Citi report: slowing global warming would save tens of trillions of dollars

http://www.theguardian.com/environment/climate-consensus-97-per-cent/2015/aug/31/citi-report-slowing-global-warming-would-save-tens-of-trillions-of-dollars?CMP=share_btn_fb

Dana Nuccitelli
Monday 31 August 2015

Citi Global Perspectives & Solutions (GPS), a division within Citibank (America’s third-largest bank), recently published a report looking at the economic costs and benefits of a low-carbon future. The report considered two scenarios: “Inaction,” which involves continuing on a business-as-usual path, and Action scenario which involves transitioning to a low-carbon energy mix.

One of the most interesting findings in the report is that the investment costs for the two scenarios are almost identical. In fact, because of savings due to reduced fuel costs and increased energy efficiency, the Action scenario is actually a bit cheaper than the Inaction scenario.

What is perhaps most surprising is that looking at the potential total spend on energy over the next quarter century, on an undiscounted basis the cost of following a low carbon route at $190.2 trillion is actually cheaper than our ‘Inaction’ scenario at $192 trillion. This, as we examine in this chapter, is due to the rapidly falling costs of renewables, which combined with lower fuel usage from energy efficiency investments actually result in significantly lower long term fuel bill. Yes, we have to invest more in the early years, but we potentially save later, not to mention the liabilities of climate change that we potentially avoid.

This conclusion soundly refutes the main argument against climate action – that it’s too expensive, with some contrarians even having gone so far as to claim that cutting carbon pollution will create an economic catastrophe. To the contrary, the Citi report finds that these investments will save money, before even accounting for the tremendous savings from avoiding climate damage costs.

What about those avoided climate costs? As shown in the bottom left corner of the above figure, the difference in climate damage costs between low (1.5°C) warming and high (4.5°C) warming scenarios could be as high as $50 trillion. Even moderate (2.5°C) warming could cost $30 trillion less than a business-as-usual high global warming scenario.

As a result, the Citi report concludes that taking action to cut carbon pollution and slow global warming would result in a positive return on investment.

By comparing the cost of mitigation to the avoided ‘liabilities’ of climate change, we can derive a simple ‘return on investment’. On a risk adjusted basis this implies a return of 1-4% at the low point in 2021, rising to between 3% and 10% by 2035.

This isn’t a groundbreaking finding. Other reports have arrived at the same conclusion, and have found that a revenue-neutral carbon tax would be modestly beneficial for the economy (again, before accounting for the economic benefits of curbing global warming). This is why there’s a consensus among economists that we should be reducing carbon pollution.

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The original Citi report:

https://ir.citi.com/hsq32Jl1m4aIzicMqH8sBkPnbsqfnwy4Jgb1J2kIPYWIw5eM8yD3FY9VbGpK%2Baax


Some studies suggest that globally a third of oil reserves, half of gas reserves and over 80% of current coal reserves would have to remain unused from 2010 to 2050 in order to have a chance of meeting the 2°C target.

The fossil fuel industry has extensive influence over many world governments. They hire Merchants of Doubt to spread disinformation and uncertainty about the science and economics of climate change, and spend billions of dollars in campaign contributions to American political candidates in order to delay the low-carbon transition that would benefit the global economy and most people.

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