On March 25, EUAbout took part in the webinar on the role of economic policies in the shaping of a climate neutral economy held by the DG ECFIN (Directorate-General for Economic and Financial Affairs).
Thanks to the participation of distinguished experts, it was possible to highlight and discuss the challenges that economic systems have to face in light of climate change. The event addressed three main topics: the cost of inaction on climate change, the design of cost-effective economic policies to mitigate climate change, the missing links between macro-economics and climate action.
In his opening remarks, Commissioner Paolo Gentiloni referred to climate change as one of the biggest threats that modern humanity is facing, following economic losses due to extreme events occurring also in the EU. A crucial step will not be whether to act, but how to act and have a positive impact.
The strategy to follow in order to react to climate change has been analyzed by Nicholas Stern, Professor at the London School of Economics and Chair of the Grantham Research Institute on Climate Change and the Environment, who emphasized the need to put in place mitigation and adaptation measures to counter the effects of the rising temperatures. Looking at the opportunities of potential changes, instead of burdens, will help mobilizing private investments that are required in order to incentivize the green transition.
The analysis provided by Marshall Burke, Professor at StanfordUniversity, traced the excursus of the past harming consequences of warmer temperatures from the economic and social point of view. Through an historical understanding it is possible, indeed, to shed light on what might happen in the future. The study showed there is no strong evidence that the structure of the economy might mitigate or adapt to the effects of warming temperatures and, therefore, there is a high likelihood of substantial losses under future climate change.
The limitations and next step to undertake were addressed by Juan Carlos Ciscar in the Joint Reasearch Centre study, which highlighted the need to integrate economic modelling with biophysical impacts in order to build a comparative static framework. In fact, as stated by Professor Francesco Bosello from Ca’ Foscari University, it is essential to assess the presence of a regional pattern in climate change: economic losses from temperature rise do not happen in Europe’s Northern Regions, rather there are GDP losses and negative climate effects in European Southern countries.
Similarly, Matthias Weitzel, DG Joint Research Centre, and Professor John Hassler from Stockholm Universitygave an overview regarding how impacts might be exacerbated by possible policy mistakes mostly oriented towards precaution principle or setting low targets.
In conclusion, the panel discussion emphasized how the costs of green transition are inferior to the cost of climate change and to an absent transition. As a result, policies need to intervene in a credible way in order to encourage investments towards the commitment to international agreements.