Waiting to Address Climate Change Will Cost Trillions of Dollars

Waiting to Address Climate Change Will Cost Trillions of Dollars
Spend money on this now to avoid higher costs later. (Photo: Scott Olson, Getty Images)
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There’s really no good reason to wait to tackle the climate crisis, but especially when it comes to money. A new report offers yet more proof that the longer we wait, the higher that cost will be.

The analysis by policy research firm Energy Innovation, published on Wednesday morning, examines two scenarios for reaching net-zero greenhouse gas emissions by 2050. That’s a target set by the Biden administration and several other countries, and based on advice from United Nations climate scientists on how to avert dangerous levels of warming. In one modelled scenario, the U.S. begins aggressive efforts to decarbonize now. In the other, officials wait until 2030 to start.

The financial difference could prove to be massive. The analysis shows that starting to decarbonize now would cost $US320 ($420) billion per year, or a total of $US4.5 ($6) trillion. Waiting until 2030, though, and the costs of reaching net-zero by 2050 would be $US750 ($985) billion each year, or about $US8 ($11) trillion by 2050 when all is said and done. That means the cumulative cost associated with putting off decarbonizing until 2030 are 72% higher than the cost of getting the ball rolling now.

“To meet climate goals, it is imperative to start climate action today,” Megan Mahajan, one of the co-authors and a senior policy analyst on the Energy Policy Solution team, said in an email. “In particular, it is urgent to quickly transition to electric vehicles and building components, because polluting equipment sold today will last for decades. And transitioning to clean sources of electricity as rapidly as possible becomes even more important as vehicles and buildings increasingly rely on electricity rather than fossil fuels.”

The authors used Energy Innovation’s open-source Energy Policy Simulator, a peer-reviewed model that estimates the impacts of climate and energy policies. In the 2021 scenario, the policies the authors plugged in include a clean energy standard that reaches 90% by 2035 and 100% by 2050, 100% electric vehicle standards for light-duty vehicles by 2035 and heavy-duty vehicles by 2045, and building efficiency improvements ranging from 11%-40% by 2050.

The 2030 scenario, the study says, “necessarily requires steeper emissions reductions to achieve the same cumulative abatement.” That’s because if the U.S. keeps emitting greenhouse gases, more urgent action will be needed to stave off extreme heating. Waiting a decade, for instance, would mean having to transition to 100% clean energy by 2040 instead of 2050 due to the pollution that piled up in the atmosphere over the course of the 2020s. It would also require constructing nine times more clean energy capacity per year by the mid-2030s.

Procrastinating will also lead to the need to develop technology to capture carbon directly out of the air, which is extremely expensive and currently unproven to work at scale. If officials continue to allow the build-out of oil- and gas-fired power plants, the 2030 scenario will also create more costs due to stranded assets and the need to wind down more equipment before the end of its expected lifespan.

“The accelerated transition will create a global economic shock,” the authors say.

The report doesn’t even get into the costs associated with extreme weather, which delayed climate action could make even worse. A recent report found that last year, the U.S. saw record 22 disasters that cost $US1 ($1) billion or more. That number is sure to increase as the climate crisis worsens.

The results, which follows other scientific reports on the cost of delaying climate action, has a clear message for policymakers. Between building new energy sources, taking old power plants offline, decarbonizing the housing sector and transitioning away from fossil-powered cars, the U.S. will need to spend billions. But it needs to get started now.

“The upshot is that the next decade is critical,” the authors write.