Heating our climate damages our economies
A PIK study reveals greater costs than expected and that damage from weather extremes would be most costly of all. Previous research suggested that a 1°C hotter year reduces economic output by about 1%, whereas the new analysis points to output losses of up to three times that figure in warm regions and finds significant economic losses: 10% on a global average and more than 20% in the tropics by 2100. This is still a conservative assessment, since the study did not take into account damage from, for example, extreme weather events. Every tonne of CO₂ emitted in 2020 will cause economic damage amounting to between 73 and 142 dollars in 2010 prices. By 2030, the so-called social cost of carbon will already be almost 30 percent higher due to rising temperatures. By way of comparison: the carbon price in European emissions trading currently fluctuates between 20 and 30 euros per tonne, while the national carbon price in Germany rises from 25 euros next year to 55 euros in 2025. These current carbon prices thus reflect only a small part of the actual climate damage. According to the polluter-pays principle, they would need to be adjusted upwards significantly, the study says.