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OECD Environmental Outlook to 2050:The Consequences of Inaction
Simon Upton
Environment Director, OECD
New York, 21 March 2012
2
Linking economy and environment
Health &
environment
Local air
pollution
(under
construction)
Land use
Yie
ld
eff
icie
nc
y
Biodiversity
Energy use
Fu
el p
ric
es
En
erg
y
eff
icie
nc
y
3
DeforestationGHG emissions
Climate
change
Water stress
& water
quality
Economic growth
Population & demographics Capital supply Natural resources
Bioenergy
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
GDP +124%
GDP +478%
GDP +458%
GDP +295%
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model
Note: values using constant 2010 purchasing power parity (PPP) exchange rates.Source: OECD Environmental Outlook Baseline; output from ENV-Linkages.
5
Environmental Outlook to 2050:Socioeconomic Developments
Projections for real gross domestic product: Baseline, 2010-2050
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
2010 2015 2020 2025 2030 2035 2040 2045 2050
Bill
ions o
f consta
nt 2010 U
SD
OECD BRIICS RoW US China India
Growth – not just a developing country concern
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
1996 1998 2000 2002 2004 2006 2008 2010 2012
Mill
ion
sTo return to 2007 employment levels
Additional unemployed since 2007 (Right hand axis)
Employment growth (%)(Left hand axis)
Jobs
0
2
4
6
8
10
12
14
16
Per cent of GDP
Deficit improvement to achieve 60% debt to GDP by 2025
DebtDemographics
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Pensions
Long term care
Health
Percent of GDP
Changes in age related public spending to 2025
Source: OECD Environmental Outlook Baseline; output from ENV-Linkages. 7
Environmental Outlook to 2050: Climate ChangeGHG emissions by region: Baseline, 2010-2050
0
10
20
30
40
50
60
70
80
90
2010 2015 2020 2025 2030 2035 2040 2045 2050
GtC
O2e
OECD AI Russia & rest of AI Rest of BRIICS ROW
Environmental State and Pressures
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using IMAGE model suite
8
CO2 concentrations
3 - 6°C by 2100
200
300
400
500
600
700
800
900
1 000
1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
CO
2co
ncen
trati
on
(p
pm
)
450 ppm
Scenarios for the future to 2100
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model
9
0
10
20
30
40
50
60
70
80
90
100
110
120
130
2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
GtCO2e Outlook Baseline 450 ppm Core
450 ppm Delayed Action 450 ppm Accelerated Action
The 450ppm core scenario, based on least cost timing of action
A « delayed action » scenario based on Copenhagen pledges
An « accelerated action » scenario, implying reduced reliance on new technologies
A 550ppm « surrender « scenario
20
25
30
35
40
45
50
55
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GtCO2e
UNEP (2010) range Outlook Baseline
450 ppm Core 450 ppm Delayed Action
450 ppm Accelerated Action 550 ppm Core
0-
Zooming in to 2050
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model 10
The 450ppm core scenario, based on least cost timing of action
A « delayed action » scenario based on Copenhagen pledges
An « accelerated action » scenario, implying reduced reliance on new technologies
A 550ppm « surrender « scenario
Baseline GHG emissions in 2050
= 81 GtCO2e
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030 2035 2040 2045 2050
Index 2010=100
Baseline
450 ppm core scenario
The cost of action is still affordable…for now
11
The average GDP growth rate would slow by 0.2 percentage point between 2010 and 2050,
from 3.5% to 3.3% in a context of quadrupling of world GDP.
Benefits of action are not included in GDP projection
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model
GDP -5.5%
GHG emissions -69.5%
GDP
GHG emissions
Economic impact of technology choices in 2050
Leaving out any single technology – such as nuclear or carbon capture and storage (CCS) – will make the carbon and macroeconomic costs of the transition higher
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model 12
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
450 scenario (all technologies)
No CCS Nuclear phase-out
Low ef f iciency & renewables
% Im
pact o
n r
eal
inco
me in
2050
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
450 scenario (all technologies)
No CCS Nuclear phase-out
Low ef f iciency & renewables
% Im
pact o
n r
eal
inco
me in
2050
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
450 scenario (all technologies)
No CCS Nuclear phase-out
Low ef f iciency & renewables
% Im
pact o
n r
eal
inco
me in
2050
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
450 scenario (all technologies)
No CCS Nuclear phase-out
Low ef f iciency & renewables
% Im
pact o
n r
eal
inco
me in
2050
Source: OECD Environmental Outlook Baseline; output from IMAGE13
Environmental Outlook to 2050: Biodiversity
Remaining MSA
Food Crop
Bioenergy
Pasture
Forestry
Former Land-Use
Nitrogen
Climate Change
Infr+Encr+Frag
50%
60%
70%
80%
90%
100%
2010 2030 2050
MS
A
0-
Effects of different pressures on terrestrial MSA: Baseline, 2010 to 2050
Source: OECD Environmental Outlook Baseline; output from IMAGE14
Environmental Outlook to 2050: Water
Global water demand: Baseline scenario, 2000 and 2050
irrigation domestic livestock manufacturing electricity
0
1 000
2 000
3 000
4 000
5 000
6 000
2000 2050 2000 2050 2000 2050 2000 2050
World OECD BRIICS RoW
Km
3
+400%
+130%
+140%
Source: OECD Environmental Outlook Baseline; output from IMAGE15
Environmental Outlook to 2050: Water
Nitrogen effluents from wastewater: Baseline, 2000 and 2050
0
2
4
6
8
10
12
14
16
18
20
2000 2050
OECD India China Africa Rest of the world
Millions of tonnes of N / year
0
2
4
6
8
10
12
14
16
18
20
2000 2050
OECD India China Africa Rest of the world
Millions of tonnes of N / year
0
2
4
6
8
10
12
14
16
18
20
2000 2050
OECD India China Africa Rest of the world
Millions of tonnes of N / year
Source: OECD Environmental Outlook Baseline; output from IMAGE16
Environmental Outlook to 2050: Water
* Child mortality onlySource: OECD Environmental Outlook Baseline; output from IMAGE
17
Environmental Outlook to 2050: Health & Env. Global premature deaths from
selected environmental risks: Baseline, 2010 to 2050
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Particulate Matter
Ground-level ozone
Unsafe Water Supply and Sanitation*
Indoor Air Pollution
Malaria
Deaths (millions of people)
2010
2030
2050
Source: OECD Environmental Outlook Baseline; output from IMAGE18
Environmental Outlook to 2050: What policies do we need?
• Make pollution more costly
-0.7
-0.2
0.3
0.8
1.3
1.8
2.3
2.8
3.3
3.8
4.3
Pe
r ce
nt
of
GD
P
Other Motor vehicles Energy
*: 2009 figures
The modest claims of environmental taxes (Revenues in % of GDP, OECD countries, 2010)
Source: OECD/EEA database on instruments for environmental policy; www.oecd.org/env/policies/database.
Killing two birds with one stone - Green Fiscal Reform
0
1
2
3
4
5
6
7
8
9
10
0 0.5 1 1.5 2 2.5 3
US
New Zealand
Japan
Ireland UK
Switzerland
Greece
Sweden
Netherlands
Revenue from taxes on energy, CO2 and other pollutants,% of GDP, 2008. Excludes vehicle taxes
Def
icit
imp
rove
men
t to
sta
bil
ise
deb
t b
y 2
02
5,
% o
f G
DP
Source: OECD Environmental Outlook Baseline; output from IMAGE21
Environmental Outlook to 2050: What policies do we need?
• Make pollution more costly
• Value and price the natural assets and
ecosystem services
How to squander a resource – the case of fishing
Source: “Sunken Billions”, FAO World Bank
Revenue, 2004
$78 bn
$50 billion
$10 bn+
Over-exploited(31%)
Fully-exploited(53%)
State of catch fisheries, 2008
Under-exploited(16%)
Operating deficit, $5 billion
Subsidies
Economic loss
Source: FAO
Source: OECD Environmental Outlook Baseline; output from IMAGE23
Environmental Outlook to 2050: What policies do we need?
• Make pollution more costly
• Value and price the natural assets and
ecosystem services
• Remove environmentally harmful subsidies
Why make CO2 cheaper if you’re trying to make it scarcer?
Source: OECD (2012), OECD Environmental Outlook to 2050, Baseline projection using ENV-Linkages model based on IEA data; OECD and IEA analysis see website: www.oecd.org/iea-oecd-ffs
24
-2
-1
0
1
2
3
4
5
Oil-exporting countries
India China Russia Rest of the World Non-EU Eastern European Countries
$ 44 billion,
2010, global renewable electricity subsidies
6% less emissions globally from removal
of these fossil fuel subsidies
USD $409 billion2010 , developing country fossil fuel
consumption subsidies
$45-75 billion
2010, in fossil fuel support
in OECD countries
Income gains from unilateral removal of fossil fuel consumer subsidies in emerging and developing countries (% change in HH income vs BAU)
Source: OECD Environmental Outlook Baseline; output from IMAGE25
Environmental Outlook to 2050: What policies do we need?
• Make pollution more costly
• Value and price the natural assets and
ecosystem services
• Remove environmentally harmful subsidies
• Devise effective regulations and standards
• Encourage green innovation
• Measure Progress
Challenges are so big that we can’t afford expensive solutions
What you don’t know can hurt you
www.oecd.org/environment/outlookto2050
