Report: Green and just transition offers $10trn opportunity for global economy

The report argues that aspects like biodiversity and adaptation aren't accounted for under current taxonomies

Arup and Oxford Economics have published a new report exploring how the global economy can benefit from a green revolution that would see green industries massively contribute to global GDP.

The report notes that a green economy, which also encompasses supply chains, could be worth more than $10.3trn to the global economy by 2050, more than 5% of the global GDP.

Arup’s global strategy skills leader Brice Richard said: “Fear is a compelling reason to act on climate change, but we believe human ambition can be another critical driver of environmental action. This report shows the green transition is not a burden on the global economy, but a substantial opportunity to bring about a greater and more inclusive prosperity.”

A key aspect of the report is a new “comprehensive” taxonomy of the green economy and what it entails. The report claims the most definitions of the green economy are developed from a “financial compliance mindset or otherwise are often overly focused on specific contexts, such as decarbonisation”. The new report, however, encompasses broader environmental and value-creation criteria.

The new definition incorporates climate change mitigation and adaptation goals, and includes circularity, biodiversity and preservation, as well as positive economic and social outcomes. As such, more than 500 “green activities” are captured under the new taxonomy, with the report also detailing how transitional sectors, such as natural gas and energy, can be introduced as the sectors move away from fossil fuels.

Alongside the taxonomy, the report provides frameworks to help identify which opportunities, activities and transitions are best fit for which economies and details how different tools can be utilised by policymakers to help spur green markets.

The report notes that a “disruption” caused by the shift to clean energy will create new competitive opportunities for industries and that businesses can increase market shares by adapting quickly to changing demands around sustainability, while also hiring and retaining more capable talent in the workforce.

Oxford Economics’ climate scenario analysis, included in the report, found that combining carbon pricing with “productivity-oriented policies” that attract public and private investment can not only help the economy decarbonise, but also deliver more prosperous and sustainable industries in the long run.

Oxford Economics’ chief executive Adrian Cooper said: “As economists, we have to be honest about the fact that mitigating climate change will be expensive. But the transition to a carbon-neutral global economy also presents compelling opportunities.

“Our hope is that as the world and its political and business leaders look towards another year of progress in advance of next year’s COP Summit, this analysis will provide a constructive contribution to their understanding.”