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Benefits of Addressing Global Warming Outweigh the Costs: Says International Energy Agency

Jake Schmidt

Posted October 6, 2009

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I just participated in a briefing that the International Energy Agency (IEA) provided to climate negotiators in Bangkok.  It was an excerpt from their soon to be released World Energy Outlook which is the IEA's regular projection of global energy use and global warming pollution.

This analysis (available here and the presentation available here) is the first to account for the global impact of the financial crisis and the first time that they presented results for a low global warming pollution scenario with results on a country-by-country basis.

The most important finding was that the benefits of taking serious steps to solve global warming far outweigh the costs of taking action.  And the IEA representatives in fact said this explicitly in response to a question.  So when you conservatively look at both sides of the balance sheet (the costs and benefits) you find that taking action gives you a positive balance sheet (no debt here).  Here is how they come up with this conclusion:

  • Total additional investment of $10,500 billion will be needed from 2010-2030 to be on path to solving global warming pollution;
  • Savings in energy costs of undertaking this investment will be $8,600 billion over this period; and
  • Reduced costs of local air pollution will be $40 billion in 2020 and $100 billion in 2030.

This doesn't include a whole bunch of costs that would make the balance sheet more complete, but even with this limited list of benefits calculated the world is better off for taking action.  And if you include the costs of global warming then the balance sheet will tip even more in the favor of taking action.

None of this is an earth shattering finding if you've read other good analysis that looks at the whole picture.  But this is the IEA saying and analyzing this finding.  This is notoriously a very conservative organization that is more likely to inflate the costs than to inflate the benefits.  So think of this as a conservative finding, which makes it even more compelling.

Other findings of note include (I'll try to post more details as I dig into the report further):

  • If we don't take action we are headed for a 6°C world (a 1000 parts per million one). I for one don't want to live in that world as it implies a large number of climate impacts that are probably too concerning to even mention.
  • We can be on path to solving global warming with the right investments. Clearly it requires a large investment and political focus to drive these results, but they analyzed a scenario that put the world on a path to hold temperatures less than 2°C (3.6°F). And they did this with basically the set of technologies that we know today and are in various stages of being deployed around the world. Energy efficiency is the dominant source of reduction (65% of the reduction in 2020), followed by renewables (17% of the reduction). Have you ever heard of those technologies? Oh yeah we already use them.
  • Oil imports are reduced in the industrialized countries by 7 million barrels per day in 2030 below what they were in 2008; in China and India oil imports are lowered by 10%. That would have a noticeable impact on whole host of things that we care about for other reasons, such as national security and saving money to invest at home.
  • Big reductions in local air pollution as a result of taking action on global warming pollution. In 2030, sulfur dioxide emissions are 29% lower, nitrous oxide emissions are 19% lower, and particulate matter is 9% lower. This saves $200 billion in 2030 for the cost of pollution control. I don't know about you, but I kind of like the idea of having less dangerous smog and other pollutants in the air, especially this leads to both asthma, death, and lost work days (just to name a few).

Taking action on global warming at Copenhagen is a good investment for the world - the balance sheet is positive.  This new analysis has shown that addressing global warming saves countries money from reduced oil consumption, reduced energy needs, and local air pollution.  And this doesn't include the costs of global warming impacts which will tip the balance sheet even farther in favor of taking action.  This shows that addressing this challenge can reap financial benefits if world leaders focus on driving these solutions.  A clear and strong outcome in Copenhagen will unlock this potential.

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David Cohen-TanugiOct 6 2009 10:51 AM

"Savings in energy costs of undertaking this investment will be $8,600 over this period; and"

You mean $8,600 billion, right?

Jake Schmidt, NRDCOct 6 2009 11:11 PM

Thanks David,

You are correct. Call it lack of sleep. I've fixed it now, so the post contains the billions reference.

Comments are closed for this post.


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