Citibank Says Investing in Climate Solutions Could Save $30 Trillion or More
The argument that climate solutions are good for the economy just got a major boost. Citi Global Perspectives & Solutions, a division of Citibank, put out a new report last week comparing the cost of action on climate with the cost of inaction. As this Guardian article explains, the energy expenditures of the “action” scenario are slightly less than inaction due to greater fuel efficiency and the decreasing price of wind and solar power. In addition, climate action can potentially produce long-term savings of $30 trillion or more by helping avoid damages from events like hurricanes, floods, and drought.
This quote from the report says it best: “The incremental costs of following a low carbon path are in context limited and seem affordable, the ‘return’ on that investment is acceptable and moreover the likely avoided liabilities are enormous. Given that all things being equal cleaner air has to be preferable to pollution, a very strong ‘Why would you not?’ argument begins to develop.”
Climate action is indeed a win-win for the economy and American citizens alike. The report goes on to say that the upcoming Paris climate conference offers a huge opportunity for a global commitment on reducing carbon emissions – and it should be seized “with both hands.”
By Dana Nuccitelli, contributor to the Guardian
A report from America’s 3rd-largest bank asks why we’re not transitioning to a low-carbon economy
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.
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