dangerous climate change. From a focus on the economics of change, recommendations include:

  • Developing comprehensive plans for phasing out existing fossil fuel subsidies: Enhanced transparency and communication and targeted support for poor people and affected workers. Developed countries could accelerate efforts to remove fossil fuel subsidies for exploration and production. Developing countries could explore innovative approaches with development banks on how to finance the up-front costs on low-income households.
  • Implementing a predictable price escalator: For when political pressures for certain countries or sectors demand a lower price initially.
  • Applying a clear and credible carbon price signal across the economy.
  • Recycling revenues from carbon pricing for productive uses: Cutting distortionary regulations and poorly structured taxes. A share of carbon revenues should be prioritized to offset impacts on low-income households.

Some of these ideas are already gaining traction regionally. For example, Mexico approved a carbon tax, and Chile recently approved a set of ‘green’ taxes that will generate extra income that will fund education. These are innovative interventions that support a new climate economy – and improve the quality of growth.

The report’s organizing Commission will meet and discuss the study’s findings with economic decision-makers in several countries, and Nivela will track some of these developments across, e.g., Brazil, Chile, Colombia, Mexico and Peru.

Now is the right time to be having these debates. By adding visibility to the costs of inaction and the benefits of integrating economic and business models, together we can help strengthen global climate action.

The full report is available at:

Photo: Creative Commons André van Rooyen &  TckTckTck

This article was originally published by Nivela.


Read 3991 times Last modified on Tuesday, 10 February 2015 19:15
Monica Araya

Dr. Mónica Araya is Costa Rican expert on climate and low-carbon development who has worked on sustainability issues for over 20. She is Founder and Director of Costa Rica Limpia - a citizen platform to advance new thinking on environment, development and democracy. She was negotiator for her country in the climate negotiations. She collaborates frequently with leaders in government, business, academia, non-profits and think tanks in several countries. She is a member of the Steering Committee of the UNEP Emissions Gap Report and Co-Chair of the
Latin American LEDS Platform. She obtained a Masters in Economic Policy at Universidad Nacional in Costa Rica and Master and Doctorate in environmental management from Yale University.
For publications see and

La Dra. Mónica Araya es una experta costarricense en cambio climático y desarrollo bajo en carbono. Es Fundadora y Directora Ejecutiva de Costa Rica Limpia, una plataforma ciudadana para promover nuevos planteamientos en desarrollo, ambiente y democracia. Ha sido negociadora por su país, Costa Rica, en las negociaciones del clima. Colabora regularmente con líderes en el sector gubernamental, empresarial, academia, entidades sin fines de lucro y think tanks en varios países. Es miembro del Comité Directivo de la PNUMA Emissions Gap Report y Vice Presidenta del Comité Directivo de la Plataforma Latinoamericana LEDS. Obtuvo una Maestría en Política Económica de la Universidad Nacional de Costa Rica y una Maestría y Doctorado en gestión ambiental en la Universidad de Yale.
Para sus publicaciones ver y

More in this category: « Citizens for a Clean Society