Global action to cut emissions is compatible with robust economic growth

A new report co-authored by the European Commission's Joint Research Centre and Directorate-General for Climate Action explores possible domestic mitigation pathways (cuts in C0₂ and other greenhouse gas emissions) set according to specific national economic and policy conditions. On the basis of the best available scientific knowledge, these emission reductions could allow the international community to alleviate the most adverse impacts of climate change.

The "Global energy and climate outlook: road to Paris" study aims to provide analytical results of the climate and economic consequences of a potential international agreement in the upcoming United Nations Climate Change Conference (COP21) to be held in Paris in December 2015.

The authors conclude that global efforts to put economies on track to low-emission development and the integration of climate action into economic policy can simultaneously deliver climate goals, improved energy security and efficiency, and robust economic growth.

These results, which are consistent with other recent analyses, are based on a modelling exercise of two separate scenarios. The first is the 'business as usual' scenario, which evaluates existing climate policies and current trends of fossil fuel consumption. The second is a 'global mitigation' scenario where globally coordinated national action limits global temperature rise to below 2ºC, the goal agreed by 196 nations forming the United Nations Framework Convention for Climate Change (UNFCCC).

Under the global mitigation scenario, a combination of domestic efforts to move to low-emission development pathways adapted to the national contexts could halve global emissions by 2050, compared to 1990 levels. According to the Intergovernmental Panel on Climate Change (IPCC)'s last report, this translates into a 60% to 80% probability to restrain global temperature increase to below 2ºC. To achieve these low emission levels by 2050, a significant change in emission trends across all sectors must happen in the period 2020-2030. Global emissions would peak in 2020 and decline afterwards to 10% below 2010 levels by 2030.

Such global transition to a low-emission economy implies increasing the low-carbon energy supply (renewables, nuclear deployment, fuel switching), improving energy efficiency across all regions in the world, and adopting low-emission technologies in all sectors of the economy, especially in the power sector followed by the industry sector. Nevertheless, energy exports would maintain their relevance for fossil fuel-producing countries.

Reaching the necessary energy mix − including renewable sources representing 40% of primary energy in 2050 − would require substantial investments in power production. However, these investments reduce other costs in the energy sector that would exist if mitigation was not undertaken, especially in fossil fuel production. And they will cut expenditure on energy imports and subsidies and generate activity in other sectors.

The global yearly growth rate of Gross Domestic Product (GDP) for the decade 2020-2030 under the global mitigation scenario would fall slightly from 3% to 2.87% compared to the business as usual scenario. Emerging and lowest-income economies will maintain high rates of economic growth. The modelling work also provides evidence that the use of smart fiscal policies tailored to each region, i.e. increasing emission auctions and taxes, reducing indirect taxes to consumption and investment, and/or lowering labour taxes, can further increase GDP growth and decrease the gap versus the business as usual scenario to less than 0,1%.

Graphic: relation of GHG emissions per unit of GDP and per capita in major economies in 2010, 2030 and 2050

Relation of GHG emissions per unit of GDP and per capita in major economies in 2010 (historical emissions data from the UNFCCC and the European Commission Joint Research Centre, Emissions Database for Global Atmospheric Research - EDGAR), and in 2030 and 2050 according to the Global Mitigation scenario. Source: JRC POLES model.
© EU, 2015

Background

The "Global energy and climate outlook: road to Paris" study covers and deepens the modelling results summarised in the European Commission's Staff working document released last February accompanying the Communication from the Commission to the European Parliament and the Council "The Paris Protocol – a blueprint for tackling global climate change beyond 2020".

The report explores the possible evolution of the energy system and GHG emissions of a given country under a specific set of constraints and within a particular modelling framework. As such, it should not be regarded as policy prescriptive but rather as informative. The research combines the use of the world energy system POLES model, covering the entire energy balance of various energy types and the subsequent evolution of GHG emissions with the general equilibrium model GEM-E3. This model studies the interactions between the economy, the energy system and the environment, and captures the macro-economic impacts of a global mitigation effort.

The study first describes a business as usual scenario: assumptions on population and GDP growth considering the existing current climate and energy policies and the resulting energy prices, demand and GHG emissions. It then presents a global mitigation scenario securing chances to limit global warming to below 2°C with a high probability. This scenario implies very rapid action in line with the recommendations of the IPCC fifth assessment (AR5) report.

Finally, the report provides country factsheets describing in detail the specific emission reduction pathways in the Global Mitigation scenario for a number of countries and regions, namely: Brazil, Canada, China, European Union, India, Indonesia, Japan, Republic of Korea, Mexico, Russian Federation, South Africa and the USA. It also provides simplified country factsheets for Algeria and Libya, the Commonwealth of Independent States (CIS - excluding Russian Federation), Egypt, the European Free Trade Association, Morocco and Tunisia, Oceania, the Persian Gulf region, South America (excl. Brazil), South Asia & South East Asia (excl. China, India, Indonesia), Sub-Saharan Africa and Turkey.

Photo: Low-emission developments and climate action in economic policy could deliver climate goals and allow for economic growth.© Fotolia, bofotolux