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How Do Greenhouse Gases Affect the Economy?

Climate change is the greatest human issue of our time The global temperature has increased by 1 degree Celsius since the preindustrial era and, under the current climate policies, they are likely to rise by 3.1-3.7C before this century’s end. Why is it necessary to cut carbon dioxide emissions? Carbon emissions stay on the planet for a period of 100 years, and as much as 80percent of them dissolve to the ocean in a span between 20 and 200 years. The issue impacts the environment, but also the economy. Research shows that cutting carbon emissions can boost economic growth, however can governments take the action required?

What is the reason we need to Cut Carbon Emissions?

Global temperature rise and climate change are creating conditions that are unsuitable for living and pose greater dangers to the health of people. The problems caused by the high carbon emissions into the atmosphere are extensive and extensive. From aggravating the effects of outdoor air pollution that according to the World Health Organisation led to approximately 4.2 millions premature deaths 90% of these are in middle and low-income countries and ocean acidification – which causes the temperature of the ocean to rise as coral bleaching occurs, causing irreparable harm to marine ecosystems, to food insecurity, when changes in precipitation and temperature impact the yield of crops and alters areas of cultivation.

What are the effects of Greenhouse Gases on the economy?

A study from 2017 found the following: in China, 1.23 million air pollution-related deaths occurred in 2010, which accounted for the equivalent of 13.2 percent of the nation’s GDP. The similar year air pollution accounted for more than 23 000 deaths across the UK and accounted for up to 7.1 percent of the GDP. A different report predicts that annual premature deaths caused by outdoor air pollution could rise by 9 million by 2060 from 3 million deaths in 2010. There will also be an increase in global annual hospital admissions to 11 million patients in 2060, up from 3.6 million in 2010. One of the most significant advantages of cutting the carbon footprint is it could reduce death rates attributed to air pollution. It also helps to reduce the strain on health systems.

In order to achieve growth in the economy and still focus on cutting carbon emission, separation between the two needs to be achieved. There are numerous ways to accomplish this and one of them is the introduction of carbon taxes.

Carbon taxation is seen as a means to cut emissions while also making economic efficiency and are viewed as a method to boost the efficiency for the economic system, reduce dependence on fossil fuels from abroad (for countries that import them) as well as reduce pollution and reduce government expenditure. In the last twenty years Sweden have proven that through their carbon tax. introduced in 1991, the cost of carbon has steadily increased increasing from EUR29 and then EUR125 in 2014. Worldwide, Sweden has the highest tax rate on carbon worldwide and has managed to attain decoupling. The money generated from this tax can be used in any country that is in need of it.

China is the largest global carbon emitter and has significant amounts of pollutant pollution. The Low-Carbon Pilot Plan (CLCP) was adopted across five provinces and eight cities, aimed at separating the growth of economics from fossil fuel consumption by transforming to an economy that is based on efficiency in energy and renewable energy sources. Although the cities that have been piloted have made strides in developing low-carbon plans but there are some obstacles, including a lack clear definition of ‘low-carbon city’, the confusion that results from multiple parallel programs and insufficient policies to support them. But the CLCP helps to boost regional economic growth and, while it can increase manufacturing costs, it helps to encourage the expansion of companies production and the yields. Furthermore, it aids in improve the internal administration, effectiveness, and innovation, which increases greater productivity and competitiveness. A study from 2019 indicates that because of the CLCP the level of competitiveness on the market has increased, thereby promoting economic growth not just by selling goods at affordable costs, but pushing to innovating. This is apparent in the month of July in 2021 when China was able to introduce an emissions trading scheme for the nation after a long delay. The market witnessed 4.1 million tons of carbon dioxide emission quotas valued at USD$32 million being exchanged on the very initial day of its launch which makes it the largest carbon market in the world.

A 2017 study suggests the best method to prevent the cost of production rising is to create new technology that can reduce carbon dioxide emissions, while also reducing costs. Based on the National Statistics in the year 2017, because of not just climate regulations and economic structural changes and technological developments which took place in the UK The region was able achieve decoupling between the years 1985 and 2016 and the GDP per head grew by 70.7 percent, while emissions fell by 34 percent. The technological advances involved improvements in the efficiency of vehicles and the replacement of fossil fuels by renewable energy. In the years 1990 to 2017 the consumption of renewable energy sources increased by 1267 percent, while the consumption of fossil fuels declined by 22 percent. Denmark’s rapid rise in renewable energy helped reduce emissions and encouraged local production.

In contrast, productivity is adversely affected by the climate change due to the destruction of infrastructure due to disasters such as floods sea level rise, flooding and the impact on agriculture.

A study published in the journal Nature states that for every million tonnes of CO2, the loss in GDP could reach as high as one-half of a percent. The developed countries like Canada, Germany, New Zealand and the UK will suffer less than 0.1 percent of productivity loss per unit of emission. But, the loss of productivity in developing countries such as India, Thailand and Malaysia can range from 3% to 5% of GDP for each billion tonnes of carbon released. In essence keeping carbon emissions low will result in a decrease on productivity declines (the amount of reduction varies on the nation).

Furthermore, if we take advantage of all the low-cost climate mitigation opportunities that are currently available the total cost of addressing the climate crisis will be between 200 and 300 billion euros per year by 2030 . This is just 1% less predicted global GDP in 2030.

It is crucial that all countries get this decoupling done and reduce carbon emissions, perhaps with a carbon tax to ensure a economically sustainable and prosperous society. Inaction or take action too late, could lead to more climate change, which will affect the chance that humanity has of getting a new lease for the Earth.