Men and numbers
Environment. On Tuesday, November 5, the NGFS (Network for greening the financial system) published the fifth vintage of its long-term climate scenarios. The objective? Evaluate, prospectively and according to different hypotheses, climate risks.
- Published on November 20, 2024
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In partnership with the Banque de France
The Banque de France is a founding member of this network launched during the Paris One Planet Summit in December 2017. It is a group of central banks and supervisors wishing, on a voluntary basis, to share best practices and contribute to the development of environmental and climate-related risk management in the financial sector, as well as mobilize public and private financing to support the transition to a sustainable economy.
GDP losses more massive than expected
What to remember from this fifth phase: GDP losses due to climate change are expected to be greater than previous estimates.
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Estimates of GDP losses with current policies in place. (Credit: NGFS.NET) -
Estimates of GDP losses if strict climate and innovation policies are introduced. (Credit: NGFS.NET)
This development is due to the fact that the updated scenarios are based on a new damage function which covers a broader set of climatic events and captures the persistent effects of climatic shocks, notably including temperature variability, annual precipitation, number of wet days and extreme daily precipitation.
The price of Carbon increases
In addition to more alarmist forecasts than initially, it is the urgency of implementing climate change mitigation measures that emerges from this latest publication. These measures, which would have a minor cost compared to the cost of climate change, would significantly mitigate the impact of physical damage on the economy. A carbon price of around $300 per tonne of CO₂ would be needed by 2035 to incentivize a transition to net zero carbon emissions by 2050, which is around $50 per tonne additional than previous forecasts .
To arrive at these conclusions, the NGFS compared different scenarios, including two extremes: “Zero emissions in 2050”, in which global warming would be limited to 1.5°C thanks to strict climate policies and innovation. , in order to achieve net zero CO₂ emissions around 2050; and “Current Policies,” where only currently implemented policies are retained, which would result in high physical risks.
The NGFS also took into account the most recent data on demographic trajectories and GDP developments at the national level. The result is clear: in the “Zero emissions in 2050” scenario, the loss of global GDP in 2050 due to physical damage, according to the most recent data from climate science research, would be 7.3%, while it would be 14.8% if no additional mitigation measures were taken. Conclusions that encourage action and international coordination to limit the impacts of climate change on the global economy.
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