The Surprisingly Low Price Tag on Preventing Climate Disaster
As the climate crisis continues to worsen,Too many are moving from despair to denial. It was not common for people to deny the existence of climate change or downplay its severity. Now many people say it’s too late. There is no way to stop the end of the world.
It is equally dangerous to despair as it is to deny. This is false. We can prevent the ecological catastrophe by using our vast resources. What would it cost for us to prevent the end of the world? What size check should we write if humankind was to avoid catastrophic climate change?
No one can be certain, however. We have spent many weeks looking through academic papers and reports, and we are now lost in the numbers. Although the math behind these numbers is complex, it should not be overwhelming to see the end result. The International Energy Agency says that in order to have a net-zero economy, the world would spend 2% less on its annual GDP than we do now to support our energy system. Recent polls of climate economists by Reuters found that net zero would only cost 2% to 3% annually. While some estimates place the decarbonization cost at a lower or higher level, they all fall within the single digits for annual global GDP.
These numbers echo the assessment of the Intergovernmental Panel on Climate Change, which in its landmark 2018 report stated that in order to limit climate change to 1.5°C, annual investments in clean energy needed to increase to around 3% of global GDP. We only need another 2% to the clean energy pie, since humanity already invests approximately 1% annually in global GDP.
These calculations are based on costs associated with transforming energy and transport sectors. They are the largest. There are also other emissions sources, such as land use, agriculture, and forestry. You may be familiar with the infamous cow farts. It’s possible to cut a lot off these greenhouse gases by making behavioral changes, such as cutting down on dairy and meat consumption. It doesn’t cost anything to eat more veggies, and it can help you (and the rain forests) live longer.
Learn more We Must Revolutionize Food Systems in order to Save Our Planet
There are endless ways to argue about numbers and how they should be adjusted. The bigger picture should be viewed beyond math. It is important to note that the cost of preventing an apocalypse has been kept in the single digits for global annual GDP. This is not half of global GDP and it isn’t even 15%. It is much lower than 5% and could even be as low as investing 2% more of global GDP in the correct places.
Note the use of investing. We aren’t talking about burning piles of banknotes in some huge sacrifice to the spirits of the earth. This is about making new investments in technology and infrastructure such as batteries that can store and distribute solar energy, and power grids with updated capabilities to transmit it. The investments in these technologies will generate many jobs and opportunities. In the long term, they are expected to prove economically lucrative due to the reduction in health care expenses and millions being protected from air pollution-related sickness. It is possible to protect vulnerable people from the effects of climate change, create more wealth, and make our ancestors better.
This great piece of news is being overlooked during the heated debate on climate change. This wonderful piece of news should be brought to the forefront, not just for people’s hope, but because it can also translate into concrete, political plans of action. We have learned in recent years to define our goal in terms of one number: 1.5°C. The means of achieving this goal can be delineated with another number, which is 2%. Increase investments in eco-friendly technology and infrastructure 2 percentage points beyond 2020 levels
Of course, unlike the 1.5°C figure, which is a scientifically robust threshold, the 2% figure represents only a rough guesstimate. The 2% figure is a rough estimate that can be used to determine the nature of any political project. This figure shows that it is possible to prevent catastrophic climate change, even though the cost would be high. Global GDP stands at $85 trillion, which means that 2% of the global economy is currently worth $1.7 trillion. It means that to save the environment, we don’t need to completely derail the economy or abandon the achievements of modern civilization. All we need is to be clear about our priorities.
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Signature of a CheckThis is only 2% of the global annual GDP. It won’t solve all our ecological problems, such as oceans brimming with plastic or the continued loss of biodiversity. And even to prevent catastrophic climate change, we’ll need to make sure that the funds are invested in the right places and that the new investments don’t cause their own negative ecological or social fallout. We might lose just as much if we degrade ecosystems in order to extract rare metals needed by the renewables sector. It will be necessary to alter our habits and thinking about everything, including how we travel and what we eat. This will not be an easy task. But that’s exactly why we have politicians—their job is to deal with the hard stuff.
Politians can shift 2% of their resources easily. This is their daily routine. The differences in the policies of left-wing and right-wing parties can often be as small as a percentage point of GDP. Politicians quickly shift more resources when faced with a crisis. In 1945 for example, 36% of the GDP was spent by the United States on the Second World War.
During the 2008–09 financial crisis, the U.S. government spent about 3.5% of GDP to save financial institutions deemed “too big to fail.” Maybe humankind should also treat the Amazon rain forest as “too big to fail”? A combination of South America’s current market price and its size, the cost to buy the entire Amazon rainforest in order protect biodiversity, human communities, and local economies from destructive business interests, is approximately $800billion. That would be less than 1%.
The first nine months in 2020 saw governments all over the globe announce stimulus measures that accounted for nearly 14% global GDP. These were to address the COVID-19 epidemic. Politicans can respond the same way to ecological crises if they are pressed enough by citizens. Investment banks and pension funds can also do the same. About $56 trillion USD is held by pension funds. What’s the point of having a pension if you don’t have a future?
Businesses are not allowed to operate at the moment.The additional investment of 2% is not required by governments or the government to combat climate change. Instead, where does the money go?
In 2020, governments expended $2 trillion USD on their militaries—that’s 2.4% of global GDP. Another 2.4% of the world’s GDP goes on food waste every two years. Governments also spend about $500 billion annually on—wait for it—direct subsidies for fossil fuels! Which means that every 3½ years, governments write a nice fat check for an amount equivalent to 2% of annual global GDP, and gift it to the fossil-fuel industry. This is just the beginning. When you factor in the social and environmental costs that the fossil-fuel industry causes but isn’t asked to pay for, then the value of these subsidies actually reaches a staggering 7% of annual global GDP each year.
Take a look at tax evasion. According to the E.U. The E.U. estimates that the amount of money hiding in tax havens by the rich is approximately 10% of global GDP. Each year corporations stash $1.4 trillion more in profits offshore, equivalent to 1.6% GDP. To prevent the apocalypse, we’ll probably need to impose some new taxes. Why not just start collecting the existing taxes
It is available. Collecting taxes, cutting military budgets and stopping food wastage is difficult, particularly when confronted by the biggest lobbyists around the globe. But it doesn’t require a miracle. You just need to be determined.
So we shouldn’t succumb to defeatism. Whenever someone says, “It’s too late! The apocalypse is upon us!,” reply, “Nah, we can stop it with just 2%.” And when COP27 convenes in November 2022 in Egypt, we should tell the assembled leaders that it is not enough to make vague future pledges about 1.5°C. We ask them to get their pencils out and sign an agreement for 2% annual global GDP.
Harari is also the authorSapiens and Homo Deus: A Graphic History. Data sources for this article can be found on bit.ly/2-percent-more