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Economics of Climate Change

by icc-blogs@indianchamber.org

Climate change is the single most critical planetary threat that societies face today, as all 4 standard indicators of climate change reached new peaks in 2021-22. Concentrations of GHG reached record levels in 2021 –> CO2 concentrations in 2021 were 415.7 parts per million (ppm), methane at 1908 parts per billion (ppb) and nitrous oxide at 334.5 ppb and so did global sea level rising at an average of 4.5 mm per year. Top 2 km of oceans continued to warm in 2021 and the ocean waters have acidified increasingly absorbing 23% of CO2 emissions. The ecological consequences of climate change are worrying enough but a bigger worry are its socio economic repercussions as it affects production, GDP and public welfare globally. But before that we must understand that main countries responsible for climate change are the developed countries of Europe and US, though they try to blame the poverty and population density of developing countries.

And there are 3 primary causes of climate change: (a) Industrialisation (b) Colonisation and (c) Consumerism. The countries with higher levels of industrialisation are emitting higher levels of carbon. US alone is responsible for 25% of the global GHG emissions followed by China, Europe and the African nations. Ongoing ecological colonization or ownership of natural resources by the developed world also lead to carbon emissions from the developing world. Moreover, according to a UN report, developed countries account for 24% of the world population, but consume approximately 70% of the world’s energy, 75% of the world’s metals, 85% of the wood, 60% of food and 85% of chemicals.

The way forward is: (a) Sustainable and Equitable development (b) Decarbonising the atmosphere and (c) Climate Justice. Promoting a Production and Growth pattern while preserving the Environment is Sustainable Development. Equitable development would help eradicate poverty without harming the environment. The more we enforce use of Renewable Energy, the more we would succeed in Decarbonising the atmosphere. There are 3 aspects of Climate Justice : (a) Reparatory (b) Compensatory and (c) Obligatory. The principle of common but differential responsibilities and respective capabilities (CBDR&RC), creation of global climate fund and the idea to set up Loss & Damage Fund reflect the same. But, implementation has been weak.

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