The world faces a two-front battle to halt global warming and address the effects of climate change
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- Authors: ADAM BEHSUDI
- Published: September 2, 2021
Mitigation: slow or stop fossil-fuel emissions
- Core insight: Mitigation addresses the underlying problem by slowing or stopping the rise in fossil fuel emissions to avoid irreversible and catastrophic temperature increases.
- Policy tools to price carbon (definitions preserved):
- Carbon tax: This sets a direct tax on coal, oil products, natural gas, and other fossil fuels in proportion to their carbon content. The tax is passed from suppliers to consumers in the form of higher prices for electricity, gasoline, heating oil, and other products and services that rely on fossil fuels.
- Cap-and-trade system: This sets allowances on the total amount of carbon emissions released each year, creating a market-based system in which the allowances can be traded from less-carbon-intensive to more-carbon-intensive sectors.
- Advantages and trade-offs:
- Carbon taxes are identified as the most effective way to change behavior and can be added to existing taxes on gasoline and other fuels.
- Carbon pricing forces a more rapid and broader behavioral shift than regulatory approaches (for example, renewable portfolio standards), inducing electricity providers, manufacturers, and consumers to seek cleaner, lower-cost energy sources and adopt more efficient technologies.
- Pricing corrects a “market failure” where users of fossil fuels do not pay for environmental damages.
- International coordination:
- The ultimate goal is to reduce emissions enough to limit global warming to 1.5°C– 2°C above preindustrial levels.
- An international carbon price floor is increasingly viewed as the way to get the world’s largest CO2 emitters to reduce emissions enough to keep global warming below the 2°C target and to allay competitiveness and carbon leakage concerns.
- Key numeric findings:
- The IMF has found that it will take a $75 a ton price on CO2 worldwide by 2030 to limit warming to 2°C.
- Four-fifths of global emissions are not priced.
- The global average emissions price is only $3 a ton.
- At $75 a ton, over 10 years electricity prices would rise, on average, by 45 percent and gasoline prices by 15 percent.
- Policy recommendation: Pursue carbon pricing while implementing a just transition by using revenue to compensate low-income households and support people whose livelihoods rely on coal, petroleum, and other fossil fuels.
Adaptation: withstand and minimize current and future impacts
- Core insight: Adaptation is needed to help people and governments withstand and minimize the ravages of climate change that are already here.
- Forms of adaptation:
- More resilient infrastructure, securing water resources, improving crop production for dryland farming, protecting coastlines, encouraging private-sector adaptation, social protection after disasters, and holistic budgeting and planning that factors in climate change.
- Economic rationale:
- Adaptation can pay a triple dividend: countries will suffer less from future climate shocks, enjoy greater productivity and growth, and reap social and environmental benefits.
- Every $1 invested in adaptation could yield up to $10 in net economic benefits, depending on the activity, according to a report from the Global Commission on Adaptation.
- Financing challenges:
- Up-front costs are a struggle for many developing economies with limited fiscal space.
- Limited fiscal space hinders adaptation; worsening climate shocks raise risk premiums and increase the cost of borrowing, making adaptation less feasible.
- Helping countries sustainably finance these investments is critical for adaptation and will help public finances in the long run by reducing climate risk premiums.
- Key numeric findings:
- Financing for adaptation totaled $30 billion on average annually in 2017 and 2018.
- Annual adaptation costs in developing economies alone are currently estimated at close to $70 billion.
- Annual adaptation costs in developing economies are expected to rise to $140–$300 billion by 2030.
- Policy recommendation: Scale up climate financing for adaptation to break the vicious cycle of limited fiscal space and rising climate risk premiums, recognizing that adaptation investments save money over time.
Overall conclusion and metaphor
- Humanity must act on two fronts simultaneously—plugging the leak (mitigation) and bailing water (adaptation)—because unlike the metaphorical boat, there is only one Earth and keeping it afloat is a task of existential proportions.
Source: The world faces a two-front battle to halt global warming and address the effects of climate change — F&D Magazine, ADAM BEHSUDI, September 2021.
Content in this bundle
- عودة إلى الأسس
- Climate Change: What Is Mitigation vs Adaptation? - IMF F&D
- ¿Qué implica decidir entre la mitigación y la adaptación?
- Quelle différence entre atténuation et adaptation ?
- Чем смягчение воздействия отличается от адаптации?
- 返归基础 - 什么是减缓，什么是适应？ - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期