A Convenient Truth

6 November 2009

Never waste a good crisis, runs the adage. On Wednesday, the (IIASA) presented a new report outlining Annex I mitigation costs and potentials based on the effects of the economic crisis. The report uses post-crisis GDP projections based on the IEA’s 2009 world energy outlook.

Here are the headlines
•    In 2020 Annex I emissions are 6% below 1990 levels in the reference scenario.
•    The cost of implementing the most ambitious Annex 1 pledges would be  -0.03% to 0.01% of GDP.
•    The carbon price settles at EURO 3 per tonne.
•    An extra 10% reduction could be achieved at the same equilibrium carbon price (-27% instead of -17% from 1990).
•    Some country targets are well above their emissions in the reference scenario, which could create a new surplus of emissions rights.

In other words, it is now much easier to achieve the emission targets we need. The world is demand investments in the infrastructure of the 21st century – renewable energy, smart grids and mass transport. The economic transformation we need could become a job-generator for economies blacking out with systemic unemployment. And we can save our climate, which is set on a course to disaster.  So the economic crisis also turns out to be an opportunity, but this means making a choice.

For the benefit of parties, as an example here is a table of new economic models on the costs of the EU’s 30% reduction pledge, in the light of the crisis.

And what is true for the EU is true for Annex I as a whole: emissions caps developed for a pre-crisis world can easily been tightened again in a post-crisis world, to benefit both the climate and the economy.