Financial impacts of climate change mitigation: Global resource requirements and proposals for international burden sharing

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Courtesy of Lexxion Verlagsgesellschaft mbH

Financial cost estimates for mitigating global warming vary widely, depending – interalia – on the emissions reduction target and the time horizon for action. However, with a high level of generalisation, the paper suggests that average global costs of limiting climate change to 2 °C could be around €299 billion annually. The range of the 15 cost estimates assessed in this paper is €32–964 billion. About 50 % of these additional investments will be required in developing countries, raising the question of absorption capacity. The private sector may contribute between two thirds and up to 96 % of total global costs, including through the carbon market.

Due to their economic capabilities and historic responsibilities for global warming, industrialised countries will need to take the lead in climate mitigation by bearing considerably higher shares of the global costs than developing countries. Depending on the methodology of allocating global costs to different countries, the EU27 may need to shoulder costs of more than €80 billion per year (up to €305 billion in the highest cost scenario), of which between €3 and €31 billion may need to be financed by the public sector (up to some €100 billion in the highest cost scenario). Finally, the paper concludes
that scaling-up climate change finance is only one way to meet financial targets. Optimising current funds and shifting investments to low-carbon alternatives will play an important role in combating climate change.

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