World to lose $245 trillion by 2070 if temperatures rise by 3 deg C: Study

If global temperatures rise by 3 deg C above pre-industrial levels by the end of the century, the world 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 may even 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 yesterday.

Climate scientists have said limiting global warming to 1.5 deg C above pre-industrial times would help the world avoid catastrophic climate impacts.

Under the Paris climate pact, almost 200 nations, including Singapore, have 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 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 last year.

Out of the Americas, Europe and Asia-Pacific, the study identified Asia-Pacific as the region whose economy could be most severely impacted if global temperatures breach the 3 deg C threshold.

It found that Asia-Pacific, 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.

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.

By acting to mitigate climate change more quickly than the West, Asia-Pacific can 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 from fossil fuels 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.

Deloitte's global chief executive Punit Renjen said: "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, said Asia is experimenting substantially with clean energy solutions.

He cited the example of small modular reactor technologies being tested in Asia with other options such as hydrogen and renewables to meet decarbonisation targets and other national energy objectives.

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."