This report examines the evidence on the economic impacts of climate change and explores the economics of stabilising greenhouse gases in the atmosphere. It also considers the complex policy challenges involved in managing the transition to a low-carbon economy and in ensuring that societies can adapt to the consequences of climate change that can no longer be avoided. The scientific evidence points to increasing risks of serious, irreversible impacts from climate change associated with business-as-usual (BAU) paths for emissions. If no action is taken to reduce emissions, the concentration of greenhouse gases in the atmosphere could reach double its pre-industrial level as early as 2035, virtually committing populations to a global average temperature rise of over 2°C. The EU ETS is the world’s largest carbon market. The structure of the third phase of the scheme, beyond 2012, is currently under debate. It is asserted that this is an opportunity to set out a clear, long-term vision to place the scheme at the heart of future global carbon markets. In addition to this, the authors identify the establishment of a carbon price through tax, trading or regulation, as an essential foundation for climate-change policy. Key points stressed include:
adaptation efforts in developing countries must be accelerated and supported, including through international development assistance
there is still time to avoid the worst impacts of climate change if strong collective action starts now
curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions and greater international co-operation to accelerate technological innovation and diffusion will reduce the costs of mitigation
scaling up flows of carbon finance to developing countries to support effective policies and programmes for reducing emissions would accelerate the transition to a low-carbon economy.