Actions to fight global warming now and introduce environmentally clean and efficient energy technologies will cost the world less than doing nothing, an international conference heard on Monday.
"The cost of action is much less than the cost of inaction," the World Bank's Chief Scientist Robert Watson told the conference "Make markets work for climate" in Amsterdam. "It is not a question of do we adapt or do we mitigate. We clearly need to do both," he said.
Economists are divided on the issue of costs and global warming. Watson belongs to the camp, which believes that spending needed to reduce heat-trapping emissions will cost less and offset bigger damage in the future.
"Climate change is not an issue for the future. The climate is changing now and affects poor people in developing countries," Watson said. "In this decade, at least 300 million people a year will be adversely affected by changes in the weather."
He said an increase in temperatures by 2-3 degrees celsius could lead to a loss of global economic growth by up to 3 percent and the costs of inaction could run between tens to hundreds of billions of dollars a year. By contrast, additional investment needed to carry out a transition to a low-carbon economy was likely to cost the world just one percent of global GDP, he said.
The chief executive of the biggest Dutch bank ABN Amro Rijkman Groenink said he believed mitigation action could be achieved without affecting economic growth and investment in clean and renewable energy technology was necessary. Participants at the conference agreed that increasing energy efficiency was one of the key actions needed to be taken.
"The savings in energy consumption can more than offset the additional cost of investment (in energy production)," said Claude Mandil, executive director of the International Energy Agency (IEA), the West's energy watchdog. The world will needs to invest about $20 trillion in new energy supply infrastructure by 2030 to meet increasing consumption, Mandil said, citing new IEA estimates.
He said that even if these investments were made, some 1.4 billion people would still have no access to electricity if necessary government policies were not implemented.
Developing a global emissions market is another key action but the private sector needs stable, long-term regulatory framework so that it knows how to invest, the conference heard. "We as a private sector cannot do that alone. We need long-term policy guarantees and incentives to achieve carbon reduction," ABN Amro's Rijkman Groenink said.
Dutch Prime Minister Jan Peter Balkenende said politicians should put climate change high on their agenda and not give a message that growth was bad for climate but that it should be achieved in a new efficient, sustainable way.
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