To wrap-up our series of Climate Change Quick Guides, this part talks about what is the Paris Agreement, the economic impacts and the actual cost of climate change, and how technology has a role in this fight.

9. What is the Paris Agreement?

The Paris Agreement is a legally binding international treaty on climate change, adopted by 196 Parties at the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) held in Paris in 2015. The Paris Agreement aims to limit global warming to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C. And while also enhancing countries’ ability to adapt to the adverse impacts of climate change.

The Agreement requires countries to submit their Nationally Determined Contributions (NDCs), which are their individual targets for reducing greenhouse gas (GHG) emissions and adapting to the impacts of climate change. These NDCs are reviewed every five years, and countries are expected to increase their level of ambition over time. The Paris Agreement also provides a framework for transparency and accountability in reporting and reviewing progress toward achieving the agreed targets.

As of April 2023, 193 countries have signed the Paris Agreement, and 191 have ratified it. The two countries that have not ratified the agreement are Iran and Turkey. The United States, the world’s second-largest emitter of GHGs, withdrew from the Paris Agreement in 2020 but rejoined under the new Biden administration in 2021.

Each country’s NDC outlines its specific targets and plans for reducing GHG emissions and adapting to the impacts of climate change. The targets and strategic planning vary from country to country, depending on their specific circumstances, including their level of economic development, their sources of emissions, and their vulnerability to the impacts of climate change.

For instance, China, the world’s largest emitter of GHGs, aims to peak its CO2 emissions by 2030 and achieve carbon neutrality by 2060. China’s NDC includes targets for increasing the share of non-fossil fuels in primary energy consumption, increasing forest coverage, and promoting low-carbon development in key industries.

The European Union (EU) aims to reduce its GHG emissions by at least 55% by 2030 compared to 1990 levels and achieve net-zero emissions by 2050. The EU’s NDC includes targets for increasing the share of renewable energy in the energy mix, improving energy efficiency, and supporting the transition to sustainable transportation.

The United States aims to reduce its GHG emissions by 50-52% below 2005 levels by 2030 and achieve net-zero emissions by 2050. The U.S.’s NDC includes targets for accelerating the deployment of renewable energy, promoting energy efficiency, and reducing emissions from transportation, buildings, and industry. 

10. What are some of the economic impacts of climate change?

Climate change has significant economic impacts that affect a wide range of sectors and activities. The following are some of the major economic impacts of climate change:

Damage to infrastructure and property

Climate change can cause more frequent and severe weather events, such as floods, hurricanes, and wildfires, which can damage infrastructure and property. This can result in costly repairs and reconstruction, and potentially lead to reduced property values and a decline in economic activity in affected areas.

Reduced agricultural productivity

Climate change can also affect agriculture by altering precipitation patterns, increasing the frequency and severity of droughts and heat waves, and changing the distribution of pests and diseases. These factors can lead to reduced crop yields and lower agricultural productivity. That in turn, can result in higher food prices and food shortages, particularly in developing countries.

Increased health costs

Climate change can have adverse impacts on human health, such as increased incidences of heat stroke and respiratory illnesses. These impacts can result in higher healthcare costs and lost productivity, particularly in regions where the healthcare system is already strained.

Disruptions to global trade

Climate change can also disrupt global trade patterns by causing more frequent and severe weather events, which can damage transportation infrastructure, disrupt supply chains, and cause delays in the movement of goods. These disruptions can result in increased costs for businesses and consumers and potentially lead to economic losses for affected regions.

Costs of adaptation and mitigation

The costs of adapting to climate change, such as building sea walls or relocating communities, and the costs of mitigating greenhouse gas emissions, such as investing in renewable energy and transitioning to low-carbon transportation, can also have significant economic impacts. These costs can vary depending on the region and the level of ambition of climate policies.

Overall, the economic impacts of climate change can be significant and long-lasting, affecting multiple sectors and activities. Inaction on climate change could lead to increasingly severe economic impacts in the future, while ambitious climate action could create economic opportunities and foster sustainable and resilient economic development.

11. What is the economic cost in dollars of climate change?

Estimating the cost of climate change is a complex task that involves predicting the impact of climate change on various economic sectors, such as agriculture, infrastructure, and health, as well as the costs of adaptation and mitigation. While the exact cost of climate change is difficult to quantify, various studies have attempted to estimate the economic impact of climate change.

A 2020 report by the Global Commission on Adaptation estimates that the cost of climate change adaptation in developing countries could range from $140 billion to $300 billion per year by 2030, depending on the level of ambition of adaptation efforts. The report notes that the costs of inaction on adaptation could be much higher, resulting in economic losses that could exceed $1 trillion per year by 2050.

Additionally, a 2022 report by the Climate Impact Lab estimates that without significant reductions in greenhouse gas emissions, the global economic cost of climate change could reach $100 trillion by the end of the century. 

It is important to note that these estimates are subject to significant uncertainties and assumptions, and the actual cost of climate change could be higher or lower depending on various factors, such as the pace of climate change, the effectiveness of adaptation and mitigation efforts, and the level of economic development.

Overall, while the cost of climate change is difficult to quantify precisely, these estimates suggest that the economic impact of climate change could be significant, potentially reaching hundreds of billions or even trillions of dollars per year, depending on the level of action taken to address it.

12. What is carbon pricing?

Carbon pricing refers to a market-based mechanism that aims to reduce greenhouse gas emissions by putting a price on carbon dioxide and other greenhouse gas emissions. The idea behind carbon pricing is to create economic incentives for individuals and organizations to reduce their carbon emissions. This can be done by either by reducing their consumption of fossil fuels or by investing in low-carbon technologies.

Carbon pricing can take different forms, but the most common approaches are:

Carbon tax

A carbon tax is a fee imposed on each unit of greenhouse gas emissions. The tax rate is typically based on the carbon content of fossil fuels or on the emissions from industrial processes. The goal of a carbon tax is to make the use of fossil fuels more expensive, thereby incentivizing individuals and businesses to reduce their carbon emissions.

Emissions trading system (ETS)

An ETS is a cap-and-trade system that sets a limit, or cap, on the total amount of greenhouse gas emissions allowed from a particular sector or region. Companies are then given a certain number of emissions allowances that they can either use to cover their emissions or trade with other companies. The goal of an ETS is to create a market for emissions allowances, where companies can buy and sell allowances based on their emissions reduction targets.

Both carbon taxes and ETSs aim to create an economic incentive for individuals and businesses to reduce their carbon emissions by making the use of fossil fuels more expensive. By putting a price on carbon, these mechanisms also help to internalize the external costs of carbon emissions, such as the costs of climate change impacts on health, infrastructure, and agriculture.

Carbon pricing has been implemented in various countries and regions around the world, including the European Union, Canada, Japan, South Korea, and several U.S. states. While there is debate about the best approach to carbon pricing, most experts agree that pricing carbon is an essential tool for reducing greenhouse gas emissions and mitigating the impacts of climate change.

13. What is the role of technology in addressing climate change?

Technology plays a critical role in addressing climate change by providing tools and solutions to reduce greenhouse gas emissions, increase energy efficiency, and facilitate the transition to a low-carbon economy. Some examples of how technology can help include:

Renewable energy

Advancements in solar, wind, geothermal, and other renewable energy sources have made them more affordable and accessible, allowing for the reduction of reliance on fossil fuels.

Energy storage

As renewable energy sources are intermittent, energy storage systems like batteries are needed to store excess energy produced during peak periods and provide backup power when needed.

Smart grid

Smart grid technology allows for the better management of energy demand and supply, reducing energy waste and optimizing the use of renewable energy sources.

Carbon capture and storage

Technologies that capture carbon dioxide emissions from power plants and other industrial processes can help reduce emissions and mitigate climate change.

Sustainable transportation

Advances in electric vehicles, hydrogen fuel cells, and other low-carbon transportation solutions can help reduce emissions from the transportation sector, which is a major contributor to greenhouse gas emissions.

Sustainable agriculture

Technology can help farmers reduce the environmental impact of agriculture, such as precision farming techniques and the use of drones for crop monitoring and management.

Overall, technology can play a crucial role in helping the world transition to a more sustainable, low-carbon future and mitigate the impacts of climate change.