Climate price tag is more than entire world GDP, treasury secretary says

By Thomas Catenacci

Treasury Secretary Janet Yellen estimated that the world would need to devote $100-150 trillion, more than the entire world’s annual gross domestic product, to fighting climate change over the next three decades.

Yellen signaled that the world economy will need to undergo a complete transformation in order to prevent devastating climate change in the future, during a speech Wednesday at the ongoing United Nations climate conference in Glasgow, Scotland. The Treasury secretary delivered the remarks during the summit’s “finance day” opening event.

“Rising to this challenge will require the wholesale transformation of our carbon-intensive economies,” Yellen remarked during her speech. “It’s a global transition for which we have an estimated price tag: some have put the global figure between $100 and $150 trillion over the next three decades.”

She added that combating climate change is the “greatest economic opportunity of our time.” But the world’s total GDP was estimated to be about $84.6 trillion in 2020.

President Joe Biden announced the U.S. would double its commitment for assisting developing nations to expand renewable energy resources to about $11 billion, which would help the world meet the UN goal of $100 billion per year through 2030. Democrats’ budget framework includes roughly $555 billion for climate programs over the next 10 years, CNBC reported.

The U.S. said this week it would fully support the Climate Investment Funds Capital Markets Mechanism, an initiative that will attract private investment in clean energy of up to $500 million annually, and the Glasgow Financial Alliance for Net Zero, a group of massive financial institutions that pledged to achieve carbon neutrality by 2050, according to Yellen. Environmental groups, however, expressed skepticism in response to the commitments made at the conference.

“Questions remain, however: Will enough investment opportunities materialize to absorb all this capital? How quickly can this reorientation occur? And how can institutions transparently report on their commitments so we can hold each other to account on transition plans?” Yellen stated.

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2 thoughts on “Climate price tag is more than entire world GDP, treasury secretary says

  1. ““Rising to this challenge will require the wholesale transformation of our carbon-intensive economies,” Yellen remarked during her speech. “It’s a global transition for which we have an estimated price tag: some have put the global figure between $100 and $150 trillion over the next three decades.”

    Gee, I wrote an article on that subject that estimates the turnkey capital cost.

    Read the article to get an education

    WORLD AND US PRIMARY ENERGY CONSUMPTION AND CAPITAL COST
    https://www.windtaskforce.org/profiles/blogs/world-total-energy-consumption

    World energy consumption is projected to increase to 736 quads in 2040 from 575 quads in 2015, an increase of 28%, according to the US Energy Information Administration, EIA.
    See URL and click on PPT to access data, click on to page 4 of PowerPoint

    Most of this growth is expected to come from countries not in the Organization for Economic Cooperation and Development, OECD, and especially from countries where demand is driven by strong economic growth, particularly in Asia.

    Non-OECD Asia, which includes China and India, accounted for more than 60% of the world’s total increase in energy consumption from 2015 through 2040.

    PARIS AGREEMENTS

    China, India, and other developing Asian countries, and Africa, and Middle and South America, need to use low-cost energy, such as coal, to be competitive. They would not have signed up for “Paris”, if they had not been allowed to be more or less exempt from the Paris agreements

    Obama agreed to commit the US to the Paris agreements, i.e., be subject to its financial and other obligations for decades.
    However, he never submitted the commitment to the US Senate for ratification, as required by the US Constitution.
    Trump rescinded the commitment. It became effective 3 years later, one day after the US presidential elections on November 3, 2020.

    If the US had not left “Paris”, a UN Council likely would have determined a level of renewable energy, RE, spending, say $500 billion/y, for distributing to various poorer countries by UN bureaucrats.
    The Council would have assessed OECD members, likely in proportion to their GDPs.
    The US and Europe would have been assessed at 100 to 150 billion dollars/y each.
    The non-OECD countries likely would continue to be more or less exempt from paying for the Paris agreements.

    SUMMARY OF CAPITAL EXPENDITURES FOR THE WORLD AND US

    The analysis includes two scenarios: 1) 50% RE by 2050, and 2) 100% RE by 2050.
    The CAPEX values exclude a great many items related to transforming the world economy to a low-carbon mode. See next section.

    50% RE by 2050

    World CAPEX for RE were $2,652.2 billion for 2010-2019, 10 years
    World CAPEX for RE were $282.2 billion in 2019.
    World CAPEX for RE would be $24,781 billion for 2019 – 2050, 32 years; compound growth 5.76%/y

    US CAPEX for RE were $494.5 billion for 2010 – 2019, 10 years.
    US CAPEX for RE were $59 billion in 2019.
    US CAPEX for RE would be $7,233 billion for 2019 – 2050, 32 years; compound growth 8.81%/y

    100% RE by 2050

    World CAPEX for RE were $2,652.2 billion for 2010-2019, 10 years
    World CAPEX for RE were $282.2 billion in 2019.
    World CAPEX for RE would be $60,987 billion for 2019 – 2050, 32 years; compound growth 10.08%/y

    US CAPEX for RE were $494.5 billion for 2010 – 2019, 10 years.
    US CAPEX for RE were $59 billion in 2019.
    US CAPEX for RE would be $16,988 billion for 2019 – 2050, 32 years; compound growth 13.42%/y

    SUMMARY OF “BIG-PICTURE” CAPEX FOR THE WORLD AND THE US

    World More-Inclusive CAPEX

    The above CAPEX numbers relate to having 50% RE, or 100% RE, in the primary energy mix by 2050, which represents a very narrow area of “fighting climate change”. See Appendix for definitions of source, primary and upstream energy.

    This report, prepared by two financial services organizations, estimates the world more-inclusive CAPEX at $100 trillion to $150 trillion, over the next 30 years, about $3 trillion to $5 trillion per year

    NOTE: The Intergovernmental Panel on Climate Change has estimated that an average of $3.5 trillion per year will be needed just in energy investments between 2016 and 2050 to achieve the 1.5-degree target.

    US More-Inclusive CAPEX

    The ratio of World CAPEX for RE / US CAPEX for RE = 16,988/60,987 = 0.279

    A more-inclusive US CAPEX could be $27.9 trillion to $41.8 trillion

    The US CAPEX could be less, because, at present, the world is adding a quad of RE at about $58.95 billion, compare to the US at about $102.78 billion.

    It is unclear what accounts for the large difference.
    Part of it may be due to differences of accounting methods among countries.

    NOTE: The CAPEX numbers exclude costs for replacements of shorter-life systems, such as EVs, heat-pumps, batteries, wind-turbines, etc., during these 30 years. For comparison:

    Hydro plants have long lives, about 100 years.
    Nuclear plants about 60 years
    Coal and gas-turbine plants about 40 years
    Wind turbine systems about 20 years
    Solar systems about 25 years
    Battery systems about 15 years

  2. This is funny stuff! Unfortunately people listen to Yellen and believe the rhetoric she spews.
    Not soon enough, her words will be viewed as worthless as lord fauci’s by most Americans.
    Let’s hope it’s not to late to stop the carnage she and her believers intend to bring to bear.

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