US climate summit: What's the global economic response to climate change?

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WASHINGTON (AFP) – World leaders participating in the virtual Earth Day summit are unanimous: fighting climate change will be good for economic growth worldwide.

US President Joe Biden, Chinese President Xi Jinping and IMF Managing Director Kristalina Georgieva were among the officials who backed calls for higher carbon taxes and massive investments in green energy to curb rising temperatures and put the world on the path to prosperity.

Here is a rundown of the latest in the global effort to fight climate change:

What’s at stake?

Climate change is a major threat to global growth, with perils ranging from declines in crop yields, extreme weather that devastates tourist economies, disease outbreaks and other catastrophes that would sap productivity.

The effects could reduce global gross domestic product by as much as 18 per cent by 2050 compared to estimates without climate change, according to a report published on Thursday (April 22) by Swiss Re, one of the world’s largest providers of reinsurance.

China could lose 24 per cent of GDP in the worst-case scenario, the largest impact, while Europe could lose 11 per cent and the United States around 10 per cent, according to the report.

The World Bank estimates that between 32 million and 132 million additional people could fall into extreme poverty by 2030 due to the effects of climate change.

What needs to be paid for?

The World Bank has identified five priority areas for investment: early warning systems, climate resilient infrastructure, dryland agriculture, mangrove protection and water resilience.

The Washington-based development lender has estimated that investing US$1.8 trillion (S$2.39 trillion) in these areas globally over the next nine years could generate US$7.1 trillion in returns.

The International Energy Agency in January urged “decisive action” by 2030.

It called for increasing electric cars’ share of annual sales to more than 50 per cent from three per cent currently, raising low-carbon hydrogen production to 40 million metric tonnes from just 450,000, and increasing investment in clean electricity to US$1.6 trillion from US$380 billion.

Global leaders and multilateral institutions say these