Minister Hendricks: "Climate action pays off"
Investments in climate action promote economic growth, while neglecting to do so will lead to a decline in growth rates. This is the main conclusion reached by a new study carried out by the Organisation for Economic Cooperation and Development (OECD) which was presented today at the Petersberg Climate Dialogue in Berlin. The study "Investing in Climate, Investing in Growth" was supported by the Federal Environment Ministry and prepared in the context of the German Presidency of the G20. It shows that adopting a climate policy that is supported structurally and fiscally will have a positive impact on the economic output of all G20 countries.
Federal Environment Minister Barbara Hendricks said: "The OECD study proves that climate action pays off. An ambitious climate policy which is supplemented with appropriate economic growth measures, will lead to an increase in economic output of nearly 5 percent on average across the G20 countries by 2050. Our message to the G20 is that climate policy, if implemented swiftly and well, will have economic benefits for everyone."
According to the OECD study, we can only avoid declines in economic growth by taking immediate action to reduce greenhouse gases. The next 10 to 15 years will be the crucial as this is when we will be laying the foundation for constructing or upgrading public and private infrastructures. Even without climate action, around 95 trillion US dollars will be needed between now and 2030 to do this - which equates to 6.3 trillion US dollars per year. Adjusting plans to be in line with the Paris Agreement would require an additional 0.6 trillion US dollars more per year in investments. However, according to OECD calculations these additional investments would be compensated for by the resulting fuel savings of approximately 1.7 trillion US dollars a year.
Minister Hendricks commented: "We now have a great opportunity to combine economic prosperity with climate action, as the OECD recommends. Expanding and renewing global infrastructure were already on the cards. It is now important to ensure this is done in conformity with the climate targets set out in the Paris Agreement. For instance, new coal-fired power plants would not be a good investment decision."
The OECD study also highlights the importance of long-term climate action plans. As the German Climate Action Plan 2050 already outlines, the interaction between different policy areas is crucial for driving ambitious climate action forward, promoting economic growth and making the transformation towards sustainable economic systems socially compatible.