The urgent need for solutions to the climate crisis was made clear in the IPCC climate report published earlier this year – but who will pay the price? Not most people, but the super wealthy, according to new research.
According to a recent study, a transition to renewable energy would have a low impact on the majority of the population – despite previous assumptions that moving away from fossil fuels would negatively impact retirement plans and savings.
Instead, the team of economists from Sciences Po university in Paris, France, and The University of Massachusetts Amherst, USA, estimate that the biggest losses in high-income countries would be to the wealthiest citizens – and even then these losses would account for a small percentage of their total wealth.
“There’s this big question of who’s winning and who is losing from the transition and from climate change in general,” says co-first author Lucas Chancel, economics professor at Sciences Po.
“Even though our results are simple, they were not present in research or public debates before. This work is one step forward in understanding the winners and losers from the point of view of the assets that might be at risk in this transition.”
The study found similar results in both the US and the UK, as well as other countries in Europe. In these nations, an estimated two-thirds of financial losses would affect the wealthiest 10 per cent of the population.
Half of the assets lost would affect the top one per cent of wealth holders. Within this super-wealthy one per cent, the losses would make up less than one per cent of the individuals’ net wealth.
Meanwhile, the poorest half of citizens would only suffer 3.5 per cent of the financial losses.
At a much lower rate of loss, the economists argue that these damages would be more easily compensated by governments. They propose carbon emission taxes as one way of raising compensation funds.
According to the UN, a transition to renewables is likely to financially benefit everyone in the long term. Short term investments in new infrastructure will pay off, as a more resilient system helps to reduce the impacts of pollution and climate impacts – saving the world a whopping £3.3 trillion(or $4.2 trillion) per year by 2030.
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