Climate change has already had devastating effects on the global economy, which are forecasted to exacerbate each year. In 2017 the IMF (international monetary fund) claimed that these consequences of climate change have affected the distributions of income and wealth. (Burke et al. 2015) estimated that ‘climate change will reduce global GDP by 23% by 2100, and GDP per capita by around 80% in South Asia, Southeast Asia and Sub-Saharan Africa based on an assumption of global warming of 3.7 °C. To mitigate the risks that climate change brings to the economy, global warming must be reduced drastically.
The Intergovernmental Panel on Climate Change (IPCC), the Paris Agreement and the Sustainable Development Goals (SDG’s) all support limiting global warming to below 2 °C, with the target of 1.5 °C. However, the IPCC states that this requires reductions of 45% in carbon dioxide emissions by 2030, reaching net-zero by 2050. Currently, NDCs are far from satisfying this aim. This is perhaps because three out of the nine boundaries for maintaining sustainable ecosystems necessary to support human civilization have already been breached (Rockström et al. 2009). Consequently, 2018 was the fourth warmest year on record since 1880, with the previous five years being the five warmest ever recorded (OAA, 2018).
To reduce global warming, the IPCC in 2018 expressed that: widespread adoption of new technologies and practices; changes in consumer behaviour; changes in production and land use; agricultural processes and enhanced climate-driven innovation are required. According to an IMF report, to remain consistent with the target of 2 °C warming, carbon must be priced at $75 per ton. At present, the global average carbon price is $2 per ton - which is minute in comparison to the colossal $75 per ton that’s required. At that level, coal prices would rise by more than 200% above baseline levels in 2030 and the price of natural gas would increase by 70% on average, impacting North and South America the most. However, this increase in the cost of fossil fuels and carbon taxing may be unfeasible, and so other strategies may be required.
Companies such as the Bank of England must continue to work alongside other central banks and financial regulators across the world; even the little things, such as using reusable cups in their offices have a significant help. Governments and firms need to take inspiration from cities such as Freiburg and Malmo and adopt their practices within themselves. Perhaps an increase in influence by a more environmental orientated government could help mitigate the risks of climate change. For example after the UK's upcoming December 12th election, the Green party, who has claimed to reach net-zero carbon emissions in the UK by 2030, could add numerous suggestions to the party in control, such as carbon taxing, that may assist them to achieve their goal. Finally, there needs to be a greater focus on educating individuals, targeting the youth, on how to reduce our carbon footprint; so that we can preserve our blemished planet.