The transition to a more carbon-neutral society will slow economic growth somewhat and increase inflation in the short term, admits the International Monetary Fund (IMF).
But postponing the measures and leaving them for later will multiply that cost, according to a report published this Wednesday by the agency.
“Decades of procrastination have transformed what could have been a smooth transition to a more carbon-neutral society into what is likely to be a more difficult transition,” he notes.
Different hypotheses developed by the Fund's economists on the speed of transition of electricity generation towards low-carbon technologies place these costs between 0.15 and 0.25 percentage points of GDP growth and between 0.1 and 0, 4 additional percentage points of inflation per year.
That is, if the appropriate measures are applied immediately and gradually introduced over the next eight years, so that the goal of emitting 25% less greenhouse gases by the end of the decade than in 2022 is achieved. It is the only way to have a chance of achieving the goals set in Paris in 2015 and "avoid catastrophic climate disruption", says the agency, which admits that since the energy transition has to be fast in any case,
More waiting, more impact
But the Fund's message is that if you leave your homework for later with the excuse that this is not the best time, the cost will be much higher.
"The longer we wait, the worse the impact will be," say economists Benjamin Carton and Jean-Marc Natal in an IMF blog.
The in-depth analysis of the implications of delaying the energy transition has been included in a chapter
of the World Economic Outlook
report that is published this Wednesday, in advance of the Fund's assembly that is held next week in Washington.
In its model to assess the short-term impact of the transition to renewable energy, the IMF analysis has divided countries into four groups: China, the euro zone, the United States and a bloc representing the rest of the world.
They assume that each group introduces budget-neutral policies, including taxes on greenhouse gases, which are gradually increased to achieve a 25% reduction in emissions by 2030, combined with transfers to homes, subsidies for low emission technologies and tax cuts on work.
Impact by regions
The results show that in Europe, the United States and China costs are likely to be lower, ranging from 0.05 percentage points to 0.20 percentage points on average over eight years.
Instead, they will be higher for fossil fuel exporting countries and highly energy-intensive emerging market economies.
For its part, the impact on inflation would range between 0.1 and 0.4 annual points.
The IMF warns that policies that are not very credible, with steps forward and backwards, and those that delay the energy transition, will increase their economic costs.
The Fund warns against the temptation to avoid taking action now on the grounds that inflation is high.
According to his analysis, delaying the energy transition would end up causing higher inflation and lower growth.
The model is based on the premise that countries meet emission reduction targets, which remains to be seen.
But the alternative, they warn, is much worse: “In all cases, policymakers must take into account potential long-term production losses from uncontrolled climate change, which could be orders of magnitude higher, according to some estimates.” , point out the economists Carton and Natal.