Low-carbon future to cost $300 bn per year

Around 90 per cent of the region’s economies have made pledges to mitigate their greenhouse-gas emissions under the Paris agreement. The consequence of inaction could be devastating.
If left uncontrolled, the report estimates that climate change could cut the region’s gross domestic product by more than 10 per cent by 2100, eating away its hard-won socio-economic gains.
The findings are set forth in a special theme chapter, “Meeting the Low-Carbon Growth Challenge”, in an update to the ADB’s flagship annual economic publication, “Asian Development Outlook 2016”.
“This is a substantial sum but the economic returns from adopting low-carbon policies needed to mitigate the increasingly devastating impacts of climate change far outweigh the costs,” said Juzhong Zhuang, ADB deputy chief economist. “ADB estimates that the region can generate more than $2 in gains for each $1 of cost it bears to reach the Paris goal – if the right steps are taken.”
Climate mitigation not only helps avoid such GDP losses, it brings many other benefits. The report notes that actions to keep global warming below 2 degrees Celsius past pre-industrial levels can lead to improved air quality that helps to avoid nearly 600,000 premature deaths a year in the region than under business-as-usual.
It can also preserve environmental resilience. Mitigation measures can expand forests and their environmental services, including soil-erosion control, biodiversity preservation, and pollination for agriculture.
Simulations show that limiting warming to 2 degrees would mean 45 million more hectares of forest in developing Asia than would business as usual, and this forest cover would help to avert those impacts still posed under mitigated climate change.
The returns on sound climate policy far outweigh their costs, the report said. Mitigation in the 2-degree scenario can eliminate an estimated 2-per-cent GDP loss from climate change by 2050 and an 8-per-cent loss by 2100.
Taking into account significant co-benefits such as better health from improved air quality, each $1 spent towards the 2-degree scenario can generate more than $2 in gains. Delaying ambitious mitigation by even 10 years slashes the gross benefit-cost ratio by more than 30 per cent.
The report estimates that half |of the region’s emissions reduc-|tion through 2050 can come from low-carbon energy production |and another third from energy-efficiency measures, with the rest achieved by curtailing emissions from forest deforestation, land degradation, and other non-energy sources.
Sharply scaling up new investments in renewable power, smart grids, energy-efficiency measures, and carbon capture and storage technologies are all essential to developing Asia’s low-carbon transition. Resources freed up by eliminating costly fossil-fuel subsidies can be redirected to clean-energy investments.
Because developing Asia’s mitigation costs are lower than in other parts of the world, the region can benefit from the development of a market to buy and sell carbon credits. According to the report, such a carbon market can reduce the region’s mitigation costs by 50 per cent compared with countries acting alone.
Further, bringing ambitious actions to cut emissions forward by 10 years is found to increase benefit-cost ratios by more than 30 per cent and lower long-run costs by more than a quarter.