Climate goals as an economic engine: opportunities for growth and development!

Climate goals as an economic engine: opportunities for growth and development!

The latest OECD and UNDP report, “Investing in Climate for Growth and Development: The Case for Enhanced Nationally Determined Contributions (NDCs),” highlights the economic opportunities presented by ambitious climate targets. This becomes particularly clear against the background of global developments and challenges. According to the report published on the Sunny side published, well-designed NDCs can not only reduce greenhouse gas emissions but also promote inclusive economic growth.

Global emissions reached a record high in 2024 and average temperatures exceeded the critical 1.5°C mark for the first time. To break this trend, countries are required to submit new climate plans every five years. The next round of NDC will take place in 2025, with the possibility of increasing shared ambitions. By the end of May 2023, 22 countries had already submitted new NDCs.

Economic perspectives and climate goals

The report finds that global gross domestic product (GDP) could grow by around 60% between 2022 and 2040 if appropriate measures are taken. Compared to the scenario assuming continuation of current policies, GDP in 2040 would be 0.2% higher. This is supported by long-term economic arguments that emphasize the avoided losses from climate-related risks and the integration possibilities of climate and development strategies.

OECD Secretary General Mathias Cormann emphasizes that growth and climate goals can go hand in hand. UNDP Administrator Achim Steiner sees implementing greener economies as a way to boost GDP growth. Integrating climate and development strategies could help provide financial security to one in five people in extreme poverty by 2050.

Results of the Global Stocktake and the importance of the NDCs

The 2015 Paris Agreement sets out a five-year cycle to increase climate ambition, supported by the Global Stocktake (GST). The GST allows parties to assess progress on climate policy and focuses on solutions and implementation options for effective climate action. According to the Federal Environment Agency The NDCs for 2025 must be formulated in line with the global temperature target of a maximum of 1.5 °C above pre-industrial levels.

The demands to reduce greenhouse gases include, among other things, doubling global renewable energy capacity and widespread efficiency improvements by 2030. Current forecasts show that emissions would consume up to 86% of the carbon budget for the 1.5°C target and 37% for the 2°C target if no additional measures are taken.

Strategic priorities for the NDC cycle

The strategic priorities for the upcoming NDC cycle include high-level political engagement, aligning climate and development goals, and engaging the private sector. Furthermore, optimizing public finances and strengthening international financial institutions is essential. The report makes it clear that NDCs must be formulated transparently and without loopholes in order to achieve the required reductions in greenhouse gas emissions.

Overall, the analysis shows that the implementation of the proposed climate goals is crucial for preserving the global environment and the level of prosperity of future generations. There is a clear need for action to close the gap between the planned measures and the actually required target values.