Thereis nowlittledoubtthattheworldis approaching
a criticalcrossroadsonclimatechange.In 2021
AmericanswatchedwildfiresspreadacrosstheWest
withunprecedentedferocity.Coldsnapsinthecountry’s
heartlanddestroyedharvests,whiletheGulfwasbattered
byhurricanes.
Thescaleoftheseeventshasnotgoneunnoticed.CEOs
havedevotedmanypagesintheirshareholdernotestothe
threatofclimatechange,whilepoliticianshavebangedtheir
fistsin determination.Thecacophonydiesaway,however,
whentheyarepresentedwiththeupfrontcosts.
Decision-makersarelookingatthesecostsina siloedway.
A newreportfromtheDeloitteEconomicsInstituteseeks
toaddressthatcollectivesenseofshockhead-on.“The
world’scurrentsystemofeconomicproductionis creating
untenablechangestoourphysicalenvironment,sowe
needtocreatea newmodelforeconomicgrowth,”write
theauthorsofTheturningpoint:A neweconomicclimate
intheUnitedStates.“Everycorneroftheeconomywillbe
impacted,andeveryorganizationandindividualhasa role
inremakingthesystemsthatunderpinmodernlife.”
Thecostofinaction
Attheheartofthisanalysisis Deloitte’sD.Climatemodel
(RegionalClimateIntegratedAssessmentComputable
GeneralEquilibriumModel),whichmodelstheeconomic
impactofclimatechangescenarios.Theanalysismakes
thecostsandbenefits of climatepolicyresponsesand
investmentdecisionseasierto see,andoffersa longerview
ofwhatpolicydecisionscouldcosttheUSdowntheline.
Onexactlyhowmuchis at stake,Deloitte’sanalysisoffers
somesoberingfindings.Withoutsufficientactionon
decarbonization,theUSeconomystandstoseelosses of
$14.5trn(presentvalue)overthenext 50 years,ora lifetime
lossofnearly$70,000foreveryAmericanworkertoday.
Inthattime,theUSwouldalsoriskshedding900,000 jobs
eachyearonaverage.Losseswouldbeparticularlyhigh in
manufacturing,retailandtourism,andinthepublicand
privateservicesindustries.Reapingthespoils
Combatingtheseoutcomeswouldcomeata lower
economiccostthanbudgethawksmightexpect.It would
takesignificantinvestmentovermanyyears,thereport
finds,as theUSadjustspolicy,fundsresearchandbrings
onlinenewtechnologythatshiftsthenationawayfrom
emissions-intensiveproduction.But,accordingtoDeloitte,
thenecessarytransformationcouldbeaccomplished for
anaverageannualreductionof0.1%ofGDP,oranaverage
ofabout$35bn,everyyearto2050.Thisnetcostcaptures
theenormousinvestmentsthatwillleadtovaluecreation,
aswellasthedisruptiontoactivityinotherpartsofthe
economy.Thisanalysisalsoaccountsforthecostsof
locked-inclimatedamage,evenastheworldreaches
netzero.Butits modelsuggeststhatDeloittehasidentifiedwhat it
callsthe“turningpoint”– themomentatwhichthecosts
ofa massiveinvestmentindecarbonizationwouldbegin to
payoff. It findsthattakingstepsnowto investin theskills,
technologyandinnovationsrequiredtodrasticallycurb
carbonemissionswouldsetuptheUSforeconomicgains
everyyearfrom2048.ADVERTISEMENT
A new report by Deloitte identifi es an economic
“turning point” in America’s climate change journey.