You are going to have to dig deep into your pockets. Really, really deep. $275 trillion deep.
And as I've said, don't look at me, I don't have that kind of money.
From CNBC, January 25:
- The transition to net-zero greenhouse emissions by 2050 will require an extra $3.5 trillion a year in capital spending on physical assets for energy and land-use systems , according to estimates from a new McKinsey report.
- That amount is the equivalent of half of global corporate profits, one-quarter of total tax revenue, or 7% of household spending in 2020.
- The report estimates the transition’s effects on demand, capital allocation, costs and jobs across sectors in 69 countries that produce about 85% of global emissions.
As the world grapples with a worsening climate change crisis, governments and companies are pledging to achieve net-zero greenhouse emissions by 2050 — a goal that will require an extra $3.5 trillion a year in capital spending, according to estimates from a McKinsey & Company report released on Tuesday.
That amount is the equivalent of half of global corporate profits, one-quarter of total tax revenue, or 7% of household spending in 2020.
“The net-zero transition will amount to a massive economic transformation,” said Mekala Krishnan, a partner at the McKinsey Global Institute and the lead author of the report.
The report estimates the transition’s effects on demand, capital allocation, costs and jobs across sectors in 69 countries that produce about 85% of global emissions.
Capital spending on physical assets for energy and land-use systems during the transition will amount to roughly $275 trillion, or $9.2 trillion each year on average, the report said. That’s $3.5 trillion more than the amount being spent on those assets annually today.
The report said an additional $1 trillion of today’s annual spending must be reallocated from high-emissions to low-emissions assets in order to achieve a net-zero transition. It also urged businesses, governments and institutions to prepare for uncertainty during the transition and warned stakeholders to accelerate efforts to decarbonize and adapt to climate risk....
....MUCH MORE
This actual cost of the transition is one of the reasons some very smart folks were calling bullshit on Sir Nicholas Stern and his eponymous Stern Review (662 page PDF) back in October 2006.
By choosing to use a deceitfully low discount rate he came up with a cost for the transition that was essentially "oh, maybe a couple bucks, so cheap you won't even notice."
It didn't matter what the critics and critiques said though, Stern got a promotion from the knighthood, so now he's Baron Stern of Brentford, of Elsted in the County of West Sussex and of Wimbledon in the London Borough of Merton. Lord Stern to his friends.
He also got a vice-chairmanship at IDEAglobal, parent at carbon consultancy IDEAcarbon
Stern also has a comfy endowed chair at the LSE and is Chairman of the Grantham Research Institute on Climate Change and the Environment.
Some of the folks who weighed in on the Review and said he was playing fast and loose:
The intro to 2013's "...Price Distortions Lead to Shortages, Queues, Searching, Hoarding, and so Forth":
Long time readers will remember Professor Weitzman, along with Tol and Nordhaus, as one of the bigs of climate change economics. His paper "A Review of The Stern Review on the Economics of Climate Change" was one of the first to point out the goofy-ass discount rate [a technical term] that Sir (now Lord) Stern used.
While Weitzman's c.v. indicates difficulty keeping a job, bouncing from Yale to MIT to Harvard, some of his stuff is near-genius level.
Although Prof. Weitzman's self-reported current research interests are:
Environmental and Natural Resource Economics, Climate Change, Discounting, Economics of Catastrophes, Cost-Benefit Analysis, Comparison of Alternative Instruments for Controlling Pollution, Green Accounting, Economics of Biodiversity, Role of Uncertainty in Environmental Economics.he has a very diverse body of work including the instant case:....
Here's Tol in a 2007 post:
THE SOCIAL COST OF CARBON: TRENDS, OUTLIERS AND CATASTROPHES
And Nordhaus who made some green heads explode when he was awarded the Nobel Prize in Economics:
Generational Carbon Pricing: Professor Nordhaus and the Activists
We have dozens/hundreds more posts just on the economics of global warming, much less policy and business and science and regulation finance and....
Use the 'search blog' box if interested.
