There will also be many job gains. The evidence shows that investment in low-carbon energy sources and energy efficiency is a major source of job creation. For example, the International Renewable Energy Agency (IRENA) estimates that almost 6 million people were directly employed in the renewable energy sector in 2012, including over 1.7 million in China. This is approaching the number of people employed in the coal industry. As developed countries have adopted low-carbon measures, there has been a little-noticed but remarkable growth in employment in a wide range of businesses in the “low-carbon sector”. As the transition to a lower-carbon economy accelerates, this pattern of job creation and business expansion is likely to be replicated more widely.
Against this background, the Commission’s research programme has sought to calculate the emissions reductions which the most significant measures and actions set out in this report might have the potential to achieve by 2030, compared with the standard “base case”. All of the actions included in these calculations – in the fields of urban development, land use change, energy investment and specific forms of innovation in manufacturing and services – have multiple economic benefits. That is, all of them provide benefits not just in terms of standard economic indicators, but in other welfare-enhancing factors, such as reductions in rural poverty, improvements in health from better air quality, lower urban traffic congestion and the protection of ecosystem services. While some may have a small net cost considered in narrow economic terms, all can therefore make a strong claim to contribute to higher-quality growth. Another way of putting this is that governments, cities and businesses would have strong reasons to implement them even without consideration of their climate change benefits.
One notable development has been the emergence of business-led initiatives in sectors of the global economy where a large share of products are internationally traded, making it particularly difficult to manage the related GHG emissions. Examples in the consumer goods sector include the , and the (TFA 2020). The TFA 2020 is a partnership of businesses, governments and non-governmental organisations committed to reducing deforestation driven by production of palm oil, soy, beef, and paper and pulp. In the case of palm oil, companies participating in the initiative have 15% of the total consumer market by volume, and well over 50% of the global trade in the commodity, which it is believed may make it possible to tip the entire global market towards sustainable palm oil.
The Organisation for Economic Co-operation and Development (OECD) has projected that if current trends continue, as the global population grows from 7 billion in 2010 to more than 9 billion in 2050, per capita consumption will more than triple, from about US$6,600 to US$19,700 per year, and global GDP will nearly quadruple, requiring 80% more energy. Sustaining growth at that scale will only be possible with radically new business models, products and means of production.
Establishing a long-term transition to a lower-carbon model of growth and development will also require a more systemic shift. All major economic actors – national governments, sub-national and city authorities, private- and public-sector companies and financial institutions – will need to integrate climate risk management into their core economic and business strategies. Each can do this for itself – but many more will do so if it is required by the rules and norms under which they operate. In a global economy, such rules and norms are increasingly determined at an international level.
This analysis rests on a considerable body of experience and research on the relationship between economic growth and development, and climate action. This includes academic literature as well as policy and business reports by the Organisation for Economic Co-operation and Development (OECD), United Nations agencies, multilateral development banks, the International Energy Agency (IEA) and many others. The Commission’s work has drawn extensively from this body of applied economic learning, as well as from many interviews with economic decision-makers in governments, city and subnational authorities, and businesses, and with investors across the world.
A central insight of this report is that many of the policy and institutional reforms needed to revitalise growth and improve well-being over the next 15 years, can also help reduce climate risk. In most economies, there are a range of market, government and policy failures that can be corrected, as well as new technologies, business models and other options that countries at various stages of development can use to improve economic performance and climate outcomes together. These opportunities exist in the short (less than 5 years), medium (5–15 years) and long term (greater than 15 years), as the various chapters of this report show. They require good policy design and implementation across three main drivers of change:
Even in the short term (the next five years), there are multiple opportunities to advance both economic and climate objectives by correcting market failures and policy distortions. No economy today is perfectly efficient, and many efforts to make key resources more affordable – such as by subsidising fossil fuels, water or fertilisers – have the unintended consequence of promoting inefficiency and waste. Policies to support established businesses may stifle competition from low-carbon innovators. Lack of coordination across levels of government and between neighbouring communities can lead to scattered development and sprawl, increasing the cost of infrastructure and public service delivery. Better policy design can correct these problems, increasing economic efficiency while lowering GHG emissions.
Many of the investments and policies discussed in this report will be particularly valuable to the poorest and most vulnerable people in developing countries: smallholder farmers whose crops are increasingly threatened by land degradation and climate change; the 350 million people who live in (and often depend on) forests; the billions who lack modern cooking facilities, electricity or both; and low-income urban residents who rely on public transport. The low-carbon economy can help reduce poverty and raise living standards in many ways, such as through “climate-smart” agriculture, payments for ecosystem services, off-grid renewable energy solutions, and bus rapid transit (BRT) systems, among many others.
A related example is in urban transport. The Commission’s analysis of urban development planning shows cities that control sprawl and are built around efficient public transport systems can both stimulate economic performance (by reducing traffic congestion, making journeys shorter, and reducing fuel costs) and reduce GHG emissions. But they are also likely to improve air quality, reduce road accidents (a major source of death and injury, particularly in developing countries ), and generate higher quality of life for residents. This, in turn, can make them more attractive to businesses and their potential employees.
But the fact that in relation to the economy as a whole, the net employment impacts of low-carbon policies are small does not mean that they are unimportant. On the contrary, in some sectors, the impact on jobs is likely to be significant. Employment in the coal sector, which is still relatively labour-intensive in developing countries but already highly mechanised in developed economies, will almost certainly decline even beyond the job reductions that technological change would anyway cause. Employment in heavy and energy-intensive industrial sectors is also likely to be affected, as the shift to a low-carbon economy would probably shrink the relative share of these industries in the economy over the long term. At the same time, the relative value of companies involved in the fossil fuel sector in general (oil and gas as well as coal) is likely to decline over time, as future demand falls.