Boosting GDP: Climate Action's Economic Potential

Accelerated climate action could increase global GDP by 0.2% by 2040, according to a study by OECD and UNDP. Effective climate policies enhance productivity and innovation, offsetting economic impacts of policy changes. Clear climate policies offer market confidence, while delayed action may cut GDP by 0.75% by 2030.

A study released on Tuesday reveals that accelerated climate action could potentially increase global GDP by 0.2% by 2040, compared to current policy trajectories. This optimistic outlook emerges as delegates from 40 nations convene in Berlin to strategize for the upcoming COP30 summit in Brazil.

The analysis, conducted by the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP), highlights the multifaceted benefits of well-structured climate policies. These measures not only reduce emissions but also drive efficiency, productivity, and innovation, potentially boosting economic output to the equivalent of Sweden's economy. The research indicates that investment in clean energy and efficiency further propels productivity, counterbalancing the economic effects of policy-induced price and consumption shifts. Reinvesting carbon revenues could further enhance GDP and garner public support for climate initiatives.

As nations prepare to update their Nationally Determined Contributions (NDCs) by September, the report underscores the importance of clear policy frameworks in providing the market certainty needed to mobilize resources towards sustainable growth. The study warns that unclear climate policies may hinder private investment and reduce GDP by as much as 0.75% as early as 2030. This comes as global ministers meet in Berlin for the Petersberg Climate Dialogue, focusing on preparations for the UN climate conference set for November in Brazil.

(With inputs from agencies.)