Abstract
The recent IPCC Special Report on global warming of 1.5 °C emphasizes that rapid action to reduce greenhouse gas (GHG) emissions is vital to achieving the climate mitigation goals of the Paris Agreement. The most-needed substantial upscaling of investments in GHG mitigation options in all sectors, and particularly in manufacturing sectors, can be an opportunity for a green economic development leap in developing countries. Here, we use the Brazilian manufacturing sectors as an example to explore a transformation of its economy while contributing to the Paris targets. Projections of Brazil’s economic futures with and without a portfolio of fiscal policies to induce low carbon investments are produced up to 2030 (end year of Brazil’s Nationally Determined Contribution—NDC), by employing the large-scale macro econometric Energy-Environment-Economy Model, E3ME. Our findings highlight that the correct mix of green stimulus can help modernize and decarbonize the Brazilian manufacturing sectors and allow the country’s economy to grow faster (by up to 0.42% compared to baseline) while its carbon dioxide (CO2) emissions decline (by up to 14.5% in relation to baseline). Investment levels increase, thereby strengthening exports’ competitiveness and alleviating external constraints to long-term economic growth in net terms.
Highlights
The twin challenge of pursuing socioeconomic development while reducing greenhouse gas (GHG) emissions to the levels needed to meet the Paris Agreement’s [1] temperature goals in developing countries is often recognized
The IPCC AR5 [2] reports that reaching to levels of atmospheric GHG concentrations that are consistent with warming below 2 ◦C relative to pre-industrial levels, results in net macroeconomic losses that range between 2% and 15% of global GDP in relation to a baseline without mitigation
External constraints to long-term economic growth are related to insufficient productive modernization, such that exports specialize in low added-value products, and more technologically elaborated goods and services, which are necessary for industrial development, must be obtained from the external market via imports [64,65,66]
Summary
The twin challenge of pursuing socioeconomic development while reducing greenhouse gas (GHG) emissions to the levels needed to meet the Paris Agreement’s [1] temperature goals in developing countries is often recognized. The IPCC AR5 [2] reports that reaching to levels of atmospheric GHG concentrations that are consistent with warming below 2 ◦C relative to pre-industrial levels, results in net macroeconomic losses that range between 2% and 15% of global GDP in relation to a baseline without mitigation (the IPCC SR1.5 [3] did not assess macroeconomic costs of reducing global GHG emissions to the level required to achieve 1.5 ◦C and 2 ◦C pathways) These existing estimates of net macroeconomic costs of mitigation can lead to the misleading perception that economies perform better when no explicit action to reduce GHG emissions is taken and that mitigation policies are necessarily costly in macroeconomic terms.
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