How To Grow The Economy And Address Climate Change At The Same Time

It’s not an oxymoron–dealing with climate change can boost the global economy.

How To Grow The Economy And Address Climate Change At The Same Time
[Top photo: Flickr user Jacob Ehnmark]

In a sense, dealing with climate change isn’t that complicated. Certain sectors of the economy are disproportionately responsible for global warming and have disproportionate opportunities for fixing the problem. A new report says concentrating on just three areas–cities, land use, and energy–could generate 90% of the reductions we need to bring temperatures down to relatively safe levels.


According to the Global Commission on the Economy and Climate, a group made up of 24 government and business leaders, these areas hold the greatest potential to grow economies. We need to make investments in cities, agriculture, and energy not only because of climate change, but because of a host of other issues, from projected shortages of food to projected growth in city populations. Much of what the report proposes is really just sensible policy in sectors like urban planning and energy efficiency.

Flickr user Christine Puccio

“Some people argue that action to tackle climate change will inevitably damage economic growth, so societies have to choose: grow and accept rising climate risk, or reduce climate risk but accept economic stagnation and continued under-development,” says the report, which was prepared with the World Resources Institute think-tank, McKinsey and others.

“This view is based on a fundamental misunderstanding of the dynamics of today’s global economy… New pressures on resources, changing structures of global production and trade, demographic change and technological advances have already altered countries’ growth paths. They will make the future inescapably different from the past.”

Here are a few points dealing with those three key areas.


Cities are expected to add one billion people in the next 15 years and to be home to two-thirds of the world by 2050. The report calls for denser, transit-oriented development to reduce sprawl and cut emissions from energy and personal transport. The largest 724 cities could cut emissions by 1.5 billion tons of CO2 equivalent per year by 2030, mainly by discouraging car use and investing in things like bus rapid transit (BRT) and cycling. “There is now powerful evidence that more compact and connected urban development, built around mass public transport, can create cities that are economically dynamic and healthier, and have lower GHG emissions,” the authors write.

Many cities currently lack the planning capacity for low carbon development, the report says, and there’s often a lack of integrated decision-making at the national level. Cities need better access to global financial markets. And international development banks should spurn “investments that lock in unstructured, unconnected urban expansion.”


Flickr user John Lawlor

Land use

To meet growing demand for food, agricultural productivity will need to improve by 2% a year. By 2050, farmers will have to produce 70% more calories compared to 2006. The problem: up to 25% of land has been degraded because of heavy use, and millions of hectares of land are being cleared to grow crops, contributing to climate change. In total, agriculture, forestry, and other land use, accounts for a quarter of all greenhouse gas emissions.

To boost yields, the Commission recommends doubling funding for agricultural R&D in developing countries. It says governments should phase out subsidies for fertilizer inputs that degrade the soil (and that are often surplus to need) and commit to restoring some 150 million hectares of land. At the same time, the report calls for action on food waste, which not only reduces calories in circulation but also contributes to warming. It estimates developed countries alone could save $200 billion per year by 2030, and reduce emissions by at least 0.3 gigatons of CO2 equivalent.


Energy demand is expected to jump 25% to 30% in the next 15 years. The report recommends countries make broader assessments of the cost of fuels, so as to make clean energy more attractive. For example, a coal-fired power plant in South Asia currently produces power for as little as $60 per megawatt hour, but that’s before you include related health environmental costs that could add $40 per MWh to that.

“Governments should require that new coal construction be preceded by a full assessment showing that other options are infeasible, and the benefits of coal outweigh the full costs,” the report says.


The Commission also recommends phasing out fossil fuel subsidies (which are worth billions of dollars a year, even in oil-rich countries) and concentrating on energy efficiency. Developed countries have improved their output-per-energy-unit by 40% in four decades, it says. By 2030, India could need 40% less energy if it adopted similar high-efficiency policies.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.