Integrating measures to tackle climate change into regular economic policy could provide a net increase of nearly 5% to the GDP of G20 countries by 2050, according to an OECD report released yesterday.
It argues that $6.9trn (£5.32trn) of infrastructure investment will be needed each year if global temperature rises are to be kept below 2°C, and that this will cost just 10% more than the carbon-intensive alternative.
In addition, the report states that climate-friendly infrastructure is more energy-efficient, and would lead to fossil fuel savings totalling $1.7trn annually, more than offsetting the incremental cost.
"Far from being a dampener on growth, integrating climate action into growth policies can have a positive economic impact," OECD secretary-general, Angel Gurría, said. "There is no economic excuse for not acting on climate change, and the urgency to act is high."
G20 countries, which account for 85% of global GDP and 80% of CO2 emissions, should strengthen climate mitigation policies like carbon pricing and fossil fuel subsidy reform to help drive low-carbon innovation, according to the report.
It argues that delaying action until after 2025 will lead to an average output loss of 2% after 10 years for G20 economies, relative to taking action now.
The delay would also mean that even more stringent climate policies would have to be introduced more urgently, risking greater environmental and economic disruption and leaving more fossil fuel assets as economically unviable.
"We have a unique window of opportunity to bring the climate and economic growth agendas together to generate inclusive economic growth in the short-term, while ensuring that we meet the climate challenge in the longer term," Gurría said.
The report adds that even in countries where the transition to a low-carbon economy will be economically challenging, such as in net fossil-fuel exporters, the right combination of policies can mean that low-carbon growth offsets the cost in terms of the economy and jobs of putting in place mitigation policies.
It suggests that G20 countries engage with local governments, employers and workforces during the transition in order to reduce widening inequalities.
"Meeting the Paris agreement's goals will require countries to step up ambition, enhance co-operation across borders, and strengthen domestic policies and implementation on the ground as a matter of urgency," Gurría added.