Climate action to boost global GDP growth: OECD-UNDP 

Accelerated climate action does not hinder economic growth, it provides economic gains. Under an enhanced Nationally Determined Contributions (NDCs) scenario aligned with the Paris Agreement, global GDP in 2040 would be 0.2% higher than under the current scenario, says OECD-UNDP analysis.

NDCs are commitments made by countries under the Paris Agreement to reduce greenhouse gas emissions. The analysis released June 10 says investing in clean energy and energy efficiency increases productivity and innovation, balancing the economic impact of policy constraints on prices and consumption.

“Reinvesting carbon revenues can further boost GDP while ensuring a just transition and securing public support. In the enhanced NDCs scenario, global GDP is projected to grow by 60% by 2040 compared to 2022. All regions can benefit from robust economic growth in an Enhanced NDCs scenario, though at different paces,” it further says.

On the question of policy uncertainty, the analysis found that it weakens investment and slows growth with unclear policies risk delaying private investments and reducing GDP by 0.75% as early as 2030.

“Coordinated climate, fiscal and monetary policies are needed to achieve growth while limiting short-term inflationary effects and mobilise private sector investment. The economic case for climate ambition gets even stronger in the long run, particularly when factoring in avoided climate damages,” it added.

By reducing the risk of climate-induced events, an Enhanced NDC scenario could prevent significant economic losses and increase global GDP by up to 3% by 2050 and up to 13% by 2100.

The actual benefits could be even greater, as uncertain current estimates do not fully account for the economic and social consequences of the increased likelihood of crossing tipping points, such as melting ice sheets or reversing circulation patterns in the ocean.

Also, integrating climate and development-enhancing policies into NDCs could help one in five people in extreme poverty escape the poverty trap by 2050, lifting 175 million additional people out of extreme poverty while strengthening resilience and energy equity.