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UNLOCKING the INCLUSIVE GROWTH STORY of the 21ST CENTURY: ACCELERATING CLIMATE ACTION in URGENT TIMES Managing Partner

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UNLOCKING the INCLUSIVE GROWTH STORY of the 21ST CENTURY: ACCELERATING CLIMATE ACTION in URGENT TIMES Managing Partner UNLOCKING THE INCLUSIVE GROWTH STORY OF THE 21ST CENTURY: ACCELERATING CLIMATE ACTION IN URGENT TIMES Managing Partner Partners Evidence. Ideas. Change. New Climate Economy www.newclimateeconomy.report c/o World Resources Institute www.newclimateeconomy.net 10 G St NE Suite 800 Washington, DC 20002, USA +1 (202) 729-7600 August 2018 Cover photo credit: REUTERS/Rupak De Chowdhuri Current page photo credit: Flickr/Neil Palmer/CIAT Photo credit: Chuttersnap/Unsplash The New Climate Economy The Global Commission on the Economy and Climate, and its flagship project the New Climate Economy, were set up to help governments, businesses and society make better-informed decisions on how to achieve economic prosperity and development while also addressing climate change. It was commissioned in 2013 by the governments of Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden, and the United Kingdom. The Global Commission, comprising, 28 former heads of government and finance ministers, and leaders in the fields of economics, business and finance, operates as an independent body and, while benefiting from the support of the partner governments, has been given full freedom to reach its own conclusions. The Commission has published three major flagship reports: Better Growth, Better Climate: The New Climate Economy Report, in September 2014; Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate, in July 2015; and The Sustainable Infrastructure Imperative: Financing Better Growth and Development, in October 2016. The project has also released a number of country reports on Brazil, China, Ethiopia, India, Uganda, and the United States, as well as various working papers on cities, land use, energy, industry, and finance. It has disseminated its messages by engaging with heads of governments, finance ministers, business leaders and other key economic decision-makers in over 60 countries around the world. This Report was prepared by teams from the following institutions: the Brookings Institution, the Energy Transitions Commission (ETC), the Coalition for Urban Transitions, the Food and Land Use Coalition (FOLU), the Grantham Research Institute on Climate Change and the Environment, the Overseas Development Institute (ODI), SYSTEMIQ, and World Resources Institute (WRI). For a full list of the authors and contributors to this Report, please see page 205. The New Climate Economy's work on this Report is made possible with support from, among others, the government of Denmark, the government of Germany, the government of Norway, and the governent of Sweden. The views expressed here do not necessarily reflect the opinions or official policies of these institutions. The Global Commission on the Economy and Climate This Report was produced on behalf of the Global Commission on the Economy and Climate. The Global Commission comprises former heads of government and finance ministers, and leaders in the fields of economics, business and finance. Members of the Global Commission endorse the general thrust of the arguments, findings, and recommendations made in this Report, but should not be taken as agreeing with every word or number. They serve on the Commission in a personal capacity. The institutions with which they are affiliated have therefore not been asked formally to endorse the Report and should not be taken as having done so. Felipe Calderón Hinojosa, Former President of Mexico Naina Lal Kidwai, Chairman, Max Financial Services, (Honorary Chair) India, and Past President, Federation of Indian Chambers of Commerce & Industry Ngozi Okonjo-Iweala, Former Finance Minister of Nigeria (Co-Chair) Caio Koch-Weser, Chair, European Climate Foundation (ECF), Former Deputy Finance Minister of Paul Polman, CEO of Unilever (Co-Chair) Germany Nicholas Stern, IG Patel Professor of Economics and Ricardo Lagos, Former President of Chile Government at the London School of Economics; President of the Royal Economic Society (Co-Chair) Frannie Leautier, Former Senior Vice President, African Development Bank (AfDB) Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC) Patricia de Lille, Mayor of Cape Town Suma Chakrabarti, President, European Bank for Carlos Lopes, Professor, University of Cape Town; Reconstruction and Development (EBRD) Visiting Professor, Sciences Po, Paris Helen Clark, Former Prime Minister of New Zealand Takehiko Nakao, President, Asian Development Bank (ADB) John Flint, Group Chief Executive, HSBC Holding plc. Eduardo Paes, Former Mayor, Rio de Janeiro Kristalina Georgieva, CEO of the World Bank Christian Rynning-Tønnesen, President and CEO, Jamshyd Godrej, Chairman and Managing Director, Statkraft Godrej & Boyce Mfg Co. Ltd. Kristin Skogen Lund, Director-General, Confederation Stephen Green, Baron Green of Hurstpierpoint; of Norwegian Enterprise Chairman, Asia House UK Jean-Pascal Tricoire, CEO and Chairman, Schneider Ángel Gurría, Secretary-General, Organisation for Electric Economic Co-operation and Development (OECD) Maria van der Hoeven, Former Executive Director, Chad Holliday, Chairman, Royal Dutch Shell plc International Energy Agency (IEA) Sri Mulyani Indrawati, Finance Minister, Republic of Chen Yuan, Former Vice Chairman of the National Indonesia Committee of the Chinese People’s Political Agnes Kalibata, President, Alliance for a Green Consultative Conference; Former Chairman of the Revolution in Africa (AGRA), Former Agriculture and China Development Bank (CDB) Animal Resources Minister of Rwanda The growth story of “ the 21st century will unlock unprecedented opportunities and deliver a strong, sustainable, inclusive global economy. The benefits of climate action are greater than ever before, while the costs of inaction continue to mount. It is time for a decisive shift to a new climate economy.” —The Global Commission on the Economy and Climate 6 UNLOCKING THE INCLUSIVE GROWTH STORY OF THE 21ST CENTURY Table of Contents PART 1 Key Findings 8 Report Summary 10 The New Growth Agenda 17 PART 2 Key Economic Systems 31 Energy 37 Cities 67 Food and Land Use 89 Water 115 Industry, Innovation, 131 and Transport Endnotes 157 Unlocking the Inclusive Growth Story of the 21st Century: Accelerating Climate Action in Urgent Times Key Findings • We are on the cusp of a new economic era: one next 10–15 years are also essential in terms of where growth is driven by the interaction between climate: unless we make a decisive shift, by 2030 rapid technological innovation, sustainable we will pass the point by which we can keep global infrastructure investment, and increased average temperature rise to well below 2oC. resource productivity. This is the only growth • story of the 21st century. It will result in efficient, We know that we are grossly under-estimating liveable cities; low-carbon, smart and resilient the benefits of this new growth story. Current infrastructure; and the restoration of degraded economic models are deeply inadequate lands while protecting valuable forests. We can in capturing the opportunities of such a have growth that is strong, sustainable, balanced, transformational shift, or the grave dangers of and inclusive. climate inaction. We need a new class of economic models that can capture the powerful dynamics • Over the last decade, we have seen amazing at play, including transformative technological technological and market progress driving the advances, preservation of essential natural capital, shift to a new climate economy. We are seeing real and the full health benefits of cleaner air and results in terms of new jobs, economic savings, a safer climate, including the containment of competitiveness and market opportunities, and pandemic diseases. improved wellbeing for people worldwide. And this • progress in the real economy has been delivered While recognising the shortcomings of current on the back of often weak or even contradictory economic models, analysis produced for this policies in countries. How much more could be Report found that bold action could yield a direct achieved in the coming years with clear, consistent economic gain of US$26 trillion through to 2030 policy signals? compared with business-as-usual. And this is likely to be a conservative estimate. • In 2014, the Global Commission on the Economy • and Climate concluded that ambitious climate Making such a shift would also limit dangerous action does not need to cost much more than climate change. With each passing year, the risks business-as-usual growth. The evidence today of unabated climate change mount. The last 19 shows that climate action is even more attractive years included 18 of the warmest years on record, than we imagined then. This remarkable new worsening food and water security risks and growth opportunity is now hiding in plain sight. increasing the frequency and severity of hazards such as wildfires. Disasters triggered by weather- • Yet we are not making progress anywhere near and climate-related hazards were responsible for fast enough. While many private sector players are thousands of deaths and US$320 billion in losses stepping-up, policy-makers in most countries still in 2017. Climate change will lead to more frequent have the hand-brake on. We are now at a fork in and more extreme events like these, including the road. floods, droughts, and heat waves. It is increasingly our ‘new normal’. • The next 10–15 years are a unique ‘use it or lose it’ moment in economic history. We expect to invest • The challenge now is to accelerate the transition to about US$90 trillion
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