Drastic Shift in World Economy Essential for Combatting Global Warming

The global climate goal is clear: Keep warming at or below 1.5°C for the next three decades.

To do this, no less than an extreme overhaul of the world economy is necessary, according to bankers, academics, and policymakers attending the annual Green Swan conference on sustainable finance in early June.

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“We have to change the structure of the world economy – all countries, all sectors – very rapidly over 20 or 30 years,” Nicholas Stern, Professor of Economics and Government at the London School of Economics and Political Science, told the South China Morning Post. “All systems have to change – energy, transport, cities, land. It has to be fast, and we have to invest a lot.”

Integral to the change is “blended finance” from both public and private sectors, provided by developed nations to developing nations, which would help ensure that the poor have access to decarbonization strategies. These include electric vehicle charging stations and energy efficiency measures such as home insulation, said Stern.

Public and private markets would need to collaborate to provide fair access to climate strategies, whether through “market-driven initiatives (or) regulatory frameworks,” Paulina Dejmek Hack, Director for General Affairs for the Directorate-General for Financial Stability, Financial Services, and Capital Markets Union (DG FISMA) at the European Commission, told the Morning Post.

To reach the Paris Agreement’s carbon dioxide emissions goal, the world would need to invest $9.2 trillion per year for the next three decades, according to a McKinsey report.

The Earth has already warmed by an average 1.1°C since pre-industrial times, and extreme climate events will continue to occur unless the warming is contained, according to the United Nations’ Intergovernmental Panel on Climate Change. Temperatures are projected to increase 2.7°C by 2100 if current policies remain in place, but could be limited to a 2.1°C increase if governments and businesses figure out how to deliver on their long-term net zero-emission targets, according to estimates by the research organization Climate Action Tracker.