SINGAPORE - If global temperatures rise by 3 deg C above pre-industrial levels by the end of the century, the global economy could face losses amounting to US$178 trillion (S$245 trillion) by 2070, a new study has found.
However, if the warming is limited to less than 1.5 deg C by the century's end through achieving global net-zero emissions by 2050, economies could not only avoid losses but even stand to gain US$43 trillion by 2070 instead, said the study by global consulting firm Deloitte.
The Global Turning Point Report by the Deloitte Centre for Sustainable Progress was released during the World Economic Forum's annual meeting on Tuesday (May 24).
Climate scientists have said that limiting global warming to 1.5 deg C above pre-industrial times would help the world avoid catastrophic climate impact.
Under the Paris climate pact, which almost 200 nations, including Singapore, have signed, countries agreed to take action to limit warming to well under 2 deg C - preferably 1.5 deg C - above pre-industrial levels.
But based on the current pledges made by countries, the world is on track to warm by 2.7 deg C above pre-industrial levels by the century's end, an analysis by the United Nations showed in 2021.
Out of the Americas, Europe and Asia-Pacific, the Deloitte study identified Asia-Pacific as the region whose economy could be most severely impacted if global temperatures breach the 3 deg C threshold.
The report found that the Asia-Pacific region, which comprises China, Japan, South Korea, India, South-east Asia and Taiwan, could face a cumulative economic loss of US$96 trillion by 2070.
These losses make up more than half of the total global losses, and are driven by many climate impacts, such as productivity loss from heat stress and sea level rise, the report said.
In May, CNN reported that a deadly heatwave radiating across India led to the loss of wheat harvests in Punjab. More than 500kg of wheat per hectare was lost to this heatwave, which marked an average 7 deg C increase from usual temperatures in April.
But the report also showed that if the Asia-Pacific region takes rapid steps to cut its emissions, such as by switching to renewable energy, its economy stands to grow around US$9 trillion more a year, compared with a scenario in which no such action is taken and the world warms by 3 deg C.
This figure is nine times the expected yearly gains through decarbonisation in regions such as North America and Europe.
The Deloitte report said such substantial growth can be attributed to the Asia-Pacific's "first mover" advantage when it comes to investments in sustainable technologies, with countries such as India and China reducing the cost of renewables globally, after having rapidly deployed sustainable energy solutions domestically.
For instance, India is currently home to the world's largest solar park and the biggest floating solar energy plant, which has been operational since 2021.
China has also been operating the world's second-largest solar park, with a capacity of 2.2 gigawatts, since 2020.
This has created opportunities for players in the Asia-Pacific to become exporters of decarbonising technologies, with China the current global leader in exporting solar energy components, said the report.
By acting to mitigate climate change more quickly than their Western counterparts, Asia-Pacific will be able to benefit economically from decarbonisation by the 2020s, much sooner than the projected gain for the Americas and Europe by the 2050s, the report added.
The study concluded that economies need to start shifting away from fossil fuels and switch to renewable energy, but acknowledged that this pivot would require governments and the private sector to make substantial investments in renewable energy and green technologies for use in different industries.
This could also spur new sources of growth and job creation, it said.
Deloitte's global chief executive Punit Renjen said: "The time for debate is over. We need swift, bold and widespread action now across all sectors."
He added: "Will this require a significant investment from the global business community, from governments, from the non-profit sector? Yes. But inaction is a far costlier choice."
Dr Victor Nian, an adviser to the Centre for Strategic Energy and Resources, an independent think-tank established in Singapore, added that Asia is currently experimenting substantially in clean energy solutions.
Dr Nian cited the example of small modular reactor technologies being tested in Asia alongside other options such as hydrogen and renewables to meet decarbonisation targets and other national energy objectives.
For instance, a report by the Energy Market Authority (EMA) said nuclear energy has been identified as a potential power source for Singapore by 2050.
Noting the unstable geopolitical climate that may undermine economic growth, Dr Nian added: "It is important for Asia to stay open to technology options despite the current geopolitical turbulence."